Loans, net of the allowance for loan losses, increased $7.5 million, or 1.4%, to $564.1 million at September 30, 2011, as compared to $556.6 million at June 30, 2011. Loan growth consisted primarily of commercial loans and commercial real estate loans, and was partially offset by decreases in construction and residential real estate loan balances.

       Non-performing loans were 0.11% of gross loans at September 30, 2011, as compared to 0.12% at June 30, 2011; non-performing assets were 0.28% of total assets at September 30, 2011, compared to 0.35% at June 30, 2011. Our allowance for loan losses at September 30, 2011, totaled $6.8 million, representing 1.18% of gross loans and 1,117% of non-performing loans, as compared to $6.4 million, or 1.14% of gross loans, and 919% of non-performing loans, at June 30, 2011.

       Available-for-sale investments increased $1.4 million, or 2.2%, to $64.7 million at September 30, 2011, as compared to $63.3 million at June 30, 2011. Increases in obligations of state and political subdivisions and obligations of U.S. government-sponsored enterprises were funded by principal repayments received on mortgage-backed securities and deposit growth.

       Total liabilities increased $17.1 million to $649.5 million at September 30, 2011, an increase of 2.7% as compared to $632.5 million at June 30, 2011. This growth was the result of an increase in deposits, partially offset by a decrease in other liabilities.

       Deposits increased $18.7 million, or 3.3%, to $578.8 million at September 30, 2011, as compared to $560.2 million at June 30, 2011. Deposit growth was comprised primarily of interest-bearing transaction accounts (including a significant new public unit relationship), savings accounts, non-interest bearing transaction accounts, and certificates of deposit. The average loan-to-deposit ratio for the first quarter of fiscal 2012 was 99.5%, as compared to 101.6% for the same period of the prior year.

       Federal Home Loan Bank (FHLB) advances were $33.5 million at September 30, 2011, unchanged from June 30, 2011. At both dates, FHLB borrowings included no short-term borrowings. Securities sold under agreements to repurchase totaled $25.4 million at September 30, 2011, as compared to $25.2 million at June 30, 2011. At both dates, the full balance of repurchase agreements was held by local small business and government counterparties.

       The Company's stockholders' equity increased $13.2 million, or 23.8%, to $69.0 million at September 30, 2011, from $55.7 million at June 30, 2011. The increase was due primarily to the additional capital invested in the Company's preferred stock issued under the SBLF program, net of the redemption of preferred stock issued under the TARP program, as well as retention of net income, and an increase in accumulated other comprehensive income, partially offset by cash dividends paid on common and preferred stock.

       Income Statement Summary:

       The Company's net interest income for the three-month period ended September 30, 2011, was $7.5 million, an increase of $3.0 million, or 65.6%, as compared to the same period of the prior fiscal year. For the three-month period, the increase reflected substantial improvement in the Company's net interest rate spread, attributable primarily to the December 2010 acquisition of most assets and substantially all of the liabilities of the former First Southern Bank, Batesville, Arkansas (the Acquisition). As a result of the Acquisition, we obtained assets marked at a discounted fair value, resulting in an effective yield on the acquired assets that is higher than the Company's legacy earning assets. For the three months ended September 30, 2011, our net interest rate spread was 4.20%, as compared to 3.19% for the same period of the prior fiscal year. It is anticipated that the magnitude of this improvement will diminish as the assets acquired at a discount mature or prepay. Additionally, our growth initiatives, including the Acquisition, resulted in a 27.9% increase in the average balance of interest-earning assets (and a 24.8% increase in interest-bearing liabilities) in the three months ended September 30, 2011, compared to the same period a year ago.

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       The provision for loan losses for the three-month period ended September 30, 2011, was $517,000, as compared to $643,000 in the same period of the prior fiscal year. The provision for the current three-month period represents an annualized charge of 0.37% of average loans outstanding, as compared to 0.59% for the same period of the prior fiscal year. The decrease in the three-month period ended September 30, 2011, as compared to the same period of the prior fiscal year was attributed to reduced provisioning needed during the period to bring reserves to an appropriate level based on our continued analysis of the loan portfolio, the result of slower loan growth and stable credit quality.

       The Company's noninterest income for the three-month period ended September 30, 2011, was $1.1 million, an increase of $297,000, or 36.2%, as compared to the same period of the prior fiscal year. The increase was attributed primarily to income recognized on settlement of a legal claim obtained as a result of the Acquisition, gains on secondary market loan sales, and income generated from bank card network transactions, partially offset by lower deposit service charges (the result of higher write offs of NSF charges).

       Noninterest expense for the three-month period ended September 30, 2011, was $3.8 million, an increase of 1.0 million, or 36.2%, as compared to the same period of the prior fiscal year. Higher expenses for compensation and benefits, occupancy, postage and office supplies, advertising, bank card network fees, amortization of intangible assets, and internet banking expenses were all attributable, at least in part, to the Acquisition. Additionally, higher expenses for sales and use tax, legal and professional fees, and losses due to fraud were partially offset by lower deposit insurance premiums and a net gain realized on the sale of foreclosed real estate. The lower deposit insurance premiums resulted from a change in the assessment base employed by the FDIC in the calculation of the premium, from deposits to total assets net of tangible equity. The efficiency ratio for the three-month period ended September 30, 2011, was 44.0%, as compared to 53.6% for the same period of the prior fiscal year. The improvement was due primarily to improvement in net interest income, which increased at a greater rate than noninterest expense.

       The income tax provision for the three-month period ended September 30, 2011, was $1.4 million, an increase of $832,000, as compared to the same period of the prior fiscal year. The effective tax rate for the three-month period ended September 30, 2011, was 33.6%, as compared to 32.0% for the same period of the prior fiscal year. The increases in both the amount of the provision and the effective tax rate were attributed primarily to higher pre-tax income.

       Forward Looking Information:

       Except for the historical information contained herein, the matters discussed in this press release may be deemed to be forward-looking statements that are subject to known and unknown risks, uncertainties, and other factors that could cause the actual results to differ materially from the forward-looking statements, including: the strength of the United States economy in general and the strength of the local economies in which we conduct operations; fluctuations in interest rates and in real estate values; monetary and fiscal policies of the Board of Governors of the Federal Reserve System and the U.S. Government and other governmental initiatives affecting the financial services industry; the risks of lending and investing activities, including changes in the level and direction of loan delinquencies and write-offs and changes in estimates of the adequacy of the allowance for loan losses; our ability to access cost-effective funding; the timely development of and acceptance of our new products and services and the perceived overall value of these products and services by users, including the features, pricing and quality compared to competitors' products and services; expected cost savings, synergies and other benefits from the Company's merger and acquisition activities might not be realized within the anticipated time frames or at all, and costs or difficulties relating to integration matters, including but not limited to customer and employee retention, might be greater than expected; fluctuations in real estate values and both residential and commercial real estate market conditions; demand for loans and deposits in our market area; legislative or regulatory changes that adversely affect our business; results of examinations of us by our regulators, including the possibility that our regulators may, among other things, require us to increase our reserve for loan losses or to write-down assets; the impact of technological changes; and our success at managing the risks involved in the foregoing. Any forward-looking statements are based upon management's beliefs and assumptions at the time they are made. We undertake no obligation to publicly update or revise any forward-looking statements or to update the reasons why actual results could differ from those contained in such statements, whether as a result of new information, future events or otherwise. In light of these risks, uncertainties and assumptions, the forward-looking statements discussed might not occur, and you should not put undue reliance on any forward-looking statements.

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