FIRST BANCORP /NC/ (Form: 10-K, Received: 03/16/2010 16:34:24)

Exhibit 10.v

FIRST BANCORP

EMPLOYEES’ PENSION PLAN

Amended and Restated:

Effective

January 1, 2001

TABLE OF CONTENTS

Article		Page

1	DEFINITIONS	2

2	ELIGIBILITY	14

3	EARLY RETIREMENT	16

4	NORMAL RETIREMENT	17

5	DELAYED RETIREMENT	27

6	DISABILITY RETIREMENT	28

7	SURVIVOR BENEFITS	31

8	TERMINATION OF EMPLOYMENT-VESTING	38

9	PAYMENT OF RETIREMENT BENEFITS	40

10	RE-EMPLOYMENT / RESTORATION OF SERVICE AND ACCRUED BENEFITS	45

11	TOP HEAVY RULES	49

12	RETIREMENT COMMITTEE	54

13	CLAIM PROCEDURE	56

14	CONTRIBUTIONS AND FUNDING	58

15	ADMINISTRATIVE AND FIDUCIARIES’ RESPONSIBILITIES	59

16	INCOME TAX REGULATIONS 1.401-4(C)(2)	62

17	SPENDTHRIFT	65

18	THE INSURER	66

19	AMENDMENT AND TERMINATION	67

20	MISCELLANEOUS PROVISIONS	72

21	DIRECT ROLLOVERS	74

APPENDIX A	COVERED COMPENSATION 35 YEAR AVERAGE TABLE (2001)	76

APPENDIX B	SOCIAL SECURITY INTEGRATION LIMIT ON EARLY OR DEFERRED COMMENCEMENT OF BENEFITS	77

FIRST BANCORP

EMPLOYEES’ PENSION PLAN

EFFECTIVE the 1 st day of January, 1993, the Employer established the First Bancorp Employees’ Pension Plan.

WHEREAS, Employees and Participants who have retired or terminated employment from the Employer prior to this restated Plan shall have all rights and benefits to which they are entitled determined under the terms of the Plan as it existed at the time such Employees or Participants retired or terminated employment, unless expressly stated otherwise herein.

WHEREAS, effective January 1, 2001, the Plan is amended in its entirety and restated.

WHEREAS, the Plan must comply with all qualification and operational provisions required by the Uruguay Round Agreements Act ("GATT"), the Uniformed Services Employment and Re-employment Rights Act of 1994 ("USERRA"), the Small Business Job Protection Act of 1996 ("SBJPA") and Tax Reform Act of 1997 ("TRA'97") (with all such legislation referred to collectively as "GUST") and any regulations, interpretations, rulings or procedures promulgated in relation to GUST;

WHEREAS, it is the intention of the Employer and the Trustees to operate this Pension Plan in accordance with the provisions of the Internal Revenue Code as amended by the Employee Retirement Income Security Act of 1974 (ERISA), as interpreted by regulations prescribed by the Department of the Treasury and the Secretary of Labor; and

WHEREAS, this Plan embodied herein has been duly approved and authorized by the Board of Directors of said Company.

NOW, THEREFORE, THIS AGREEMENT,

CREATION AND NAME

This Pension Plan is amended and restated effective January 1, 2001. The name of the Plan shall be designated as First Bancorp Employees’ Pension Plan, hereafter referred to as "Plan"(#002).

ARTICLE 1

DEFINITIONS

The following terms shall have the meaning indicated when capitalized throughout this document, unless the context clearly indicates otherwise.

1.1

Accrued Benefit shall mean a Participant's benefit on any given date and will be the benefit to which he will be entitled at his Normal Retirement Date. The Accrued Benefit is the Participant's Accrued Benefit at Normal Retirement Date, calculated under Section 4.2 herein, using actual Years of Benefit Service and Final Average Compensation as of the accrual date. In no event shall the Accrued Benefit as of any accrual date subsequent to this amendment be less than the Accrued Benefit as of the adoption date of this amendment.

1.2	Actuarial (or Actuarially) Equivalent shall mean a benefit of equivalent value to the Normal Annuity Form determined by generally accepted actuarial principles.

(a)

For Benefits Not Paid As A Lump Sum - All alternate forms of distribution shall be Actuarially Equivalent to the Normal Annuity Form of distribution at the Normal Retirement Date. The conversion to an alternate form shall be based upon the 1983 Group Annuity Male Mortality Table and an interest rate of 8%. In no event shall the Actuarial Equivalent of a benefit to which Section 1.2(a) or (d) is applicable be less than the Actuarial Equivalent based on factors in effect immediately prior to the adoption of any amendment changing such factors, as applied to the Accrued Benefit determined immediately prior to the later of the adoption of or effective date of such amendment.

(b)

For Benefits Paid As A Lump Sum . The determination of lump sum values shall be based upon (i) “the applicable interest rate” (under Code Section 417(e)(3)(A)(ii)(II)) which shall be the annual rate of interest on 30-year Treasury securities for the month one month prior to the beginning of the Plan Year during which such distribution is made, and (ii) the "applicable mortality table" under Rev. Rul. 95-6.

(c)

For Determination of Top Heavy Status - Pursuant to Section 11.3, "Present Value" shall be determined on the basis of a (5%) interest rate assumption and the 1983 Group Annuity Mortality Table.

(d)

For Determination of the Actuarial Reduction of Monthly Benefits For Commencement Prior To Age 55 - (and for determining reductions in the Excess Percentage referred to in Section 4.2) a five percent (5%) interest rate and the 1983 Group Annuity Mortality Table for males shall be used. These factors shall be applied only after the Accrued Benefit has been reduced to age 55 by the other applicable reduction factors under Section 3.1, and such reduction shall apply only to the time period prior to age 55.

1.3	Adjustment Factor shall mean the cost of living adjustment factor prescribed by the Secretary of the Treasury under Code Section 415(d) for years beginning after December 31, 1987, applied to such items and in such manner as the Secretary shall prescribe.

1.4

Affiliated Employer shall mean the Employer and any corporation which is a member of a controlled group of corporations (as defined in Code Section 414(b)) which includes the Employer; any trade or business (whether or not incorporated) which is under common control (as defined in Code Section 414(c)) with the Employer; any organization (whether or not incorporated) which is a member of an affiliated service group (as defined in Code Section 414(m)) which includes the Employer; and any other entity required to be aggregated with the Employer pursuant to regulations under Code Section 414(o).

For purposes of this Section 1.4, the term "controlled group" means any two or more corporations, trades or businesses under common control of which the Employer is a member, or two or more "affiliated organizations" under Code Section 414(m). The term "two or more corporations, trades or businesses under common control" will include any group of corporations, trades or businesses which is either:

(a)

a parent-subsidiary group, or

(b)

a brother-sister group, or

(c)

a combined group

within the meaning under Code Sections 414(b), 414(c), and 414(m) and their regulations.

All Employees of a controlled group will be treated as employed by a single Employer for purposes of applying the provisions of qualification of this Plan; of minimum participation standards of this Plan; of minimum vesting standards of this Plan; and of limitation of benefits and contributions under this Plan.

Refer to Section 1.17 for a list of Affiliated Employers.

1.5	Annuity Starting Date shall mean the first day of the first period for which a benefit under this Plan is payable in the form of an annuity. In the case of a benefit not payable in the form of an annuity, the first day on which all events have occurred which entitle the Participant to such benefit.

The Annuity Starting Date for disability benefits shall be the date such benefits commence if the disability benefit is not an auxiliary benefit. An auxiliary benefit is a disability benefit which does not reduce the benefit payable at Normal Retirement Age.

1.6	Beneficiary shall mean any person or legal entity designated by a Participant pursuant to Section 7.7 herein to receive benefits under this Plan.

1.7	Board shall mean the Board of Directors of the Employer.

1.8	Break-In-Service shall mean the failure of a Participant to complete more than five hundred (500) Hours of Service during a twelve (12) consecutive month Plan Year period.

1.9	Code shall mean the Internal Revenue Code of 1986 and amendments thereto.

1.10	Committee shall mean the Pension Retirement Committee as established under Article 12 of the Plan (also known as the Pension Committee or the Retirement Committee).

1.11

Compensation - An Employee's Compensation for any Plan Year shall be total annual compensation actually paid to the Employee by the Employer for the Plan Year concerned, including any amount of earnings deferred under any other qualified Employer sponsored plan under Code Sections 125, 401(k), 403(b), 408(k) for Plan Years beginning after January 1, 2001, Code Section 132(f), or any other qualified cash or deferred arrangement, but excluding any reimbursements for the use of an automobile, any reimbursements due to travel or moving expenses, travel or entertainment and the taxable value of any Employer paid group term life insurance, or other taxable fringe benefit provided by the Employer.

Notwithstanding the foregoing, Compensation shall include all of the following types of elective contributions and all of the following types of deferred compensation:

(a)

elective contributions that are made by the Employer on behalf of a Participant that are not includible income under Code Sections 125, 402(e)(3), 402(h)(1)(B), 403(b), and for Plan Years beginning on or after January 1, 2001, 132(f)(4);

(b)

Compensation deferred under an eligible deferred compensation plan within the meaning of Code Section 457(b); and

(c)

Employee contributions (under governmental plans) described in Code Section 414(h)(2) that are picked up by the employing unit and thus are treated as Employer contributions.

For Plan Years beginning on or after January 1, 1989, and before January 1, 1994, the annual Compensation of each Participant taken into account for determining all benefits provided under the Plan for any Plan Year shall not exceed $200,000. This limitation shall be adjusted by the Secretary of Treasury at the same time and in the same manner as under Code Section 415(d), except that the dollar increase in effect on January 1 of any calendar year is effective for Plan Years beginning in such calendar year and the first adjustment to the $200,000 limitation is effective on January 1, 1990. For Plan Years beginning on or after January 1, 1994, Compensation in excess of $150,000 (or such other amount provided in the Code) shall be disregarded for all purposes other than for purposes of salary deferral elections. Such amount shall be adjusted by the Commissioner for increases in the cost-of-living in accordance with Code Section 401(a)(17)(B). The cost-of-living adjustment in effect for a calendar year applies to any determination period beginning in such calendar year. If a determination period consists of fewer than twelve (12) months, the $150,000 annual Compensation limit will be multiplied by a fraction, the numerator of which is the number of months in the determination period, and the denominator of which is twelve (12).

If Compensation for any prior determination period is taken into account in determining a Participant's’ allocations for the current Plan Year, the Compensation for such prior

determination period is subject to the applicable annual Compensation limit in effect for that prior period. For this purpose, in determining allocations in Plan Years beginning on or after January 1, 1989, the annual Compensation limit in effect for determination periods beginning before that date is $200,000. In addition, in determining allocations in Plan Years beginning on or after January 1, 1994, the annual Compensation limit in effect for determination periods beginning before that date is $150,000.

For Plan Years beginning on or after January 1, 1985 and prior to January 1, 1997, Compensation shall be subject to the family aggregation rules of Code Section 401(a)(17), and the regulations promulgated thereunder, in effect during these same Plan Years. Effective January 1, 1997, the family aggregation provision as described in Code Section 401(a)(17)(A) that requires a Plan Participant, the spouse of such Participant, and any lineal descendants who have not attained age 19 before the close of the Plan Year, to be treated as a single Participant for purposes of applying the limitation on Compensation for a Plan Year is hereby deleted and shall no longer apply.

For any self-employed individual covered under the Plan, Compensation will mean Earned Income. "Earned Income" means the net earnings from self-employment in the trade or business with respect to which the plan is established, for which personal services of the individual are a material income-producing factor. Net earnings will be determined without regard to items not included in gross income and the deductions allocable to such items. Net earnings are reduced by contributions by the Employer to a qualified plan to the extent deductible under Code Section 404.

Net Earnings shall be determined with regard to the deduction allowed to the taxpayer by Code Section 164(f) for taxable years beginning after December 31, 1989.

Military Service . Effective December 12, 1994, for the Participant who resumes Employment after a period of absence due to qualified military service (as defined in Code Section 414(u)), the Plan will impute Compensation in the amount he would have received if he had remained in active Employment, based on his rate of pay in effect when he began his absence and taking into account any promotion he would have received, or if that pay rate cannot be determined with certainty, the Plan will treat him as having Compensation equal to the amount he received during the 12-month period preceding his absence, or during the entire period of his Employment if shorter than 12 months.

1.12	Computation Periods :

(a)

Eligibility Computation Period - For purposes of determining Years of Service and Breaks in Service for purposes of eligibility, the initial Eligibility Computation Period is the 12-consecutive month period beginning on the date the Employee first performs an Hour of Service for the Employer. The succeeding 12-consecutive month period commences with the first Plan Year which commences prior to the first anniversary of the Employee's initial Eligibility Computation Period regardless of whether the Employee is entitled to be credited with 1,000 Hours of Service during the initial Eligibility Computation Period. An Employee who is credited with 1,000 Hours of Service in both the initial Eligibility Computation Period and

such first Plan Year as referenced above will be credited with two Years of Service for purposes of eligibility to participate.

(b)

Vesting Computation Period - The 12 consecutive month period beginning with the first day of the Plan Year and ending with the last day of the Plan Year in which an Employee is credited with 1,000 or more Hours of Service. Thus, if an Employee is not credited with at least 1,000 Hours of Service during a Plan Year, he is not given credit for a Year of Vesting Service.

(c)

Accrual of Benefit Computation Period - The 12 consecutive month period beginning with the first day of the Plan Year and ending with the last day of the Plan Year during which an Employee is credited with at least 1,000 or more Hours of Service. Thus, if an Employee is not credited with at least 1,000 Hours of Service during a Plan Year, he is not given credit for a year of benefit accrual for that Plan Year.

1.13

Covered Compensation shall mean the average (without indexing) of the taxable wage bases in effect for each calendar year during the 35 year period ending with the last day of the calendar year in which the Participant attains (or will attain) his Social Security Retirement Age. The Covered Compensation Table to be used under this Plan is the table rounded to the next lower multiple of $12.00. As this Covered Compensation Table is updated each year for increases in the Social Security taxable wage base, the updated Table will be deemed a part of this Plan, and will be effective for the Plan Year beginning in such calendar year (See Appendix A for the 2001 35-Year Average Table). In the event of termination of employment of a Participant, the Covered Compensation Table used in determining such Participant's Accrued Benefit shall be the Table in effect for the Plan Year in which the termination of employment occurs.

If the definition of Covered Compensation shall be changed by a subsequent statute or regulation, this Section 1.13 shall be deemed to reflect any such change.

1.14

Dates :

(a)

The original Effective Date of the Plan was January 1, 1993. The Effective Date of this Amendment and Restatement is January 1, 2001.

(b)

Anniversary Date is January 1, 2001, and thereafter the Anniversary Date shall be the first day of each Plan Year.

(c)

Plan Year : The Plan Year shall begin each January 1 and end the following December 31.

(d)

Entry Date shall mean the first day of the Plan Year (January 1) and the first day of the seventh month of the Plan Year (July 1).

(e)

Valuation Date is each January 1. A Valuation Date is the annual date on which plan assets and liabilities are valued.

For purposes of the Top Heavy Test under Article 11, the Valuation Date is the same date as specified hereunder for computing plan costs for minimum funding under Code Section 412.

1.15

Eligible Spouse shall mean one to whom a Participant is married throughout the one year period ending on the earlier of the Participant's Annuity Starting Date or the Participant's date of death, provided that a former spouse will be treated as the Eligible Spouse to the extent provided under a Qualified Domestic Relations Order as described in section 414(p) of the Code.

1.16	Employee shall mean any employee of the Employer maintaining the Plan or of any other employer required to be aggregated with such Employer under Code sections 414(b), (c), (m) or (o).

A Leased Employee will be considered for purposes of testing under Code Section 410(b) unless the requirements of Code Section 414(n)(5) are satisfied.

