Special Cautionary Notice Regarding Forward-looking Statements

Statements and financial discussion and analysis contained in this Quarterly Report on Form 10-Q that are not historical facts are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. The Company intends such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995 and is including this statement for purposes of invoking these safe harbor provisions. These forward-looking statements include information about possible or assumed future results of the Company's operations or performance. Words such as "believe", "expect", "anticipate", "estimate", "continue", "intend", "may", "will", "should", or similar expressions, identifies these forward-looking statements. Many possible factors or events could affect the future financial results and performance of the Company and could cause those financial results or performance to differ materially from those expressed in the forward-looking statement. These possible events or factors include, without limitation:

• changes in the strength of the United States economy in general and the strength of the local economies in which the Company conducts operations resulting in, among other things, a deterioration in credit quality or a reduced demand for credit, including the resultant effect on the Company's loan portfolio and allowance for loan losses;

• changes in interest rates and market prices, which could reduce the Company's net interest margins, asset valuations and expense expectations;

• changes in the levels of loan prepayments and the resulting effects on the value of the Company's loan portfolio;

• changes in local economic and business conditions which adversely affect the ability of the Company's customers to transact profitable business with the Company, including the ability of borrowers to repay their loans according to their terms or a change in the value of the related collateral;

• increased competition for deposits and loans adversely affecting rates and terms;

• the Company's ability to identify suitable acquisition candidates;

• the timing, impact and other uncertainties of the Company's ability to enter new markets successfully and capitalize on growth opportunities;

• the effect of compliance, or failure to comply within stated deadlines, of the provisions of the formal agreement with regulators;

• increased credit risk in the Company's assets and increased operating risk caused by a material change in commercial, consumer and/or real estate loans as a percentage of the total loan portfolio;

• the failure of assumptions underlying the establishment of and provisions made to the allowance for loan losses;

• the incurrence and possible impairment of goodwill associated with an acquisition and possible adverse short-term effects on the results of operations;

• changes in the availability of funds resulting in increased costs or reduced liquidity;

• a deterioration or downgrade in the credit quality and credit agency ratings of the securities in the Company's securities portfolio;

• increased asset levels and changes in the composition of assets and the resulting impact on our capital levels and regulatory capital ratios;

• the Company's ability to acquire, operate and maintain cost effective and efficient systems without incurring unexpectedly difficult or expensive but necessary technological changes;

• the loss of senior management or operating personnel and the potential inability to hire qualified personnel at reasonable compensation levels;

• government intervention in the U.S. financial system; and

• changes in statutes and government regulations or their interpretations applicable to bank holding companies and our present and future banking and other subsidiaries, including changes in tax requirements and tax rates.

All written or oral forward-looking statements attributable to the Company are expressly qualified in their entirety by these cautionary statements. The Company undertakes no obligation to publicly update or otherwise revise any forward-looking statements, whether as a result of new information, future events or otherwise.

Management's Discussion and Analysis of Financial Condition and Results of Operations of the Company analyzes the major elements of the Company's balance sheets and statements of income. This section should be read in conjunction with the Company's Condensed Consolidated Financial Statements and accompanying notes and other detailed information appearing elsewhere in this document.

Overview

The Company recorded net income of $1.2 million for the three months ended June 30, 2009, a decrease of $1.1 million compared with the same quarter in 2008. The Company's diluted earnings per common share for the three months ended June 30, 2009 was $0.05, a decrease of $0.16 per diluted share compared with diluted earnings per common share of $0.21 for the same quarter in 2008. Diluted earnings per share is computed by dividing net income (after deducting dividends on preferred stock) by the weighted-average number of common shares and potentially dilutive common shares outstanding during the period. Preferred stock dividends were $562,000 or $0.05 per diluted share for the three months ended June 30, 2009. There were no preferred stock dividends for the three months ending June 30, 2008. The Company recorded a net loss of $882,000 for the six months ended June 30, 2009, a decrease of $5.4 million compared with the same period in 2008. The Company's diluted loss per common share for the six months ended June 30, 2009 was $0.18, a decrease of $0.59 per diluted share compared with diluted earnings per common share of $0.41 for the same period in 2008. Preferred stock dividends were $1.0 million or $0.09 per diluted share for the six months ended June 30, 2009. There were no preferred stock dividends for the six months ended June 30, 2008.

