- Amended Annual Report (10-K/A)

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K/A
(Amendment No. 1)


ý		Annual report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the fiscal year ended December 31, 2009
o		Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the transition period from to

Commission file number: 0-25923

Eagle Bancorp, Inc.
(Exact Name of Registrant as Specified in its Charter)


Maryland (State or other jurisdiction of incorporation or organization)		52-2061461 (I.R.S. Employer Identification Number)
7815 Woodmont Avenue, Bethesda, Maryland (Address of Principal Executive Offices)		20814 (Zip Code)

Registrant's Telephone Number, including area code: (301) 986-1800

Securities registered pursuant to Section 12(b) of the Act:

Title of class		Name of each exchange on which registered

Common Stock, $0.01 par value		The NASDAQ Capital Market

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Section 405 of the Securities Act. Yes o No ý

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes o No ý

Indicate by check mark whether the registrant; (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports; and (2) has been subject to such filing requirements for the past 90 days. Yes ý No o

Indicate by checkmark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes o No o

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act.


Large accelerated filer o		Accelerated filer ý		Non-accelerated filer o		Smaller reporting company o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act. Yes o No ý

The aggregate market value of the outstanding Common Stock held by nonaffiliates as of June 30, 2009 was approximately $86.8 million.

As of March 4, 2010, the number of outstanding shares of the Common Stock, $0.01 par value, of Eagle Bancorp, Inc. was 19,631,164.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the Company's definitive Proxy Statement for the Annual Meeting of Shareholders to be held on May 20, 2010 are incorporated by reference in part III hereof.

EXPLANATORY NOTE

We filed our Annual Report on Form 10-K for the year ended December 31, 2009 on March 15, 2010 (the "Original Report"). We are filing this Amendment No. 1 on Form 10-K/A (this "Amendment") to:

•: correct inadvertent errors in the Cross Reference Sheet;
•: include a reconciliation of non-GAAP financial measures included in the Six Year Summary of Financial Information
•: provide additional disclosures relating to the Company's troubled debt restructurings, potential problem loans, use of updated appraisals and accounting for securities sold under agreements to repurchase;
•: provide certain additional information regarding targets during 2009 under our Senior Executive Incentive Plan;
•: to eliminate certain qualifications to our description of applicable supervisory and regulatory matters; and
•: to reflect certain inadvertently omitted exhibits.

No other changes to the Original Report are included in this Amendment other than the items mentioned above and to provide currently-dated Exhibit Nos. 23, 31.1, 31.2, 32.1 and 32.2.

This Amendment is being filed in response to comments we received from the staff of the Division of Corporation Finance of the Securities and Exchange Commission (the "SEC") in connection with the staff's review of the Original Report. We have made no attempt in this Amendment to modify or update the disclosures presented in the Original Report other than as noted above. Also, this Amendment does not reflect events occurring after the filing of the Original Report. Accordingly, this Amendment should be read in conjunction with the Original Report, as amended and our other filings with the SEC subsequent to the filing of the Original Report.

Form 10-K Cross Reference Sheet

The following shows the location in this Annual Report on Form 10-K or the Company's Proxy Statement for the Annual Meeting of Stockholders to be held on May 20, 2010, of the information required to be disclosed by the United States Securities and Exchange Commission Form 10-K. References to pages only are to pages in this report.


PART I	Item 1.	Business. See "Business" at Pages 92 through 97, "Employees" at Page 106, "Market Area and Competition" at Pages 107 through 108 and "Regulation" at Pages 109 through 114.
	Item 1A.	Risk Factors. See "Risk Factors" at Pages 98 through 106.
	Item 1B.	Unresolved Staff Comments. None
	Item 2.	Properties. See "Properties" at Pages 114 through 116.
	Item 3.	Legal Proceedings. From time to time the Company is a participant in various legal proceedings incidental to its business. In the opinion of management, the liabilities (if any) resulting from such legal proceedings will not have a material effect on the financial position of the Company.
	Item 4.	Submission of Matters to a Vote of Security Holders. No matter was submitted to a vote of the security holders of the Company during the fourth quarter of 2009.
PART II	Item 5.	Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. See "Market for Common Stock and Dividends" at Pages 45 though 47.
	Item 6.	Selected Financial Data. See "Six Year Summary of Financial Information" at Pages 3 through 4.
	Item 7.	Management's Discussion and Analysis of Financial Condition and Results of Operation. See "Management's Discussion and Analysis of Financial Condition and Results of Operation" at Pages 5 through 44.
	Item 7A.	Quantitative and Qualitative Disclosures about Market Risk. See "Interest Rate Risk Management—Asset/Liability Management and Quantitative and Qualitative Disclosures About Market Risk" at Pages 37 through 41.
	Item 8.	Financial Statements and Supplementary Data. See Consolidated Financial Statements and Notes thereto at Pages 52 through 91.
	Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure. None.
	Item 9A.	Controls and Procedures. See "Disclosure Controls and Procedures" at Page 48 and "Management Report on Internal Control Over Financial Reporting" at Page 49.
	Item 9B.	Other Information. None.
PART III	Item 10.	Directors, Executive Officers and Corporate Governance. The information required by this Item is incorporated by reference to the material appearing under the captions "Election of Directors" and "Compliance with Section 16(a) of the Securities Exchange Act of 1934" in the Proxy Statement.
		The Company has adopted a code of ethics that applies to its Chief Executive Officer and Chief Financial Officer. A copy of the code of ethics will be provided to any person, without charge, upon written request directed to Jane Cornett, Corporate Secretary, Eagle Bancorp, Inc., 7815 Woodmont Avenue, Bethesda, Maryland 20814.
		There have been no material changes in the procedures previously disclosed by which shareholders may recommend nominees to the Company's Board of Directors.
	Item 11.	Executive Compensation. The information required by this Item is incorporated by reference to the material appearing under the captions "Election of Directors—Director's Compensation" and "Executive Compensation" in the Proxy Statement, as amended under "Executive Compensation" at Pages 117 through 137.
	Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters. See "Market for Common Stock and Dividends—Securities Authorized for Issuance Under Equity Compensation Plans" at page 46. The remainder of the information required by this Item is incorporated by reference to the material appearing under the caption "Voting Securities and Principal Shareholders" in the Proxy Statement.
	Item 13.	Certain Relationships and Related Transactions and Director Independence. The information required by this Item is incorporated by reference to the material appearing under the captions "Election of Directors" and "Certain Relationships and Related Transactions" in the Proxy Statement.
	Item 14.	Principal Accountant Fees and Services. The information required by this Item is incorporated by reference to the material appearing under the caption "Ratification of Appointment of Independent Registered Public Accounting Firm—Fees Paid to Independent Accounting Firm" in the Proxy Statement.
PART IV	Item 15.	Exhibits, Financial Statement Schedules. See "Exhibits and Financial Statements" at Pages 138 through 139.

Six Year Summary of Selected Financial Data

The following table shows selected historical consolidated financial data for Eagle Bancorp, Inc. (the "Company"). It should be read in conjunction with the Company's audited Consolidated Financial Statements appearing elsewhere in this report.

	Year ended December 31,

(dollars in thousands except per share data)	2009			2008			2007			2006			2005			2004
*Balance Sheet—Period End*
Securities	$	245,644		$	169,079		$	87,117		$	91,140		$	68,050		$	64,098
Loans held for sale		1,550			2,718			2,177			2,157			2,924			2,208
Loans		1,399,311			1,265,640			716,677			625,773			549,212			415,509
Allowance for credit losses		20,619			18,403			8,037			7,373			5,985			4,240
Intangible assets, net		4,379			2,533			236			255			168			—
Total assets		1,805,504			1,496,827			846,400			773,451			672,252			553,453
Deposits		1,460,274			1,129,380			630,936			628,515			568,893			462,287
Borrowings		150,090			215,952			128,408			68,064			32,139			30,316
Subordinated debt		9,300			12,150			—			—			—			—
Total liabilities		1,617,183			1,354,456			765,234			700,535			607,288			494,919
Preferred stockholders' equity		22,612			36,312			—			—			—			—
Common stockholders' equity		165,709			106,059			81,166			72,916			64,964			58,534
Total stockholders' equity		188,321			142,371			81,166			72,916			64,964			58,534
Tangible common equity(1)		161,330			102,568			80,930			72,661			64,796			58,534
*Statement of Operations*
Interest income	$	84,338		$	65,657		$	57,077		$	50,318		$	36,726		$	24,195
Interest expense		24,809			23,676			23,729			17,880			8,008			4,328
Provision for credit losses		7,669			3,979			1,643			1,745			1,843			675
Noninterest income		7,297			4,366			5,186			3,846			3,998			3,753
Noninterest expense		42,773			30,817			24,921			21,824			18,960			14,952
Income before taxes		16,384			11,551			11,970			12,715			11,913			7,993
Income tax expense		5,965			4,123			4,269			4,690			4,369			2,906
Net income		10,419			7,428			7,701			8,025			7,544			5,087
Preferred dividends		2,307			177			—			—			—			—
Net income available to common shareholders		8,112			7,251			7,701			8,025			7,544			5,087
*Per Common Share Data(2)*
Net income, basic	$	0.55		$	0.63		$	0.73		$	0.77		$	0.74		$	0.51
Net income, diluted		0.55			0.62			0.71			0.74			0.70			0.48
Dividends declared		—			0.11			0.22			0.21			0.20			—
Book value		8.48			8.19			7.59			6.99			6.32			5.80
Tangible book value(1)		8.26			7.92			7.57			6.97			6.31			5.80
Common shares outstanding		19,534,226			12,714,355			10,693,447			10,425,870			10,274,394			10,078,712
Weighted average common shares outstanding		14,643,294			11,556,569			10,531,236			10,373,080			10,177,948			10,062,368
*Ratios*
Net interest margin		3.85	%		4.05	%		4.37	%		4.81	%		4.99	%		4.35	%
Efficiency ratio(3)		64.01	%		66.49	%		66.54	%		60.15	%		57.95	%		63.30	%
Return on average assets		0.65	%		0.69	%		0.96	%		1.13	%		1.24	%		1.04	%
Return on average common equity		6.60	%		8.05	%		10.03	%		11.63	%		12.25	%		9.16	%
Total capital (to risk weighted assets)		13.57	%		11.93	%		11.21	%		11.91	%		12.05	%		13.45	%
Tier 1 capital (to risk weighted assets)		11.82	%		9.78	%		10.20	%		10.82	%		11.04	%		12.52	%
Tier 1 capital (to average assets)		10.29	%		9.22	%		9.46	%		9.67	%		9.94	%		11.98	%
*Asset Quality*
Nonperforming assets and loans 90+ past due	$	27,131		$	26,366		$	5,324		$	2,013		$	491		$	156
Nonperforming assets and loans 90+ past due to total assets		1.50	%		1.76	%		0.63	%		0.26	%		0.07	%		0.03	%
Allowance for credit losses to loans		1.47	%		1.45	%		1.12	%		1.18	%		1.09	%		1.02	%
Allowance for credit losses to nonperforming assets		76.00	%		69.80	%		150.96	%		366.27	%		1218.94	%		2717.95	%
Net charge-offs	$	5,454		$	1,123		$	979		$	357		$	98		$	115
Net charge-offs to average loans		0.42	%		0.12	%		0.15	%		0.06	%		0.02	%		0.03	%

(1): The information set forth below contains certain financial information determined by methods other than in accordance with generally accepted accounting policies in the United States ("GAAP"). These non-GAAP financial measures are "tangible common equity," and "tangible book value per common share." Our management uses these non-GAAP measures in its

analysis of our performance because it believes these measures are material and will be used as a measure of our performance by investors. These disclosures should not be considered in isolation or a substitute for results determined in accordance with GAAP, and are not necessarily comparable to non-GAAP performance measures which may be presented by other bank holding companies. Management compensates for these limitations by providing detailed reconciliations between GAAP information and the non-GAAP financial measures. A reconciliation of these non-GAAP measures to the most comparable GAAP measure is set forth below.