1.17

Employer or Company shall mean First Bancorp (EIN#56-1421916) or any other organization which has adopted the Plan with the consent of such establishing employer; and any successor of such employer. The term Employer shall also apply to any subsidiary or affiliated corporations who adopt the Plan and who, at the time such reference applies, are included in the list of Affiliated Employers set forth below. For the purpose of this Plan, First Bancorp, shall deal exclusively with the Funding Agent and shall be deemed the representative of each Employer, and any action taken by First Bancorp, shall be binding on all Employers.

List of Affiliated Employers	EIN#	Date of Plan Adoption

First Bank	56-0132230	1-1-93
First Bancorp Financial Services	56-1597887	1-1-93
First Montgomery Financial
Services Corporation	54-2061020	1-1-93
First Bank Insurance Services, Inc.	56-1659931	1-1-93
First Troy Realty Corporation	56-2140094	1-1-93

An Employer may be removed from the above list as of the date on which it ceases to be subsidiary to, affiliated with, or allied with First Bancorp, or such Employer loses its status as a legal entity by means of dissolution, merger, consolidation, bankruptcy, or otherwise. An Employer shall also be removed from the list of Employers upon the termination of the Plan for that Employer.

If the adopting Employer is an unrelated entity and has adopted this Plan with the explicit permission of the Employer, the term Employer shall be deemed to apply to each Employer independently. The requirement that any unrelated entity deal exclusively with the Funding Agent is for administrative convenience only. In no event shall this Plan be interpreted to be a multi-employer plan as defined in Code Section 413(3).

1.18

Fund, Trust, or Trust Fund shall be synonymous and shall mean the total of the contributions made by the Employer pursuant to the Plan and held by the Trustee in a Trust or any Group Annuity Contract created by the Employer under the Plan, increased by profits or income thereon and decreased by any benefit payments, or any loss or expense incurred in the administration of the Trust or Plan or payments therefrom.

1.19	Gender and Number - The masculine pronoun shall include the feminine and the singular shall include the plural.

1.20	Hour of Service shall mean each hour for which an Employee is either directly or indirectly paid, or entitled to payment by the Employer for the performance of duties during the applicable computation period.

(a)

Crediting Hours - Hours shall be credited to an Employee for the Computation Period or periods in which the duties were performed. Each hour for which any back pay, irrespective of mitigation of damages, has been either awarded or agreed to by the Employer, shall be credited to the Employee for the Computation Period or periods to which the award or agreement pertains (and not the Computation Period in which the award, agreement or payment is made). Salaried and commissioned Employees employed by the Employer whose compensation is not determined on the basis of hours worked and whose hours are not required to be recorded by any other Federal law shall be credited with forty-five (45) Hours of Service per week during which the Employee is performing services on behalf of the Employer (and actually performs at least one Hour of Service); provided, however, that this alternative method for salaried and commissioned Employees may only be used if it results in crediting an Employee to whom it is applied with at least one thousand (1,000) Hours of Service for the respective computation period.

An Hour of Service shall be credited for each hour for which an Employee is paid or entitled to payment by the Employer or Affiliated Employer on account of a period of time during which no duties were performed (regardless of whether his employment relationship has been terminated) due to vacations, holidays, illness, incapacity, including disability, layoff, jury duty, military duty, or leave of absence.

(b)

Leave of Absence Without Pay - A Leave of Absence not in excess of one (1) year granted as such by the Employer for reasons of illness, injury, pregnancy, reduction of work force, educational purposes or for periods of military service during which the Participant's re-employment rights are protected by law shall not be considered a termination of employment provided that the Participant shall return to the service of the Employer within ninety (90) days after such Leave of Absence. If the Participant shall not so return, he shall be deemed to have terminated employment at the time the absence commenced. No credit for Hours of Service shall be given for Leave of Absence without pay. An Hour of Service required by Federal law to be credited to an Employee (such as for military duty) shall be credited as an Hour of Service under this Plan.

This definition of Hour of Service shall be construed so as to resolve any ambiguities in favor of crediting Employees with Hours of Service.

(c)

Department of Labor Regulations 2530-200b-2(b) and (c) are herein incorporated by reference.

(d)

Solely for purposes of determining whether a Break in Service (as defined in Section 1.8 for participation and vesting purposes), has occurred in a Computation Period, an individual who is absent from work for maternity or paternity reasons shall receive credit for the Hours of Service which would otherwise have been credited to such individual but for such absence. For this purpose, eight (8) Hours of Service per day of such absence shall be credited, subject to a maximum of 501 Hours of Service for maternity or paternity Leave of Absence. For purposes of this paragraph, such an absence means an absence (1) by reason of the pregnancy of the individual, (2) by reason of a birth of a child of the individual, (3) by reason of the placement of a child with the individual in connection with the adoption of such child by such individual, or (4) for purposes of caring for such child for a period beginning immediately following such birth or placement. The Hours of Service credited under this paragraph shall be credited (1) in the Computation Period in which the absence begins if the crediting is necessary to prevent a Break in Service in that period, or (2) in all other cases, in the following Computation Period.

1.21	Insurer - Any insurance company licensed to do business in any state where this Plan is located.

1.22

Leased Employee effective for Plan Years beginning after December 31, 1996, means any person (other than an Employee of the recipient) who pursuant to an agreement between the recipient and any other person ("leasing organization") has performed services for the recipient (or for the recipient and related persons determined in accordance with Code Section 414(n)(6)) on a substantially full time basis for a period of at least one year, and such services are performed under the primary direction or control of recipient. Contributions or benefits provided to a Leased Employee by the leasing organization which are attributable to services performed for the recipient employer shall be treated as provided by the recipient employer. A Leased Employee shall not be considered an Employee of the recipient:

(a)

if such employee is covered by a money purchase pension plan providing:

(1)

a non-integrated contribution rate of at least 10% of compensation, as defined in Code Section 415 (c)(3), but including amounts which are contributed by the Employer pursuant to a salary reduction agreement and which are not includible in the gross income of the Participant under Code Sections 125, 402(e)(3), 402(h)(1)(B), 403(b), 457(b) or, for Limitation Years beginning on or after Janaury 1, 2001, Code Section 132(f), and Employee contributions described in Code Section 414(h)(2) that are treated as Employer contributions.

(2)

immediate participation; and

(3)

full and immediate vesting; and

(b)

if Leased Employees do not constitute more than 20% of the recipient's non-highly compensated work force.

1.23

Limitation Year shall mean the 12 month period beginning January 1 and ending the following December 31. Execution of this Plan (or any amendment to this Plan changing the Limitation Year) constitutes adoption of a written resolution by the Employer electing a Limitation Year pursuant to governmental regulations.

1.24

Normal Annuity Form - The Normal Annuity Form for an unmarried Participant shall be a life annuity which provides monthly payments to the Participant, the first payment becoming due on the first day of the month coinciding with or next following such Participant's retirement date, if he is then living, and subsequent payments of an equal amount monthly thereafter during the lifetime of such Participant, terminating with the last payment due preceding the death of such Participant.

Notwithstanding the preceding paragraph, in the absence of any other election with spousal consent, the form of payment for a married Participant who has been married to his spouse for the full twelve month period preceding his annuity starting date (or for less than twelve months provided they remain married for at least one year), shall be the Actuarial Equivalent of the Normal Annuity Form payable as a Qualified Joint and Survivor Annuity.

1.25	Normal Retirement Age shall be age sixty-five (65).

1.26	Normal Retirement Date for a Participant shall be the first day of the month coinciding with or next following the Participant's sixty-fifth (65th) birthday.

1.27

Participant shall mean any Employee of the Employer who has met the eligibility and participation requirements of the Plan pursuant to Article 2 herein. The term Participant shall also mean a former Employee who retired or terminated with vested benefits, or such other former Employee whose service cannot be disregarded under the Break in Service rules; provided such former Employee shall participate on his rehire date. In the event a former Participant, who is eligible for re-entry into the Plan , has received a lump sum distribution of his vested balance, which is less than the present value of his Accrued Benefit, and repays such amount upon re-employment, his Accrued Benefit shall be restored.

1.28	Plan shall mean the First Bancorp Employees’ Pension Plan as embodied in this instrument, any and all supporting documents, and all subsequent amendments and supplements thereto.

1.29	Plan Administrator shall mean the Employer, unless otherwise designated by the Board.

1.30

Qualified Joint & Survivor Annuity shall be the Actuarial Equivalent of the Normal Annuity Form, and shall provide an immediate annuity for the life of the Participant with a survivor annuity for the life of the Eligible Spouse which is 50% of the amount of the annuity payable during the joint lives of the Participant and the Eligible Spouse. For purposes of Section 4.3(a) regarding the maximum benefit limitations, Joint and Survivor annuities with 50% to 100% continuation to the Eligible Spouse will be considered a "Qualified Joint and Survivor Annuity."

1.31	Qualifying Year of Service shall mean an Eligibility Computation Period as defined in Section 1.12(a) during which an Employee completes at least 1,000 Hours of Service and (subject to Section 10.1), shall commence on such Employee's latest employment commencement date.

Military Leave . Effective December 12, 1994, credit toward the Qualifying Year of Service eligibility requirement will be granted for the period during which an Employee is absent from work by reason of his military duty with the Uniformed Services of the United States of America; provided that he retains statutory re-employment rights and resumes Employment within 90 days after his honorable discharge from active military duty, or during any other period prescribed by law.

1.32	Service . The specific categories of Service herein shall include, where applicable, all service required under Code Section 414(a), with the predecessor employer who maintained this Plan.

(a)

Years of Service

(1)

Years of Service prior to January 1, 1993 , shall mean all of an Employee's full years and completed months of continuous employment, provided he was employed by the Employer on January 1, 1993.

(2)

Years of Service on or after January 1, 1993, shall mean all Plan Years during which an Employee completed 1,000 or more Hours of Service with the Employer or any Affiliated Employer, provided that the following special provisions shall apply:

With respect to an Employee who shall have a Break in Service after and before he shall have any Vested Interest in his Accrued Benefit under the Plan, all such Years of Service prior to such break shall be disregarded if the number of consecutive 1-Year Breaks in Service equals or exceeds the greater of (a) five (5) consecutive 1-Year Breaks in Service, or (b) the aggregate number of Years of Service earned prior to the Break(s) in Service.

(b)

Years of Benefit Service shall mean all of a Participant's Years of Service as an Employee, provided, that notwithstanding the provisions of this Section 1.32, if a Participant retires or has a Break-in-Service and shall have received all of his vested Accrued Benefit under the Plan, or the Actuarial Equivalent thereof, and shall subsequently re-enter service, service prior to such retirement or Break-in-Service shall be disregarded for the purpose of determining Years of Benefit Service, subject to the requirements of Article 10 being met (regarding reinstatement of Accrued Benefits).

Employees hired as a result of the November 14, 1997 First Union Bank transaction shall receive credit for Years of Benefit Service retroactive to their original hire date with First Union Bank.

Years of Benefit Service for any Participant under this Plan are subject to the special provisions found in Section 2.2, if applicable.

Military Service . Effective December 12, 1994, each Participant will receive credit for Years of Benefit Service as if his active employment had continued during the period of his military service with the Uniformed Services of the United States of America; provided that he retains statutory re-employment rights and resumes employment within 90 days after his honorable discharge from military duty, or during any other period prescribed by law.

(c)

Years of Plan Participation - shall mean all of an Employee's Years of Service while a Participant in this Plan. If a Participant's Accrued Benefit is determined on the basis of Years of Plan Participation, and if a Participant commences participation in the Plan on a date other than the first day of a Plan Year, then all Hours of Service credited to the Employee during the entire Plan Year, including Hours of Service credited to the Employee for the portion of the Plan Year before the date on which the Employee commences participation, shall be taken into account in determining whether the Employee has 1,000 or more Hours of Service, and therefore one Year of Plan Participation.

(d)

Years of Vesting Service - For purposes of vesting, a "Year of Vesting Service" is as defined in Section 1.32(a) above. Service of any Employee who is a leased employee to any employer aggregated under Code Section 414 (b), (c) or (m) must be credited for vesting purposes whether or not such individual is eligible to participate in the Plan. All service (subject to Section 10.2) of an Employee with the Employer must be taken into consideration for purposes of determining such Employee's vesting percentage, excluding the following service:

For Service on or after January 1, 1983, a 1-year Break in Service if the Participant was not vested and the number of consecutive 1-year Breaks in Service equals or exceeds the greater of (a) five (5) consecutive 1-year Breaks in Service, or (b) the aggregate number of Years of Service preceding the break.

For purposes of the Vesting Percentage, if one Year of Service is required for eligibility, and if

(i)

an Employee’s Year of Service overlaps two vesting computation periods, and

(ii)

the Employee completed 1,000 Hours of Service in the twelve (12) consecutive months beginning on his employment (or re-employment) commencement date but fails to complete 1,000 Hours or more of Service in either of the overlapping vesting computation periods, and

(iii)

the Employee becomes a Participant, then the Employee's Year of Service shall also be considered a Year of Vesting Service at the time the Employee becomes a Participant.

(3)

Military Service . Effective December 12, 1994, each Participant will receive credit for Vesting Service as if his active Employment had continued during the period of his military service with the Uniformed Services of the United States of America; provided that he retains statutory re-employment rights and resumes

Employment within 90 days after his honorable discharge from military duty, or during any other period prescribed by law.

Employees hired as a result of the November 17, 2000 First Savings Bank acquisition will receive prior service credit under this Plan for vesting purposes.

(e)

Notwithstanding the preceding provisions of this Section 1.32, the Years of Service of any Employee who terminates employment and is reemployed by the Employer shall be determined in conjunction with Article 10 herein.

1.33

Social Security Retirement Age shall mean the age used as the retirement age for the Participant under Section 216(l) of the Social Security Act, but without regard to the age increase factor, and shall mean the age at which the participant is entitled to receive unreduced Social Security Benefits, and as if the early retirement age under Section 216(l)(2) of such Act were age 62.

For purposes of determining the applicable excess percentage under Section 4.2 and for determining maximum benefits under Section 4.3, the Social Security Retirement Age for a given year of birth shall be:

Year of Birth		Social Security Retirement Age

1937 or earlier		65 years
1938 - 1954		66 years
1955 and after		67 years

Should the Social Security Act be amended or should regulations be published to provide for Social Security Retirement Ages other than those shown in the table herein, Social Security Retirement Age shall be construed to have the new definition when effective.

1.34	Trustee shall mean the person, corporation, association, or combination of them, who shall accept the appointment to execute the duties of the Trustee as specifically set forth in any Trust Agreement entered into pursuant to the Plan.

1.35	Vested Interest shall mean a nonforfeitable right to all or a portion of the Accrued Benefit derived from Employer contributions made to the Plan.

ARTICLE 2

ELIGIBILITY

2.1	Requirements for Participation

An Employee who was a Participant in the Plan as it existed on December 31, 2000, or on the adoption date of this Plan if later, shall continue to participate in this Amended and Restated Plan. An Employee who as of January 1, 2001, or the adoption date of this Plan if later, was not yet a Participant shall become a Participant on January 1, 2001, or any subsequent Plan Entry Date coincident with or next following the later of the completion of a Qualifying Year of Service or the attainment of age twenty-one (21).

Notwithstanding the above, the following classes of Employees shall not be eligible to participate in the Plan:

(a)

Leased Employees, and

(b)

any Employee of the Employer who is included in a unit of employees covered by an agreement which the Secretary of Labor finds to be a collective bargaining agreement between employee representatives and the Employer, if there is evidence that retirement benefits were the subject of good faith bargaining between such employee representatives and the Employer, and

(c)

independent contractors, the terms of whose bona fide employment contract does not specifically provide for inclusion in this Plan.

2.2	Transferred Participants

(a)

A Participant who is transferred to any Affiliated Employer which is not an Employer as defined in Section 1.17 or to a class of employees not covered by this Plan shall be considered a Transferred Participant. The Accrued Benefit of such Transferred Participant shall be determined as of the date of transfer and shall be held under the Plan until such time as the Transferred Participant becomes eligible to receive it. If such Transferred Participant is not fully vested in his Accrued Benefit as of the date of transfer, such service after the date of transfer shall be used in determining Years of Vesting Service. In no event, however, shall service with the Affiliated Employer or in a class of employees not covered by this Plan be used to accrue further benefits under this Plan.