Total assets were $1.61 billion at June 30, 2009, an increase of $32.3 million or 2.0% from $1.58 billion at December 31, 2008. Available-for-sale investment securities at June 30, 2009 were $121.9 million, an increase of $19.8 million or 19.3% from $102.1 million at December 31, 2008. Net loans at June 30, 2009 were $1.30 billion, a decrease of $24.6 million or 1.9% from $1.32 billion at December 31, 2008. Total deposits at June 30, 2009 were $1.37 billion, an increase of $104.3 million or 8.2% from $1.27 billion at December 31, 2008. Other borrowings at June 30, 2009 were $27.6 million, a decrease of $111.4 million or 80.2% from $139.0 million at December 31, 2008. The Company's return on average assets ("ROAA") for the three months ended June 30, 2009 and 2008 was 0.28% and 0.59%, respectively. The Company's return on average equity ("ROAE") for the three months ended June 30, 2009 and 2008 was 2.83% and 7.46%, respectively. The Company's ROAA for the six months ended June 30, 2009 and 2008 was (0.11)% and 0.60%, respectively. The Company's ROAE for the six months ended June 30, 2009 and 2008 was (1.10)% and 7.49%, respectively. Shareholders' equity at June 30, 2009 was $162.8 million compared to $119.2 million at December 31, 2008, an increase of $43.6 million or 36.6%. Details of the changes in the various components of net income are further discussed below.

Recent Developments

On August 10, 2009, MetroBank entered into a written agreement (the "Agreement") with the Office of the Comptroller of the Currency ("OCC"). The Agreement is based on the findings of the OCC during the most recent on-site examination of MetroBank and is primarily focused on matters related to MetroBank's asset quality. The examination was dated March 16, 2009 and based on financial information as of and for the year ended December 31, 2008.

The requirements of the Agreement must be implemented within 30 to 90 days as specified in the Agreement. At this time, management believes that all requirements of the Agreement will be met within the required time parameters. As part of the Company's and MetroBank's active role in improving the asset quality and overall condition of the bank, MetroBank has previously developed and implemented various programs contemplated by the Agreement and taken many of the steps required by the Agreement. During and since the completion of the examination, management of MetroBank has proactively made adjustments in policies and procedures in an effort to alleviate the effects of the credit challenge caused by the economic deterioration and market conditions generally and in its market areas. Additionally, management and the Boards of Directors of the Company and MetroBank have aggressively taken steps to address the findings of the exam and are aggressively working to comply with the requirements of the Agreement.

Under the terms of the Agreement, MetroBank has agreed, to improve and enhance its internal procedures and programs on the following:

• Loan portfolio management;

• Construction loan underwriting standards;

• Commercial real estate concentration risk management;

• Timely and accurate identification of nonaccrual loans and other low graded loans by lending officers;

• Eliminate the basis of criticism of criticized assets;

• Ensure the maintenance of an adequate allowance for loan losses; and

• Develop a profit plan to improve future earnings.

Pursuant to the Agreement, the Board of Directors of MetroBank is also required to appoint a Compliance Committee to monitor and coordinate MetroBank's performance under the Agreement and to submit, on a quarterly basis, a report setting forth a description of the action needed to comply with the Agreement, the actions taken to comply and the results and status of such actions. Additionally, MetroBank must obtain prior approval from the Assistant Deputy Comptroller of the OCC before it may accept, renew or roll over any brokered deposits.

As noted above, the results of the examination were based on financial information as of December 31, 2008. The examination and the actions required by the Agreement correspond to MetroBank's recent experience of an increase in criticized assets as the economy in its primary lending area has come under increasing downward pressure. Management believes that the substantive actions called for by the Agreement should strengthen MetroBank and make it more efficient in the long-run.

