2010 Bank Failures

The table below highlights the 30 banking failures that have occurred in 2010. A write-up on
each bank noted below is provided on the following pages.

Leverage Total LACE

Total NPAs/ Capital/ Cap/ Tier 1/ Rating LACE
Assets Asset Assets Assets Asset ROA Prior Rating Failure
NAME CITY State ($) (%) (%) (%) (%) (%) Qtr. Failed Qtr Date
Horizon Bank Bellingham WA 1.30B 9.49 0.77 1.98 0.99 (10.44) E (2Q09) E (3Q09) 1/8/10
Barnes
Banking
Company Kaysville UT 827.8M 26.76 4.09 6.73 5.40 (10.49) E (2Q09) E (3Q09) 1/15/10
Town
Community
Bank & Trust Antioch IL 69.6M 13.49 2.15 3.92 2.63 (5.51) E (2Q09) E (3Q09) 1/15/10
Saint Stephen
State Bank Saint Stephen MN 24.7M 8.70 0.19 0.46 0.23 (10.17) E (2Q09) E (3Q09) 1/15/10
Charter Bank Santa Fe NM 1.25B 7.16 N/A 1.98 0.97 (6.14) E (2Q09) E (3Q09) 1/22/10
Columbia
River Bank The Dalles OR 1.06B 11.11 2.08 4.05 2.78 (6.43) E (2Q09) E (3Q09) 1/22/10
Evergreen
Bank Seattle WA 488.5M 11.56 2.77 5.20 3.91 (4.81) E (2Q09) E (3Q09) 1/22/10
Premier
American
Bank Miami FL 350.9M 24.66 1.44 3.92 1.96 (5.42) E (2Q09) E (3Q09) 1/22/10
Bank of
Leeton Leeton MI 22.9M 10.96 2.01 3.93 2.65 (9.89) E (2Q09) E (3Q09) 1/22/10
First Regional
Bank Los Angeles CA 2.18B 17.51 5.94 7.46 6.19 (6.71) E (2Q09) E (3Q09) 1/29/10
Community
Bank & Trust Cornelia GA 1.21B 15.89 1.26 3.05 1.77 (6.76) E (2Q09) E (3Q09) 1/29/10
Florida
Community
Bank Immokalee FL 875.5M 31.06 2.32 4.58 3.28 (4.34) E (2Q09) E (3Q09) 1/29/10
First National
Bank of GA Carrollton GA 832.6M 16.87 1.15 2.77 1.50 (8.54) E (2Q09) E (3Q09) 1/29/10
American Bainbridge
Marine Bank Island WA 373.2M 9.38 3.50 6.40 5.13 (6.61) E (2Q09) E (3Q09) 1/29/10
Marshall
Bank, N.A. Hallock MN 59.9M 6.32 3.36 5.55 4.27 (8.39) E (2Q09) E (3Q09) 1/29/10

Copyright 2010 LACE Financial Corporation 118 North Court Street Frederick, Maryland 21701
Tel.: 301.662.1011 Fax: 301.662.1458 www.lacefinancial.com inquiries@lacefinancial.com
 Leverage Total LACE
Total NPAs/ Capital/ Cap/ Tier 1/ Rating LACE
Assets Asset Assets Assets Asset ROA Prior Rating Failure
NAME CITY State ($) (%) (%) (%) (%) (%) Qtr. Failed Qtr Date
st
1 American
State Bank of
MN Hancock MN 18.4M 11.64 2.23 4.69 3.38 (9.09) E (2Q09) E (3Q09) 2/5/10
La Jolla Bank,
FSB La Jolla CA 3.65B 21.46 N/A 1.79 0.90 (7.94) E (2Q09) E (3Q09) 2/19/10
George
Washington
Savings Bank Orland Park IL 413.7M 30.15 2.75 4.75 3.45 (7.12) E (2Q09) E (3Q09) 2/19/10
Marco
Community
Bank Marco Island FL 119.6M 8.13 1.39 2.97 1.88 (11.80) E (2Q09) E (3Q09) 2/19/10
La Coste
National Bank, B+
The La Coste TX 53.9M 0.13 7.77 20.80 19.89 0.39 (2Q09) B+ (3Q09) 2/19/10
Rainier Pacific
Savings Bank Tacoma WA 717.8M 5.84 1.69 2.80 1.55 (9.27) E (2Q09) E (3Q09) 2/26/10
Carson River
Community NB
Bank Carson City NV 51.1M 19.02 1.82 3.50 2.19 (9.31) (2Q09) NB (3Q09) 2/26/10
Sun American
Bank Boca Raton FL 535.7M 14.59 1.74 3.62 2.33 (7.13) E (2Q09) E (3Q09) 3/5/10
Centennial
Bank Ogden UT 215.2M 26.18 1.00 2.50 1.30 (5.24) E (2Q09) E (3Q09) 3/5/10
Bank of
Illinois Normal IL 211.7M 7.57 1.26 3.05 1.73 (2.51) E (2Q09) E (3Q09) 3/5/10
Waterfield
Bank Germantown MD 155.6M 5.05 N/A (7.73) (7.73) (11.42) E (3Q09) E (4Q09) 3/5/10
Park Avenue
Bank New York NY 520.1M 10.53 0.30 0.80 0.40 (3.68) E (3Q09) E (4Q09) 3/12/10
Old Southern
Bank Orlando FL 336.4M 12.28 0.60 1.50 0.80 (8.73) E (3Q09) E (4Q09) 3/12/10
Statewide
Bank Covington LA 243.2M 7.79 2.00 3.20 1.90 (3.83) E (3Q09) E (4Q09) 3/12/10
LibertyPointe
Bank New York NY 216.5M 19.95 2.20 4.30 3.00 (4.86) E (2Q09) E (3Q09) 3/11/10