(b)

A Participant whose employment changes to a class of employment which is not covered by this Plan shall be considered a Transferred Participant and shall be treated as described in Section 2.2(a) above.

(c)

An Employee, previously excluded from the Plan because he was a member of a class of Employees excluded from the Plan, shall enter (or re-enter, as the case may be) the Plan in the Plan Year during which he becomes a member of the class of

Employees covered by this Plan. Any such Employee shall accrue benefits under this Plan only with respect to those Years of Service performed while a member of the covered class of Employees.

If an Employee transfers from employment not covered under this Plan, and if such transfer occurs at any time during a Plan Year, all Hours of Service earned during such Plan Year, regardless of whether or not they were worked under excluded employment, shall be considered in determining Years of Benefit Service for such year.

ARTICLE 3

EARLY RETIREMENT

3.1

Early Retirement Benefit - If a Participant terminates employment after his 55th birthday but prior to his Normal Retirement Date, he shall be eligible for Early Retirement, provided the Participant shall have completed fifteen (15) Years of Vesting Service in the employ of the Employer. Monthly benefit payments shall start, at the election of the Participant, on the Early Retirement Date (defined below) or Normal Retirement Date or on the first day of any intervening month, and the amount of such benefit shall be determined as follows:

(a)

If the payment of benefits commences at his Normal Retirement Date, the amount of the benefit shall be the Participant's Accrued Benefit as of his Early Retirement Date.

(b)

If the payment of benefits commences prior to his Normal Retirement Date, the amount of the benefit shall be the Participant's Accrued Benefit as of his Early Retirement Date, reduced as follows:

The Accrued Benefit shall be reduced by one-one hundred eightieth (1/180) for each of the first sixty (60) months, and one-three hundred sixtieth (1/360) for each of the next sixty (60) months, by which payments commence prior to his Normal Retirement Date.

(c)

After applying the reductions referred to in (b) immediately above, the net Excess Percentage applicable to each year's accrual as referred to in Section 4.2(a)(2) shall be tested to ensure that it does not exceed the applicable maximum Excess Percentage as found in Appendix B . To the extent necessary, the Excess Percentage only shall be reduced to comply with the table in Appendix B .

3.2	The Early Retirement Date of a Participant who ceases to be an Employee shall be the first day of the month coinciding with or next following the date such Participant meets the requirements stated in the first paragraph above.

3.3	The Accrued Benefit of a Participant shall be 100% vested and nonforfeitable on his Early Retirement Date.

3.4

A terminated Participant who has met the service requirement for Early Retirement, but who has not met the age requirement, upon satisfaction of the age requirement will be eligible to receive his Accrued Benefit appropriately reduced for early commencement of payments in accordance with Section 3.1 above.

ARTICLE 4

NORMAL RETIREMENT

4.1	At Normal Retirement Age each Participant shall have a 100% vested and nonforfeitable right to his Normal Retirement Benefit.

4.2	Amount of Normal Retirement Benefit - The amount of the monthly Normal Retirement Benefit, payable as the Normal Annuity Form, shall be determined as follows:

(a)

Determination of Normal Retirement Benefit - An amount equal to one-twelfth of the sum of (1) plus (2) below:

(1)

Seventy-five hundredths of one percent (.75%) of the Participant's "Final Average Compensation," multiplied by his number of Years of Benefit Service, subject to a maximum of forty (40) such years, plus

(2)

sixty-five hundredths of one percent (.65%) of the Participant's "Final Average Compensation" in excess of the applicable Covered Compensation multiplied by his number of Years of Benefit Service, subject to a maximum of thirty-five (35) such years. The applicable Covered Compensation table is defined as the current table in effect at the beginning of the Plan Year in which termination of employment occurs, or in which the accrual date falls. ( Appendix A contains the Covered Compensation table for the 2001 Plan Year. In the event that the Covered Compensation table shall be revised by subsequent laws or regulations, such table shall be deemed to be in effect for this Plan, regardless of the values found in Appendix A ).

(a)

Minimum Normal Retirement Benefit - The minimum Normal Retirement Benefit of a Participant shall be $20 per month.

(b)

The Normal Retirement Benefit shall be equal to the greater of his Early Retirement Benefit or his Normal Retirement Benefit at Normal Retirement Age.

(c)

Final Average Compensation - A Participant's "Final Average Compensation" is:

(1)

his average annual Compensation for those five consecutive calendar years during each of which he earned a Year of Benefit Service, within the last ten calendar years in which he earned a Year of Benefit Service including the current calendar year during each of which he worked as an Employee, that produce the highest average, or

(2)

his average annual Compensation for all calendar years during which he earned a Year of Benefit Service while an Employee if five or less years.

However, the Compensation corresponding to a calendar year during which he did not work throughout the entire year shall be used as one of the five consecutive years if the result is a higher average than as determined under (1) and/or (2) above.

In no event shall any Participant’s benefit accrual hereunder (or in combination with any contribution or benefit accrual under another qualified plan sponsored by the Employer) exceed the overall permitted disparity limits of Code Section 401(l). A Participant’s benefit accrual will be adjusted, if necessary under this Plan to comply with Code Section 401(l). Any adjustments to Participants’ benefit accruals hereunder shall be made in a uniform and nondiscriminatory manner.

4.3	Maximum Limitations on Benefits :

(a)

Defined Benefit Dollar Limitation - Notwithstanding any provision of the Plan to the contrary, a Participant's benefit under the Plan shall not exceed the maximum amount permitted under Code Section 415. For purposes of determining the maximum amount permitted, Employee contributions, if any, are treated as if contributed to a separate Defined Contribution Plan.

The Defined Benefit Dollar Limitation for any Limitation Year may not exceed the lesser of:

(1)

$90,000, adjusted for each Limitation Year by the Adjustment Factor to take into account any cost-of-living increase provided for that year in accordance with regulations prescribed by the Secretary of the Treasury. Any such increase shall be applicable to former employees as well as to Participants whose termination of employment has not yet occurred,

(2)

100% of the Participant's average compensation (as defined in Section 4.3(f)(1) for the high three years. For purposes of this Section, a Participant's high three years shall be the period of consecutive calendar years (3, or all such years if less than 3) during which the Participant was an active Participant.

The Defined Benefit Dollar Limitation of this Section 4.3(a) is deemed satisfied if the annual benefit payable to a Participant is not more than $1,000 multiplied by the Participant's number of Years of Service or parts thereof (not to exceed 10) with the Employer, and the Employer has not at any time maintained a Defined Contribution Plan, a welfare plan as defined in section 419(e) of the Code, or an individual medical account as defined in section 415(1)(2) of the Code in which such Participant participated.

Such limitation shall apply to benefits commencing at the Participant's Social Security Retirement Age.

Actuarial Adjustment for Alternative Forms of Benefits : Notwithstanding any other Plan provision, a benefit payable in a form other than a straight life annuity must be adjusted to an Actuarial Equivalent straight life annuity before applying the

limitations of this Section. For Limitation Years beginning before January 1, 1995, such Actuarially Equivalent straight life annuity is equal to the greater of the annuity benefit computed using the interest rate specified in the Plan for adjusting benefits in the same form or five percent (5%). For Limitation Years beginning after December 31, 1994, the Actuarially Equivalent straight life annuity is equal to the greater of the annuity benefit computed using the interest rate and mortality table defined in Section 1.2 of the Plan and the annuity benefit computed using an interest rate of five percent (5%) and the “applicable mortality table” (the mortality table prescribed by the Secretary of the Treasury). In determining the Actuarially Equivalent straight life annuity for a benefit form other than a nondecreasing annuity payable for a period of not less than the life of the Participant (or, in the case of a Qualified Pre-retirement Survivor Annuity, the life of the surviving Spouse), or decreases during the life of the Participant merely because of (a) the death of the survivor annuitant (but only if the reduction is not below 50% of the annual benefit payable before the death of the survivor annuitant), or (b) the cessation or reduction of Social Security supplements of qualified disability payments (as defined in Code Section 401(a)(11)), "the applicable interest rate," as defined in Section 1.2 of the Plan, will be substituted for "a five percent (5%) interest rate assumption" in the preceding sentence.

(b)

Defined Benefit Dollar Limitations Adjustments - The Defined Benefit Dollar Limitation shall be reduced for benefit commencement prior to the month of attainment of the Participant's Social Security Retirement Age. The reduction factor applicable to benefit payments commencing on or after age 62 is:

5/9 of one percent per month for each of the first 36 months by which the benefit commences prior to the month in which Social Security Retirement Age is attained.

5/12 of one percent per month for each month after the first 36 months mentioned above (up to 24 months) that the benefit commences prior to the month in which Social Security Retirement Age is attained.

For Limitation Years commencing after December 31, 1994, the following provisions shall apply. The Defined Benefit Dollar Limitation for benefits commencing prior to age 62 is the Actuarial Equivalent of the limitation for benefits commencing at age 62, as determined above, reduced for each month by which benefits commence before the month in which the Participant attains age 62. The annual benefit beginning prior to age 62 shall be determined as the lesser of the equivalent annual benefit computed using the interest rate and mortality table (or other tabular factor) equivalence for early retirement benefits, and the equivalent annual benefit computed using a five percent (5%) interest rate and the applicable mortality table as defined in Section 1.2(b) of the Plan. Any decrease in the adjusted Defined Benefit Dollar Limitation determined in accordance with this provision (b) shall not reflect any mortality decrement to the extent that benefits will not be forfeited upon the death of the Participant.

The Defined Benefit Dollar Limitation shall be increased for benefit commencement subsequent to the month of attainment of the Social Security Retirement Age. The equivalent annual benefit beginning after Social Security

Retirement Age shall be determined as the lesser of the equivalent annual benefit computed using the interest rate and mortality table (or other tabular factor) specified in the Plan for purposes of determining Actuarial Equivalence for delayed retirement benefits, and the equivalent annual benefit computed using a five percent (5%) interest rate assumption and the applicable mortality table as defined in Section 1.2 of the Plan.

(c)

Adjustment of Limitation for Years of Service or Participation .

(1)

Defined Benefit Dollar Limitation Adjusted for Participation . If a Participant has completed less than ten (10) Years of Plan Participation , the Participant's Accrued Benefit shall not exceed the Defined Benefit Dollar Limitation as adjusted by multiplying such amount by a fraction, the numerator of which is the Participant's number of Years (or part thereof) of Plan Participation, and the denominator of which is ten (10).

(2)

Other Defined Benefit Limitation Adjusted for Service . If a Participant has completed less than ten (10) Years of Service with the Affiliated Employers, the limitations described in Code Sections 415(b)(1)(B) and 415(b)(4) shall be adjusted by multiplying such amounts by a fraction, the numerator of which is the Participant's number of Years of Service (or part thereof), and the denominator of which is ten (10).

(3)

Limitations of Reductions . In no event shall this Section reduce the limitations provided under Code Sections 415(b)(1) and (4) to an amount less than one-tenth of the applicable limitation (as determined without regard to this Section 4.3(c).

(4)

Application to Changes in Benefit Structure . To the extent provided by the Secretary of the Treasury, this Section 4.3(c) shall be applied separately with respect to each change in the benefit structure of the Plan.

(5)

Years of Service shall include future years occurring before the Participant's Normal Retirement Age. Such future years shall include the year which contains the date the Participant reaches Normal Retirement Age, if the Participant will receive a Year of Service for such year.

(d)

Preservation of Current Accrued Benefit Under Defined Benefit Plan .

(1)

In General . This Section 4.3(d) shall apply to Defined Benefit Plans that were in existence on May 6, 1986, and that met the applicable requirements of Code Section 415 as in effect for all Limitation Years.

(2)

Protection of Current Accrued Benefit . If the Current Accrued Benefit of an individual who is a Participant as of the first day of the Limitation Year beginning on or after January 1, 1987, exceeds the benefit limitations under Code Section 415(b) (as modified by Sections 4.3(b) and 4.3(c) of this Plan), then, for purposes of Code Section 415(b) and (e), the Defined Benefit Dollar

Limitation with respect to such individual shall be equal to such Current Accrued Benefit.

The following limitations apply, for Plan Years beginning prior to January 1, 2000, where a Participant in this Plan is also a Participant in one or more plans, one of which is a qualified Defined Contribution Plan maintained by the Employer during the Limitation Years:

In the event that an individual shall at any time be a Participant in this Plan and/or any other defined benefit plan of the Employer and in one or more Defined Contribution plans of the Employer, the sum of the Defined Benefit Plan Fraction (as defined in Section 4.3(f)(5)) and the Defined Contribution Plan Fraction (as defined in Section 4.3(f)(6)) for any Limitation Year shall not exceed 1.0. In the event such limit is exceeded, a reduction in the defined benefit plan's Accrued Benefit shall be implemented to comply with the combined limit requirements, to the extent that other permitted adjustments (such as transition adjustments) do not meet such requirements.

(e)

Special Rules for Plans Subject to Overall Limitations Under Code Section 415(e) .

(1)

Annual Addition . For purposes of computing the Defined Contribution Plan Fraction of Code Section 415(e)(1), "Annual Addition" shall mean the amount allocated to a Participant's account during the Limitation Year as a result of:

(i)

Employer Contributions,

(ii)

Employee Contributions,

(iii)

Forfeitures, and

(iv)

amounts described in Sections 415(l)(2) and 419(e) of the Code.

(2)

Recomputation Not Required . The Annual Addition for any Limitation Year beginning before January 1, 1987 shall not be recomputed to treat all Employee Contributions as an Annual Addition.

(3)

Adjustment of Defined Contribution Plan Fraction . If the Plan satisfied the applicable requirements of Section 415 of the Code as in effect for all Limitation Years beginning before January 1, 1987, an amount shall be subtracted from the numerator of the Defined Contribution Plan Fraction (not exceeding such numerator) so that the sum of the Defined Benefit Plan Fraction and Defined Contribution Plan Fraction computed under Code Section 415(e)(1) (as revised by this Section 4.3(e)) does not exceed 1.0 for such Limitation Year. Such amount to be subtracted shall be an amount equal to the product of (a) and (b) where (a) is the sum of the Defined Contribution Plan Fraction plus the Defined Benefit Plan Fraction as of the Determination Date, minus one, and (b) is the denominator of the Defined Contribution Plan Fraction as of the Determination Date.

(f)

Special Definitions :

(1)

Compensation - The Participant's earned income, wages, salaries, fees for professional service and other amounts received for personal services actually rendered in the course of employment with the Employer maintaining the Plan (including, but not limited to, commissions paid salesmen, compensation for services on the basis of a percentage of profits, commissions on insurance premiums, tips and bonuses). The term "Compensation" shall not include:

(i)

Employer contributions to a plan of deferred compensation to the extent the contributions are not included in the gross income of the Employee for the taxable year in which contributed, on behalf of an Employee to a Simplified Employee Pension Plan described in Code Section 408(k) to the extent such contributions are deductible by the Employee under Code Section 219(b)(7), and any distributions from a plan of deferred compensation, regardless of whether such amounts are includible in the gross income of the Employee when distributed.

(ii)

Amounts realized from the exercise of a non-qualified stock option, or when restricted stock (or property) held by an Employee either becomes freely transferable or is no longer subject to a substantial risk of forfeiture.

(iii)

Amounts realized from the sale, exchange or other disposition of stock acquired under a qualified stock option.

(iv)

Other amounts which receive special tax benefits, such as premiums for group term life insurance (but only to the extent that the premiums are not includible in the gross income of the Employee), or contributions made by an Employer (whether or not under a salary reduction agreement) towards the purchase of an annuity contract described in Code Section 403(b) (whether or not the contributions are excludible from the gross income of the Employee). The provisions of this subparagraph 4.3(f)(1) shall apply solely to Section 4.3.

For purposes of applying the limitations of Section 4.3 amounts included as Compensation are those amounts actually paid to a Participant or includible in his gross income within the Limitation Year.