Results of Operations

Net Interest Income and Net Interest Margin. For the three months ended June 30, 2009, net interest income, before the provision for loan losses, was $13.7 million, a decrease of $805,000 or 5.6% compared with $14.5 million for the same period in 2008, primarily due to lower loan yields and an increase in nonperforming assets. Average interest-earning assets for the three months ended June 30, 2009 were $1.53 billion, an increase of $76.1 million or 5.2% compared with $1.46 billion for the same period in 2008, primarily due to growth in federal funds sold and other short-term investments and loan growth. The weighted average yield on interest-earning assets for the second quarter of 2009 was 5.78%, a decrease of 102 basis points compared with 6.80% for the same quarter in 2008. Average interest-bearing liabilities for the three months ended June 30, 2009 were $1.24 billion, an increase of $55.7 million or 4.7% compared with $1.19 billion for the same period in 2008, primarily due to an increase in money market accounts and time deposits, partially offset by a decrease in other borrowings. The weighted average interest rate paid on interest-bearing liabilities for the second quarter 2009 was 2.71%, a decrease of 72 basis points compared with 3.43% for the same quarter in 2008. Interest rate cuts by the Federal Reserve, which caused the prime rate to decrease from 5% to 3.25% during the last 12 months, resulted in a decrease in yields and costs for the three months ended June 30, 2009, compared with the same period in 2008.

For the six months ended June 30, 2009, net interest income, before the provision for loan losses, was $26.5 million, a decrease of $2.0 million or 7.0% compared with $28.5 million for the same period in 2008, primarily due to lower loan yields and an increase in nonperforming assets. Average interest-earning assets for the six months ended June 30, 2009 were $1.52 billion, an increase of $105.6 million or 7.5% compared with $1.42 billion for the same period in 2008, primarily due to loan growth. The weighted average yield on interest-earning assets for the six months ended June 30, 2009 was 5.80%, down 126 basis points compared with 7.06% for the same period in 2008. Average interest-bearing liabilities for the six months ended June 30, 2009 were $1.23 billion, an increase of $73.4 million or 6.3% compared with $1.16 billion for the same period in 2008, primarily due to an increase in money market accounts and time deposits, partially offset by a decrease in other borrowings. The weighted average rate paid on interest-bearing liabilities for the six months ended June 30, 2009 was 2.83%, down 85 basis points compared with 3.68% for the same period in 2008.

The net interest margin for the three months ended June 30, 2009 was 3.58%, a decrease of 42 basis points compared with 4.00% for the same period in 2008. The decrease was primarily the result of a decline in the yield on earning assets of 102 basis points, partially offset by a decrease in the cost of earning assets of 60 basis points. The net interest margin for the six months ended June 30, 2009 was 3.51%, down 53 basis points compared with 4.04% for the same period in 2008. For the six months ended June 30, 2009, the yield on average earning assets decreased 126 basis points, which was partially offset by a decrease in the cost of average earning assets of 73 basis points. The decrease in yield on earning assets and the cost of earning assets for the three and six months ended June 30, 2009 was due primarily to interest rate cuts and an increase in nonperforming assets.

Total Interest Income. Total interest income for the three months ended June 30, 2009 was $22.1 million, a decrease of approximately $2.5 million or 10.4% compared with $24.6 million for the same period in 2008. Total interest income for the six months ended June 30, 2009 was $43.8 million, a decrease of $5.9 million or 11.9% compared with $49.7 million for the same period in 2008. The decrease for the three and six months ended June 30, 2009 was primarily due to lower loan yields and an increase in nonperforming assets.

Interest Income from Loans. Interest income from loans for the three months ended June 30, 2009 was $20.7 million, a decrease of $2.3 million or 9.9% compared with $23.0 million for the same quarter in 2008. Average total loans for the three months ended June 30, 2009 were $1.32 billion compared to $1.29 billion for the same period in 2008, an increase of $27.6 million or 2.1%. For the second quarter of 2009, the average yield on loans was 6.31% compared to 7.17% for the same quarter in 2008, a decrease of 86 basis points. Interest income from loans for the six months ended June 30, 2009 was $41.1 million, a decrease of $5.3 million or 11.4% compared with $46.4 million for the same period in 2008. The decrease for the three and six months ended June 30, 2009 was the result of lower loan yields and an increase in nonperforming assets. Average total loans for the six months ended June 30, 2009 were $1.33 billion compared with average total loans for the same period in 2008 of $1.25 billion, an increase of $76.9 million or 6.1%. For the six months ended June 30, 2009, the yield on average total loans was 6.23%, down 122 basis points compared with 7.45% for the same period in 2008.

Approximately $891.1 million or 67.3% of the total loan portfolio are variable rate loans that periodically reprice and are sensitive to changes in market interest rates. To lessen interest rate sensitivity in the event of a falling interest rate environment, the Company originates variable rate loans with interest rate floors. At June 30, 2009, the average yield on total loans was approximately 306 basis points above the prime rate primarily because of interest rate floors. At June 30, 2009, approximately $725.5 million in loans or 54.8% of the total loan portfolio were variable rate loans with interest rate floors that carried a weighted average interest rate of 6.39%. At June 30, 2008, variable rate loans with interest rate floors carried a weighted average interest rate of 6.92% and comprised 49.3% of the total loan portfolio.