Copyright 2010 LACE Financial Corporation 118 North Court Street Frederick, Maryland 21701
Tel.: 301.662.1011 Fax: 301.662.1458 www.lacefinancial.com inquiries@lacefinancial.com
January 11, 2010

First Bank Failure of the New Decade

Horizon Bank (Bellingham, WA), with $1.3 billion in assets and eighteen branch locations, was
the first in what is sure to be a long list of bank failures in 2010. The failed bank had been rated
“E” by LACE for five consecutive quarters and appeared on the Institutions of Concern list twice
due to extremely poor asset quality – largely driven by past due construction loans – and
mounting losses. Most importantly, while banks are required to maintain a leverage capital ratio
of at least 4.0%, to be classified as adequately capitalized; Horizon Bank’s leverage ratio
amounted to just 0.77% in the third quarter of 2009. Because of the bank’s deficiencies, the
FDIC issued Horizon Bank a cease and desist order in March of 2009 and a prompt corrective
action directive in early December of the same year. According to a recent 8-K filed by Horizon
Bank, the prompt corrective action directive order set a January 2, 2010 deadline to raise enough
capital to return Horizon Bank to adequately capitalized levels. Washington Federal Savings &
Loan Association in Seattle Washington (LACE Rating, “C”) assumed all of Horizon Bank’s
deposits with the exception of some brokered deposits, which comprised 16.04% of the failed
bank’s total deposits in the third quarter.

3Q09 Financial Summary

Total NPAs/ Leverage Tier 1/ 1Q09 2Q09 3Q09
Assets Assets Capital Asset ROA LACE LACE LACE
Name City State ($mil) (%) (%) (%) (%) Rating Rating Rating
Horizon Bank Bellingham WA 1,300 9.49 0.77 0.99 (10.44) E E E

Ben Stewart - Financial Analyst

LACE Financial

Copyright 2010 LACE Financial Corporation 118 North Court Street Frederick, Maryland 21701
Tel.: 301.662.1011 Fax: 301.662.1458 www.lacefinancial.com inquiries@lacefinancial.com
January 19, 2010

Three More Banks Fall Victim to the Banking Crisis

Barnes Banking Company was the largest bank to fail on January 15 with assets totaling
approximately $828 million and ten locations. The bank was rated “E” for five consecutive
quarters and appeared on the Institutions of Concern (IOC) list on three occasions due to poor
asset quality, particularly in its construction portfolio, and mounting losses. Beginning in the
second quarter of 2009, Barnes Banking Company also began posting weak capital levels. The
Federal Reserve Board issued the failed bank a written agreement in May and a prompt
corrective action directive in December of last year. The latter enforcement action stated that the
bank was critically undercapitalized and set a January 15 deadline for Barnes Banking Company
to restore its capital to adequate levels. On Thursday, January 14, the Davis County Clipper, a
local newspaper, reported that Barnes Banking Company’s vice-president, Doug Stranger,
believed that the bank’s capital levels were not yet adequate but that the bank had taken
sufficient steps to allow the bank to continue operations. As it happens, Mr. Stranger was
incorrect and Barnes Banking Company was shuttered the following day. As regulators could
not locate a buyer for Barnes Banking Company, the Deposit Insurance National Bank of
Kaysville was created to manage Barnes Banking Company’s insured deposits until February 12,
2010.

Town Community Bank and Trust, a small bank based in Antioch, Illinois was rated “E” for
three consecutive quarters and appeared on the IOC list twice due to concerns with
nonperforming commercial and industrial loans and construction loans, negative earnings, and
poor capitalization. However, the bank was not operating under any known regulatory
enforcement actions. First American Bank in Carpentersville, Illinois (LACE Rating, “C”)
assumed the failed bank’s deposits and agreed to purchase the majority of its assets under a loss
sharing agreement with the FDIC.

Saint Stephen State Bank, another small bank with approximately $25 million in assets was
also among last week’s banking casualties. The bank had been operating under an FDIC cease
and desist order since last July and was rated “E” for three consecutive quarters. The bank was
critically undercapitalized in the third quarter of 2009 with a Tier 1 capital ratio of 0.23% and a
leverage capital ratio of 0.19%. Furthermore, in the fourth quarter of 2009, the bank’s Tier 1 and
leverage capital ratios declined to negative 4.98% and negative 6.61%, respectively. In
comparison, a bank must have a leverage capital ratio of at least 3% to be defined as adequately
capitalized. Additionally, the bank was suffering from poor asset quality, particularly in its
commercial and industrial loan portfolio. First State Bank of Saint Joseph (LACE Rating, “B”)
assumed the failed bank’s deposits and agreed to purchase all of its assets under a loss sharing

Copyright 2010 LACE Financial Corporation 118 North Court Street Frederick, Maryland 21701
Tel.: 301.662.1011 Fax: 301.662.1458 www.lacefinancial.com inquiries@lacefinancial.com
agreement with the FDIC. Saint Stephen State Bank’s two locations reopened under the First
State Bank of Saint Joseph banner, one on Saturday morning and the other this morning.