(v)

Notwithstanding the above, effective for Limitation Years beginning after December 31, 1997, the term "Compensation" includes (1) an Employee's elective deferrals under Code Section 402(g)(3), and (2) amounts contributed or deferred under Code Section 125 or Code Section 457 by the Employer at the Employee's election that are not otherwise includible in the Employee's gross income, and for Limitation Years beginning after December 31, 2000, Code Section 132(f).

(2)

Current Accrued Benefit shall mean the Accrued Benefit of a Participant determined as if the Participant had separated from service as of the last day of the Plan Year beginning before January 1, 1987 computed as a straight life annuity (with no ancillary benefits), taking into account the provisions of the Plan as it existed prior to January 1, 1987; provided, that in computing a Participant's Current Accrued Benefit, no amendments to the Plan adopted after May 5, 1986 which would affect such benefit and no cost-of-living adjustments occurring after May 5, 1986 shall be taken into account.

(3)

Defined Contribution Dollar Limitation Effective for the first Limitation Year beginning after December 31, 1994, shall mean the lesser of (i) $30,000, adjusted for cost of living in accordance with Code Section 415(d), in multiples of $5,000 (or rounded to the next lowest multiple of $5,000) or (ii) 25% of the Participant’s Compensation.

(4)

Defined Benefit Plan - A retirement plan which does not provide for individual accounts for Employer contributions. The Committee shall treat all Defined Contribution plans (whether or not terminated) maintained by the Employer as a single plan.

(5)

Defined Benefit Plan Fraction shall mean the following fraction:

Projected annual benefit of the Participant

under the Defined Benefit Plan(s)

Divided by the lesser of

(i)

125% multiplied by the dollar limitation in effect under Code Section 415(b)(1)(A) for the Limitation Year,

(ii)

140% multiplied by 100% of the Participant's Compensation Limitation under Code Section 415(b)(1) for the Limitation Years (referred to as the "Defined Benefit Compensation Limitation")

In the event an Employee was a Participant in one or more Defined Benefit plans maintained by the Employer which were in existence on July 1, 1982, if such Participant's then current accrued benefit (current accrued benefit shall mean a Participant’s Accrued Benefit under the Plan, determined as if the Participant had separated from service as of the close of the last Limitation Year beginning before July 1, 1983) exceeds the Defined Benefit Dollar Limitation, the denominator of this fraction shall not be less than 125% of such Participant's current accrued benefit under such plans which the Employee had accrued as of the end of the 1982 Limitation Year (the last Limitation Year beginning before January 1, 1983). The preceding sentence only applies if the Defined Benefit Plans individually and in the aggregate satisfied the requirements of Code Section 415 as in effect at the end of the 1982 Limitation Year. The Committee shall treat a Master or Prototype plan adopted and placed in effect by the Employer before October 1, 1983, as a

plan in existence on July 1, 1982; provided however, that the Master or Prototype plan had a current opinion letter when adopted by the Employer.

In the case of an individual who was a Participant in one or more Defined Benefit Plans of the Employer as of the first day of the first limitation year beginning after December 31, 1986, the application of the limitations of this section shall not cause the maximum amount permitted for such individual under all such Defined Benefit Plans to be less than the individual's current Accrued Benefit. The preceding sentence applies only if such Defined Benefit Plans met the requirements of Code Section 415, for all limitation years beginning before January 1, 1987.

(6)

Defined Contribution Plan Fraction shall mean the following fraction:

the sum of the Annual Additions to the Participant's

Account under the Defined Contribution Plan(s)

as of the close of the Limitation Year divided by

the sum of the lesser of the following amounts

determined for the Limitation Year and for each prior

Year of Service with the Employer (regardless as to

whether a Plan was in existence during those years)

(i)

125% multiplied by the Defined Contribution Dollar Limitation for Defined Contribution Plans in effect under Code Section 415(c)(1)(A) for the Limitation Year (determined without regard to the special Dollar Limitations for Employee Stock Ownership plans),

(ii)

140% multiplied by 25% of the Participant's Compensation for the Plan Year (referred to as the "Defined Contribution Compensation Limitation").

Provided, that if the limitations of Code Section 415 as in effect for the last Limitation Year beginning before January 1, 1983 were not exceeded for such Limitation Year, but the limitation of this Section 4.3 would be exceeded for any subsequent year, the Defined Contribution Plan Fraction computed for the Limitation Year beginning before January 1, 1983 shall be permanently adjusted in accordance with Section 4.3(e)(3).

The Committee shall make the same adjustment as of the end of the 1983 Limitation Year (the last Limitation Year beginning before January 1, 1984) if the sum of the fractions exceeds 1.0 because (i) the Plan is top-heavy in the first Plan Year beginning after December 31, 1983, or (ii) the Employer had not amended its plans in existence on July 1, 1982, to comply with the limitations of this Article 4. The Committee also may use any "transitional rules" provided by law which are applicable in computing the Participant's Defined Contribution Plan Fraction. The Committee shall treat a Master or Prototype plan adopted and placed in effect by the Employer before October 1,

1983, as a plan in existence on July 1, 1982; provided however, that the Master or Prototype plan had a current favorable opinion letter when adopted by the Employer.

"Transition Rule" for Defined Contribution Plans: The Plan Administrator may elect to use a different denominator (taking into account all pre-TEFRA years) in computing the Fraction after 1982 with respect to each Participant for all years ending before January 1, 1983. The Defined Contribution Plan Fraction denominator for the Limitation Year ending in 1982 shall be multiplied by the "Transition Fraction". (This election will be advantageous to any Participant who earned less than $148,216 for 1981 but detrimental to those earning in excess of $148,216 for 1981).

This " Transition Fraction " shall be a fraction the numerator of which is the lesser of (a) $51,875 or (b) the product of 1.4 multiplied by 25% of the Participant's Compensation for the Limitation Year ending in 1981; and the denominator of which is the lesser of (a) $41,500 or (b) 25% of the Compensation of the Participant for the Limitation Year ending in 1981. In the event the limitation of this Section 4.3 would be exceeded for any Limitation Year, the reduction necessary to comply with the limitation shall be made in the Annual Addition for such Limitation Year to the Defined Contribution Plan.

(7)

Employer - The Employer that adopts this Plan. In the case of a group of employers which constitutes a " controlled group " of corporations (as defined in Code Section 414(b) as modified by Code Section 415(h)); which constitutes trades or businesses (whether or not incorporated) which are under " common control " (as defined in Code Section 414(c) as modified by Code Section 415(h)); or, which constitutes an " affiliated service " group within the meaning of Code Section 414(m), the Committee shall consider all such employers as a single employer for purposes of applying the limitations of this Section 4.3.

(8)

Limitation Year - The period selected by the Employer under Section 1.23. All qualified plans of the Employer must use the same Limitation Year. If the Employer amends the Limitation Year to a different twelve (12) consecutive month period, the new Limitation Year must begin on a date within the Limitation Year for which the Employer makes the amendment.

(9)

Projected Annual Benefit shall mean the annual Normal Retirement Benefit payable in the form of a straight life annuity (with no ancillary benefits) to which a Participant would be entitled under the terms of the Plan if the following factors are assumed:

(i)

the Participant will continue employment with the Employer until he reaches Normal Retirement Age (or until his then current age, if he has previously reached age Normal Retirement Age),

(ii)

the Participant's Compensation for the Limitation Year will remain the same until the date the Participant attains Normal Retirement Age, and

(iii)

all other relevant factors used to determine benefits under the Defined Benefit Plan for the Limitation Year will remain constant for all future Limitation Years.

(10)

Defined Contribution Plan shall mean a retirement plan which provides for individual accounts for Employer or Employee Contributions. The Committee shall treat all Defined Contribution plans (whether or not terminated) maintained by the Employer as a single plan.

(g)

IRC Section 415 Incorporated by Reference The preceding Sections 4.3(a) through 4.3(f) are intended to comply with the provisions of Code Section 415 and the regulations thereunder. To the extent that there is any discrepancy between this Section 4.3 and the Code and regulations, the Code and regulations shall govern and are incorporated herein by reference.

(h)

Any Participant who is subject to Code Section 401(a)(17) shall have his Accrued Benefit determined in accordance with Reg. 1.401(a)(17)-1(e), with regard to the limit on compensation to be taken into account under the Plan. The 401(a)(17) limit in effect at the beginning of the calendar year during which the Plan Year begins shall be the limit for that Plan Year.

ARTICLE 5

DELAYED RETIREMENT

5.1	A Participant may retire later than his Normal Retirement Date. In such event:

(a)

A Participant's Delayed Retirement Date shall be the first day of the month coincident with or next following his last day of employment. The amount of benefit to which the Participant shall be entitled as of the date payments actually commence shall be equal to the greater of:

(1)

his Accrued Benefit calculated as of his Delayed Retirement Date, considering his Final Average Compensation through his Delayed Retirement Date and his total Years of Benefit Service as of such date, or

(2)

his Normal Retirement Benefit actuarially increased to his Delayed Retirement Date.

The net Excess Percentage applicable to each year's accrual as referred to in Section 4.2(a)(2) shall be tested to ensure that it does not exceed the applicable maximum Excess Percentage as found in Appendix B . To the extent necessary, the Excess Percentage only shall be reduced to comply with the table in Appendix B .

(b)

The benefit so determined in 5.1(a) above shall be of the Normal Annuity Form. The Participant shall have the right, however, to elect any other option pursuant to Article 9 herein.

(c)

Notwithstanding a Participant's decision to remain in the employ of the Employer beyond his Normal Retirement Date, payment of his retirement benefits shall commence in accordance with Section 9.4(b) (for Plan Years beginning prior to January 1, 1997), or 9.4(c) (for Plan Years beginning after December 31, 1996).

(d)

In the event a Participant, who is covered by this Article 5, dies while employed, the provisions of Article 7 shall apply with regard to the availability and calculation of a death benefit, if any.

ARTICLE 6

DISABILITY RETIREMENT

6.1	Eligibility for Disability Retirement Benefits

(a)

A Participant who is not yet eligible for Early Retirement under Article 3, or Normal Retirement under Article 4, and who ceases to be an Employee due to disability shall be eligible to receive a Disability Retirement Benefit if:

(1)

a Participant qualifies for any disability benefits sponsored by the Employer under any existing Insured Disability Income Plan, or if no such benefits are provided, then

(2)

a Participant becomes unable to engage in any substantial gainful occupation by reason of any physical or mental impairment which, on the basis of competent medical opinion to the satisfaction of the Pension Committee, meets the following requirements:

(i)

The Participant has become totally disabled by bodily injury, disease or mental disorder and is unable to perform any and every duty of any gainful occupation for which he is reasonably fitted by training, education, or experience, and

(ii)

Such disability has continued for a period of six consecutive months and will be permanent and continuous for the remainder of the Participant's lifetime.

(3)

For purposes of this Plan, however, no Participant shall be deemed totally and permanently disabled if his disability results from chronic alcoholism, addiction to narcotics, injury incurred while engaging in any illegal or felonious enterprise, intentionally self-inflicted injury, or injury incurred while serving in the armed forces of any country.

(4)

The Employer may require proof of continued disability from time to time, but not more frequently than once in any six (6) month period.

(b)

The Disability Retirement Date of a Participant shall be the first day of the month coinciding with or next following the date a Participant meets the requirements of Section 6.1(a) above.

Provided, however, if a disabled Participant is entitled upon his disability retirement to receive benefits under an insured long-term disability program of the Employer, payment of his disability retirement benefit shall be deferred until the earlier of (i) his Normal Retirement Date or (ii) the date on which such insured disability benefit shall terminate, whereupon, if he is then living, he shall be

eligible to receive his disability retirement benefit reduced as provided in Section 6.2(b)(3).

6.2	Payment of Disability Benefit

(a)

Disability Benefit Payments shall be payable commencing on any date elected by the Participant, but not before the six month period referred to in Section 6.1(a) has expired, and not later than what would have been such Participant's Normal Retirement Date had he not become disabled. The Participant's disability benefit shall be payable in accordance with any option elected pursuant to Article 9 herein, provided, however, that any such benefit shall cease upon the first to occur of the following events:

(1)

the date the Participant is deemed to be no longer permanently and totally disabled,

(2)

the date the Participant refuses to submit to a medical examination or refuses to furnish due proof of continued disability,

(3)

the date of the Participant's death, unless the option elected by the Participant pursuant to Article 9 provides for the continuation of payments to a surviving spouse or other beneficiary, or

(4)

the date the Participant attains his Normal Retirement Age, at which time such Participant shall be deemed to be a retired Participant no longer required to furnish proof of disability. Any benefit being paid to a disabled Participant who reaches Normal Retirement Age shall continue as if the Participant had elected such benefit at his Normal Retirement Date.

(b)

The amount of such benefit shall be determined as follows:

(1)

Once a Participant is determined to be totally and permanently disabled, his Accrued Benefit shall become 100% vested and nonforfeitable.

(2)

If the payment of benefits commences at Normal Retirement Date, the amount of the benefit shall be the Participant's Accrued Benefit as of his Disability Retirement Date.

(3)

If the payment of benefits commences prior to Normal Retirement Date, the amount of the benefit shall be the Participant's Accrued Benefit as of his Disability Retirement Date, reduced as follows:

The Accrued Benefit shall be reduced by one-one hundred eightieth (1/180) for each of the first sixty (60) months and one-three hundred sixtieth (1/360) for each of the next sixty (60) months by which the starting date of the benefit precedes Normal Retirement Date, and reduced actuarially in accordance with Section 1.2(d) herein for each year thereafter.

After applying the reductions referred to immediately above, the net Excess Percentage applicable to each year's accrual as referred to in Section 4.2(a)(2) shall be tested to ensure that it does not exceed the applicable maximum Excess Percentage as found in Appendix B . To the extent necessary, the Excess Percentage only shall be reduced to comply with the table in Appendix B .

6.3

Cash-out of Small Benefits - The provisions of Section 6.2 notwithstanding, if the Actuarially Equivalent lump sum present value of the disability benefit determined (at the time distribution commences) for any disabled Participant shall be $5,000 or less ($3,500 or less for Plan Years beginning on or before August 5, 1997), then such lump sum shall be paid directly to such disabled Participant.

Notwithstanding the preceding paragraph, if the lump sum so payable exceeds $3,500 for Plan Years beginning on or before August 5, 1997, the Participant must be offered an immediately payable Qualified Joint and Survivor Annuity before the lump sum may be paid. In addition, the Participant and the Eligible Spouse must consent in writing to payment of any such lump sum in excess of $3,500 for Plan Years beginning on or before August 5, 1997.

6.4	Recovery from Disability

(a)

If, prior to his Normal Retirement Date, a Participant is deemed to be no longer permanently and totally disabled prior to his Normal Retirement Date and returns to the service of the Employer within one month of such determination or recovery, then the Participant shall be deemed not to have incurred a Break in Service. The number of years and fractions thereof during which he received payments pursuant to this Article shall not be counted in determining his Years of Service for any purposes under the Plan. Disability payments shall nonetheless cease in accordance with Section 6.2(a).

(b)

If, prior to his Normal Retirement Date, a Participant is deemed to be no longer permanently and totally disabled and he does not return to the service of the Employer within one month of such determination or recovery, then he shall be deemed to have separated from the service of the Employer as of the date he became permanently and totally disabled. In this event, the provisions of Section 6.2(a) shall apply, and benefit payments shall cease.

ARTICLE 7

SURVIVOR BENEFITS

7.1	Eligibility for Preretirement Death Benefits

(a)

In the event a Participant dies (i) before becoming vested in any benefit provided by this Plan or (ii) without a surviving Eligible Spouse, there shall be no death benefit from this Plan.

(b)

In the event a vested Participant dies before reaching his "Earliest Retirement Age," a death benefit in the form of a Qualified Preretirement Survivor Annuity shall be paid to his surviving Eligible Spouse, unless the conditions of Section 7.4 have been met regarding optional forms of benefit. In the event there is no surviving Eligible Spouse no benefit shall be paid hereunder.