	Year ended December 31,

(dollars in thousands except per share data)	2009			2008			2007			2006			2005			2004
Common stockholders' equity	$	165,709		$	106,059		$	81,166		$	72,916		$	64,964		$	58,534
Less: Intangible assets		(4,379	)		(2,533	)		(236	)		(255	)		(168	)		—

Tangible common equity	$	161,330		$	103,526		$	80,930		$	72,661		$	64,796		$	58,534

Book value per common share	$	8.48		$	8.34		$	7.59		$	6.99		$	6.32		$	5.80
Less: Intangible book value per common share		(0.22	)		(0.20	)		(0.02	)		(0.02	)		(0.01	)		—

Tangible book value per common share	$	8.26		$	8.14		$	7.57		$	6.97		$	6.31		$	5.80

(2): Presented giving retroactive effect to the 10% stock dividend paid on the common stock on October 1, 2008 and the stock splits in the form of 30% dividend on the common stock paid on July 5, 2006 and February 28, 2005. In July 2008, the Company discontinued the payment of its quarterly cash dividend.
(3): Computed by dividing noninterest expense by the sum of net interest income and noninterest income.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

The following discussion provides information about the results of operations, financial condition, liquidity, and capital resources of Eagle Bancorp, Inc. (the "Company"). The Company's primary subsidiaries are EagleBank (the "Bank") and Eagle Commercial Ventures ("ECV"). This discussion and analysis should be read in conjunction with the audited Consolidated Financial Statements and Notes thereto, appearing elsewhere in this report.

Caution About Forward Looking Statements. This report contains forward looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act. These forward looking statements represent plans, estimates, objectives, goals, guidelines, expectations, intentions, projections and statements of our beliefs concerning future events, business plans, objectives, expected operating results and the assumptions upon which those statements are based. Forward looking statements include without limitation, any statement that may predict, forecast, indicate or imply future results, performance or achievements, and are typically identified with words such as "may," "could," "should," "will," "would," "believe," "anticipate," "estimate," "expect," "intend," "plan," or words or phases of similar meaning. These forward looking statements are based largely on our expectations and are subject to a number of known and unknown risks and uncertainties that are subject to change based on factors which are, in many instances, beyond our control. Actual results, performance or achievements could differ materially from those contemplated, expressed, or implied by the forward looking statements.

The following factors, among others, could cause our financial performance to differ materially from that expressed in such forward looking statements:

•: The strength of the United States economy in general and the strength of the local economies in which we conduct operations;
•: Geopolitical conditions, including acts or threats of terrorism, actions taken by the United States or other governments in response to acts or threats of terrorism and/or military conflicts, which could impact business and economic conditions in the United States and abroad;
•: The effects of, and changes in, trade, monetary and fiscal policies and laws, including interest rate policies of the Board of Governors of the Federal Reserve System (the "Federal Reserve Board;" inflation, interest rate, market and monetary fluctuations;
•: The timely development of competitive new products and services and the acceptance of these products and services by new and existing customers;
•: The willingness of users to substitute competitors' products and services for our products and services;
•: The impact of changes in financial services policies, laws and regulations, including laws, regulations and policies concerning taxes, banking, securities and insurance, and the application thereof by regulatory bodies;
•: The effect of changes in accounting policies and practices, as may be adopted from time-to-time by bank regulatory agencies, the Securities and Exchange Commission (the "SEC"), the Public Company Accounting Oversight Board, the Financial Accounting Standards Board or other accounting standards setters;
•: Technological changes;
•: The effect of acquisitions we may make, including, without limitation, the failure to achieve the expected revenue growth and/or expense savings from such acquisitions;

•: The growth and profitability of non-interest or fee income being less than expected;
•: Changes in the level of our non-performing assets and charge-offs;
•: Changes in consumer spending and savings habits; and
•: Unanticipated regulatory or judicial proceedings.

If one or more of the factors affecting our forward looking information and statements proves incorrect, then our actual results, performance or achievements could differ materially from those expressed in, or implied by, forward looking information and statements contained in this report. You should not to place undue reliance on our forward looking information and statements. We will not update the forward looking statements to reflect actual results or changes in the factors affecting the forward looking statements.

GENERAL

The Company is a growth oriented, one-bank holding company headquartered in Bethesda, Maryland. The Company provides general commercial and consumer banking services through the Bank, its wholly owned banking subsidiary, a Maryland chartered bank which is a member of the Federal Reserve System. The Company was organized in October 1997, to be the holding company for the Bank. The Bank was organized as an independent, community oriented, full service banking alternative to the super regional financial institutions, which dominate the primary market area. The Company's philosophy is to provide superior, personalized service to its customers. The Company focuses on relationship banking, providing each customer with a number of services, becoming familiar with and addressing customer needs in a proactive, personalized fashion. The Bank currently has a total of fourteen offices which is comprised of eight offices serving Montgomery County, Maryland, five offices in the District of Columbia and one office in Fairfax County, Virginia. Our eighth office in Montgomery County, located in Potomac, Maryland, opened in the fourth quarter of 2009.

The Company offers a broad range of commercial banking services to its business and professional clients as well as full service consumer banking services to individuals living and/or working primarily in the service area. The Company emphasizes providing commercial banking services to sole proprietors, small and medium-sized businesses, partnerships, corporations, non-profit organizations and associations, and investors living and working in and near the primary service area. A full range of retail banking services are offered to accommodate the individual needs of both corporate customers as well as the community the Company serves. These services include the usual deposit functions of commercial banks, including business and personal checking accounts, "NOW" accounts and money market and savings accounts, business, construction, and commercial loans, residential mortgages and consumer loans and cash management services. The Company has developed significant expertise and commitment as an SBA lender, and has been designated a Preferred Lender by the Small Business Administration ("SBA").

Throughout 2009, the financial services industry continued to encounter significant volatility and stress following severe contraction in worldwide economic activity, credit defaults and asset value declines in the fourth quarter of 2008 and first quarter of 2009. Generally weak economic conditions persisted in the U.S. economy and regionally in the twelve months ended December 31, 2009, with unemployment levels increasing, real estate values declining, personal income levels remaining flat, and average interest rates declining sharply. In this difficult operating environment, the Company was able to produce positive earnings in each quarter of 2009. The Company's primary market, the Washington, D.C. metropolitan area, has been relatively less impacted by the severe recessionary climate than other parts of the country, due in part to the significant economic impact of the federal government. The Company did not make subprime residential mortgage loans to retail customers, and did not invest in private label mortgage backed securities, securities backed by subprime or Alt A mortgages, or the preferred stock of Freddie Mac and Fannie Mae, factors which have negatively impacted many banking companies. Notably, the

Company was successful in raising a significant amount of additional common equity in the third quarter of 2009 to fund additional growth, at a time when many community banks did not have access to capital markets. The new capital allowed the Company to redeem $15 million of the preferred stock which had been sold to the United States Department of the Treasury (the "Treasury") under the Troubled Asset Relief Program Capital Purchase Program (the "Capital Purchase Program") in December 2008.

While the slowdown in the economy was less severe in the Company's marketplace than many other areas of the country, declines in housing construction and real estate values, and the related impact on contractors and other small and medium sized businesses' activity, has impacted the Company's customers and business. However, the Company has continued had the resources to continue to meet the credit needs of its community. The Company believes its strategies during these difficult economic times are providing substantial new relationships and future growth opportunities.

CRITICAL ACCOUNTING POLICIES

The Company's Consolidated Financial Statements are prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") and follow general practices within the banking industry. Application of these principles requires management in certain circumstances to make estimates, assumptions, and judgments that affect the amounts reported in the financial statements and accompanying notes. These estimates, assumptions and judgments are based on information available as of the date of the Consolidated Financial Statements; accordingly, as this information changes, the Consolidated Financial Statements could reflect different estimates, assumptions, and judgments. Certain policies inherently have a greater reliance on the use of estimates, assumptions and judgments and as such have a greater possibility of producing results that could be materially different than originally reported.

Estimates, assumptions, and judgments are necessary when assets and liabilities are required to be recorded at fair value, when a decline in the value of an asset warrants an impairment write-down or a valuation reserve to be established, or when an asset or liability needs to be recorded contingent upon a future event. Carrying assets and liabilities at fair value inherently results in more financial statement volatility.

The fair values and the information used to record valuation adjustments for investment securities available for sale are based either on quoted market prices or are provided by other third-party sources, when available. The Company's investment portfolio is categorized as available for sale with unrealized gains and losses net of tax being a component of stockholders' equity and comprehensive income. Refer to the fair value disclosures at page 19 and Note 19 to the Consolidated Financial Statements at page 83 for further discussion of the carrying value of the investment portfolio and certain loans.

The allowance for credit losses is an estimate of the losses that may be sustained in our loan portfolio. The allowance is based on two principles of accounting: (a) ASC Topic 450, "Contingencies," which requires that losses be accrued when they are probable of occurring and are estimable and (b) ASC Topic 310, "Receivables," which requires that losses be accrued when it is probable that the Company will not collect all principal and interest payments according to the contractual terms of the loan. The loss, if any, can be determined by the difference between the loan balance and the value of collateral, the present value of expected future cash flows, or values observable in the secondary markets.

Three components comprise our allowance for credit losses: a specific allowance, a formula allowance and a nonspecific or environmental factors allowance. Each component is determined based on estimates that can and do change when actual events occur.

The specific allowance allocates a reserve to identified impaired loans. Loans identified in the risk rating evaluation as substandard, doubtful and loss (classified loans), are segregated from non-classified loans. Classified loans are assigned specific reserves based on an impairment analysis. Under ASC Topic

310, "Receivables," a loan for which reserves are individually allocated may show deficiencies in the borrower's overall financial condition, payment record, support available from financial guarantors and the fair market value of collateral. When a loan is identified as impaired, a specific reserve is established based on the Company's assessment of the loss that may be associated with the individual loan.

The formula allowance is used to estimate the loss on internally risk rated loans, exclusive of those identified as requiring specific reserves. The portfolio of unimpaired loans is stratified by loan type and risk assessment. Allowance factors relate to the type of loan and level of the internal risk rating, with loans exhibiting higher risk and loss experience receiving a higher allowance factor.

The environmental allowance is used to estimate the loss associated with pools of non-classified loans. These unclassified loans are also stratified by loan type, and environmental allowance factors are assigned by management based upon a number of conditions, including delinquencies, loss history, changes in lending policy and procedures, changes in business and economic conditions, changes in the nature and volume of the portfolio, management expertise, concentrations within the portfolio, quality of internal and external loan review systems, competition, and legal and regulatory requirements.

The allowance captures losses inherent in the portfolio which have not yet been recognized. Allowance factors and the overall size of the allowance may change from period to period based upon management's assessment of the above described factors, the relative weights given to each factor, and portfolio composition.

Management has significant discretion in making the judgments inherent in the determination of the provision and allowance for credit losses, including, in connection with the valuation of collateral, a borrower's prospects of repayment, and in establishing allowance factors on the formula allowance and environmental allowance components of the allowance. The establishment of allowance factors involves a continuing evaluation, based on management's ongoing assessment of the global factors discussed above and their impact on the portfolio. The allowance factors may change from period to period, resulting in an increase or decrease in the amount of the provision or allowance, based upon the same volume and classification of loans. Changes in allowance factors can have a direct impact on the amount of the provision, and a related after tax effect on net income. Errors in management's perception and assessment of the global factors and their impact on the portfolio could result in the allowance not being adequate to cover losses in the portfolio, and may result in additional provisions or charge-offs. Alternatively, errors in management's perception and assessment of the global factors and their impact on the portfolio could result in the allowance being in excess of amounts necessary to cover losses in the portfolio, and may result in lower provisions in the future. For additional information regarding the allowance for credit losses, refer to the discussion under the caption "Allowance for Credit Losses" at page 24.

The Company follows the provisions of ASC Topic 718 "Compensation," which requires the expense recognition for the fair value of share based compensation awards, such as stock options, restricted stock units, and performance based shares. This standard allows management to establish modeling assumptions as to expected stock price volatility, option terms, forfeiture rates and dividend rates which directly impact estimated fair value. The accounting standard also allows for the use of alternative option pricing models which may impact fair value as determined. The Company's practice is to utilize reasonable and supportable assumptions which are reviewed with the appropriate Board Committee.

In accounting for the acquisition of Fidelity & Trust Financial Corporation ("Fidelity") and its subsidiary Fidelity & Trust Bank ("F&T Bank"), the Company followed the provisions of ASC Topic 805 "Business Combinations ," which mandates the use of the purchase method of accounting and ASC Topic 310-30, "Loans and Debt Securities Acquired with Deteriorated Credit Quality ." Accordingly, the tangible assets and liabilities and identifiable intangibles acquired were recorded at their respective fair values on the date of acquisition, with any impaired loans acquired being recorded at fair value outside the allowance for loan losses. The valuation of the loan and time deposit portfolios acquired were made by independent analysis for the difference between the instruments' stated interest rates and the instruments' current

origination interest rate, with premiums and discounts being amortized to interest income and interest expense to achieve an effective market interest rate. An identified intangible asset related to core deposits was recorded based on independent valuation. Deferred tax assets were recorded for the future value of a net operating loss and for the tax effect of temporary timing differences between the accounting and tax basis of assets and liabilities. The Company recorded an unidentified intangible (goodwill) for the excess of the purchase price of the acquisition (including direct acquisition costs) over the fair value of net tangible and identifiable intangible assets acquired. See "Allowance for Credit Losses" at page 24, "Nonperforming Assets" at page 26, "Intangible Assets" at page 29, and Note 4 "Loans and Allowance for Credit Losses;" to the Consolidated Financial Statements, for further information on the acquisition of Fidelity.