3Q09 Financial Summary

Total NPAs/ Leverage Tier 1/ 1Q09 2Q09 3Q09
Assets Assets Capital Asset ROA LACE LACE LACE
Name City State ($mil) (%) (%) (%) (%) Rating Rating Rating
Barnes Banking
Kaysville UT 827.84 26.76 4.09 5.40 (10.49) E E E
Company

Town Community
Antioch IL 69.61 13.49 2.15 2.63 (5.51) E E E
Bank and Trust

Saint Stephen State Saint

MN 24.74 8.70 0.19 0.23 (10.17) E E E
Bank Stephen

Ben Stewart - Financial Analyst

LACE Financial

Copyright 2010 LACE Financial Corporation 118 North Court Street Frederick, Maryland 21701
Tel.: 301.662.1011 Fax: 301.662.1458 www.lacefinancial.com inquiries@lacefinancial.com
January 25, 2010

Bank Failures Accelerate as Five Banking Institutions Fail in a Single Day.

Charter Bank (Santa Fe, NM), a thrift with $1.3 billion in assets and eight branches was taken
into receivership by the Office of Thrift Supervision (OTS) last Friday. At the time of failure,
the thrift, which was rated “E” for four consecutive quarters, had been operating under an OTS
prompt corrective action directive for two days and a cease and desist order since last November.
Charter Bank had been significantly undercapitalized since the third quarter of 2009 and had a
high concentration of nonperforming residential loans. Beal Financial Corporation, which owns
Beal Bank and Beal Bank, Nevada, created a new thrift, Charter Bank in Albuquerque, New
Mexico to acquire Charter Bank’s deposits and agreed to purchase the majority of the failed
thrift’s assets. Charter Bank’s eight branches reopened under its new charter this morning.

Columbia River Bank (The Dalles, OR), an institution with approximately $1.06 billion in
assets and 21 branches, was closed by the Oregon Division of Finance and Corporate Securities
on January 22. The bank was “E” rated for five periods and appeared on the LACE Institutions
of Concern list for four periods prior to failure. Columbia River Bank’s financial condition
declined significantly over the past year and a half, posting continued negative earnings,
declining capital levels, and deteriorating asset quality. The bank had also been operating under
an FDIC cease and desist order issued on February 9, 2009, citing poor loan quality, inadequate
capital levels, and an inadequate loan valuation reserve, among other items. Columbia State
Bank of Tacoma, WA (LACE Rated, “C-”) acquired all of the deposits and nearly all of the
failed bank’s assets, of which $697.4 million are covered under a loss-share agreement with the
FDIC.

Evergreen Bank based in Seattle, WA, with $488.5 million in assets and seven offices, was
closed by the Washington Department of Financial Institutions on Friday. The bank had
experienced significant declines in asset quality, primarily in its construction, land, and land
development portfolio, resulting in losses and declining capital ratios. Evergreen Bank was “E”
rated for four consecutive quarters and appeared on the LACE Institutions of Concern list for
two quarters prior to failure. The Seattle based bank has been operating under two orders issued
by the FDIC, a cease and desist order issued on October 23, 2009 and a prompt corrective action
directive issued on November 4, 2009, requiring the bank to recapitalize. Umpqua Bank of
Roseburg, OR (LACE Rated, “C+”) acquired all deposits and essentially all of the failed bank’s
assets, of which $379.5 million are covered under a loss-share agreement with the FDIC.

Premier American Bank (Miami, FL), a bank with $350.9 million in assets and four locations,
was closed by regulators last week after struggling with exceptionally poor asset quality, a loss
trend extending back to the middle of 2008, and most importantly, declining capital levels, which

Copyright 2010 LACE Financial Corporation 118 North Court Street Frederick, Maryland 21701
Tel.: 301.662.1011 Fax: 301.662.1458 www.lacefinancial.com inquiries@lacefinancial.com
left the bank critically undercapitalized in the third quarter of 2009. The ailing bank was rated
“E” for six consecutive quarters, appeared on LACE Financial’s Institutions of Concern list five
times, and was operating under an FDIC cease and desist order issued in May of last year due to
the above-mentioned weaknesses. A newly chartered bank, Premier American Bank, N.A.,
owned by Bond Street Holdings, LLC, assumed Premier Bank’s deposits and agreed to purchase
its assets under a loss sharing agreement with the FDIC.