(c)

In the event a vested Participant dies after reaching his "Earliest Retirement Age," a death benefit in the form of a Qualified Joint and Survivor annuity shall be paid to his surviving Eligible Spouse, unless the conditions of Section 7.4 have been met regarding optional forms of benefit.

7.2	Determination of Preretirement Death Benefits

(a)

For a Participant who meets the requirements of Section 7.1(b) above, unless an optional form of benefit is selected within the Election Period pursuant to a Qualified Election, a Qualified Preretirement Survivor Annuity shall be determined as follows:

(1)

the Participant will be deemed to have separated from service on the date of death;

(2)

survived to the Earliest Retirement Age;

(3)

retired with an immediate Qualified Joint and 50% Survivor Annuity at the Earliest Retirement Age; and

(4)

died on the day after the Earliest Retirement Age.

(b)

For a Participant who meets the requirements of Section 7.1(c) above, unless an optional form of benefit is selected within the Election Period pursuant to a Qualified Election, the Participant's surviving Eligible Spouse (if any) will receive the same benefit that would be payable if the Participant had retired with an immediate Qualified Joint and 50% Survivor Annuity on the day prior to his death.

(c)

Notwithstanding the provisions of Sections 7.2(a) and 7.2(b) above, if the Actuarial Equivalent present value (at the time distribution commences) of the

survivor's benefit is $5,000 or less ($3,500 or less for Plan Years beginning on or before August 5, 1997), then such lump sum present value shall be paid as soon as practical to the surviving Eligible Spouse.

Notwithstanding the preceding paragraph, if the lump sum present value exceeds $3,500 for Plan Years beginning on or before August 5, 1997, however, the Eligible Spouse must be offered an immediately payable survivor annuity and must consent in writing to receive the lump sum.

7.3 Post-Retirement Death Benefit

Upon the death of the Participant who has retired and elected an optional form of settlement pursuant to Section 9.3, and subject to the Transition Rules of Section 9.4, the following distribution provisions shall take effect:

(a)

If the Participant dies after distribution of his interest has commenced, the remaining portion of such interest will continue to be distributed at least as rapidly as under the method of distribution being used prior to the Participant's death.

(b)

If the Participant dies before distribution of his interest commences, then, subject to Sections 7.1(b) or 7.1(c) as applicable, the Participant's entire interest will be distributed no later than five (5) years after the Participant's death except to the extent that an election is made to receive distributions in accordance with (1) or (2) below:

(1)

If any portion of the Participant's interest is payable to a designated Beneficiary, distributions may be made in substantially equal installments over the life or life expectancy of the designated Beneficiary commencing no later than one (1) year after the Participant's death;

(2)

If the designated Beneficiary is the Participant's surviving Eligible Spouse, the date distributions are required to begin in accordance with (1) above shall not be earlier than the date on which the Participant would have attained age 70 1/2, and, if the Eligible Spouse dies before payments begin, subsequent distributions shall be made as if the Eligible Spouse had been the Participant.

(c)

For purposes of (b) above, payments that are to be made in installments over a specified period of time will be calculated by use of the return multiples specified in Section 1.72-9 of the regulations. Life expectancy of a surviving Spouse may be recalculated annually; however, in the case of any other designated Beneficiary, such life expectancy will be calculated at the time payment first commences without further recalculation.

(d)

For purposes of (a), (b) and (c) above, any amount paid to a minor child of the Participant will be treated as if it had been paid to the surviving Eligible Spouse if the amount becomes payable to the surviving Eligible Spouse when the child reaches the age of majority.

7.4	Definitions .

(a)

Election Period (for Qualified Preretirement Survivor Annuity): The period which begins on the first day of the Plan Year in which the Participant attains age 35 and ends on the date of the Participant's death. If a Participant separates from service prior to the first day of the Plan Year in which age 35 is attained, with respect to benefits accrued prior to separation, the Election Period shall begin on the date of separation.

Pre-age 35 Waiver : A Participant who will not yet attain age 35 as of the end of any current Plan Year may make a special Qualified Election to waive the Qualified Preretirement Survivor Annuity for the period beginning on the date of such election and ending on the first day of the Plan Year in which the Participant will attain age 35. Such election will not be valid unless the Participant receives a written explanation of the Qualified Preretirement Survivor Annuity in such terms as are comparable to the explanation required under section 7.5. Qualified Preretirement Survivor Annuity coverage will be automatically reinstated as of the first day of the Plan Year in which the Participant attains age 35. Any new waiver on or after such date shall be subject to the full requirements of this article.

(b)

Earliest Retirement Age: The earliest date on which, under the Plan, the Participant could elect to receive retirement benefits. For this purpose, if a Participant dies prior to meeting the service requirement, if any, for eligibility for early retirement, then his Earliest Retirement Age shall be his Normal Retirement Age.

(c)

Qualified Election : A waiver of a Qualified Joint and Survivor Annuity or a Qualified Preretirement Survivor Annuity. Any waiver of a Qualified Joint and Survivor Annuity or a Qualified Preretirement Survivor Annuity shall not be effective unless: (1) the Participant's Eligible Spouse consents in writing to the election; (2) the election designates a specific alternate beneficiary, including any class of beneficiaries or any contingent beneficiaries, which may not be changed without Spousal consent (or the Eligible Spouse expressly permits designations by the Participant without any further Spousal consent; (3) the Spouse's consent acknowledges the effect of the election; and (4) the Spouse's consent is witnessed by a Plan representative or notary public. Additionally, a Participant's waiver of the Qualified Joint and Survivor Annuity will not be effective unless the election designates a form of benefit payment under Article 9 which may not be changed without Spousal consent (or the Spouse expressly permits designations by the Participant without any further Spousal consent). If it is established to the satisfaction of a Plan representative that such written consent may not be obtained because there is no Spouse or the Spouse cannot be located, a waiver will be deemed a qualified election.

Any consent by a Spouse obtained under this provision (or establishment that the consent of a Spouse cannot be obtained) shall be effective only with respect to such Spouse. A consent that permits designations by the Participant without any requirement of further consent by such Spouse must acknowledge that the Spouse

has the right to limit consent to a specific beneficiary, and a specific form of benefit where applicable, and that the Spouse voluntarily elects to relinquish either or both of such rights. A revocation of a prior waiver may be made by a Participant without the consent of the Spouse at any time prior to the commencement of benefits. The number of revocations shall not be limited. No consent obtained under this provision shall be valid unless the Participant has received notice as provided in Section 7.5 below.

The terms of any annuity contract purchased and distributed by the Plan to a Participant or Spouse shall comply with the provisions of this Plan.

7.5	Notice Requirements .

(a)

In the case of a Qualified Joint and Survivor Annuity as described in Section 1.30, the Plan Administrator shall provide each Participant no less than 30 days and no more than 90 days prior to the commencement of benefits, a written explanation of:

(1)

the terms and conditions of a Qualified Joint and Survivor Annuity;

(2)

the Participant's right to make and the effect of an election to waive a Qualified Joint and Survivor Annuity form of benefit;

(3)

the rights of a Participant's Eligible Spouse;

(4)

the right to make, and the effect of, a revocation of a previous election to waive the Qualified Joint and Survivor Annuity; and

(5)

the relative values of the various optional forms of benefit under the Plan.

The Annuity Starting Date for a distribution in a form other than a Qualified Joint and Survivor Annuity may be less than 30 days after receipt of the written explanation described in the preceding paragraph provided: (a) the Participant has been provided with information that clearly indicates that the Participant has at least 30 days to consider whether to waive the Qualified Joint and Survivor Annuity and elect (with spousal consent) to a form of distribution other than a Qualified Joint and Survivor annuity; (b) the Participant is permitted to revoke any affirmative distribution election at least until the Annuity Starting Date or, if later, at any time prior to the expiration of the 7-day period that begins the day after the explanation of the Qualified Joint and Survivor Annuity is provided to the Participant; and (c) the Annuity Starting Date is a date after the date that the written explanation was provided to the Participant. The normal form annuity cannot be waived after the commencement of benefits.

(b)

In the case of a Qualified Preretirement Survivor Annuity as described in Section 7.2 of this Article, the Plan Administrator shall provide each Participant within the "applicable period" for such Participant, a written explanation of the Qualified Preretirement Survivor Annuity in such terms and in such manner as would be

comparable to the explanation under Section 7.5(a) applicable to a Qualified Joint and Survivor Annuity.

The "applicable period" for a Participant is whichever of the following periods ends last: (i) the period beginning with the first day of the Plan Year in which the Participant attains age 32 and ending with the close of the Plan Year preceding the Plan Year in which the Participant attains age 35; (ii) a reasonable period ending after the individual becomes a Participant; (iii) a reasonable period ending after Section 7.5(c) ceases to apply to the Participant; (iv) a reasonable period ending after this Article first applies to the Participant. Notwithstanding the foregoing, notice must be provided within a reasonable period ending after separation of service in case of a Participant who separates from service before attaining age 35.

For purposes of the preceding paragraph, a reasonable period ending after the enumerated events described in (ii), (iii) and (iv) is the end of the two-year period beginning one year prior to the date the applicable event occurs and ending one year after that date. In the case of a Participant who separates from service before the Plan Year in which age 35 is attained, notice shall be provided within the two-year period beginning one year prior to separation and ending one year after separation. If such a Participant thereafter returns to employment with the employer, the applicable period for such Participant shall be redetermined.

(c)

Notwithstanding the other requirements of this Section 7.5, the respective notices prescribed by this Section need not be given to a Participant if this Plan "fully subsidizes" the costs of a Qualified Joint and Survivor Annuity or Qualified Preretirement Survivor Annuity and if the Participant is not permitted to waive either form of benefit described above or select a nonspouse beneficiary. For purposes of this Section 7.5(c), a Plan fully subsidizes the costs of a benefit if under the Plan the failure to waive such benefit by a Participant would not result in a decrease in any plan benefits with respect to such Participant and would not result in increased contributions from the Participant.

7.6	Transitional Rules (Terminated Vested Participants)

(a)

Any living Participant not receiving benefits on August 23, 1984, who would otherwise not receive the benefits prescribed by the previous Sections of this Article 7, must be given the opportunity to elect to have the prior Sections of this Article apply if such Participant is credited with at least one Hour of Service under this Plan or a Predecessor Plan in a Plan Year beginning on or after January 1, 1976, and such Participant had at least 10 Years of Service when he separated from service.

(b)

Any living Participant not receiving benefits on August 23, 1984, who was credited with at least one Hour of Service under this Plan or a Predecessor Plan on or after September 2, 1974, and who is not otherwise credited with any service in a Plan Year beginning on or after January 1, 1976, must be given the opportunity to have his benefits paid in accordance with Section 7.6(d) of this Article.

(c)

The respective opportunities to elect (as described in Sections 7.6(a) and 7.6(b) above) must be afforded to the appropriate Participants during the period commencing on August 23, 1984, and ending on the date benefits would otherwise commence to said Participants.

(d)

Any Participant who has elected pursuant to Section 7.6(b) of this Article and any Participant who does not elect under Section 7.6(a) or who meets the requirements of Section 7.6(a) except that such Participant does not have at least 10 Years of Service when he separates from service, shall have his benefits distributed in accordance with all of the following requirements if benefits would have been payable in the form of a life annuity:

(1)

Automatic Joint and Survivor Annuity - If benefits in the form of a life annuity become payable to a married Participant who:

(i)

begins to receive payments under the Plan on or after Normal Retirement Age; or

(ii)

dies on or after Normal Retirement Age while still working for the Employer; or

(iii)

begins to receive payments on or after the Qualified Early Retirement Age; or

(iv)

separates from service on or after attaining Normal Retirement Age (or the Qualified Early Retirement Age) and after satisfying the eligibility requirements for the payment of benefits under the Plan and thereafter dies before beginning to receive such benefits;

then such benefits will be received under this Plan in the form of a Qualified Joint and Survivor Annuity, unless the Participant has elected otherwise during the Election Period. The Election Period must begin at least 6 months before the Participant attains Qualified Early Retirement Age and end not more than 90 days before the commencement of benefits. Any election hereunder will be in writing and may be changed by the Participant at any time.

(2)

Election of Early Survivor Annuity - a Participant who is employed after attaining the Qualified Early Retirement Age will be given the opportunity to elect, during the Election Period to have a survivor annuity payable on death. If the Participant elects the survivor annuity, payments under such annuity must not be less than the payments which would have been made to the spouse under the Qualified Joint and Survivor Annuity if the Participant had retired on the day before his death. Any election under this provision will be in writing and may be changed by the Participant at any time. The Election Period begins on the later of:

(i)

the 90th day before the Participant attains the Qualified Early Retirement Age, or

(ii)

the date on which participation begins, and ends on the date the Participant terminates employment.

(3)

For purposes of this Section 7.6(d):

(i)

Qualified Early Retirement Age is the latest of:

(a)

the earliest date, under the Plan, on which the Participant may elect to receive retirement benefits,

(b)

the first day of the 120th month beginning before the Participant reaches Normal Retirement Age, or

(c)

the date on which the Participant begins Participation.

(ii)

Qualified Joint and Survivor Annuity is as defined in Section 1.30.

7.7

Beneficiary - A Participant or former Participant electing an optional form of benefit which may become payable after his death in a lump sum, or for a period determined without reference to the duration of any person's life, may designate in writing one or more direct or contingent beneficiaries on forms supplied by the Committee. However, in order for a married Participant to name a beneficiary other than his Eligible Spouse, he must comply with Section 7.4(c). A Participant or former Participant may change his designation at any time in the same manner. Any portion of a Participant's or former Participant's death benefit which is not disposed of under a designation of beneficiary for any reason whatsoever shall be paid in the following order:

(a)

to his Spouse, if living, otherwise

(b)

his natural or adopted children and survivors thereof, in equal shares per stirpes, otherwise

(c)

his parents and survivor thereof, in equal shares, or

(d)

his executors or administrators.

The benefit shall be paid to the first named person or class of persons surviving the Participant, in the order listed above, to the exclusion of all subsequently named persons or classes. "Beneficiary" means the person, or persons, designated by the Participant, or former Participant, or by the terms of this Section, to receive death benefits, but the provisions of this Section shall in no event apply to any amounts payable to a contingent pensioner, or other person entitled to payments for life after the death of the Participant, or former Participant, under any optional form of pension payment.

7.8

Notwithstanding any provision of this Article 7 to the contrary, any death benefit provided herein shall be an "incidental" benefit within the meaning of Reg. 1.401-1(b) and any amendments thereto. For the purpose of complying with this Section, a Qualified Preretirement Survivor Annuity shall always be an incidental benefit.

ARTICLE 8

TERMINATION OF EMPLOYMENT - VESTING

8.1

Nonforfeitable Rights - Notwithstanding any other provisions of this Article, a Participant's Accrued Benefit shall be 100% vested and nonforfeitable upon such Participant's attaining Normal Retirement Age or, if earlier, upon his becoming totally and permanently disabled pursuant to Article 6 herein.

8.2

Terminated Participant - Vesting Schedule - In the event a Participant terminates his employment for any reason other than for disability or retirement, he shall be considered a terminated Participant. Such terminated Participant shall have a vested right to a portion of his Accrued Benefit funded by the Employer based on his Years of Vesting Service at his date of termination. The amount of his Vested Accrued Benefit shall be a percentage of his Accrued Benefit accrued at date of termination of employment as determined by the following schedule:

Years of Vesting Service		Vesting Percentage
Less than 5 years		0%
5 years or more		100%

8.3

The facts concerning the termination of a Participant's employment shall be transmitted to the Committee of the Plan by written statement from the Employer, and the Committee may accept such statement as true. The Committee shall not incur any liability by reason of any action taken or omitted on the strength of such statement.