RESULTS OF OPERATIONS

Overview

The Company reported net income of $10.4 million for the year ended December 31, 2009, a 40% increase from net income of $7.4 million for the year ended December 31, 2008, as compared to $7.7 million for the year ended December 31, 2007. Net income available to common stockholders, which is after accrual of preferred stock dividends, was $8.1 million for year ended December 31, 2009, a 12% increase from net income available to common stockholders of $7.3 million for the year ended December 31, 2008.

The increase in net income for the twelve months ended December 31, 2009 can be attributed primarily to an increase in net interest income of 42% as compared to the same period in 2008. Net interest income growth was due substantially to growth in average earning assets of 49% in 2009.

Earnings per basic common share were $0.55 for the year ended December 31, 2009, as compared to $0.63 for 2008 and $0.73 for 2007. Earnings per diluted common share were $0.55 for the year ended December 31, 2009, as compared to $0.62 for 2008 and $0.71 for 2007. Per common share amounts and the number of shares have been adjusted to give effect to the 10% stock dividend paid on October 1, 2008. The decline in net income per common share for 2009 in part reflects the significant increase in the number of shares outstanding as a result of the Company's successful offering of common stock completed in September 2009.

For the three months ended December 31, 2009, the Company reported net income of $3.0 million as compared to $1.7 million for the same period in 2008. Earnings per basic and diluted common shares were $0.12 for the three months ended December 31, 2009 and for the same period in 2008, respectively.

The Company had a return on average assets of 0.65% and a return on average common equity of 6.60% for the year of 2009, as compared to returns on average assets and average equity of 0.69% and 8.05%, respectively, for the year of 2008 and 0.96% and 10.03%, respectively, for the year of 2007.

The Company's earnings are largely dependent on net interest income, which represented 89% of total revenue in 2009 and 91% in 2008. For the twelve months ended December 31, 2009, the net interest margin, which measures the difference between interest income and interest expense (i.e. net interest income) as a percentage of earning assets declined from 4.05% for the twelve months ended December 31, 2008 to 3.85% for the twelve months ended December 31, 2009. This decline was due primarily to a reduced benefit of noninterest funding sources from 63 basis points in 2008 to 48 basis points for 2009, as average interest rates were lower in 2009 than in 2008. Average interest bearing liabilities funding average earning assets decreased to 77% as compared to 78% for the year of 2008. Additionally, while the average rate on earning assets for the twelve month period ended December 31, 2009, as compared to 2008 decreased by 87 basis points from 6.33% to 5.46%, the cost of interest bearing liabilities decreased by 82 basis points from 2.91% to 2.09%, resulting in a net interest spread of 3.37% for the twelve months ended December 31, 2009, as compared to 3.42% for the same period in 2008, a slight decline of 5 basis points.

For the twelve months ended December 31, 2009, average noninterest sources funding earning assets were $355 million as compared to $225 million for the same period in 2008.

For the three months ended December 31, 2009 and 2008, average interest bearing liabilities were 75% and 79%, respectively, of average earning assets. Additionally, while the average rate on earning assets for the three months ended December 31, 2009 has declined by 61 basis points from 5.91% to 5.30%, as compared to 2008, the cost of interest bearing liabilities has decreased by 92 basis points from 2.73% to 2.81%, resulting in a increase in the net interest spread of 31 basis points from 3.18% for the quarter ended December 31, 2008 to 3.49% for the three months ended December 31, 2009. The net interest margin increased 22 basis points from 3.74% for the three months ended December 31, 2008 to 3.96% for the three months ended December 31, 2009. The higher margin in the fourth quarter of 2009 was due primarily to lower funding costs resulting from a decline in money market rates and a higher mix of noninterest bearing deposits. Noninterest sources funding earning assets declined from 56 basis points for the three months ended December 31, 2008 to 47 basis points for the three months ended December 31, 2009. As with the twelve month period comparisons, this decline was due to the lower level of interest rates in 2009 as compared to 2008.

The Company believes it has effectively managed its net interest margin and net interest income over the past twelve months as market interest rates have declined. This factor has been significant to overall earnings performance over the past twelve months as net interest income represents the most significant component of the Company's revenues.

Due to favorable core deposit growth over the past twelve months, the need to meet loan funding objectives has not required the expanded use of alternative funding sources, such as Federal Home Loan Bank ("FHLB") advances, correspondent bank lines of credit and brokered time deposits, the balances of which have declined since December 31, 2008. The major component of the growth in core deposits has been growth in a special money market account originally promoted through advertisements, but which is now promoted primarily through direct sales effort by the business development staff.

In terms of the average balance sheet composition or mix, loans, which generally have higher yields than securities and other earning assets, decreased from 88% of average earning assets in 2008 to 85% of average earning assets for 2009, as balance sheet liquidity evidenced by an increased level of average federal funds sold and other short term investments increased in 2009. Investment securities accounted for 12% and 11% of average earning assets for 2009 and 2008, respectively. Federal funds sold averaged 3% and 1% of average earning assets for 2009 and 2008, respectively. The higher average level of investments and federal funds sold in 2009 (i.e. higher average liquidity) contributed to the decline in the net interest margin in 2009 as compared to 2008.

For the three months ended December 31, 2009, average loans were 81% of average earning assets as compared to 87% for the same period in 2008. Loan growth amounted to $82.2 million in the fourth quarter, as compared to $128.3 million of deposit growth. The loan growth is attributable to both seasonality and to third quarter end loan commitments whose fundings carried into the fourth quarter of 2009. The significant increase in deposits in the fourth quarter is primarily attributable to strong sales force efforts and some seasonal inflows. Average investment securities for the three months ended December 31, 2009 amounted to 13% of average earning assets, an increase of 1% from an average of 12% for the same period in 2008. Average federal funds sold averaged 6% of average earning assets for the three months ended December 31, 2009 as compared to 1% for the same period in 2008, the increase due to higher average deposit growth as compared to average loan growth.

The provision for credit losses was $7.7 million for the year ended December 31, 2009 as compared to $4.0 million in 2008. The higher provisioning in 2009 as compared to 2008 is attributable to higher net charge-offs in 2009, $134 million in loan growth, risk migration within the portfolio due to a weaker economy and to increased reserves for problem loans. For the full year 2009, the Company recorded net charge-offs of $5.5 million, as compared to $1.1 million for the same period in 2008. The ratio of net

charge-offs to average loans was 0.42% for 2009 and 0.12% for 2008. The amount of net charge-offs in 2009 was attributable to charge-offs in the unguaranteed portion of SBA loans ($496 thousand), commercial and industrial loans ($3.2 million), consumer loans ($568 thousand), mortgage loans ($552 thousand), commercial real estate investment property loans ($488 thousand) and owner occupied commercial real estate loans ($175 thousand).

At December 31, 2009, the allowance for credit losses was $20.6 million or 1.47% of total loans, as compared to $18.4 million or 1.45% of total loans at December 31, 2008. The higher allowance percentage in 2009, as compared to 2008, is primarily attributable to higher levels of classified loans and related reserve allocations.

The provision for credit losses was $2.5 million for the three months ended December 31, 2009 as compared to $1.5 million for the same period in 2008, the increase being primarily attributable to both higher levels of net credit losses and substantial loan growth in the fourth quarter of 2009. For the fourth quarter of 2009, the Company recorded net charge-offs of $1.8 million, as compared to $166 thousand net charge-offs for the fourth quarter of 2008. The charge-offs in the fourth quarter of 2009 were attributable to charge-offs in the unguaranteed portion of SBA loans ($194 thousand), commercial and industrial loans ($1.0 million), consumer loans ($188 thousand), mortgage loans ($161 thousand), commercial real estate investment property loans ($115 thousand), and owner occupied commercial real estate loans ($137 thousand).

Total noninterest income was $7.3 million for the year 2009 as compared to $4.4 million for 2008, an increase of 67%. This increase was due primarily to higher service charges on deposit accounts of $839 thousand resulting primarily from increased number of deposit accounts, gains realized on the sale of residential and SBA loans of $628 thousand, and gains realized on the investment securities portfolio of $1.5 million. Investment gains realized in the second quarter of 2009 were the result of asset/liability management decisions to reduce call risk in the portfolio of U.S. Agency securities, to reduce potential extension risk in longer term U.S. Agency mortgage backed securities and to better position the investment portfolio for potentially higher interest rates over future years. Increased gains from mortgage banking activities in 2009 reflect higher levels of mortgage refinancing given lower market interest rates.

Total noninterest income for the three months ended December 31, 2009 increased slightly to $1.28 million from $1.26 million for the three months ended December 31, 2008, a 1% increase. This slight increase was due to higher gains realized on the sale of residential and SBA loans and securities of $138 thousand offset by a decrease of $123 thousand in service charges and other income, primarily from lower levels of overdraft charges.

Total noninterest expenses increased from $30.8 million for 2008 to $42.8 million for 2009, an increase of 39%. The primary reason for this increase was the Fidelity acquisition (completed August 31, 2008) and staff additions which increased the size of the organization, and other related personnel and benefit costs of $4.2 million, increased occupancy costs of $1.9 million, related in part to one new office and increased data processing costs of $734 thousand. In addition, higher costs were incurred for legal, accounting and professional fees of $1.7 million and Federal Deposit Insurance Corporation ("FDIC") deposit insurance premiums of $2.1 million, which includes the special FDIC assessment of approximately $723 thousand recorded in the second quarter of 2009 and reflects higher base premium rates and increased levels of insured deposits. Other expenses increased $1.3 million primarily due to $304 thousand in OREO expenses, other losses of $299 thousand resulting from the write-off of ATM/Overdrafts fees, director fees of $169 thousand and $123 thousand of intangible amortization. The efficiency ratio, which measures the level of non-interest expense to total revenue (defined as the sum of net interest income and noninterest income) was 64.01% for the year of 2009 as compared to 66.49% for 2008. While the Company continues to make strategic investments in infrastructure, attention to post-merger integration was emphasized in 2009, resulting in more efficient operations.

Total noninterest expenses were $10.6 million for the three months ended December 31, 2009, as compared to $10.5 million for the three months ended December 31, 2008, a 1% increase. Higher costs were incurred for salaries and benefits of $142 thousand, data processing of $106 thousand, legal, accounting and professional fees of $292 thousand, and FDIC insurance of $35 thousand. The higher costs were offset by a reduction in other expenses of $95 thousand and in marketing and advertising of $343 thousand resulting from the second year of sponsorship costs for the EagleBank Bowl being accrued over the twelve months of 2009, compared to 2008 where the costs were expensed primarily in the fourth quarter. The efficiency ratio was 59.02% for the fourth quarter of 2009, as compared to 72.54% for the fourth quarter of 2008, as the Company has enhanced its productivity since the acquisition.

Net Interest Income and Net Interest Margin

Net interest income is the difference between interest income on earning assets and the cost of funds supporting those assets. Earning assets are composed primarily of loans and investment securities. The cost of funds represents interest expense on deposits, customer repurchase agreements and other borrowings, which comprise federal funds purchased and other borrowings. Noninterest bearing deposits and capital are other components representing funding sources. Changes in the volume and mix of assets and funding sources, along with the changes in yields earned and rates paid, determine changes in net interest income. Net interest income in 2009 was $59.5 million compared to $42.0 million in 2008 and $33.3 million in 2007. For the three months ended December 31, 2009, net interest income was $16.7 million as compared to $13.2 million and $8.8 million for the same period in 2008 and 2007, respectively.

The tables below labeled "Average Balances, Interest Yields and Rates and Net Interest Margin" present the average balances and rates of the various categories of the Company's assets and liabilities for the years and three months ended December 31, 2009, 2008 and 2007. Included in the tables are measurements of interest rate spread and margin. Interest spread is the difference (expressed as a percentage) between the interest rate earned on earning assets less the interest expense on interest bearing liabilities. While net interest spread provides a quick comparison of earnings rates versus cost of funds, management believes that margin provides a better measurement of performance. Margin includes the effect of noninterest bearing sources in its calculation and is net interest income expressed as a percentage of average earning assets.