Bank of Leeton (Leeton, MO), with assets totaling approximately $23 million, was the smallest
bank to fail this year. The failed bank had been struggling with its asset quality, management
oversight, low capital levels, losses dating to the fourth quarter of 2008, and numerous other
issues. Due to its poor financial condition, Bank of Leeton was rated “E” and appeared on the
Institutions of Concern list for four consecutive quarters and was issued a cease and desist order
by the FDIC in February 2009. Sunflower Bank, N.A. (LACE Rating, “B-”) in Salina, Kansas,
assumed the failed bank’s deposits and reopened its single location under the Sunflower Bank
banner on Saturday morning.

3Q09 Financial Summary

Total NPAs/ Leverage Tier 1/ 1Q09 2Q09 3Q09
Assets Assets Capital Asset ROA LACE LACE LACE
Name City State ($mil) (%) (%) (%) (%) Rating Rating Rating

Charter Bank Santa Fe NM 1,251.9 7.16 N/A 0.97 (6.14) E E E

Columbia River Bank The WA 1,057 11.11 2.08 2.78 (6.43) E E E

Evergreen Bank Seattle WA 488.5 11.56 2.77 3.91 (4.81) E E E

Premier American
Miami FL 350.9 24.66 1.44 1.96 (5.42) E E E
Bank

Bank of Leeton Leeton MO 22.9 10.69 2.01 2.65 (9.89) E E E

Ben Stewart and Caleb Mooney - Financial Analysts

LACE Financial

Copyright 2010 LACE Financial Corporation 118 North Court Street Frederick, Maryland 21701
Tel.: 301.662.1011 Fax: 301.662.1458 www.lacefinancial.com inquiries@lacefinancial.com
February 1, 2010

Fifteen Banking Institutions Failed in January.

First Regional Bank (Los Angeles, CA), a bank with $2.2 billion in assets and eight locations,
carried a LACE Rating of “E” for five consecutive quarters and appeared on the LACE
Institutions of Concern list twice prior to its failure last week. Poor asset quality was a major
factor in First Regional Bank’s deterioration, and by extension, its LACE Rating. Beginning in
the fourth quarter of 2008, the bank posted significant increases to its portfolio of nonperforming
loans, particularly in the construction and land development category. The FDIC issued First
Regional Bank two cease and desist orders, one in March 2008 and a second in February 2009.
The first order focuses on internal controls and procedural concerns while the order issued a year
later focused on the bank’s financial condition. Specifically, the 2009 cease and desist order
enumerated concerns with asset quality, management, earnings, lending practices, and liquidity.
First-Citizens Bank & Trust Company in Raleigh, NC (LACE Rating, “B”) assumed the failed
bank’s deposits and agreed to purchase the majority of its assets.

Community Bank & Trust (Cornelia, GA), with $1.2 billion in assets and thirty-six branch
locations was rated “E” for four quarters and appeared on LACE Financial’s Institutions of
Concern list twice prior to being closed by the Georgia Department of Banking and Finance on
January 29. Community Bank & Trust had been operating under an FDIC cease and desist order
since May of last year due to issues with asset quality, lending practices, management, earnings,
and insufficient liquidity and capital. The bank’s nonperforming assets, especially residential
and construction loans, had been steadily increasing since the beginning of 2008. Additionally,
Community Bank & Trust’s capital levels declined by 75% in the third quarter of 2009, resulting
in Community Bank & Trust being critically undercapitalized at the time of failure. SCBT,
National Association (LACE Rating, “B”) acquired Community Bank & Trust’s deposits and
agreed to purchase its assets.

Florida Community Bank (Immokalee, FL), an institution with approximately $875.5 million
in assets and 11 branches was closed by the Florida Office of Financial Regulation. The failed
institution had been LACE Rated “E” for twelve consecutive quarters dating back to the fourth
quarter of 2006 and appeared on the Institutions of Concern list since the first quarter of 2008.
Florida Community Bank experienced extremely poor asset quality, largely due to the bank’s
construction real estate portfolio. As a result, the bank produced negative earnings dating back
to 1Q09 and became significantly under-capitalized by regulatory standards in 3Q09. Florida
Community Bank was not operating under any known enforcement actions at the time of failure.
However, the bank’s holding company, Florida Community Banks, Inc., was operating under a
written agreement with the Federal Reserve Board since February 2009.

Copyright 2010 LACE Financial Corporation 118 North Court Street Frederick, Maryland 21701
Tel.: 301.662.1011 Fax: 301.662.1458 www.lacefinancial.com inquiries@lacefinancial.com
Premier American Bank, N.A. of Miami, FL purchased all deposits and $499.1 million of Florida
Community Bank’s assets. Premier American Bank, N.A. was formed on January 23, 2010 by
Bond Street Holdings, LLC to acquire the deposits and assets of the failed bank, Premier
American Bank, from the FDIC. As such, Premier American Bank, N.A. is not currently rated
by LACE.

First National Bank of Georgia (Carrollton, GA), an institution with11 branches and $832.6
million in assets, was closed by the OCC on Friday. The Carrollton based bank was LACE rated
“E” for nine consecutive quarters dating back to 3Q07 and appeared on the Institutions of
Concern list since 2Q08. The bank had extremely poor asset quality, primarily due to
deterioration in construction real estate loans, resulting in continued negative earnings and
declining capital. First National Bank of GA was operating under an OCC formal agreement
issued in November of 2008 and an OCC prompt corrective action directive issued in December
of 2009, requiring the bank to recapitalize. Community and Southern Bank of Carrollton, GA
was created to assume all of the deposits and essentially all of the assets of the failed bank.