8.4	Normal Method and Time of Payment - Vested Benefit - No payment or distribution of a vested benefit shall occur until the Participant terminates employment. If a termination of employment does occur, then his vested Accrued Benefit shall be deferred with the first payment to commence on:

(a)

his Normal Retirement Date, or

(b)

if the terminated Employee had met the Years of Service requirement for Early Retirement under the Plan, then at his election payments of the annuity may commence once he meets the age requirement for Early Retirement, subject to the early retirement reduction factors as provided in Section 3.1(b).

However, a lump sum cash payment of the Actuarial Equivalent of his vested Accrued Benefit may be made to a terminated Participant as soon as possible after the first day of the Plan Year following a Break in Service of the Participant if the Actuarial Equivalent (determined at the time distribution commences) of the Participant's vested Accrued Benefit is $5,000 or less ($3,500 or less for Plan Years beginning on or before August 5, 1997).

Notwithstanding the preceding paragraph, for Plan Years beginning on or before August 5, 1997, the written consent of a terminated Participant and his Eligible Spouse, if any, is necessary before a lump sum distribution of more than $3,500 can be made. In addition, if the lump sum value exceeds $3,500 for Plan Years beginning on or before August 5, 1997, the Participant must be offered an immediately payable Qualified Joint and Survivor Annuity before the lump sum may be paid.

Deemed Cash-out A Participant who has terminated his employment with the Employer and who has no Vested Interest in his Accrued Benefit shall be deemed to have received a distribution of the full value of his Accrued Benefit coincident with the date he separated from service with the Employer.

A partial or total cash-out may not be made, after the Annuity Starting Date, where the Actuarial Equivalent of the Qualified Joint and Survivor Annuity or Qualified Preretirement Survivor Annuity either does or does not exceed $5,000 ($3,500 for Plan Years beginning on or before August 5, 1997), unless (i) the annuity form of payment has been waived in accordance with Article 9, (ii) the cash-out is consented to in writing by the Participant and the Participant's Eligible Spouse, if any, or (iii) where the Participant is deceased, the surviving Eligible Spouse consents in writing.

8.5

Restoration of Accrued Benefits - If a Participant receives a distribution pursuant to this Section and the Participant resumes covered employment under the plan, he shall have the right to restore his Employer-provided Accrued Benefit (including all optional forms of benefits and subsidies relating to such benefits) to the extent forfeited upon the repayment to the Plan of the full amount of the distribution plus interest, compounded annually from the date of distribution at the rate determined for purposes of Code section 411(c)(2)(C). Such repayment must be made before the earlier of five years after the first date on which the Participant is subsequently reemployed by the Employer, or the date the Participant incurs 5 consecutive 1-year Breaks in Service following the date of distribution.

If a Participant is deemed to receive a distribution pursuant to Section 8.4, and the Participant resumes employment covered under this Plan before the date the Participant incurs 5 consecutive breaks in service, upon the re-employment of such Participant, the Employer-provided Accrued Benefit will be restored to the amount of such Accrued Benefit on the date of the deemed distribution.

8.6	No Divestment for Cause - Under no circumstances shall a Participant be divested of any benefits for cause.

ARTICLE 9

PAYMENT OF RETIREMENT BENEFITS

9.1

At a Participant's Disability, Early, Normal or Delayed Retirement Date, benefits shall be provided him in accordance with this Plan. Such benefits shall be provided from the Plan assets. Any annuity contract distributed to a retiring Participant from the Plan shall contain the word "nontransferable."

Subject to Section 9.4 herein, there shall be no payment of benefits to any retiring or terminating Participant until such Participant actually ceases to be an active Employee of the Employer.

9.2	The retirement benefit, with respect to a Participant who has been married throughout the one year period ending on his Annuity Starting Date, shall be payable under the form of the Qualified Joint and Survivor Annuity with 50% continuation as described in Section 1.30, subject to the following:

(a)

Such retirement benefit shall be the Actuarial Equivalent of the "Normal Annuity Form" of retirement benefit.

(b)

The Participant's Eligible Spouse shall be designated as the contingent annuitant.

(c)

In lieu of this form of payment, a Participant (and his Eligible Spouse) may, prior to his actual retirement date, elect in writing (after having received a written explanation of the terms and conditions of the survivor annuity described in Section 7.5 of this Plan and the effect of an election under this subsection) to have his retirement benefit payable under any one of the other forms of retirement benefits or annuity options provided under the Plan. In order to elect out of a Qualified Joint and Survivor Annuity, the Participant and his Eligible Spouse must consent to the election. The normal form annuity cannot be waived after the commencement of benefits.

The election period for this section (c) is the 90-day period ending on the Participant's Annuity Starting Date. The Annuity Starting Date for a distribution in a form other than a Qualified Joint and Survivor Annuity may be less than 30 days after receipt of the written explanation described in Section 7.5, provided: (a) the Participant has been provided with information that clearly indicates that the Participant has at least 30 days to consider whether to waive the Qualified Joint and Survivor Annuity and elect (with spousal consent) to a form of distribution other than a Qualified Joint and Survivor annuity; (b) the Participant is permitted to revoke any affirmative distribution election at least until the Annuity Starting Date or, if later, at any time prior to the expiration of the 7-day period that begins the day after the explanation of the Qualified Joint and Survivor Annuity is provided to the Participant; and (c) the Annuity Starting Date is a date after the date that the written explanation was provided to the Participant. The waiver must contain a beneficiary designation and/or form of payment. The

waiver must also provide that the Eligible Spouse must consent, in writing, to any subsequent change in beneficiary or form of payment. The Participant may revoke this waiver any time during the 90-day period ending on the Annuity Starting Date. The Eligible Spouse's consent must be in writing and witnessed by a Plan representative or Notary Public, and the Eligible Spouse's consent must acknowledge the effect of the election.

A single Participant shall receive his benefit in the form of a life annuity, unless he otherwise elects one of the optional forms of benefit payment provided in Section 9.3.

9.3	Optional Forms of Benefit Payment - Subject to Section 9.2 above and the limitations set forth in paragraph (e) below, a retiring Participant may elect to receive his retirement benefits under any one of the following forms:

(a)

A life annuity, with no more payments after death of the Participant.

(b)

A life annuity providing for 120, 180 or 240 minimum guaranteed monthly payments.

(c)

Any Qualified Joint and Survivor Annuity (as defined in Section 1.30) of either 50%, 75% or 100%.

(d)

A lump sum payment of the Actuarial Equivalent of a Participant's retirement benefit provided such lump sum (determined at the time distribution commences) does not exceed $5,000. Notwithstanding the preceding sentence, for Plan Years beginning on or before August 5, 1997, any lump sum Actuarial Equivalent in excess of $3,500 shall not be distributed without the written consent of the Participant and the Participant's Eligible Spouse.

Each optional form of payment shall be Actuarial Equivalent of the "Normal Annuity Form" of payment of retirement benefits.

An election of an optional form of payment under this Section 9.3 may be revoked by the Participant at any time prior to the commencement of payments by making another election with appropriate spousal consent. Once payments have begun under an optional form of payment, however, such election shall become irrevocable, except as provided in Section 9.5 herein.

(e)

Limitation on Settlement Options :

(1)

The provisions of this Plan shall be subject to the limitation that no Participant shall, prior to his retirement, elect an interest only option. Distributions, if not made in a lump sum, may only be made over one of the following periods (or a combination thereof):

(i)

the life of the Participant,

(ii)

the life of the Participant and a designated Beneficiary,

(iii)

a period certain not extending beyond the life expectancy of the Participant, or

(iv)

a period certain not extending beyond the joint and last survivor expectancy of the Participant and a designated Beneficiary.

(2)

A Participant may not elect an optional form of benefit which provides monthly benefits to his Eligible Spouse, or to a Beneficiary, unless the actuarial value of the payments expected to be made to the Participant at the time the payment is to commence is more than 50% of the actuarial value of the total payments expected to be made under such optional form. In no event, however, can the amount of each monthly payment to a contingent annuitant or Beneficiary exceed that payable to the Participant.

(3)

Distributions from the Plan will be made in accordance with the requirements of the regulations under Code Section 401(a)(9) including the minimum distribution incidental benefit requirements of Section 1.401(a)(9)-2 of the proposed regulation.

9.4	Time of Payment of Benefits

(a)

Unless a Participant elects otherwise, payment of benefits must begin no later than 60 days after the close of the Plan Year in which the latest of the following events occurs:

(1)

the Participant's attainment of age 65 or earlier Normal Retirement Age specified under the Plan,

(2)

the termination of the Participant's service with the Employer.

Notwithstanding the above, the failure of a Participant and Spouse to consent to a distribution while a benefit is immediately distributable, within the meaning of the Plan, shall be deemed to be an election to defer commencement of payment of any benefit sufficient to satisfy this Section. Consent of the participant (and where applicable, such Participant's Spouse) shall be required for any distribution which occurs prior to the later of age 62 or the Participant’s Normal Retirement Age.

(b)

Age 70½ Distributions (prior to January 1, 1997) : Section 9.4(a)(2) notwithstanding, payment of the Accrued Benefit of a Participant must commence no later than the first day of April following the calendar year in which the Participant attains age 70½.

(c)

Age 70½ Distributions (effective for Plan Years beginning after December 31, 1996 ), subject to the provisions of Section 9.2.

At the election of the Participant payment of the Participant's Accrued Benefit may commence on the later of April 1 of the calendar year following the calendar year in which the Participant attains age 70½ or retires, except that benefit

distributions to a 5-percent owner must commence by the April 1 of the calendar year following the calendar year in which the participant attains age 70½.

Any Participant, except 5-percent owners, attaining age 70½ in years prior to 1997 may elect to stop distributions and recommence by the April 1 of the calendar year following the year in which the Participant retires. There is no new Annuity Starting Date upon recommencement.

A Participant is treated as a 5-percent owner for purposes of this section if such Participant is a 5-percent owner as defined in section 416(i) of the Code (determined in accordance with section 416 but without regard to whether the plan is top-heavy) at any time during the Plan Year.

Once distributions have begun to a 5-percent owner under this section, they must continue to be distributed, even if the Participant ceases to be a 5-percent owner in a subsequent year.

Compliance with Code Section 401(a)(9) . The intent of this Section is that the beginning dates and payment periods of benefits payable to each Participant and beneficiary will be within the limitations permitted under Code Section 401(a)(9) and the regulations promulgated thereunder. If there is any discrepancy between this Section and Code Section 401(a)(9), that Code Section will prevail. Further, if there is any discrepancy between this Section and any other provision of the Plan, this Section will prevail. It is the intent of this Plan to comply with the requirements of the regulations under Code Section 401(a)(9) including the minimum distribution incidental benefits rule.

9.5

Suspension of Benefits - If a Participant who is currently receiving monthly retirement payments returns to work for the Employer, and works for two hundred and fifty (250) or more Hours of Service during a calendar quarter, then any such monthly retirement payments shall be suspended. The period of suspension shall continue until such Participant again terminates his employment. At that time, benefit payments shall resume and shall be in the amount originally computed, unless the Participant's employment was sufficient to give him additional Years of Benefit Service. If the Participant shall earn additional Years of Benefit Service, then his benefit shall be recomputed as of his subsequent termination date, taking into account all of his Years of Benefit Service, but shall be adjusted actuarially to reflect any benefits previously received.

Furthermore, in no event shall such recomputation of the Participant's Accrued Benefit cause him to receive less in the way of monthly payments than what he was receiving immediately prior to the time his retirement payments were suspended.

9.6

Missing Persons - The administrator shall direct the Trustee to make a reasonable effort to locate all persons entitled to benefits under the Plan; however, notwithstanding any provisions in the Plan to the contrary, if, after a period of five (5) years from the date such benefit shall be due, any such persons entitled to benefits have not been located, their rights under the Plan shall become suspended. Before this provision becomes operative, the Trustee shall send a certified letter to all such persons at their last known addresses

advising them that their interest or benefits under the Plan shall be suspended. Any such suspended amounts shall be held by the Trustee for a period of three (3) additional years (or a total of eight (8) years from the time the benefits first become payable), provided, however, that if a person subsequently makes a valid claim with respect to such suspended benefits, his right to benefits shall be reinstated. Any such suspended amounts shall be handled in a manner not inconsistent with regulations issued by the Internal Revenue Service and Department of Labor.

ARTICLE 10

RE-EMPLOYMENT / RESTORATION OF SERVICE AND ACCRUED BENEFITS

10.1	Eligibility for Participation :

(a)

No "Break-in-Service" has occurred

(1)

If a terminated Participant resumes employment before a Break-in-Service, he shall re-enter the Plan on his re-employment date, regardless of whether he had a vested benefit or not.

(2)

If an Employee terminates employment during his initial Eligibility Computation Period and returns to work after the first date on which he would otherwise have become a Participant in the Plan, but prior to incurring a Break-in-Service, such Employee shall become a Participant on his date of re-employment, provided that he had completed 1,000 or more Hours of Service prior to his termination of employment. If such Employee shall not have completed 1,000 or more Hours of Service prior to his termination of employment, his Eligibility Computation Period shall shift to the Plan Year which overlaps his initial employment year for purposes of measuring Hours of Service for eligibility to participate.

(b)

"Break-in-Service" has occurred

(1)

General Rule (Vested or Non-Vested Participant) - All Years of Service preceding a Break in Service shall be taken into account in computing an Employee's Qualifying Years of Service. However, he will be required to complete one Year of Service, computed from date of re - employment, before combining post-break and pre-break service. Upon the completion of a Year of Service measured from his date of re-employment, he will participate retroactively as of his date of re-employment.

(2)

Exception to the General Rule - In the case of an Employee who does not have a Vested Interest in his Accrued Benefit, Years of Service preceding a Break in Service shall not be taken into account in computing an Employee's eligibility to participate in the Plan if the number of consecutive 1-Year Breaks in Service equals or exceeds the greater of (a) five (5) consecutive 1-Year Breaks in Service, or (b) the aggregate number of Years of Service earned before the consecutive Breaks in Service. Furthermore, the "aggregate number of Years of Service preceding the Break in Service" shall not include Years of Service which were not required to be taken into account under this Section by reason of any prior Break in Service.