Average Balances, Interest Yields and Rates, and Net Interest Margin

		Year Ended December 31,

		2009							2008							2007
(dollars in thousands)		Average Balance		Interest		Average Yield/Rate			Average Balance		Interest		Average Yield/Rate			Average Balance		Interest		Average Yield/Rate
ASSETS:
Interest earning assets:
Interest bearing deposits with other banks and other short-term investments		$	3,928	$	94		2.39	%	$	3,750	$	98		2.61	%	$	4,565	$	293		6.42	%
Loans(1)(2)(3)			1,312,537		77,004		5.87	%		911,329		59,901		6.57	%		659,204		51,931		7.88	%
Investment securities available for sale(3)			182,073		7,138		3.92	%		111,398		5,459		4.90	%		85,177		4,177		4.90	%
Federal funds sold			46,412		102		0.22	%		11,255		199		1.77	%		13,682		676		4.94	%

	Total interest earning assets		1,544,950		84,338		5.46	%		1,037,732		65,657		6.33	%		762,628		57,077		7.48	%

Noninterest earning assets			70,012							50,050							45,217
Less: allowance for credit losses			19,344							11,581							7,408

	Total noninterest earning assets		50,668							38,469							37,809

	TOTAL ASSETS	$	1,595,618						$	1,076,201						$	800,437

LIABILITIES AND STOCKHOLDERS' EQUITY
Interest bearing liabilities:
Interest bearing transaction		$	52,083	$	161		0.31	%	$	48,094	$	306		0.64	%	$	51,465	$	306		0.59	%
Savings and money market			401,912		6,144		1.53	%		225,126		4,212		1.87	%		177,312		6,044		3.41	%
Time deposits			566,686		14,651		2.59	%		402,232		15,025		3.74	%		270,480		13,461		4.98	%

	Total interest bearing deposits		1,020,681		20,956		2.05	%		675,452		19,543		2.89	%		499,257		19,811		3.97	%
Customer repurchase agreements and federal funds purchased			93,363		957		1.03	%		68,696		1,406		2.05	%		44,992		1,886		4.19	%
Other short-term borrowings			30,562		611		1.97	%		15,577		546		3.51	%		11,093		611		5.51	%
Long-term borrowings			45,322		2,285		5.04	%		53,750		2,181		4.06	%		29,033		1,421		4.89	%

	Total interest bearing liabilities		1,189,928		24,809		2.09	%		813,475		23,676		2.91	%		584,375		23,729		4.06	%

Noninterest bearing liabilities:
Noninterest bearing demand			236,340							164,116							135,075
Other liabilities			8,702							5,718							4,227

	Total noninterest bearing liabilities		245,042							169,834							139,302

Stockholders' equity			160,648							92,892							76,760

	TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	1,595,618						$	1,076,201						$	800,437

Net interest income				$	59,529						$	41,981						$	33,348

Net interest spread							3.37	%						3.42	%						3.42	%
Net interest margin							3.85	%						4.05	%						4.37	%

(1): Includes loans held for sale.
(2): Loans placed on nonaccrual status are included in average balances. Net loan fees and late charges included in interest income on loans totaled $2.1 million, $1.6 million and $1 million for 2009, 2008 and 2007, respectively.
(3): Interest and fees on loans and investment securities available for sale exclude tax equivalent adjustments.

Average Balances, Interest Yields and Rates, and Net Interest Margin

		Three Months Ended December 31,

		2009							2008							2007
(dollars in thousands)		Average Balance		Interest		Average Yield/Rate			Average Balance		Interest		Average Yield/Rate			Average Balance		Interest		Average Yield/Rate
ASSETS:
Interest earning assets:
Interest bearing deposits with other banks and other short-term investments		$	7,470	$	39		2.07	%	$	6,648	$	24		1.44	%	$	4,675	$	112		9.50	%
Loans(1)(2)(3)			1,352,076		20,576		6.04	%		1,218,067		18,804		6.14	%		687,032		13,299		7.68	%
Investment securities available for sale(3)			224,225		1,747		3.09	%		166,803		2,040		4.87	%		102,643		1,218		4.71	%
Federal funds sold			93,802		51		0.22	%		14,903		36		0.96	%		21,839		250		4.54	%

	Total interest earning assets		1,677,573		22,413		5.30	%		1,406,421		20,904		5.91	%		816,189		14,879		7.23	%

Noninterest earning assets			74,569							62,433							43,556
Less: allowance for credit losses			19,974							17,559							7,503

	Total noninterest earning assets		54,595							44,874							36,053

	TOTAL ASSETS	$	1,732,168						$	1,451,295						$	852,242

LIABILITIES AND STOCKHOLDERS' EQUITY
Interest bearing liabilities:
Interest bearing transaction		$	55,434	$	44		0.31	%	$	51,536	$	53		0.41	%	$	47,809	$	92		0.76	%
Savings and money market			527,300		1,845		1.39	%		282,534		1,232		1.73	%		196,283		1,490		3.01	%
Time deposits			524,860		2,975		2.25	%		605,022		5,128		3.37	%		274,035		3,341		4.84	%

	Total interest bearing deposits		1,107,594		4,864		1.74	%		939,092		6,413		2.72	%		518,127		4,923		3.77	%
Customer repurchase agreements and federal funds purchased			82,106		184		0.89	%		99,071		388		1.56	%		55,698		511		3.64	%
Other short-term borrowings			23,696		184		3.08	%		16,717		124		2.95	%		21,752		302		5.51	%
Long-term borrowings			35,604		453		5.05	%		62,166		755		4.84	%		30,249		300		3.93	%

	Total interest bearing liabilities		1,249,000		5,685		1.81	%		1,117,046		7,680		2.73	%		625,826		6,036		3.83	%

Noninterest bearing liabilities:
Noninterest bearing demand			273,711							213,284							141,229
Other liabilities			7,453							7,719							5,130

	Total noninterest bearing liabilities		281,164							221,003							146,359

Stockholders' equity			202,004							113,245							80,057

	TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	1,732,168						$	1,451,294						$	852,242

Net interest income				$	16,728						$	13,224						$	8,843

Net interest spread							3.49	%						3.18	%						3.40	%
Net interest margin							3.96	%						3.74	%						4.30	%

(1): Includes loans held for sale.
(2): Loans placed on nonaccrual status are included in average balances. Net loan fees and late charges included in interest income on loans totaled $752 thousand, $514 thousand and $263 thousand for the three months ended December 31, 2009, 2008 and 2007, respectively.
(3): Interest and fees on loans and investment securities available for sale exclude tax equivalent adjustments.

The rate/volume table below presents the composition of the change in net interest income for the periods indicated, as allocated between the change in net interest income due to changes in the volume of average earning assets and interest bearing liabilities, and the changes in net interest income due to changes in interest rates. As the table shows, the increase in net interest income in 2009 as compared to 2008 was a function of a significant increase in the volume of earning assets, partially offset by a decrease in the net interest margin on earning assets, due to the lower value of noninterest funding sources in 2009 as compared to 2008. For 2008 over 2007, the change is due to growth in the volume of earning assets offset by a decrease in the net interest margin on earning assets.

Rate/Volume Analysis of Net Interest Income

			2009 compared with 2008								2008 compared with 2007

(dollars in thousands)			Change Due to Volume		Change Due to Rate			Total Increase (Decrease)			Change Due to Volume			Change Due to Rate			Total Increase (Decrease)
Interest earned on:
	Loans		$	26,371	$	(9,268	)	$	17,103		$	19,862		$	(11,892	)	$	7,970
	Investment securities			3,463		(1,784	)		1,679			1,286			(4	)		1,282
	Interest bearing bank deposits			5		(9	)		(4	)		(52	)		(143	)		(195	)
	Federal funds sold			622		(719	)		(97	)		(120	)		(357	)		(477	)

		Total interest income		30,461		(11,780	)		18,681			20,976			(12,396	)		8,580

Interest paid on:
	Interest bearing transaction			25		(170	)		(145	)		(20	)		20			—
	Savings and money market			3,308		(1,376	)		1,932			1,630			(3,462	)		(1,832	)
	Time deposits			6,143		(6,517	)		(374	)		6,557			(4,993	)		1,564
	Customer repurchase agreements			505		(954	)		(449	)		994			(1,474	)		(480	)
	Other borrowings			183		(14	)		169			1,457			(762	)		695

		Total interest expense		10,164		(9,031	)		1,133			10,617			(10,670	)		(53	)

Net interest income			$	20,297	$	(2,749	)	$	17,548		$	10,359		$	(1,726	)	$	8,633

Provision for Credit Losses

The provision for credit losses represents the amount of expense charged to current earnings to fund the allowance for credit losses. The amount of the allowance for credit losses is based on many factors which reflect management's assessment of the risk in the loan portfolio. Those factors include economic conditions and trends, the value and adequacy of collateral, volume and mix of the portfolio, performance of the portfolio, and internal loan processes of the Company and Bank.

Management has developed a comprehensive analytical process to monitor the adequacy of the allowance for credit losses. This process and guidelines were developed utilizing among other factors, the guidance from federal banking regulatory agencies. The results of this process, in combination with conclusions of the Bank's outside loan review consultant, support management's assessment as to the adequacy of the allowance at the balance sheet date. Please refer to the discussion under the caption "Critical Accounting Policies" for an overview of the methodology management employs on a quarterly basis to assess the adequacy of the allowance and the provisions charged to expense. Also, refer to the table in the section titled "Allowance for Credit Losses" at page 24, which reflects the comparative charge-offs and recoveries.

During the year of 2009, the allowance for credit losses increased $2.2 million reflecting $7.7 million in provision for credit losses and $5.5 million in net charge-offs during the period. The provision for credit losses of $7.7 million for 2009 compared to a provision for credit losses of $4.0 million for the same period in 2008. For 2009, net charge-offs amounted to $5.5 million as compared to $1.1 million for 2008. The higher provisioning in 2009 as compared to 2008 is attributable to higher net charge-offs in 2009, $134 million in loan growth, risk migration within the portfolio due to a weaker economy and to increased reserves for problem loans.

During the three months ended December 31, 2009, the allowance for credit losses increased $690 thousand reflecting $2.5 million in provision for credit losses and $1.8 million in net charge-offs during the period. The provision for credit losses was $2.5 million for the three months ended December 31, 2009 as compared to $1.4 million for the three months ended December 31, 2008. For the fourth quarter of 2009, net charge-offs amounted to $1.8 million as compared to $166 thousand of net charge-offs for the same period in 2008. The higher provision for the fourth quarter of 2009 is primarily attributable to loan growth in the fourth quarter of 2009, migration within the portfolio to higher risk assessments, and increases in specific reserves for problem loans.

As part of its comprehensive loan review process, the Bank's Board of Directors and Loan Committee or Company's Credit Review Committees carefully evaluate loans which are past-due 30 days or more. The Committees make a thorough assessment of the conditions and circumstances surrounding each delinquent loan. The Bank's loan policy requires that loans be placed on nonaccrual if they are ninety days past-due, unless they are well secured and in the process of collection. Additionally, Credit Administration specifically analyzes the status of development and construction projects, sales activities and utilization of interest reserves in order to carefully and prudently assesses potential increased levels of risk requiring additional reserves.

The maintenance of a high quality loan portfolio, with an adequate allowance for possible credit losses, will continue to be a primary management objective for the Company.

Noninterest Income

Total noninterest income includes service charges on deposits, gain on sale of loans, gain on sale of investments, income from bank owned life insurance ("BOLI") and other income.

Total noninterest income for the 2009 was $7.3 million compared to $4.4 million for 2008, an increase of 67%. The increase was attributed primarily to $1.5 million of income in 2009 from the gain on sale of investment securities. Other factors were higher service charges on deposit accounts of $839 thousand ($2.9 million in 2009 versus $2.1 million in 2008), and gains realized on the sale of residential and SBA loans of $628 thousand ($1.1 million in 2009 versus $426 thousand in 2008).

Total noninterest income for the fourth quarter of 2009 and 2008 was $1.3 million. Increases in gains realized on the sale of residential and SBA loans of $85 thousand and gain on sale of investment securities of $53 thousand were offset by decreases in service charges on deposit accounts of $51 thousand, due substantially to lower overdraft fees and decrease in other income of $72 thousand, primarily a result of lower loan prepayment fees.

For the year ended December 31, 2009, service charges on deposit accounts increased to $2.9 million from $2.1 million, an increase of 41% over 2008. The increase in service charges was primarily related to fee increases due in part to the impact of lower interest rates on customer earnings credits and to new relationships. For the three months ended December 31, 2009, service charges on deposit accounts decreased from $767 thousand to $716 thousand compared to the same period in 2008, a decrease of 7%. This decrease was due to a lower amount of overdraft fees.