Interest Income from Investments. Interest income from investments (which includes investment securities, Federal funds sold, and other investments) for the three months ended June 30, 2009 was $1.3 million, a decrease of $274,000 or 17.3% compared to $1.6 million for the same period in 2008. Average total investments for the three months ended June 30, 2009 were $212.2 million compared to average total investments for the same period in 2008 of $163.7 million, an increase of $48.5 million or 29.6%. For the second quarter 2009, the average yield on total investments was 2.47% compared to 3.88% for the same quarter in 2008, a decrease of 141 basis points. Interest income from investments for the six months ended June 30, 2009 was $2.6 million, down $624,000 or 19.2% compared with $3.3 million for the same period in 2008. The decrease in interest income from investments for the three and six months ended June 30, 2009 was primarily the result of declining interest rates, in addition to the effect of paydowns, calls and maturities of securities. Average total investments for the six months ended June 30, 2009 were $190.6 million compared with average total investments for the same quarter in 2008 of $161.9 million, an increase of $28.7 million or 17.7%. The increase in average total investments for the three and six months ended June 30, 2009 was primarily the result of an increase in Federal funds sold, partially offset by a decrease in taxable securities. For the six months ended June 30, 2009, the average yield on investments was 2.78% compared with 4.04% for the same quarter in 2008, a decrease of 126 basis points.

Total Interest Expense. Total interest expense for the three months ended June 30, 2009 was $8.4 million, a decrease of $1.7 million or 17.2% compared to $10.1 million for the same period in 2008. Total interest expense for the six months ended June 30, 2009 was $17.3 million, down $3.9 million or 18.4% compared with $21.2 million for the same period in 2008. Interest expense decreased for both the three and six months ended June 30, 2009 primarily due to lower cost of funds and the effects of a decrease in other borrowings that was partially offset by an increase in interest-bearing deposits.

Interest Expense on Deposits. Interest expense on interest-bearing deposits for the three months ended June 30, 2009 was $7.6 million, a decrease of $1.1 million or 12.6% compared to $8.7 million for the same period in 2008. Average interest-bearing deposits for the three months ended June 30, 2009 were $1.18 billion compared to average interest-bearing deposits for the same period in 2008 of $1.00 billion, an increase of $177.5 million or 17.7%. The average interest rate paid on interest-bearing deposits for the second quarter of 2009 was 2.60% compared to 3.51% for the same quarter in 2008, a decrease of 91 basis points. The decline in interest expense and the average interest rate paid on interest-bearing deposits was primarily due to declining interest rates in the deposit market.

Interest expense on interest-bearing deposits for the six months ended June 30, 2009 was $15.7 million, down $2.7 million or 14.5% compared with $18.4 million for the same period in 2008. Average interest-bearing deposits for the six months ended June 30, 2009 were $1.15 billion compared with average interest-bearing deposits for the same period in 2008 of $991.4 million, an increase of $159.2 million or 16.1%. The average interest rate incurred on interest-bearing deposits for the six months ended June 30, 2009 was 2.76% compared with 3.73% for the same period in 2008, a decrease of 97 basis points. The decline in interest expense and the average interest rate paid on interest-bearing deposits was primarily due to declining interest rates in the deposit market.

Interest Expense on Junior Subordinated Debentures. Interest expense on junior subordinated debentures for the three months ended June 30, 2009 and 2008 was $520,000. Interest expense on junior subordinated debentures for the six months ended June 30, 2009 and 2008 was $1.0 million. Average junior subordinated debentures for the three and six months ended June 30, 2009 and 2008 were $36.1 million. The average interest rate incurred on junior subordinated debentures for the three and six months ended June 30, 2009 and 2008 was 5.76%. The junior subordinated debentures accrue interest at a fixed rate of 5.76% until December 15, 2010, at which time the debentures will accrue interest at a floating rate equal to the 3-month LIBOR plus 1.55%.