North Carolina		56-1421916
(State of Incorporation)		(I.R.S. Employer Identification Number)

341 North Main Street, Troy, North Carolina		27371-0508
(Address of Principal Executive Offices)		(Zip Code)
Registrant’s telephone number, including area code:		(910) 576-6171

Title of each class		Name of each exchange on which registered
Common Stock, No Par Value		The Nasdaq Global Select Market

¨ Large Accelerated File	x Accelerated Filer	¨ Non-Accelerated Filer	¨ Smaller Reporting Company
		(Do not check if a smaller reporting company)

		Begins on
		Page (s)


Forward-Looking Statements		5
	PART I
Item 1	Business	5
Item 1A	Risk Factors	18
Item 1B	Unresolved Staff Comments	23
Item 2	Properties	23
Item 3	Legal Proceedings	23

	PART II
Item 5	Market for the Registrant’s Common Stock, Related Shareholder Matters, and Issuer Purchases of Equity Securities	24, 60
Item 6	Selected Consolidated Financial Data	27, 60
Item 7	Management’s Discussion and Analysis of Financial Condition and Results of Operations	27
	Overview – 2009 Compared to 2008	28
	Overview – 2008 Compared to 2007	30
	Outlook for 2010	31
	Critical Accounting Policies	32
	Merger and Acquisition Activity	34
	Statistical Information
	Net Interest Income	36, 61
	Provision for Loan Losses	38, 68
	Noninterest Income	39, 62
	Noninterest Expenses	40, 63
	Income Taxes	41, 63
	Stock-Based Compensation	41
	Distribution of Assets and Liabilities	45, 63
	Securities	45, 64
	Loans	47, 66
	Nonperforming Assets	48, 68
	Allowance for Loan Losses and Loan Loss Experience	50, 69
	Deposits and Securities Sold Under Agreements to Repurchase	51, 71
	Borrowings	53
	Liquidity, Commitments, and Contingencies	54, 73
	Capital Resources and Shareholders’ Equity	55, 75
	Off-Balance Sheet Arrangements and Derivative Financial Instruments	57
	Return on Assets and Equity	57, 74
	Interest Rate Risk (Including Quantitative and Qualitative Disclosures About Market Risk)	57, 72
	Inflation	59
	Current Accounting Matters	59
Item 7A	Quantitative and Qualitative Disclosures About Market Risk	59
Item 8	Financial Statements and Supplementary Data:
	Consolidated Balance Sheets as of December 31, 2009 and 2008	77
	Consolidated Statements of Income for each of the years in the three-year period ended December 31, 2009	78

		Begins on
		Page (s)
	Consolidated Statements of Comprehensive Income for each of the years in the three-year period ended December 31, 2009	79
	Consolidated Statements of Shareholders’ Equity for each of the years in the three-year period ended December 31, 2009	80
	Consolidated Statements of Cash Flows for each of the years in the three-year period ended December 31, 2009	81
	Notes to Consolidated Financial Statements	82
	Reports of Independent Registered Public Accounting Firm	131
	Selected Consolidated Financial Data	60
	Quarterly Financial Summary	76

Item 9	Changes in and Disagreements with Accountants on Accounting and Financial Disclosures	133
Item 9A	Controls and Procedures	133
Item 9B	Other Information	134

	PART III
Item 10	Directors, Executive Officers and Corporate Governance	134*
Item 11	Executive Compensation	134*
Item 12	Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters	134*
Item 13	Certain Relationships and Related Transactions, and Director Independence	134*
Item 14	Principal Accountant Fees and Services	134*

	PART IV
Item 15	Exhibits and Financial Statement Schedules	135

	SIGNATURES	138

County	Number of Branches		Deposits (in millions)		Market Share			Number of Competitors
Anson, NC		1	$	11		4.2	%		5
Beaufort, NC		3		48		6.3	%		6
Bladen, NC		1		29		11.4	%		5
Brunswick, NC		4		103		4.3	%		12
Cabarrus, NC		2		36		1.9	%		11
Carteret, NC		2		42		4.7	%		8
Chatham, NC		2		75		11.5	%		10
Chesterfield, SC		3		76		21.0	%		7
Columbus, NC		2		45		6.3	%		6
Dare, NC		1		18		1.8	%		11
Davidson, NC		3		106		4.2	%		10
Dillon, SC		3		72		26.6	%		3
Duplin, NC		3		125		26.3	%		6
Florence, SC		2		34		1.7	%		14
Guilford, NC		1		54		0.6	%		21
Harnett, NC		3		123		13.1	%		10
Horry, SC		1		7		0.1	%		26
Iredell, NC		2		35		1.5	%		22
Lee, NC		4		201		24.9	%		10
Montgomery, NC		5		104		38.1	%		4
Montgomery, VA		1		33		1.9	%		13
Moore, NC		11		464		23.6	%		11
New Hanover, NC		5		194		5.0	%		19
Onslow, NC		2		52		4.9	%		9
Pulaski, VA		1		22		5.7	%		8
Randolph, NC		4		69		3.6	%		15
Richmond, NC		1		23		5.0	%		6
Robeson, NC		5		187		17.3	%		10
Rockingham, NC		1		28		2.4	%		11
Rowan, NC		2		54		3.5	%		12
Scotland, NC		2		59		17.7	%		6
Stanly, NC		4		96		10.2	%		6
Wake, NC		1		16		0.1	%		30
Washington, VA		1		26		2.0	%		16
Wythe, VA		2		62		10.7	%		10
Brokered & Internet Deposits		-		204
Total		91	$	2,933

	Total Return Index Values (1) December 31,
	2004		2005		2006		2007		2008		2009
First Bancorp	$	100.00		76.68		85.96		77.18		78.40		61.01
Russell 2000		100.00		104.55		123.76		121.82		80.66		102.58
SNL Index-Banks between $1 billion and $5 billion		100.00		98.29		113.74		82.85		68.72		49.26

Financial Highlights
($ in thousands except per share data)	2009			2008			Change

Earnings
Net interest income	$	107,096			86,559			23.7	%
Provision for loan losses		20,186			9,880			104.3	%
Noninterest income		89,518			20,657			333.4	%
Noninterest expenses		78,551			62,211			26.3	%
Income before income taxes		97,877			35,125			178.7	%
Income tax expense		37,618			13,120			186.7	%
Net income		60,259			22,005			173.8	%
Preferred stock dividends and accretion		(3,972	)		—
Net income available to common shareholders	$	56,287			22,005			155.8	%

Net income per common share
Basic	$	3.38			1.38			144.9	%
Diluted		3.37			1.37			146.0	%

At Year End
Assets	$	3,545,356			2,750,567			28.9	%
Loans		2,652,865			2,211,315			20.0	%
Deposits		2,933,108			2,074,791			41.4	%

Ratios
Return on average assets		1.82	%		0.89	%
Return on average common equity		22.55	%		10.44	%
Net interest margin (taxable-equivalent)		3.81	%		3.74	%

	Year ended December 31,
($ in thousands)	2009		2008		2007
Net interest income, as reported	$	107,096		86,559		79,284
Tax-equivalent adjustment		818		658		554
Net interest income, tax-equivalent	$	107,914		87,217		79,838

($ in thousands)	Year Ended December 31, 2009
	Cooperative			Great Pee Dee			Total

Interest income – reduced by premium amortization on loans	$	−			(196	)		(196	)
Interest income – increased by accretion of loan discount		1,469			−			1,469
Interest expense – reduced by premium amortization of deposits		(3,711	)		(200	)		(3,911	)
Interest expense – reduced by premium amortization of borrowings		−			(464	)		(464	)
Impact on net interest income	$	5,180			468			5,648

($ in thousands)	Year Ended December 31, 2008
	Cooperative		Great Pee Dee			Total

Interest income – reduced by premium amortization on loans	$	−		(147	)		(147	)
Interest income – increased by accretion of loan discount		−		−			−
Interest expense – reduced by premium amortization of deposits		−		(898	)		(898	)
Interest expense – reduced by premium amortization of borrowings		−		(347	)		(347	)
Impact on net interest income	$	−		1,098			1,098

($ in thousands )	Balance at beginning of period		Internal growth (1)			Growth from Acquisitions		Balance at end of period		Total percentage growth			Internal percentage growth (1)
2009
Loans	$	2,211,315		(159,554	)		601,104		2,652,865		20.0	%		-7.2	%

Deposits – Noninterest bearing		229,478		7,720			35,224		272,422		18.7	%		3.4	%
Deposits – NOW		198,775		131,576			32,015		362,366		82.3	%		66.2	%
Deposits – Money market		340,739		110,444			45,757		496,940		45.8	%		32.4	%
Deposits – Savings		125,240		2,855			21,243		149,338		19.2	%		2.3	%
Deposits – Brokered time		78,569		(45,180	)		42,943		76,332		-2.8	%		-57.5	%
Deposits – Internet time		5,206		(38,854	)		161,672		128,024		n/a			n/a
Deposits – Time >$100,000		520,198		35,826			148,104		704,128		35.4	%		6.9	%
Deposits – Time <$100,000		576,586		(58,131	)		225,103		743,558		29.0	%		-10.1	%
Total deposits	$	2,074,791		146,256			712,061		2,933,108		41.4	%		7.0	%

2008
Loans	$	1,894,295		133,180			183,840		2,211,315		16.7	%		7.0	%

Deposits – Noninterest bearing		232,141		(11,099	)		8,436		229,478		-1.1	%		-4.8	%
Deposits – NOW		192,785		(4,405	)		10,395		198,775		3.1	%		-2.3	%
Deposits – Money market		264,653		61,025			15,061		340,739		28.7	%		23.1	%
Deposits – Savings		100,955		21,697			2,588		125,240		24.1	%		21.5	%
Deposits – Brokered time		–		53,012			25,557		78,569		n/a			n/a
Deposits – Internet time		–		5,206			–		5,206		n/a			n/a
Deposits – Time >$100,000		479,176		3,350			37,672		520,198		8.6	%		0.7	%
Deposits – Time <$100,000		568,567		(39,981	)		48,000		576,586		1.4	%		-7.0	%
Total deposits	$	1,838,277		88,805			147,709		2,074,791		12.9	%		4.8	%

	At December 31, 2009 (1)		At December 31, 2008
Commercial, financial, and agricultural	$	4,033		1,726
Real estate – construction, land development, and other land loans		80,669		6,936
Real estate – mortgage – residential (1-4 family) first mortgages		48,424		10,856
Real estate – mortgage – home equity loans/lines of credit		16,951		2,242
Real estate – mortgage – commercial and other		28,476		3,624
Installment loans to individuals		1,569		1,216
Total nonaccrual loans	$	180,122		26,600

	Covered Nonaccrual Loans		Non-covered Nonaccrual Loans		Total Nonaccrual Loans
Commercial, financial, and agricultural	$	263		3,770		4,033
Real estate – construction, land development, and other land loans		54,023		26,646		80,669
Real estate – mortgage – residential (1-4 family) first mortgages		31,315		17,109		48,424
Real estate – mortgage – home equity loans/lines of credit		13,451		3,500		16,951
Real estate – mortgage – commercial and other		18,595		9,881		28,476
Installment loans to individuals		269		1,300		1,569
Total nonaccrual loans	$	117,916		62,206		180,122

	At December 31, 2009 (1)		At December 31, 2008
Vacant land	$	44,078		975
1-4 family residential properties		10,004		2,149
Commercial real estate		2,141		1,693
Other		–		15
Total other real estate	$	56,223		4,832

($ in thousands)	2009		2008		2007
Commissions earned from:
Sales of credit life insurance	$	281		294		304
Sales of investments, annuities, and long term care insurance		503		474		387
Sales of property and casualty insurance		740		784		820
Total	$	1,524		1,552		1,511

($ in thousands, except per share and nonfinancial data)	Year Ended December 31,
	2009			2008		2007		2006		2005
Income Statement Data
Interest income	$	155,991			147,862		148,942		129,207		101,429
Interest expense		48,895			61,303		69,658		54,671		32,838
Net interest income		107,096			86,559		79,284		74,536		68,591
Provision for loan losses		20,186			9,880		5,217		4,923		3,040
Net interest income after provision		86,910			76,679		74,067		69,613		65,551
Noninterest income		89,518			20,657		17,217		14,310		15,004
Noninterest expense		78,551			62,211		56,324		53,198		47,636
Income before income taxes		97,877			35,125		34,960		30,725		32,919
Income taxes		37,618			13,120		13,150		11,423		16,829
Net income		60,259			22,005		21,810		19,302		16,090
Preferred stock dividends and accretion		(3,972	)		—		—		—		—
Net income available to common shareholders		56,287			22,005		21,810		19,302		16,090

Earnings per common share – basic		3.38			1.38		1.52		1.35		1.14
Earnings per common share – diluted		3.37			1.37		1.51		1.34		1.12


Per Share Data (Common)
Cash dividends declared - common	$	0.32			0.76		0.76		0.74		0.70
Market Price
High		19.00			20.86		26.72		23.90		27.88
Low		6.87			11.25		16.40		19.47		19.32
Close		13.97			18.35		18.89		21.84		20.16
Stated book value – common		16.59			13.27		12.11		11.34		10.94
Tangible book value – common		12.35			9.18		8.56		7.76		7.48


Selected Balance Sheet Data (at year end)
Total assets	$	3,545,356			2,750,567		2,317,249		2,136,624		1,801,050
Loans		2,652,865			2,211,315		1,894,295		1,740,396		1,482,611
Allowance for loan losses		37,343			29,256		21,324		18,947		15,716
Intangible assets		70,948			67,780		51,020		51,394		49,227
Deposits		2,933,108			2,074,791		1,838,277		1,695,679		1,494,577
Borrowings		176,811			367,275		242,394		210,013		100,239
Total shareholders’ equity		342,383			219,868		174,070		162,705		155,728

	Year Ended December 31,
	2009							2008							2007
($ in thousands)	Average Volume		Avg. Rate			Interest Earned or Paid		Average Volume		Avg. Rate			Interest Earned or Paid		Average Volume		Avg. Rate			Interest Earned or Paid
Assets
Loans (1)	$	2,475,045		5.98	%	$	148,007	$	2,117,028		6.56	%	$	138,878	$	1,808,219		7.70	%	$	139,323
Taxable securities		167,041		3.94	%		6,580		152,246		4.82	%		7,333		131,035		4.92	%		6,453
Non-taxable securities (2)		23,018		7.29	%		1,677		16,258		7.98	%		1,298		13,786		8.09	%		1,115
Short-term investments, primarily overnight funds		168,063		0.32	%		545		43,493		2.32	%		1,011		45,388		5.74	%		2,605
Total interest- earning assets		2,833,167		5.53	%		156,809		2,329,025		6.38	%		148,520		1,998,428		7.48	%		149,496
Cash and due from banks		42,350							39,627							38,906
Bank premises and equipment, net		52,789							49,815							45,398
Other assets		168,831							65,829							56,844
Total assets	$	3,097,137						$	2,484,296						$	2,139,576

Liabilities and Equity
NOW accounts	$	244,863		0.29	%	$	720	$	197,459		0.19	%	$	377	$	192,407		0.37	%	$	712
Money market accounts		429,068		1.52	%		6,537		309,917		2.36	%		7,311		239,258		3.31	%		7,929
Savings accounts		137,142		1.08	%		1,487		124,460		1.65	%		2,048		106,357		1.62	%		1,727
Time deposits >$100,000		745,159		2.54	%		18,908		532,566		4.00	%		21,308		450,801		5.03	%		22,687
Other time deposits		736,358		2.43	%		17,866		586,235		3.79	%		22,197		567,572		4.67	%		26,498
Total interest-bearing deposits		2,292,590		1.99	%		45,518		1,750,637		3.04	%		53,241		1,556,395		3.83	%		59,553
Securities sold under agreements to repurchase		53,537		1.37	%		736		42,097		2.15	%		903		39,220		3.76	%		1,476
Borrowings		151,177		1.75	%		2,641		226,522		3.16	%		7,159		130,387		6.62	%		8,629
Total interest- bearing liabilities		2,497,304		1.96	%		48,895		2,019,256		3.04	%		61,303		1,726,002		4.04	%		69,658
Non-interest- bearing deposits		257,119							234,695							223,870
Other liabilities		29,541							19,535							18,847
Shareholders’ equity		313,173							210,810							170,857
Total liabilities and shareholders’ equity	$	3,097,137						$	2,484,296						$	2,139,576
Net yield on interest- earning assets and net interest income				3.81	%	$	107,914				3.74	%	$	87,217				4.00	%	$	79,838
Interest rate spread				3.57	%						3.34	%						3.44	%

Average prime rate				3.25	%						5.09	%						8.05	%

	Year Ended December 31, 2009									Year Ended December 31, 2008
	Change Attributable to									Change Attributable to
(In thousands)	Changes in Volumes			Changes in Rates			Total Increase (Decrease)			Changes in Volumes			Changes in Rates			Total Increase (Decrease)
Interest income (tax-equivalent):
Loans	$	22,448			(13,319	)		9,129			22,026			(22,471	)		(445	)
Taxable securities		648			(1,401	)		(753	)		1,033			(153	)		880
Non-taxable securities		516			(137	)		379			199			(16	)		183
Short-term investments, primarily overnight funds		1,650			(2,116	)		(466	)		(76	)		(1,518	)		(1,594	)
Total interest income		25,262			(16,973	)		8,289			23,182			(24,158	)		(976	)

Interest expense:
NOW accounts		115			228			343			14			(349	)		(335	)
Money Market accounts		2,313			(3,087	)		(774	)		2,004			(2,622	)		(618	)
Savings accounts		173			(734	)		(561	)		296			25			321
Time deposits>$100,000		6,950			(9,350	)		(2,400	)		3,693			(5,072	)		(1,379	)
Other time deposits		4,663			(8,994	)		(4,331	)		789			(5,090	)		(4,301	)
Total interest-bearing deposits		14,214			(21,937	)		(7,723	)		6,796			(13,108	)		(6,312	)
Securities sold under agreements to repurchase		201			(368	)		(167	)		85			(658	)		(573	)
Borrowings		(1,849	)		(2,669	)		(4,518	)		4,700			(6,170	)		(1,470	)
Total interest expense		12,566			(24,974	)		(12,408	)		11,581			(19,936	)		(8,355	)