Gain on sale of loans consists of SBA and residential mortgage loans. For the year ended December 31, 2009, gain on sale of loans increased from $426 thousand to $1.1 million compared to the

same period in 2008 or 147%. For the three months ended December 31, 2009, gain on sale of loans increased from $19 thousand to $104 thousand compared to the same period in 2008. The higher amount of gains is due substantially to lower interest rates in 2009 which provided more attractive borrower refinancing opportunities.

The Company is an originator of SBA loans and its current practice is to sell the insured portion of those loans at a premium. Income from this source was $372 thousand for the year ended December 31, 2009 compared to $212 thousand for the year ended December 31, 2008. For the three months ended December 31, 2009, gains on the sale of SBA loans amounted to $75 thousand as compared to no sales for the same period in 2008. Activity in SBA loan sales to secondary markets can vary widely from quarter to quarter. Beginning in 2010, the Company's earnings from the sale of the guaranteed portion of SBA loans originated may be negatively impacted by a new accounting standard, ASC Topic 860, " Transfers and Servicing," which will require that the recognition of profit on the sale of loans will be deferred until all re-purchase recourse provisions are met, which is typically a period of 90-120 days.

The Company originates residential mortgage loans on a pre-sold basis, servicing released. Sales of these mortgage loans yielded gains of $682 thousand for the year of 2009 compared to $214 thousand in the same period in 2008. For the three months ended December 31, 2009, gains on the sale of residential mortgage loans were $29 thousand as compared to $26 thousand for the same three months of 2008. The Company continues its efforts to originate and sell residential mortgages on a servicing released basis. Loans sold are subject to repurchase in circumstances where documentation is deficient or the underlying loan becomes delinquent within a specified period following sale and loan funding. The Bank considers these potential recourse provisions to be a minimal risk. The Bank does not originate so called "sub-prime" loans and has no exposure to this market segment. Higher refinancing activity resulting from a decline in residential mortgage rates in 2009 as compared to 2008 was the primary reason for the increase in income. In 2010, the Company's earnings from residential mortgage loan origination and sale will be negatively impacted by new accounting guidance, ASC Topic 860, " Transfers and Servicing," which will require that the recognition of profit on the sale of loans will be deferred until all re-purchase recourse provisions are met, which is a period of 90-120 days.

Other income totaled $1.3 million for the year ended 2009 as compared to $1.4 million for the same period in 2008, a decrease of 5%. The major components of income in this category consist of ATM fees, SBA service fees, noninterest loan fees and other noninterest fee income. ATM fees increased from $352 thousand for the year ended 2008 to $430 thousand for the year ended 2009, a 22% increase. SBA service fees increased from $163 thousand for the year ended 2008 to $184 thousand for the year ended 2009, a 13% increase. Noninterest loan fees decreased to $461 thousand for the year ended 2009 from $622 thousand for the same period in 2008, a 26% decrease, primarily due to lower levels of prepayment fees. Other noninterest fee income was $246 thousand for the year 2009 compared to $277 thousand for the same period in 2008. Other income totaled $340 thousand for the three months ended December 31, 2009 as compared to $412 thousand for the same period in 2008, a decrease of 17%.

Net investment gains amounted to $1.5 million and $1 thousand for the year and quarter ended December 31, 2009, respectively, as compared to net investment gains of $2 thousand and a loss of $52 thousand for the year and quarter ended December 31, 2008, respectively. The increase in gains for the year of 2009 was the result of asset/liability management decisions to reduce call risk in the portfolio of U.S. Agency securities, to reduce potential extension risk in longer term U.S. Agency mortgage backed securities, and to better position the investment portfolio for potentially higher interest rates over future years.

Noninterest Expense

Total noninterest expense consists of salaries and employee benefits, premises and equipment expenses, marketing and advertising, data processing, legal, accounting and professional fees, FDIC insurance and other expenses.

Total noninterest expenses were $42.8 million for 2009, as compared to $30.8 million for 2008, a 39% increase, which primarily reflects the larger organization subsequent to the Fidelity acquisition. For the three months ended December 31, 2009, total noninterest expenses were $10.6 million for the fourth quarter of 2009, as compared to $10.5 million for 2008, a 1% increase.

Salaries and employee benefits were $20.9 million for the year ended 2009, as compared to $16.7 million for 2008, a 25% increase. For the three months ended December 31, 2009, salaries and employee benefits amounted to $5.4 million versus $5.3 million for the same period in 2008, a 3% increase. These increases were due to staff additions and related personnel costs, primarily resulting from the Fidelity acquisition, merit increases, incentive based compensation and increased benefit costs. The higher salaries and employee benefits in 2009 as compared to 2008, were the result of have the additional staff for the full year compared to four months in 2008. At December 31, 2009 and 2008, the Company's staff numbered 235, as compared to 175 at December 31, 2007.

Premises and equipment expenses amounted to $7.3 million for the year ended December 31, 2009 as compared to $5.4 million for the same period in 2008. This increase of 35% was due primarily to new banking offices acquired in the Fidelity acquisition. Additionally, ongoing operating expense increases associated with the Company's facilities, all of which are leased, and increased equipment costs contributed to the overall increase in expense. For the year ended December 31, 2009, the Company recognized $366 thousand of sublease revenue as compared to $293 thousand for the same period in 2008. The sublease revenue is a direct offset of premises and equipment expenses. For the three months ended December 31, 2009, premises and equipment expenses amounted to $1.8 million versus $1.9 million for the same period in 2008. For the three months ended December 31, 2009, the Company recognized $97 thousand in sublease revenue compared to $75 thousand for the three months ended December 31, 2008.

Marketing and advertising costs remained the same at $1.1 million for the years ended December 31, 2009 and 2008. For the three months ended December 31, 2009, advertising expenses amounted to $313 thousand versus $656 thousand for the same period in 2008, a decrease of 52%. The primary reason for the decrease was the accrual of sponsorship costs for the 2009 EagleBank Bowl over full year, while the expenses for the inaugural event were expensed primarily in the fourth quarter of 2008.

Data processing costs were $2.4 million for 2009, as compared to $1.6 million in 2008, an increase of 45%. For the three months ended December 31, 2009, data processing costs amounted to $576 thousand compared to $470 thousand for the same period in 2008, an increase of 23%. Increases for the year and quarter were due to the addition of new banking offices and an increase in the volume of data processing activity following the Fidelity acquisition and organic account growth.

Legal, accounting and professional fees were $2.7 million for the year ended 2009, as compared to $1.1 million for 2008, a 159% increase. This increase was primarily due to collection costs related to higher levels of problem assets and professional fees for consulting services. For the three months ended December 31, 2009, legal, accounting and professional fees amounted to $690 thousand compared to $398 thousand for the same period in 2008, a 73% increase. The same factors responsible for the year over year increase were responsible for the increase in the fourth quarter.

FDIC insurance premiums were $2.7 million for the year ended 2009, as compared to $642 thousand in 2008, an increase of 328%. The primary reasons for the increase were an increase in the base FDIC premium rates charged on deposits, a special FDIC assessment of approximately $723 thousand recorded in the second quarter of 2009, and higher deposit balances, resulting both from the Fidelity acquisition and organic growth. For the three months ended December 31, 2009, FDIC insurance premiums amounted to $278 thousand as compared to $243 thousand for the same period in 2008, a 14% increase. This increase was due to an increase in the base FDIC premium rates charged on deposits and to higher deposit balances.

Other expenses increased to $5.6 million in the year ended 2009 from $4.3 million for the year ended December 31, 2008, or an increase of 31%. For the three months ended December 31, 2009, other expenses amounted to $1.5 million compared to $1.6 million for the same period in 2008, a decrease of 6%. The major components of cost in this category include insurance expenses, broker fees, record management and storage costs, communication expenses, director fees, OREO expenses, other losses and stockholder and NASDAQ related expenses. For the year ended December 31, 2009, as compared to the same period in 2008, the significant increases in this category were primarily OREO expenses, director fees, other losses and amortization of the core deposit intangible recorded in the acquisition of Fidelity.

Income Tax Expense

The Company recorded income tax expense of $6.0 million in 2009 compared to $4.1 million in 2008 and $4.3 million in 2007, resulting in an effective tax rate of 36.4%, 35.7% and 35.7%, respectively. The higher effective tax rate for 2009 relates to a higher marginal tax rate on increases in income.

BALANCE SHEET ANALYSIS

Overview

At December 31, 2009, the Company's total assets were $1.8 billion, loans were $1.4 billion, deposits were $1.5 billion, other borrowings, including customer repurchase agreements, were $150.1 million and stockholders' equity was $188.3 million. As compared to December 31, 2008, assets grew in 2009 by $308.7 million (21%), loans by $133.7 million (11%), deposits by $330.9 million (29%), borrowings decreased by $65.9 million (30%) and stockholders' equity increased by $46.0 million (32%).

A substantial portion of the growth in deposits during 2009 is due to a successful money market campaign, commenced in the second quarter of 2009 which resulted in stronger deposit growth than loan growth in the second half of the year, and a resulting higher liquidity position in federal funds sold.

On September 21, 2009, the Company completed an underwritten public offering of 6,731,640 shares its common stock, at $8.20 per share, including 878,040 shares subject to the underwriter's over-allotment option. As a result of the capital raise, the number of shares of common stock subject to the warrants issued to the Treasury in December 2008 was reduced by 50% to 385,434.

Investment Securities Available for Sale ("AFS") and Short-Term Investments

The tables below and Note 3 to the Consolidated Financial Statements provide additional information regarding the Company's investment securities categorized as "available for sale" ("AFS"). The Company classifies all its investment securities as AFS. This classification requires that investment securities be recorded at their fair value with any difference between the fair value and amortized cost (the purchase price adjusted by any discount accretion or premium amortization) reported as a component of stockholders' equity (accumulated other comprehensive income), net of deferred income taxes. At December 31, 2009, the Company had a net unrealized gain in AFS securities of $3.9 million as compared to a net unrealized gain in AFS securities of $3.9 million at December 31, 2008. The deferred income tax liability/benefit at December 31, 2009 and 2008 of these unrealized gains and losses was $1.6 million and $1.6 million, respectively.

The AFS portfolio is comprised of U.S. Government agency securities (32% of AFS securities) with an average duration of 2.2 years, seasoned mortgage backed securities that are 100% agency issued (53% of AFS securities) which have an average expected lives of 2.7 years with contractual maturities of the underlying mortgages of up to thirty years, municipal bonds ($33.3 million or 14% of AFS securities) and equity investments which comprise less than 1% of AFS securities. The equity investment includes common stock of three community banking companies which have an estimated fair value of $359 thousand and two tax lien certificates which have an estimated fair value of $40 thousand. Ninety nine

percent (99%) of the investment securities which are debt instruments are rated AAA or AA. The remaining one percent (1%) of the investment securities which are debt instruments is municipal bonds which have a rating of A. All ratings represent high investment grade issues.

At December 31, 2009, the investment portfolio amounted to $235.2 million as compared to a balance of $159.5 million at December 31, 2008, an increase of 47%. The growth in the portfolio was due in large part to investing a significant portion of the deposit growth in excess of loan growth that occurred in the twelve months ended December 31, 2009. The investment portfolio is managed to achieve goals related to income, liquidity, interest rate risk management and to provide collateral for customer repurchase agreements and other borrowing relationships.

The following table provides information regarding the composition of the Company's investment securities portfolio at the dates indicated. Amounts are reported at estimated fair value. The change in composition of the portfolio at December 31, 2009 as compared to 2008 was due principally to Asset Liability Committee decisions to increase the mix of municipal bonds, which was believed to represent good value and safety, and to increase holdings of structured mortgaged backed securities issued by U.S. Government agencies or government sponsored enterprises which are believed to well position the company in an increasing interest rate environment, which is anticipated over the next few years.

	December 31,

	2009					2008					2007
(dollars in thousands)	Balance		Percent of Total			Balance		Percent of Total			Balance		Percent of Total
U. S. Government agency securities	$	76,107		32.4	%	$	74,029		46.4	%	$	51,295		62.4	%
Mortgage backed securities		125,396		53.3	%		79,770		50.0	%		29,303		35.6	%
Municipal bonds		33,325		14.2	%		4,708		3.0	%		351		0.4	%
Other equity investments		399		0.1	%		973		0.6	%		1,298		1.6	%

	$	235,227		100	%	$	159,480		100	%	$	82,247		100	%

The increase in the investment portfolio in 2008, and the increased percentage of the portfolio consisting of mortgage backed securities, was due primarily to the acquisition of Fidelity.