American Marine Bank (Bainbridge Island, WA), with $373 million in assets and eleven
branches, was closed on Friday by the Washington Department of Financial Institutions. The
bank was rated “E” for five consecutive quarters and appeared on the LACE Institutions of
Concern list twice. Prior to its failure, American Marine Bank had been operating under an
FDIC cease and desist order as well as a prompt corrective action directive – both issued in
November 2009. The enforcement actions both directed the bank to increase its capital levels,
while the cease and desist order also focused on asset quality and management, in addition to
other concerns. At the end of the fourth quarter, the bank was critically undercapitalized with a
Tier 1 capital ratio of 1.09% and a leverage capital ratio of 0.76%. Columbia State Bank (LACE
Rating, “C-”) in Tacoma, Washington assumed the failed bank’s deposits, except for brokered
deposits, which comprised approximately 7% of total deposits in the fourth quarter of 2009.

Marshall Bank, National Association of Hallock, MN was closed by the OCC on Friday, due
primarily to deteriorating asset quality, continued negative earnings, and low capital ratios in the
second and third quarter of 2009. The institution was LACE rated “E” for four consecutive
quarters and appeared on the Institutions of Concern list for the past two quarters. Additionally,
Marshall Bank, N.A. was operating under a prompt corrective action directive and a cease and
desist order issued by the OCC, requiring the institution to recapitalize. United Valley Bank of
Cavalier, ND (LACE Rated, “C+”) assumed all of the failed bank’s deposits and essentially all
of the assets.

Copyright 2010 LACE Financial Corporation 118 North Court Street Frederick, Maryland 21701
Tel.: 301.662.1011 Fax: 301.662.1458 www.lacefinancial.com inquiries@lacefinancial.com
3Q09 Financial Summary
Total NPAs/ Leverage Tier 1/ 1Q09 2Q09 3Q09
Assets Assets Capital Asset ROA LACE LACE LACE
Name City State ($mil) (%) (%) (%) (%) Rating Rating Rating
First Regional Los
CA 2,184.10 17.51 5.94 6.19 (6.71) E E E
Bank Angeles

Community Bank
Cornelia GA 1,211.03 15.89 1.26 1.77 (6.76) E E E
& Trust

Florida
Immokalee FL 875.47 31.06 2.32 3.28 (4.34) E E E
Community Bank

First National
Carrollton GA 832.58 16.87 1.15 1.50 (8.54) E E E
Bank of GA

American Marine Bainbridge

WA 373.19 9.38 3.50 5.13 (6.61) E E E
Bank Island

Marshall Bank,
Hallock MN 59.85 6.32 3.36 4.27 (8.39) E E E
N.A.

Ben Stewart and Caleb Mooney - Financial Analysts

LACE Financial

Copyright 2010 LACE Financial Corporation 118 North Court Street Frederick, Maryland 21701
Tel.: 301.662.1011 Fax: 301.662.1458 www.lacefinancial.com inquiries@lacefinancial.com
February 8, 2010

Minnesota Bank Failure

1st American State Bank of Minnesota (Hancock, MN), a small bank with two branches and
assets totaling approximately $18.4 million was closed on Friday by the Minnesota Department
of Commerce. The failed bank was rated “E” for seven consecutive quarters and appeared on the
LACE Institutions of Concern list four times, dating back to the fourth quarter of 2008.
Additionally, 1st American State Bank of Minnesota had been operating under an FDIC cease
and desist order issued in February 2008. The order cited a slew of issues, including but not
limited to, “operating with management whose policies and practices are detrimental to the Bank and
jeopardize the safety of its deposits”, “operating with an inadequate level of capital protection…”,
and “engaging in hazardous lending and lax collection practices.” At the end of the third quarter of
2009, the bank was in the bottom percentile of its peers in terms of asset quality and capital and in
the second percentile in terms of earnings. Community Development Bank, FSB (LACE Rating,
“C+”), a thrift based in Ogema, Minnesota, assumed the failed bank’s deposits and agreed to
purchase its assets under a loss-sharing agreement with the FDIC.