Interest Expense on Other Borrowings. Interest expense on other borrowings for the three months ended June 30, 2009 was $236,000, a decrease of $644,000 compared to $880,000 for the same period in 2008. Interest expense on other borrowed funds for the six months ended June 30, 2009 was $528,000, down $1.2 million compared with $1.8 million for the same period in 2008. Average borrowed funds, consisting primarily of security repurchase agreements and borrowings from the Federal Home Loan Bank ("FHLB"), for the three months ended June 30, 2009 was $28.3 million a decrease of $121.8 million compared to $150.1 million for the same period in 2008. Other borrowings decreased primarily due to liquidity provided by deposit growth and funds received from participation in the CPP. The average interest rate paid on borrowed funds for the second quarter of 2009 was 3.34% compared to 2.36% for the same quarter in 2008. The average interest rate increased as lower cost short-term FHLB borrowings were repaid and higher cost long-term borrowings remained outstanding. Average borrowed funds for the six months ended June 30, 2009 was $46.0 million, a decrease of $85.9 million compared to $131.9 million for the same period in 2008. Other borrowings decreased primarily due to liquidity provided by deposit growth and funds received from participation in the CPP. The average interest rate paid on borrowed funds for the six months ended June 30, 2009 was 2.32% compared to 2.70% for the same period in 2008.

The following table presents, for each major category of interest-earning assets and interest-bearing liabilities, the total dollar amount of interest income from average interest-earning assets and the resultant yields, as well as the interest expense on average interest-bearing liabilities, expressed both in dollars and rates for the periods indicated. No tax-equivalent adjustments were made and all average balances are daily average balances. Nonaccruing loans have been included in the table as loans having a zero yield, with income, if any, recognized at the end of the loan term.

                                                     For The Three Months Ended June 30,
                                             2009                                           2008
                            Average         Interest       Average         Average         Interest       Average
                          Outstanding       Earned/         Yield/       Outstanding       Earned/         Yield/
                            Balance           Paid         Rate(1)         Balance           Paid         Rate(1)
                                                           (Dollars in thousands)
Assets
Interest-earning
assets:
Loans                     $  1,319,125     $   20,747           6.31 %   $  1,291,494     $   23,020           7.17 %
Taxable securities             103,479            999           3.87          119,572          1,276           4.29
Tax-exempt securities            6,212             77           4.97            5,202             64           4.95
Other investments (2)           18,637            154           3.31            8,801             95           4.34
Federal funds sold and
other short-term
investments                     83,899             77           0.37           30,155            146           1.95
Total interest-earning
assets                       1,531,352         22,054           5.78        1,455,224         24,601           6.80
Allowance for loan
losses                         (24,952 )                                      (15,065 )
Total interest-earning
assets, net of
allowance for loan
losses                       1,506,400                                      1,440,159
Noninterest-earning
assets                         121,803                                        109,378
Total assets              $  1,628,203                                   $  1,549,537

Liabilities and
shareholders' equity
Interest-bearing
liabilities:
Interest-bearing demand
deposits                  $     54,316     $       69           0.51 %   $     58,892     $      114           0.78 %
Savings and money
market accounts                417,875          2,126           2.04          281,310          1,788           2.56
Time deposits                  707,147          5,439           3.09          661,655          6,830           4.15
Junior subordinated
debentures                      36,083            520           5.76           36,083            520           5.76
Other borrowings                28,343            236           3.34          150,136            880           2.36
Total interest-bearing
liabilities                  1,243,764          8,390           2.71        1,188,076         10,132           3.43
Noninterest-bearing
liabilities:
Noninterest-bearing
demand deposits                209,085                                        219,318
Other liabilities               12,138                                         19,935
Total liabilities            1,464,987                                      1,427,329
Shareholders' equity           163,216                                        122,208
Total liabilities and
shareholders' equity      $  1,628,203                                   $  1,549,537

Net interest income                        $   13,664                                     $   14,469
Net interest spread                                             3.07 %                                         3.37 %
Net interest margin                                             3.58 %                                         4.00 %

(2) Other investments include CDARS, Federal Reserve Bank stock, Federal Home Loan Bank stock and investment in subsidiary trust.

                                                      For The Six Months Ended June 30,
                                             2009                                           2008
                            Average         Interest       Average         Average         Interest       Average
                          Outstanding       Earned/         Yield/       Outstanding       Earned/         Yield/
                            Balance           Paid         Rate(1)         Balance           Paid         Rate(1)
                                                           (Dollars in thousands)
. . .