The following table provides information, on an amortized cost basis, regarding the contractual maturity and weighted average yield of the investment portfolio at December 31, 2009. Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties. Yields on tax exempt securities have not been calculated on a tax equivalent basis.

At December 31, 2009, there were no issuers, other than the U.S. Government and its agencies, whose securities owned by the Company had a book or fair value exceeding 10% of the Company's stockholders' equity.

	One Year or Less					After One Year Through Five Years					After Five Years Through Ten Years					After Ten Years					Total

(dollars in thousands)	Amortized Cost		Weighted Average Yield			Amortized Cost		Weighted Average Yield			Amortized Cost		Weighted Average Yield			Amortized Cost		Weighted Average Yield			Amortized Cost		Weighted Average Yield
U. S. Government agency securities	$	8,095		4.49	%	$	67,885		2.50	%	$	—		—		$	—		—		$	75,980		3.04	%
Mortgage backed securities		3,069		4.19	%		2,910		4.17	%		19,934		4.94	%		96,163		5.10	%		122,076		5.03	%
Muncipal bonds		—		—			—		—			3,023		4.47	%		29,822		4.12	%		32,845		4.15	%
Other equity investments		—		—			—		—			—		—			—		—			436		4.79	%

	$	11,164		4.41	%	$	70,795		2.57	%	$	22,957		4.88	%	$	125,985		4.87	%	$	231,337		4.25	%

The Company also has a portfolio of short-term investments utilized for asset liability management needs which consists from time-to-time of discount notes, money market investments, and other bank certificates of deposit This portfolio amounted to $7.5 million at December 31, 2009 as compared to $2.5 million at December 31, 2008.

Federal funds sold amounted to $88.2 million at December 31, 2009 as compared to $191 thousand at December 31, 2008. These funds represent excess daily liquidity which is invested on an unsecured basis with well capitalized banks, in amounts generally limited both in the aggregate and to any one bank.

In its lending activities, the Company seeks to develop sound relationships with clients whose businesses and individual banking needs will grow with the Bank. There has been a significant effort to grow the loan portfolio and to be responsive to the lending needs in the markets served, while maintaining sound asset quality.

Loan growth over the past year has been favorable, with loans outstanding reaching $1.4 billion at December 31, 2009, an increase of $133.7 million or 11% as compared to $1.3 billion at December 31, 2008, and were $716.7 million at December 31, 2007, an increase of $549.0 million or 77% in 2008 over 2007.

The Company had loan growth of $134 million during 2009, with $82 million being recorded in the fourth quarter of 2009. Approximately 62% of the Company's loan growth was recorded in the fourth quarter of 2009. The loan growth was predominantly in the commercial real estate segment. As conduits and Commercial Mortgage-Backed Securities ("CMBS") credit sources dried up in late 2008 and through 2009, capital for real estate transactions became scarce. Many banks retracted their lending appetites as well, further contracting the supply of credit. The Company was able to capitalize on the demand/supply imbalance for credit with new loan fundings. Construction loans declined as projects came to completion and were paid off by permanent financing or sale. Demand for new construction loans declined sharply decreasing loan growth in that category during the year. Commercial and industrial loan growth was flat through the first half of the year, but picked up strongly during the second half of 2009. Consumer loan balances, a relatively minor focus of the Company's lending efforts, were essentially unchanged as consumers retrenched in the recessionary environment.

The Bank is primarily commercial oriented and as can be seen in the chart below, has a large proportion of its loan portfolio related to real estate with 69% consisting of commercial real estate, residential mortgage real estate and commercial construction and residential loans. Real estate also serves as collateral for loans made for other purposes, resulting in 75% of loans being secured by real estate.

The following table shows the trends in the composition of the loan portfolio over the past five years.

As discussed under the captions "Business" and "Risk Factors," the Company has directly made higher risk loans that entail additional risks as compared to loans made following normal underwriting practices. These higher risk loan transactions, representing financing subordinated to loans made by the Bank, and occasionally referred to in this report as "subordinated financings" are currently made through the Company's subsidiary, ECV. This activity is limited as to individual transaction amount and total exposure amounts based on capital levels and is carefully monitored. Transactions are structured to provide ECV with returns commensurate to the risk through the requirement of additional interest following payoff of all loans, which additional interest is recorded as a component of non-interest income:

Although the Company carefully underwrites each higher risk loan transaction and expects these transactions to provide additional revenues, there can be no assurance that any higher risk loan transaction, or the related loans made by the Bank, will prove profitable for the Company and Bank, that the Company will be able to receive any additional interest payments in respect of these loans, that any additional interest payments will be significant, or that the Company and Bank will not incur losses in respect of these transactions.

As noted above, a significant portion of the loan portfolio consists of commercial, construction and commercial real estate loans, primarily made in the Washington, D.C. metropolitan area and secured by real estate or other collateral in that market. Although these loans are made to a diversified pool of

unrelated borrowers across numerous businesses, adverse developments in the Washington D.C. metropolitan real estate market could have an adverse impact on this portfolio of loans and the Company's income and financial position. While our basic market area is the Washington, D.C. metropolitan area, in which 97% of our commercial real estate exposure exists, the Bank has made loans outside that market area where the nature and quality of such loans was consistent with the Bank's lending policies. At present, the Company believes that commercial real estate values are stable in the specific sub-markets of the Washington, D.C. metropolitan market in which the Company has its most significant real estate exposure.

The federal banking regulators have issued guidance for those institutions which are deemed to have concentrations in commercial real estate lending. Pursuant to the supervisory criteria contained in the guidance for identifying institutions with a potential commercial real estate concentration risk, institutions which have (1) total reported loans for construction, land development, and other land which represent in total 100% or more of an institutions total risk-based capital; or (2) total commercial real estate loans representing 300% or more of the institutions total risk-based capital and the institution's commercial real estate loan portfolio has increased 50% or more during the prior 36 months are identified as having potential commercial real estate concentration risk. Institutions which are deemed to have concentrations in commercial real estate lending are expected to employ heightened levels of risk management with respect to their commercial real estate portfolios, and may be required to hold higher levels of capital. The Company, like many community banks, has a concentration in commercial real estate loans. Management has extensive experience in commercial real estate lending, and has implemented and continues to maintain heightened portfolio monitoring and reporting, and strong underwriting criteria with respect to its commercial real estate portfolio. The Company is well capitalized. Nevertheless, the Company could be required to maintain higher levels of capital as a result of our commercial real estate concentration, which could require us to obtain additional capital, and may adversely affect shareholder returns.

At December 31, 2009, the Company had no other concentrations of loans in any one industry exceeding 10% of its total loan portfolio. An industry for this purpose is defined as a group of businesses that are engaged in similar activities and have similar economic characteristics that would cause their ability to meet contractual obligations to be similarly affected by changes in economic or other conditions.

The following table sets forth the time to contractual maturity of the loan portfolio as of December 31, 2009.

		Year Ended December 31,

		2009						2008						2007						2006						2005
(dollars in thousands)		Amount			%			Amount			%			Amount			%			Amount			%			Amount			%
Commercial		$	346,692			25	%	$	334,999			27	%	$	149,332			21	%	$	132,981			21	%	$	118,928			22	%
Owner occupied—commercial			196,433			14	%		184,059			15	%		127,079			18	%		95,782			15	%		79,697			15	%
Investment—commercial real estate			499,501			36	%		365,010			28	%		265,678			37	%		253,262			41	%		204,970			37	%
Real estate mortgage—residential			9,236			1	%		9,757			1	%		2,160			—			1,523			—			1,130			—
Construction—commercial and residential(1)			252,695			18	%		283,020			22	%		110,115			15	%		86,524			14	%		90,035			16	%
Home equity			87,283			6	%		80,295			6	%		57,515			8	%		50,572			8	%		50,776			9	%
Other consumer			7,471			—			8,500			1	%		4,798			1	%		5,129			1	%		3,676			1	%

	Total loans		1,399,311			100	%		1,265,640			100	%		716,677			100	%		625,773			100	%		549,212			100	%

Less: Allowance for credit losses			(20,619	)					(18,403	)					(8,037	)					(7,373	)					(5,985	)

	Net loans	$	1,378,692					$	1,247,237					$	708,640					$	618,400					$	543,227

	Due In

(dollars in thousands)	Total		One Year or Less		Over One to Five Years		Over Five to Ten Years		Over Ten Years
Commercial	$	346,692	$	131,609	$	157,383	$	34,205	$	23,495
Owner occupied—commercial		196,433		12,281		50,944		116,890		16,318
Investment—commercial real estate		499,501		65,868		245,005		179,122		9,506
Real estate mortgage—residential		9,236		65		397		1,137		7,637
Construction—commercial and residential		252,695		147,811		85,691		16,195		2,998
Home equity		87,283		618		3,748		10,747		72,170
Other consumer		7,471		3,773		2,279		110		1,309

Total loans	$	1,399,311	$	362,025	$	545,447	$	358,406	$	133,433

Loans with:
Predetermined fixed interest rate	$	470,209	$	57,228	$	321,963	$	71,889	$	19,129
Floating interest rate		929,102		304,798		223,487		286,514		114,303

Total loans	$	1,399,311	$	362,026	$	545,450	$	358,403	$	133,432

	December 31,

(dollars in thousands)	2009		2008		2007
Three months or less	$	89,318	$	109,283	$	52,570
More than three months through six months		74,189		23,448		56,540
More than six months through twelve months		74,152		91,832		61,117
Over twelve months		58,540		24,953		3,359

Total	$	296,199	$	249,516	$	173,586

(dollars in thousands)		Within One Year		One to Three Years		Three to Five Years		Over Five Years		Total

Deposits without a stated maturity(1)		$	950,533	$	—	$	—	$	—	$	950,533
Time deposits(1)			358,962		106,019		44,760		—		509,741
Borrowed funds(2)			100,790		10,000		30,000		9,300		150,090
Operating lease obligations			3,942		6,674		5,804		5,655		22,075
Outside data processing(3)			1,090		2,229		287		—		3,606

	Total	$	1,415,317	$	124,922	$	80,851	$	14,955	$	1,636,045



+200	+2.1	%	+6.7	%	-0.1	%
+100	+0.6	%	+2.0	%	+0.9	%
0	—		—		—
-100	+2.6	%	+8.2	%	-4.6	%
-200	+8.3	%	+26.5	%	-9.6	%

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(dollars in thousands)			2009			2008			2007			2006			2005

Nonaccrual Loans:
	Commercial		$	4,364		$	3,506		$	1,174		$	1,976		$	362
	Real estate—commercial			2,426			4,167			641			—			—
	Construction—commercial and residential			15,192			17,588			3,386			—			—
	Home equity			42			196			123			—			—
	Other consumer			—			—			—			—			129
Accrual loans—past due 90 days:
	Commercial			—			—			—			37			—
	Real estate—commercial			—			—			—			—			—
	Other consumer			—			—			—			—			—
Restructured loans				—			—			—			—			—

		Total nonperforming loans(1)		22,024			25,457			5,324			2,013			491

Other real estate owned				5,106			909			—			—			—

		Total nonperforming assets	$	27,130		$	26,366		$	5,324		$	2,013		$	491

Coverage ratio, allowance for credit losses to total nonperforming loans				93.62	%		72.29	%		150.96	%		366.27	%		1218.94	%
Ratio of nonperforming loans to total loans				1.57	%		2.01	%		0.74	%		0.32	%		0.09	%
Ratio of nonperforming assets to total assets				1.50	%		1.76	%		0.63	%		0.26	%		0.07	%

			0–3 months			4–12 months			13–36 months			37–60 months			Over 60 months			Total Rate Sensitive		Non- sensitive		Total Assets

Repriceable in:
RATE SENSITIVE ASSETS:
	Investments securities		$	21,624		$	46,613		$	85,130		$	32,893		$	48,967		$	235,227
	Loans (1)(2)			764,952			115,732			273,566			218,650			27,961			1,400,861
	Fed funds and other short-term investments			88,248			—			—			—			—			88,248
	Other earning assets			—			12,912			—			—			—			12,912

		Total	$	874,824		$	175,257		$	358,696		$	251,543		$	76,928		$	1,737,248	$	68,256	$	1,805,504