3Q09 Financial Summary

Total NPAs/ Leverage Tier 1/ 1Q09 2Q09 3Q09
Assets Assets Capital Asset ROA LACE LACE LACE
Name City State ($mil) (%) (%) (%) (%) Rating Rating Rating
1st American State Bank
Hancock MN 18.40 11.64 2.23 3.38 (9.09) E E E
of Minnesota

Ben Stewart – Senior Financial Analyst

LACE Financial

Copyright 2010 LACE Financial Corporation 118 North Court Street Frederick, Maryland 21701
Tel.: 301.662.1011 Fax: 301.662.1458 www.lacefinancial.com inquiries@lacefinancial.com
February 22, 2010

Twenty Bank Failures to Date in 2010

La Jolla Bank, FSB (La Jolla, CA), a thrift with assets totaling $3.6 billion and ten branch
locations, is the largest banking institution to fail so far this year. The thrift had been rated “E”
for the past two quarters and appeared on the most recent LACE Institutions of Concern list due
to very low capital levels and poor and deteriorating asset quality. Because of its financial
condition, La Jolla Bank, FSB had been operating under an OTS cease and desist order since
September 2009. La Jolla Bank, FSB was also issued a prompt corrective action directive four
days before the thrift’s closure ordering the thrift to recapitalize. In addition, according to The
Desert Sun, “fraudulent activity was recently discovered” by the FDIC. OneWest Bank, FSB
(not rated by LACE Financial) assumed the failed thrift’s deposits and a partition of its assets
under a loss-sharing agreement with the FDIC.

George Washington Savings Bank, a $413 million in assets bank headquartered in Orland
Park, Illinois, had been rated “E” and appeared on the LACE Institutions of Concern list for two
quarters. The bank posted losses in the last three quarters of 2009 and had been suffering from
poor asset quality, which left it significantly undercapitalized in the fourth quarter. FirstMerit
Bank, National Association (LACE Rating, “B”), based in Akron Ohio agreed to take over the
failed bank’s deposits and to purchase its assets under a loss-sharing agreement with the FDIC.

Marco Community Bank of Marco Island, FL, a small bank with one branch and approximately
$120 million in assets, was closed by the Florida Office of Financial Regulation on Friday.
Marco Community recorded poor asset quality and continued losses, resulting in capital ratios in
the critical under-capitalized category in the fourth quarter 2009. The bank carried a LACE
rating of “E” for ten consecutive quarters prior to its failure and appeared on the Institutions of
Concern list in the third quarter of 2009. The Federal Reserve issued the bank a written
agreement in August of 2007 citing concerns with management, loan policies, asset quality, and
allowance for loan and lease losses, among other items. Mutual of Omaha Bank, a thrift located
in Omaha, NE (LACE Rated, “B-”), assumed all of the deposits and nearly all of the assets of
Marco Community Bank.

The La Coste National Bank, located in La Coste Texas was a small bank with approximately
$54 million in assets and a single location. At the time of its failure, the bank appeared to be in
sound financial condition and was not operating under any known enforcement actions.
However, according to various sources, the bank was closed due to fraud allegedly committed by
the former President, which left the bank critically undercapitalized. Community National Bank
(LACE Rating, “B+”) in Hondo Texas acquired all of The La Coste National Bank’s deposits.

Copyright 2010 LACE Financial Corporation 118 North Court Street Frederick, Maryland 21701
Tel.: 301.662.1011 Fax: 301.662.1458 www.lacefinancial.com inquiries@lacefinancial.com
4Q09 Financial Summary
Total NPAs/ Leverage Tier 1/ 1Q09 2Q09 3Q09
Assets Assets Capital Asset ROA LACE LACE LACE
Name City State ($mil) (%) (%) (%) (%) Rating Rating Rating

La Jolla Bank. FSB La Jolla CA 3,646.07 21.46 N/A 0.90 (7.94) D E E

George Washington Orland

IL 413.67 30.15 2.75 3.45 (7.12) C- E E
Savings Bank Park

Marco Community Marco

FL 119.58 8.13 1.39 1.88 (11.80) E E E
Bank Island

The La Coste National

La Coste TX 53.94 0.13 7.77 19.89 0.39 A B+ B+
Bank

Ben Stewart and Caleb Mooney – Financial Analysts

LACE Financial

Copyright 2010 LACE Financial Corporation 118 North Court Street Frederick, Maryland 21701
Tel.: 301.662.1011 Fax: 301.662.1458 www.lacefinancial.com inquiries@lacefinancial.com
March 1, 2010
Two More Bank Failures

Rainier Pacific Savings Bank, in Tacoma, WA, failed last Friday due to exceptionally poor
capital. The bank’s equity capital declined from $11.7 million in third quarter to negative $11.1
million in the fourth quarter, or a 195% decline. This capital loss follows a 72% decline between
the second and third quarter. While the bank’s asset quality was poor and had been steadily
deteriorating, it appears that $43.5 million in securities losses, rather than its portfolio of
nonperforming loans, had the greatest impact on the Rainier Pacific Savings Bank’s capital
levels. Rainier Pacific Savings Bank was rated “E” for six quarters and appeared on LACE’s
most recent Institutions of Concern list. Additionally, the bank, had been operating under an
FDIC cease and desist order and a prompt corrective action directive – both issued in September
of 2009. Umpqua Bank (LACE Rating, “C+”) in Roseburg Oregon assumed Rainier Pacific
Savings Bank’s deposits and agreed to purchase $670 million of its assets.