RATE SENSITIVE LIABILITIES:
	Noninterest bearing demand		$	9,073		$	27,219		$	72,585		$	72,585		$	126,497		$	307,959
	Interest bearing transaction			59,720			—			—			—			—			59,720
	Savings and money market			286,840			—			118,405			118,405			59,204			582,854
	Time deposits			133,906			225,056			106,019			44,760			—			509,741
	Customer repurchase agreements and fed funds purchased			90,790			—			—			—			—			90,790
	Other borrowings			10,000			—			10,000			30,000			9,300			59,300

		Total	$	590,329		$	252,275		$	307,009		$	265,750		$	195,001		$	1,610,364	$	6,819	$	1,617,183

GAP			$	284,495		$	(77,018	)	$	51,687		$	(14,207	)	$	(118,073	)	$	126,884
Cumulative GAP			$	284,495		$	207,477		$	259,164		$	244,957		$	126,884
Cumulative gap as percent of total assets				15.76	%		11.49	%		14.35	%		13.57	%		7.03	%

	2009						2008

Quarter	High		Low		Dividends Declared per Share		High		Low		Dividends Declared per Share
First	$	7.10	$	5.36	$	0.00	$	11.97	$	9.30	$	0.0545
Second	$	11.20	$	6.15	$	0.00	$	11.09	$	7.15	$	0.0545
Third	$	10.19	$	7.70	$	0.00	$	10.44	$	6.37	$	0.00
Fourth	$	11.00	$	8.89	$	0.00	$	9.00	$	5.35	$	0.00

Plan category		Number of securities to be issued upon exercise of outstanding options, warrants and rights		Weighted average exercise price of outstanding options, warrants and rights		Number of securities remaining available for future issuance under equity compensation plans excluding securities reflected in column (a)

		(a)		(b)		(c)
Equity compensation plans approved by security holders(1)			1,282,994	$	11.46		668,715	(2)
Equity compensation plans not approved by security holders			0		0		0

	Total		1,282,994	$	11.46		668,715

	Year Ended December 31,

Index	2004		2005		2006		2007		2008		2009
Eagle Bancorp, Inc.	$	100.00	$	148.57	$	147.00	$	103.89	$	54.90	$	99.97
NASDAQ Stock Market Index—(U.S. Companies)	$	100.00	$	101.37	$	111.03	$	121.92	$	72.49	$	104.31
NASDAQ Bank Index	$	100.00	$	95.67	$	106.20	$	82.76	$	62.96	$	51.31



/s/ RONALD D. PAUL Chairman, President and Chief Executive Officer of the Company and Chief Executive Officer of the Bank		/s/ MICHAEL T. FLYNN Executive Vice President and Chief Operating Officer of the Company and Executive Vice President of the Bank		/s/ SUSAN G. RIEL Senior Executive Vice President and Chief Operating Officer of the Bank		/s/ JAMES H. LANGMEAD Executive Vice President and Chief Financial Officer of the Company and the Bank

			December 31, 2009			December 31, 2008

Assets
Cash and due from banks			$	21,955		$	27,157
Federal funds sold				88,248			191
Interest bearing deposits with banks and other short-term investments				7,484			2,489
Investment securities available for sale, at fair value				235,227			159,480
Federal Reserve and Federal Home Loan Bank stock				10,417			9,599
Loans held for sale				1,550			2,718
Loans				1,399,311			1,265,640
Less allowance for credit losses				(20,619	)		(18,403	)

	Loans, net			1,378,692			1,247,237
Premises and equipment, net				9,253			9,666
Deferred income taxes				12,455			11,106
Bank owned life insurance				12,912			12,450
Intangible assets, net				4,379			2,533
Other real estate owned				5,106			909
Other assets				17,826			11,292

		Total Assets	$	1,805,504		$	1,496,827

Liabilities and Stockholders' Equity Liabilities
Deposits:
	Noninterest bearing demand		$	307,959		$	223,580
	Interest bearing transaction			59,720			54,801
	Savings and money market			582,854			271,791
	Time, $100,000 or more			296,199			249,516
	Other time			213,542			329,692

		Total deposits		1,460,274			1,129,380
Customer repurchase agreements and federal funds purchased				90,790			98,802
Other short-term borrowings				10,000			55,000
Long-term borrowings				49,300			62,150
Other liabilities				6,819			9,124

		Total liabilities		1,617,183			1,354,456

Stockholders' Equity
Preferred stock, par value $.01 per share, shares authorized 1,000,000, Series A, $1,000 per share liquidation preference, shares issued and outstanding 23,235 and 38,235, respectively, discount of $570 and $1,892, respectively, net				22,612			36,312
Common stock, par value $.01per share; shares authorized 50,000,000, shares issued and outstanding 19,534,226 and 12,714,355, respectively				195			127
Warrants				946			1,892
Additional paid in capital				129,211			76,822
Retained earnings				33,024			24,866
Accumulated other comprehensive income				2,333			2,352

		Total stockholders' equity		188,321			142,371

		Total Liabilities and Stockholders' Equity	$	1,805,504		$	1,496,827

			2009		2008		2007

Interest Income
	Interest and fees on loans		$	77,004	$	59,901	$	51,931
	Taxable interest and dividends on investment securities			7,138		5,459		4,177
	Interest on balances with other banks and short-term investments			94		98		293
	Interest on federal funds sold			102		199		676

		Total interest income		84,338		65,657		57,077

Interest Expense
	Interest on deposits			20,956		19,543		19,810
	Interest on customer repurchase agreements and federal funds purchased			957		1,406		1,887
	Interest on short-term borrowings			611		546		611
	Interest on long-term borrowings			2,285		2,181		1,421

		Total interest expense		24,809		23,676		23,729

Net Interest Income				59,529		41,981		33,348
Provision for Credit Losses				7,669		3,979		1,643

Net Interest Income After Provision For Credit Losses				51,860		38,002		31,705

Noninterest Income
	Service charges on deposits			2,898		2,059		1,249
	Gain on sale of loans			1,054		426		1,036
	Gain on sale of investment securities			1,538		2		6
	Increase in the cash surrender value of bank owned life insurance			463		466		455
	Income from subordinated financing			—		—		1,252
	Other income			1,344		1,413		1,188

		Total noninterest income		7,297		4,366		5,186

Noninterest Expense
	Salaries and employee benefits			20,889		16,728		14,167
	Premises and equipment expenses			7,343		5,424		4,829
	Marketing and advertising			1,099		1,054		552
	Data processing			2,356		1,622		1,231
	Legal, accounting and professional fees			2,731		1,054		613
	FDIC insurance			2,743		642		449
	Other expenses			5,612		4,293		3,080

		Total noninterest expense		42,773		30,817		24,921

Income Before Income Tax Expense				16,384		11,551		11,970
Income Tax Expense				5,965		4,123		4,269

Net Income				10,419		7,428		7,701
Preferred Stock Dividends and Discount Accretion				2,307		177		—

Net Income Available to Common Shareholders			$	8,112	$	7,251	$	7,701

Earnings Per Common Share
	Basic		$	0.55	$	0.63	$	0.73
	Diluted		$	0.55	$	0.62	$	0.71
Dividends Declared Per Common Share			$	—	$	0.11	$	0.22

			Preferred Stock			Warrants			Common Stock		Additional Paid in Capital			Retained Earnings			Accumulated Other Comprehensive Income (Loss)			Total Stockholders' Equity

Balance January 1, 2007			$	—		$	—		$	95	$	50,278		$	22,796		$	(253	)	$	72,916
Comprehensive Income
	Net Income														7,701						7,701
	Other comprehensive income:
		Unrealized gain on securities available for sale (net of taxes)																841			841
		Less: reclassification adjustment for gains net of taxes of $2 included in net income																(4	)		(4	)

	Total Comprehensive Income																	837			8,538
Cash Dividends ($0.22 per share)															(2,302	)					(2,302	)
Stock-based compensation												224									224
Shares issued under dividend reinvestment plan—47,000 shares										0		689									689
Exercise of options for 196,251 shares of common stock										2		1,080									1,082
Tax benefit on non-qualified options exercise												19									19

		Balance December 31, 2007		—			—			97		52,290			28,195			584			81,166
Comprehensive Income
	Net Income														7,428						7,428
	Other comprehensive income:
		Unrealized gain on securities available for sale (net of taxes)																1,769			1,769
		Less: reclassification adjustment for gains net of taxes of $1 included in net income																(1	)		(1	)

	Total Comprehensive Income																	1,768			9,196
Cash Dividends ($0.11 per share)															(1,178	)					(1,178	)
Stock-based compensation												311									311
Shares issued under dividend reinvestment plan—76,246 shares										1		806									807
Exercise of options for 126,827 shares of common stock										1		441									442
Tax benefit on non-qualified options exercise												195									195
Shares issued to effect merger with Fidelity 1,638,031 shares, net of issuance costs of $96										16		13,037									13,053
Net tangible asset value of Fidelity assets acquired												181									181
Preferred shares and warrants issued, net of issuance costs				36,312			1,892														38,204
10% common stock dividend										12		9,567			(9,579	)					—
Cash paid in lieu of fractional shares												(6	)								(6	)

		Balance December 31, 2008		36,312			1,892			127		76,822			24,866			2,352			142,371
Comprehensive Income
	Net Income														10,419						10,419
	Other comprehensive income:
		Unrealized gain on securities available for sale (net of taxes)																966			966
		Less: reclassification adjustment for gains net of taxes of $553 included in net income																(985	)		(985	)

	Total Comprehensive Income																	(19	)		10,400
Stock-based compensation												578									578
Exercise of options for 38,646 shares of common stock										1		122									123
Tax benefit on non-qualified options exercise												98									98
Shares issued in public offering—6,731,640 shares, net of issuance costs of $3,541										67		51,591									51,658
Preferred stock dividends															(1,885	)					(1,885	)
Preferred stock:																					—
	Redemption of Series A Preferred Stock (15,000 shares)			(15,000	)																(15,000	)
	Warrants reduced by 385,434 warrants			946			(946	)													—
	Issuance costs			(22	)																(22	)
	Discount accretion			376											(376	)					—

		Balance December 31, 2009	$	22,612		$	946		$	195	$	129,211		$	33,024		$	2,333		$	188,321

				2009			2008			2007

Cash Flows From Operating Activities:
	Net income			$	10,419		$	7,428		$	7,701
		Adjustments to reconcile net income to net cash provided by (used in) operating activities:
			Decrease in deferred income taxes		(1,310	)		(1,643	)		(868	)
			Provision for credit losses		7,669			3,979			1,643
			Depreciation and amortization		2,084			1,613			1,347
			Gains on sale of loans		(1,054	)		(426	)		(1,036	)
			Origination of loans held for sale		(88,547	)		(29,071	)		(52,455	)
			Proceeds from sale of loans held for sale		90,769			28,956			53,471
			Gain on sale of investment securities		(1,538	)		(2	)		(6	)
			Net increase in surrender value of Bank-owned life insurance		(463	)		(466	)		(455	)
			Stock-based compensation expense		578			311			224
			Excess tax benefit from stock-based compensation		(98	)		(195	)		(19	)
	(Increase) decrease in other assets				(8,361	)		(19,579	)		119
	(Decrease) increase in other liabilities				(2,207	)		2,163			1,953

			Net cash provided by (used in) by operating activities		7,941			(6,932	)		11,619

Cash Flows From Investing Activities:
	(Increase) decrease in interest bearing deposits—other banks				(4,995	)		2,001			365
	Purchases of available for sale investment securities				(179,555	)		(63,056	)		(32,655	)
	Proceeds from maturities of available for sale securities				52,210			20,399			9,784
	Proceeds from sale / call of available for sale securities				53,136			64,830			29,326
	Purchases of federal reserve and federal home loan bank stock				(818	)		(4,729	)		(1,041	)
	Net increase in loans				(144,966	)		(191,577	)		(91,882	)
	Net cash received in acquisition				—			10,885			—
	Proceeds from the sale of other real estate owned				1,547			—			—
	Bank premises and equipment acquired				(1,671	)		(1,422	)		(1,094	)

			Net cash used in investing activities		(225,112	)		(162,669	)		(87,197	)

Cash Flows From Financing Activities:
	Increase in deposits				330,894			111,708			2,421
	(Decrease) increase in customer repurchase agreements and fed funds purchased				(8,012	)		(29,878	)		38,344
	(Decrease) increase in other short-term borrowings				(45,000	)		28,847			14,000
	(Decrease) increase in long-term borrowings				(12,850	)		32,150			8,000
	Issuance of preferred stock and warrants				—			38,204			—
	Issuance of common stock				51,781			1,249			1,771
	Excess tax benefit from stock-based compensation				98			195			19
	Redemption of Series A Preferred Stock				(15,000	)		—			—
	Payment of dividends on preferred stock				(1,885	)		—			—
	Payment of dividends and payment in lieu of fractional shares				—			(1,178	)		(2,302	)