Carson River Community Bank (Carson City, NV) was the twenty-second bank to fail this
year. The small bank was founded in late 2006 and was not rated by LACE Financial, which
does not rate banks less than three years old. The bank had been experiencing increasing
nonperforming assets coupled with capital losses throughout 2009, culminating in a 72%
decrease in equity in the fourth quarter of 2009, which left the bank with just $1 million in
equity. In March of last year, the FDIC issued Carson River Community Bank a cease and desist
order, citing issues with management, standards and procedures, liquidity, asset quality, capital
adequacy, and earnings. Heritage Bank of Nevada (LACE Rating, “B”) assumed the failed
bank’s deposits and entered into a loss-sharing agreement with the FDIC.

4Q09 Financial Summary

Total NPAs/ Leverage Tier 1/ 1Q09 2Q09 3Q09
Assets Assets Capital Asset ROA LACE LACE LACE
Name City State ($mil) (%) (%) (%) (%) Rating Rating Rating
Rainier Pacific Savings
Tacoma WA 717.8 5.84 1.7 1.5 (9.27) E E E
Bank

Carson River Carson

NV 51.1 19.02 1.8 2.2 (9.31) NB
Community Bank City

Ben Stewart – Senior Financial Analyst

LACE Financial

Copyright 2010 LACE Financial Corporation 118 North Court Street Frederick, Maryland 21701
Tel.: 301.662.1011 Fax: 301.662.1458 www.lacefinancial.com inquiries@lacefinancial.com
March 8, 2010

Banking Crisis Claims Four Additional Institutions

Sun American Bank (Boca Raton, FL) was rated “E” for a full year and appeared on the LACE
Institutions of Concern (IOC) list twice prior to failing last Friday. The bank, like many others,
suffered from poor asset quality, negative earnings, and decreasing capital levels. Because of
these and other issues, the Federal Reserve Board issued a prompt corrective action directive to
the bank on December 22, 2009, requiring Sun American Bank to increase capital within forty-
five days. At the time of failure, the bank was critically undercapitalized. First-Citizens Bank &
Trust Company, (LACE Rating, “B”) in Raleigh, North Carolina, acquired the failed bank’s
deposits and reopened its twelve branches this morning.

Centennial Bank (Ogden, Utah), a bank with $215 million in assets, failed last Friday as a result
of poor asset quality, inadequate capital levels, and continued losses. The bank carried a LACE
rating of “E” for nine consecutive quarters, and appeared on the IOC list several times prior to
failure. Centennial Bank had been operating under an FDIC cease and desist order since June
23, 2009. The order cited problems with management, capital levels, liquidity, and reserves.
The FDIC could not locate an assuming institution, and will be mailing checks to insured
depositors.

Bank of Illinois (Normal, IL), was rated “E” for five quarters and appeared on the most recent
IOC list prior to its failure on March 5. In the third quarter of 2009, the bank was
undercapitalized by regulatory standards with a total capital ratio of 7.10% (its Tier 1 and
leverage capital ratios were adequate). However, the bank ranked in the first percentile of its
peer group in terms of capital adequacy and was critically undercapitalized by year-end due to a
thirty-seven percent decline in capital during the fourth quarter. LACE Financial believes that
the bank’s capital deterioration is due to excessive loan losses in its construction and land
development and commercial loan portfolios. Like Sun American Bank, Bank of Illinois was
operating under a prompt corrective action issued by the Federal Reserve Board, ordering the
bank to increase capital levels within forty-five days. Heartland Bank and Trust Company,
(LACE Rating, “B”) in Bloomington, Illinois acquired Bank of Illinois’ deposits and reopened
its two locations on Saturday morning.

Waterfield Bank (Germantown, MD), a thrift with approximately $156 million in assets and
one location, was closed by the OTS on Friday. The thrift was “E” rated by LACE for five
consecutive quarters dating back to the December 2008 rating period. Waterfield Bank also
appeared on the Institutions of Concern list during the same time period. The thrift’s financial
condition suffered from poor asset quality, continued negative earnings, and negative capital
ratios in the fourth quarter of 2009. The OTS issued Waterfield Bank an enforcement action on

Copyright 2010 LACE Financial Corporation 118 North Court Street Frederick, Maryland 21701
Tel.: 301.662.1011 Fax: 301.662.1458 www.lacefinancial.com inquiries@lacefinancial.com
October 1, 2009 and a Prompt Corrective Action on February 3, 2010, giving the thrift fourteen
days to recapitalize by a merger, acquisition, or sale. The FDIC could not find a buyer for
Waterfield Bank’s assets, as such Waterfield Bank, FA was created by the FDIC and will remain
open until April 5, 2010, allowing depositors access to insured funds. The FDIC will also mail
checks to customers with insured certificates of deposits and individual retirement accounts.