			Net cash provided by financing activities		300,026			181,297			62,253

Net Increase (Decrease) in Cash					82,855			11,696			(13,325	)
Cash and Cash Equivalents at Beginning of Year					27,348			15,652			28,977

Cash and Cash Equivalents at End of Year				$	110,203		$	27,348		$	15,652

Supplemental Cash Flows Information:
	Interest paid			$	25,898		$	22,380		$	23,640

	Income taxes paid			$	7,575		$	6,088		$	4,052

	Stock issued for acquisition of Fidelity			$	—		$	13,330		$	—

Non-Cash Financing Activities
	Reclassification of borrowings from long-term to short-term			$	—		$	—		$	22,000
Non-Cash Investing Activities
	Transfers from loans to other real estate owned			$	7,178		$	909		$	—

	Less than 12 Months				12 Months or Greater				Total

December 31, 2009	Estimated Fair Value		Unrealized Losses		Estimated Fair Value		Unrealized Losses		Estimated Fair Value		Unrealized Losses
(dollars in thousands)
U. S. Government agency securities	$	37,357	$	285	$	—	$	—	$	37,357	$	285
Mortgage backed securities—GSEs		11,681		181		—		—		11,681		181
Municipal bonds		13,850		237		—		—		13,850		237
Other equity investments		140		37		—		—		140		37

	$	63,028	$	740	$	—	$	—	$	63,028	$	740

	Less than 12 Months				12 Months or Greater				Total

December 31, 2008	Estimated Fair Value		Unrealized Losses		Estimated Fair Value		Unrealized Losses		Estimated Fair Value		Unrealized Losses
(dollars in thousands)
U. S. Government agency securities	$	4,480	$	5	$	—	$	—	$	4,480	$	5
Mortgage backed securities—GSEs		7,715		31		—		—		7,715		31
Municipal bonds		4,707		353		—		—		4,707		353
Other equity investments		576		423		—		—		576		423

	$	17,478	$	812	$	—	$	—	$	17,478	$	812

December 31, 2008	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value

(dollars in thousands)
U. S. Government agency securities	$	71,837	$	2,197	$	5	$	74,029
Mortgage backed securities—GSEs		77,242		2,559		31		79,770
Municipal bonds		5,061		—		353		4,708
Other equity investments		1,396		—		423		973

	$	155,536	$	4,756	$	812	$	159,480

(dollars in thousands)	2009			2008			2007

Balance at beginning of year	$	18,403		$	8,037		$	7,373
Provision for credit losses		7,669			3,979			1,643
Acquired allowance—Fidelity		—			7,510			—
Loan charge-offs		(5,780	)		(1,217	)		(1,031	)
Loan recoveries		327			94			52

Balance at end of year	$	20,619		$	18,403		$	8,037

(dollars in thousands)		2009		2008

Interest income that would have been recognized		$	1,367	$	1,602
Interest income recognized			546		406

	Interest income not recognized	$	821	$	1,196

(dollars in thousands)		2009		2008

Impaired loans with a valuation allowance		$	5,434	$	2,810
Impaired loans without a valuation allowance			16,591		22,647

	Total impaired loans	$	22,025	$	25,457

Allowance for credit losses related to impaired loans		$	2,190	$	1,165
Allowance for credit losses related to other than impaired loans			18,429		17,238

	Total allowance for credit losses	$	20,619	$	18,403

Average impaired loans for the year		$	31,183	$	17,353
Interest income on impaired loans recognized on a cash basis		$	546	$	406

		2009			2008

Leasehold improvements		$	9,498		$	8,468
Furniture and equipment			9,361			8,810
	Less accumulated depreciation and amortization		(9,606	)		(7,612	)

Total premises and equipment, net		$	9,253		$	9,666

(dollars in thousands)

Years ending December 31:
2010		$	3,942
2011			3,485
2012			3,189
2013			2,987
2014			2,817
Thereafter			5,655

	Total minimum lease payments	$	22,075

(dollars in thousands)		Gross Intangible Assets		Adjustments		Additions		Accumulated Amortization			Net Intangible Assets

2009
	Goodwill(1)	$	105	$	2,058	$	—	$	—		$	2,163
	Core deposit(2)		2,243		—		—		(186	)		2,057
	Excess servicing(3)		185		—		62		(88	)		159

		$	2,533	$	2,058	$	62	$	(274	)	$	4,379

2008
	Goodwill(1)	$	105	$	—	$	—	$	—		$	105
	Core deposit(2)		2,305		—		—		(62	)		2,243
	Excess servicing(3)		236		—		54		(105	)		185

		$	2,646	$	—	$	54	$	(167	)	$	2,533

		2009					2008					2007

(dollars in thousands)		Balance		Average Rate			Balance		Average Rate			Balance		Average Rate
Noninterest bearing demand		$	307,959		—		$	223,580		—		$	142,477		—
Interest bearing transaction			59,720		0.31	%		54,801		0.25	%		54,090		0.73	%
Savings and money market			582,854		1.39	%		271,791		1.79	%		177,081		2.96	%
Time, $100,000 or more			296,199		2.12	%		249,516		3.21	%		173,586		4.63	%
Other time			213,542		2.33	%		329,692		3.27	%		83,702		5.66	%

	Total	$	1,460,274				$	1,129,380				$	630,936

(dollars in thousands)	2009		2008

Three months or less	$	132,861	$	172,826
More than three months through six months		120,460		127,618
More than six months through twelve months		105,641		229,926
Over twelve months		150,779		48,838

Total	$	509,741	$	579,208

			2009					2008					2007

(dollars in thousands)			Amount		Rate			Amount		Rate			Amount		Rate
Short-term:
At Year-End:
	Customer repurchase agreements and federal funds purchased		$	90,790		0.85	%	$	98,802		1.73	%	$	76,408		4.45	%
	Federal Home Loan Bank—current portion			10,000		0.14	%		55,000		0.70	%		22,000		4.44	%

		Total	$	100,790				$	153,802				$	98,408

Average Daily Balance for the Year:
	Customer repurchase agreements and federal funds purchased		$	93,363		1.03	%	$	68,696		2.05	%	$	44,992		4.19	%
	Federal Home Loan Bank—current portion			30,562		1.97	%		15,577		2.56	%		11,093		5.51	%
Maximum Month-end Balance:
	Customer repurchase agreements and federal funds purchased		$	120,918		1.16	%	$	104,243		1.92	%	$	76,408		4.45	%
	Federal Home Loan Bank—current portion			50,000		0.38	%		55,000		0.70	%		30,000		5.44	%
Long-term:
At Year-End:
	Federal Home Loan Bank		$	40,000		3.03	%	$	50,000		3.56	%	$	30,000		4.40	%
	Subordinated Debentures			9,300		10.00	%		12,150		10.00	%		—		0	%
	United Bank Line of Credit			—		0	%		—		0	%		—		0	%
Average Daily Balance for the Year:
	Federal Home Loan Bank		$	34,000		3.35	%	$	46,202		3.84	%	$	29,033		4.89	%
	Subordinated Debentures			11,322		10.00	%		4,187		10.00	%		—		0	%
	United Bank Line of Credit			—		0	%		3,361		4.39	%		—		0	%
Maximum Month-end Balance:
	Federal Home Loan Bank		$	50,000		3.56	%	$	50,000		3.56	%	$	45,000		4.57	%
	Subordinated Debentures			12,150		10.00	%		12,150		10.00	%		—		0	%
	United Bank Line of Credit			—		0	%		18,000		3.75	%		—		0	%

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(dollars in thousands)		2009			2008			2007

Current federal income tax		$	6,027		$	5,052		$	4,456
Current state income tax			1,248			714			681

	Total current		7,275			5,766			5,137

Deferred federal income tax benefit			(1,087	)		(1,418	)		(742	)
Deferred state income tax benefit			(223	)		(225	)		(126	)

	Total deferred		(1,310	)		(1,643	)		(868	)

Total income tax expense		$	5,965		$	4,123		$	4,269

	2009			2008			2007

Deferred tax assets:
Allowance for credit losses	$	8,336		$	7,440		$	3,251
Deferred loan fees and costs		1,040			746			664
Stock based compensation		90			49			53
Net operating loss		4,526			4,778			—
Deferred rent		357			278			106
Premises and equipment		446			—			—
Other		200			310			39

Total deferred tax assets		14,995			13,601			4,113

Deferred tax liabilities:
Unrealized gain on securities available for sale		(1,555	)		(1,594	)		(382	)
Excess servicing		(64	)		(74	)		(95	)
Intangible assets		(921	)		(755	)		—
Premises and equipment		—			(72	)		(39	)

Total deferred tax liabilities		(2,540	)		(2,495	)		(516	)

Net deferred income tax account	$	12,455		$	11,106		$	3,597



Statutory federal income tax rate		35.00	%	35.00	%	35.00	%
Increase (decrease) due to:
	State income taxes, net of federal income tax benefit	4.07		2.75		3.02
	Tax exempt interest and dividend income	(3.23	)	(3.48	)	(2.70	)
	Share-based compensation expense	0.98		0.95		0.52
	Other	(0.41	)	0.47		(0.17	)

Effective tax rates		36.41	%	35.69	%	35.67	%

(dollars and shares in thousands, except per share data)	2009		2008		2007

Basic:
Net income allocable to common stockholders	$	8,112	$	7,251	$	7,701
Average common shares outstanding		14,643		11,557		10,531

Basic net income per common share	$	0.55	$	0.63	$	0.73

Diluted:
Net income allocable to common stockholders	$	8,112	$	7,251	$	7,701
Average common shares outstanding		14,643		11,557		10,531
Adjustment for common share equivalents		141		135		319

Average common shares outstanding—diluted		14,784		11,692		10,850

Diluted net income per common share	$	0.55	$	0.62	$	0.71

(dollars in thousands)	2009			2008

Balance at January 1	$	24,647		$	18,203
Additions		6,190			15,991
Repayments		(5,505	)		(9,547	)

Balance at December 31	$	25,332		$	24,647

	2009					2008					2007

	Shares			Weighted-Average Grant Date Fair Value		Shares			Weighted-Average Grant Date Fair Value		Shares			Weighted-Average Grant Date Fair Value
Outstanding at Beginning of Year		1,028,580		$	2.57		828,089		$	2.98		989,610		$	2.79
Issued		326,437			2.06		429,715			1.30		104,433			2.89
Exercised		(38,645	)		1.38		(139,494	)		1.40		(215,859	)		2.07
Forfeited		(39,673	)		2.13		(15,047	)		2.53		(16,881	)		3.19
Expired		(50,932	)		1.09		(74,683	)		1.93		(33,214	)		2.76

Outstanding at End of Year		1,225,767			2.55		1,028,580			2.57		828,089			2.98

Range of Exercise Prices		Weighted-Average Exercise Price

$2.98–$8.10	484,188	$	6.05	6.15
$8.11–$11.07	255,690		10.21	4.45
$11.08–$15.43	243,359		12.99	3.60
$15.44–$26.86	242,530		22.03	4.73

	1,225,767		11.46	5.00

Range of Exercise Prices		Weighted-Average Exercise Price

$2.98–$8.10	188,550	$	5.52
$8.11–$11.07	246,188		10.24
$11.08–$15.43	130,790		12.89
$15.44–$26.86	222,218		22.49

	787,746		13.00

(dollars in thousands)	2009		2008

Loan commitments	$	47,800	$	54,531
Unused lines of credit		241,652		182,455
Letters of credit		18,238		16,794

		Company					Bank

		Company					Bank					For Capital Adequacy Purposes Ratio
(dollars in thousands)		Actual Amount		Ratio			Actual Amount		Ratio			For Capital Adequacy Purposes Ratio
As of December 31, 2009
	Total capital (to risk weighted assets)	$	203,551		13.57	%	$	165,809		11.20	%		8.0	%	10.0	%
	Tier 1 capital (to risk weighted assets)		177,334		11.82	%		147,276		9.95	%		4.0	%	6.0	%
	Tier 1 capital (to average assets)		177,334		10.29	%		147,276		8.76	%		3.0	%	5.0	%
As of December 31, 2008
	Total capital (to risk weighted assets)	$	162,285		11.93	%	$	141,735		10.46	%		8.0	%	10.0	%
	Tier 1 capital (to risk weighted assets)		133,109		9.78	%		124,778		9.21	%		4.0	%	6.0	%
	Tier 1 capital (to average assets)		133,109		9.22	%		124,778		8.69	%		3.0	%	5.0	%