4Q09 Financial Summary

Total NPAs/ Leverage Tier 1/ 2Q09 3Q09 4Q09
Assets Assets Capital Asset ROA LACE LACE LACE
Name City State ($mil) (%) (%) (%) (%) Rating Rating Rating

Sun American Bank Boca Raton FL 535.7 14.59 1.7 2.3 (7.13) E E *

Centennial Bank Ogden UT 215.2 26.18 1.0 1.3 (5.24) E E *

Bank of Illinois Normal IL 211.7 7.57 1.3 1.7 (2.51) E E *

Waterfield Bank Germantown MD 155.6 5.05 N/A (7.73) (11.42) E E E

*4Q09 bank ratings are pending

Ben Stewart, Caleb Mooney, Jeremy Sabine – Financial Analysts

LACE Financial

Copyright 2010 LACE Financial Corporation 118 North Court Street Frederick, Maryland 21701
Tel.: 301.662.1011 Fax: 301.662.1458 www.lacefinancial.com inquiries@lacefinancial.com
March 15, 2010

Four More Bank Failures

Park Avenue Bank (New York, NY) is an institution with approximately $520 million in assets
and four branches that was closed on Friday, March 12, 2010. Park Avenue Bank carried a
LACE Rating of “E” for eleven consecutive quarters, dating back to the second quarter of 2007,
and appeared on the Institutions of Concern list since the third quarter of 2008. The bank posted
a 124% quarterly decline in total equity capital, resulting in total equity capital of negative $3
million and a Tier 1 leverage ratio of 0.3%, down from 2.7% in the third quarter. Park Avenue
Bank recorded a cumulative 2009 net loss of $19.89 million, compared to a loss of $3.54 million
in 2008, resulting in an ROA of negative 3.68%. Asset quality remained stable, yet poor, with an
NPA-to-total assets ratio of 10.53%, up slightly from 10.38% in the previous quarter. The bank
has been operating under an enforcement action issued by the FDIC in February of 2009, which
notes Park Avenue’s inadequate capital, liquidity, and reserves and unsatisfactory earnings.
Valley National Bank of Wayne, NJ, (LACE Rated “B+”) assumed all deposits and nearly the
assets of Park Avenue Bank.

Old Southern Bank (Orlando, FL), a bank with approximately $336 in assets and seven
branches, was closed on Friday by the Florida Office of Financial Regulation. The bank carried
an “E” LACE rating for four quarters prior to failure and appeared on the Institutions of Concern
list in the third and fourth quarter of 2009. The bank posted a loss of $32.54 million in 2009 and
a return on assets of negative 8.73%, compared to a loss of $4 million and an ROA of negative
1.29% in 2008. As a result, total equity capital declined by 75% in the fourth quarter and the
institution’s Tier 1 leverage ratio declined from 7.0% in 3Q09 to 0.6% in 4Q09, defining Old
Southern Bank as critically undercapitalized. Asset quality remained poor as total NPAs
comprised 12.28% of total assets, up slightly from 11.89% in the previous quarter. The Federal
Reserve Board issued Old Southern bank a prompt corrective action on January 14, 2010,
requiring the bank to recapitalize. Centennial Bank of Conway, AR, (LACE Rated, “B-”)
assumed all deposits and essentially all the assets of Old Southern Bank.

Statewide Bank (Covington, LA), with $243 million in assets and six branches, was closed on
Friday by the Louisiana Office of Financial Institutions. Statewide Bank has carried a LACE
rating of “E” for six consecutive quarters prior to failure and appeared on the third and fourth
quarter 2009 Institutions of Concern list. The FDIC issued the bank a cease and desist order in
March of 2009 citing inadequate capital, an excessive level of adversely classified assets, and
concentrations of credit, among other concerns. Home Bank, a thrift located in Lafayette, LA,
(LACE Rated, “A”) assumed all of the deposits and nearly all assets of the failed bank.

Copyright 2010 LACE Financial Corporation 118 North Court Street Frederick, Maryland 21701
Tel.: 301.662.1011 Fax: 301.662.1458 www.lacefinancial.com inquiries@lacefinancial.com
LibertyPointe Bank (New York, NY) was closed by regulators last Thursday due to its poor
financial condition. The bank has been rated “E” for five consecutive quarters and appeared on
LACE’s Institutions of Concern list twice. LibertyPointe Bank was significantly
undercapitalized in the fourth quarter and had been encumbered with increasing nonperforming
loans and a history of losses. Because of these and other issues, the bank was operating under an
FDIC cease and desist order and a prompt corrective action directive, issued in July and October
2009, respectively. The orders covered numerous concerns such as poor asset quality and
inadequate earnings, with undercapitalization being the most pressing matter. Valley National
Bank (LACE Rating, “B+”) in New Jersey acquired LibertyPointe Bank’s deposits and agreed to
purchase its assets.

4Q09 Financial Summary

Total NPAs/ Leverage Tier 1/ 2Q09 3Q09 4Q09
Assets Assets Capital Asset ROA LACE LACE LACE
Name City State ($mil) (%) (%) (%) (%) Rating Rating Rating

Park Avenue Bank New York NY 520.1 10.53 0.30 0.40 (3.68) E E E

Old Southern Bank Orlando FL 336.4 12.28 0.60 0.80 (8.73) E E E

Statewide Bank Covington LA 243.2 7.79 2.00 1.90 (3.83) E E E

LibertyPointe Bank New York NY 216.5 19.95 2.20 3.00 (4.86) E E N/A

Ben Stewart, Caleb Mooney – Financial Analysts

LACE Financial

Copyright 2010 LACE Financial Corporation 118 North Court Street Frederick, Maryland 21701
Tel.: 301.662.1011 Fax: 301.662.1458 www.lacefinancial.com inquiries@lacefinancial.com