Net interest income (tax-equivalent)	$	12,696			8,001			20,697			11,601			(4,222	)		7,379

	Covered Other Real Estate		Non-covered Other Real Estate		Total Other Real Estate
Vacant land	$	40,836		3,242		44,078
1-4 family residential properties		6,171		3,833		10,004
Commercial real estate		423		1,718		2,141
Other		–		–		–
Total other real estate	$	47,430		8,793		56,223

	As of December 31,
	2009			2008			2007
Assets
Interest-earning assets
Net loans		74	%		80	%		81	%
Securities available for sale		5			6			6
Securities held to maturity		1			1			1
Short term investments		8			5			6
Total interest-earning assets		88			92			94

Noninterest-earning assets
Cash and due from banks		2			3			1
Premises and equipment		2			2			2
FDIC loss share receivable		4			—			—
Other assets		4			3			3
Total assets		100	%		100	%		100	%

Liabilities and shareholders’ equity
Demand deposits – noninterest bearing		8	%		8	%		10	%
NOW deposits		10			7			8
Money market deposits		14			12			11
Savings deposits		4			5			4
Time deposits of $100,000 or more		23			22			21
Other time deposits		23			22			25
Total deposits		82			76			79
Securities sold under agreements to repurchase		2			2			2
Borrowings		5			13			10
Accrued expenses and other liabilities		1			1			1
Total liabilities		90			92			92

Shareholders’ equity		10			8			8
Total liabilities and shareholders’ equity		100	%		100	%		100	%

	As of December 31, 2009
	Covered Loans (Carrying Value)					Non-covered Loans					Total Loans					Unpaid Principal Balance of Covered Loans		Carrying Value of Covered Loans as a Percent of the Unpaid Balance
($ in thousands)	Amount		% of Covered Loans			Amount		% of Non-covered Loans			Amount		% of Total Loans			Amount		Percentage
Commercial, financial, and agricultural	$	9,386		2	%	$	164,225		8	%	$	173,611		7	%	$	12,406		76	%
Real estate – construction, land development & other land loans		143,256		28	%		408,458		19	%		551,714		21	%		254,897		56	%
Real estate – mortgage – residential (1-4 family) first mortgages		255,405		49	%		594,470		28	%		849,875		32	%		329,141		78	%
Real estate – mortgage – home equity loans / lines of credit		22,059		4	%		247,995		11	%		270,054		10	%		24,504		90	%
Real estate – mortgage – commercial and other		85,738		16	%		632,985		30	%		718,723		27	%		108,908		79	%
Installment loans to individuals		4,178		1	%		84,336		4	%		88,514		3	%		4,673		89	%
Loans, gross		520,022		100	%		2,132,469		100	%		2,652,491		100	%	$	734,529		71	%
Unamortized net deferred loan costs/ (fees)		–					374					374
Total loans, net	$	520,022				$	2,132,843				$	2,652,865

	As of December 31, 2009
	Due within one year					Due after one year but within five years					Due after five years					Total
($ in thousands)	Amount		Yield			Amount		Yield			Amount		Yield			Amount		Yield
Variable Rate Loans:
Commercial, financial, and agricultural	$	62,767		5.27	%	$	19,662		4.54	%	$	1,336		3.93	%	$	83,765		5.08	%
Real estate – construction only		130,802		5.02	%		4,970		4.75	%		922		4.99	%		136,694		5.01	%
Real estate – all other mortgage		276,296		4.88	%		205,101		4.89	%		494,140		5.05	%		975,537		4.97	%
Installment loans to individuals		403		5.67	%		8,753		9.31	%		15,880		5.30	%		25,036		6.71	%
Total at variable rates		470,268		4.97	%		238,486		5.02	%		512,278		5.05	%		1,221,032		5.02	%

Fixed Rate Loans:
Commercial, financial, and agricultural		28,190		6.99	%		56,210		6.98	%		9,199		6.18	%		93,599		6.90	%
Real estate – construction only		11,162		5.82	%		6,653		6.49	%		1,286		5.92	%		19,101		6.06	%
Real estate – all other mortgage		219,678		6.80	%		730,437		6.76	%		136,219		6.47	%		1,086,334		6.73	%
Installment loans to individuals		11,144		7.67	%		40,452		9.51	%		1,081		7.48	%		52,677		9.08	%
Total at fixed rates		270,174		6.82	%		833,752		6.91	%		147,785		6.45	%		1,251,711		6.83	%

Subtotal		740,442		5.64	%		1,072,238		6.49	%		660,063		5.36	%		2,472,743		5.94	%
Nonaccrual loans		180,122				─					─						180,122
Total loans	$	920,564				$	1,072,238				$	660,063				$	2,652,865

	As of December 31, 2009
($ in thousands)	Covered		Non-covered		Total		Total Loans		Nonperforming Loans to Total Loans

Nonaccrual loans and Troubled Debt Restructurings (1)
Eastern Region (NC)	$	116,442		23,126		139,568	$	765,000		18.2	%
Triangle Region (NC)		–		21,875		21,875		764,000		2.9	%
Triad Region (NC)		–		11,847		11,847		415,000		2.9	%
Charlotte Region (NC)		–		5,212		5,212		111,000		4.7	%
Southern Piedmont Region (NC)		–		3,382		3,382		242,000		1.4	%
South Carolina Region		1,474		13,995		15,469		189,000		8.2	%
Virginia Region		–		2,555		2,555		159,000		1.6	%
Other		–		1,497		1,497		8,000		18.7	%
Total nonaccrual loans and troubled debt restructurings	$	117,916		83,489		201,405	$	2,653,000		7.6	%

Other Real Estate (1)
Eastern Region (NC)	$	47,166		1,712		48,878
Triangle Region (NC)		–		1,525		1,525
Triad Region (NC)		–		2,732		2,732
Charlotte Region (NC)		–		719		719
Southern Piedmont Region (NC)		–		306		306
South Carolina Region		264		696		960
Virginia Region		–		–		–
Other		–		1,103		1,103
Total other real estate	$	47,430		8,793		56,223

(1) See the counties that comprise each region in Note 12 to the consolidated financial statements.

	As of December 31, 2009
($ in thousands)	3 Months or Less		Over 3 to 6 Months		Over 6 to 12 Months		Over 12 Months		Total

Time deposits of $100,000 or more	$	247,573		227,452		277,191		64,324		816,540

	Repricing schedule for interest-earning assets and interest-bearing liabilities held as of December 31, 2009
($ in thousands)	3 Months or Less			Over 3 to 12 Months			Total Within 12 Months			Over 12 Months			Total

Earning assets:
Loans, net of deferred fees (1)	$	1,105,788			238,518			1,344,306			1,308,559			2,652,865
Securities available for sale		22,664			34,044			56,708			123,047			179,755
Securities held to maturity		1,997			1,247			3,244			31,169			34,413
Short-term investments		294,768		─				294,768		─				294,768
Total earning assets	$	1,425,217			273,809			1,699,026			1,462,775			3,161,801

Percent of total earning assets		45.08	%		8.66	%		53.74	%		46.26	%		100.00	%
Cumulative percent of total earning assets		45.08	%		53.74	%		53.74	%		100.00	%		100.00	%

Interest-bearing liabilities:
NOW deposits	$	362,366		─				362,366		─				362,366
Money market deposits		496,940		─				496,940		─				496,940
Savings deposits		149,338		─				149,338		─				149,338
Time deposits of $100,000 or more		247,573			504,643			752,216			64,324			816,540
Other time deposits		262,660			489,392			752,052			83,450			835,502
Securities sold under agreements to repurchase		64,058		─				64,058		─				64,058
Borrowings		146,394			17,600			163,994			12,817			176,811
Total interest-bearing liabilities	$	1,729,329			1,011,635			2,740,964			160,591			2,901,555

Percent of total interest-bearing liabilities		59.60	%		34.87	%		94.47	%		5.53	%		100.00	%
Cumulative percent of total interest- bearing liabilities		59.60	%		94.47	%		94.47	%		100.00	%		100.00	%

Interest sensitivity gap	$	(304,112	)		(737,826	)		(1,041,938	)		1,302,184			260,246
Cumulative interest sensitivity gap		(304,112	)		(1,041,938	)		(1,041,938	)		260,246			260,246
Cumulative interest sensitivity gap as a percent of total earning assets		(9.62	%)		(32.95	%)		(32.95	%)		8.23	%		8.23	%
Cumulative ratio of interest-sensitive assets to interest-sensitive liabilities		82.41	%		61.99	%		61.99	%		108.97	%		108.97	%

	Payments Due by Period ($ in thousands )
Contractual Obligations As of December 31, 2009	Total		On Demand or Less than 1 Year		1-3 Years		4-5 Years		After 5 Years
Securities sold under agreements to repurchase	$	64,058		64,058	─		─		─
Borrowings		176,811		117,600		12,817	─			46,394
Operating leases		5,394		786		1,275		937		2,396
Total contractual cash obligations, excluding deposits		246,263		182,444		14,092		937		48,790

Deposits		2,933,108		2,785,334		133,699		14,028		47
Total contractual cash obligations, including deposits	$	3,179,371		2,967,778		147,791		14,965		48,837

	Amount of Commitment Expiration Per Period ($ in thousands )
Other Commercial Commitments As of December 31, 2009	Total Amounts Committed		Less than 1 Year		1-3 Years		4-5 Years		After 5 Years
Credit cards	$	26,958		13,479		13,479	─		─
Lines of credit and loan commitments		288,765		111,704		12,640		10,983		153,438
Standby letters of credit		7,646		7,386		151		109	─
Total commercial commitments	$	323,369		132,569		26,270		11,092		153,438

	Expected Maturities of Market Sensitive Instruments Held at December 31, 2009 Occurring in Indicated Year
($ in thousands)	2010		2011		2012		2013		2014		Beyond		Total		Average Interest Rate			Estimated Fair Value

Due from banks, interest-bearing	$	283,175		-		-		-		-		-		283,175		0.24	%	$	283,175
Federal funds sold		7,626		-		-		-		-		-		7,626		0.24	%		7,626
Presold mortgages in process of settlement		3,967		-		-		-		-		-		3,967		5.00	%		3,967
Debt Securities- at amortized cost (1) (2)		59,963		27,356		23,632		22,464		17,154		45,149		195,718		4.29	%		197,698
Loans – fixed (3) (4)		270,776		185,082		274,990		268,817		104,292		148,255		1,252,212		6.83	%		1,258,315
Loans – adjustable (3) (4)		476,466		62,841		78,673		58,939		44,224		499,553		1,220,696		5.02	%		1,182,360
Total	$	1,101,973		275,279		377,295		350,220		165,670		692,957		2,963,394		5.27	%	$	2,933,141

NOW deposits	$	362,366		-		-		-		-		-		362,366		0.28	%	$	362,366
Money market deposits		496,940		-		-		-		-		-		496,940		1.18	%		496,940
Savings deposits		149,338		-		-		-		-		-		149,338		0.99	%		149,338
Time deposits		1,504,268		108,812		24,887		8,945		5,083		47		1,652,042		2.13	%		1,661,473
Securities sold under agreements to repurchase		64,058		-		-		-		-		-		64,058		0.86	%		64,058
Borrowings – fixed (2)		17,600		1,800		7,500		-		-		-		26,900		4.35	%		27,984
Borrowings – adjustable		100,000		3,000		–		–		–		46,911		149,911		0.93	%		113,192
Total	$	2,694,570		113,612		32,387		8,945		5,083		46,958		2,901,555		1.90	%	$	2,875,351

	For the Year Ended December 31,
	2009			2008			2007

Return on assets		1.82	%		0.89	%		1.02	%
Return on common equity		22.55	%		10.44	%		12.77	%
Dividend payout ratio		9.47	%		55.07	%		50.00	%
Average shareholders’ equity to average assets		10.11	%		8.49	%		7.99	%

($ in thousands, except per share data)	2009			2008			2007

Interest Income
Interest and fees on loans	$	148,007			138,878			139,323
Interest on investment securities:
Taxable interest income		6,580			7,333			6,453
Tax-exempt interest income		859			640			561
Other, principally overnight investments		545			1,011			2,605
Total interest income		155,991			147,862			148,942

Interest Expense
Savings, NOW and money market		8,744			9,736			10,368
Time deposits of $100,000 or more		18,908			21,308			22,687
Other time deposits		17,866			22,197			26,498
Securities sold under agreements to repurchase		736			903			1,476
Borrowings		2,641			7,159			8,629
Total interest expense		48,895			61,303			69,658

Net interest income		107,096			86,559			79,284
Provision for loan losses		20,186			9,880			5,217
Net interest income after provision for loan losses		86,910			76,679			74,067

Noninterest Income
Service charges on deposit accounts		13,854			13,535			9,988
Other service charges, commissions and fees		4,848			4,392			3,902
Fees from presold mortgage loans		1,505			869			1,135
Commissions from sales of insurance and financial products		1,524			1,552			1,511
Data processing fees		139			167			204
Gain from acquisition		67,894		–			–
Securities gains (losses)		(104	)		(14	)		487
Other gains (losses)		(142	)		156			(10	)
Total noninterest income		89,518			20,657			17,217

Noninterest Expenses
Salaries		30,745			28,127			26,227
Employee benefits		10,843			7,319			7,443
Total personnel expense		41,588			35,446			33,670
Occupancy expense		6,071			4,175			3,795
Equipment related expenses		4,334			4,105			3,809
Intangibles amortization		630			416			374
Acquisition expenses		1,343		–			–
Other operating expenses		24,585			18,069			14,676
Total noninterest expenses		78,551			62,211			56,324

Income before income taxes		97,877			35,125			34,960
Income taxes		37,618			13,120			13,150

Net income		60,259			22,005			21,810

Preferred stock dividends and accretion		(3,972	)	–			–

Net income available to common shareholders	$	56,287			22,005			21,810

Earnings per common share:
Basic	$	3.38			1.38			1.52
Diluted		3.37			1.37			1.51

Dividends declared per common share	$	0.32			0.76			0.76

Weighted average common shares outstanding:
Basic		16,648,822			15,980,533			14,378,279
Diluted		16,686,880			16,027,144			14,468,974

	Preferred		Preferred Stock			Common Stock						Common Stock		Retained			Accumulated Other Comprehensive			Total Share- holders’
(In thousands, except share data )	Stock		Discount			Shares			Amount			Warrants		Earnings			Income (Loss)			Equity


Balances, January 1, 2007	$	—		—			14,353		$	56,035			—		111,220			(4,550	)		162,705

Net income															21,810						21,810
Cash dividends declared ($0.76 per share)															(10,928	)					(10,928	)
Common stock issued under stock option plans							52			568											568
Purchases and retirement of common stock							(27	)		(532	)										(532	)
Tax benefit realized from exercise of nonqualified stock options						—				41											41
Stock-based compensation						—				190											190
Other comprehensive income																		216			216

Balances, December 31, 2007		—		—			14,378			56,302			—		122,102			(4,334	)		174,070

Net income															22,005						22,005
Cash dividends declared ($0.76 per share)															(12,155	)					(12,155	)
Common stock issued under stock option plans							57			705											705
Common stock issued into dividend reinvestment plan							80			1,252											1,252
Common stock issued in acquisition							2,059			37,605											37,605
Tax benefit realized from exercise of nonqualified stock options							—			65											65
Stock-based compensation							—			143											143
Other comprehensive income																		(3,822	)		(3,822	)

Balances, December 31, 2008		—		—			16,574			96,072			—		131,952			(8,156	)		219,868

Net income															60,259						60,259
Preferred stock issued		65,000		(4,592	)																60,408
Common stock warrants issued													4,592								4,592
Common stock issued under stock option plans							42			393											393
Common stock issued into dividend reinvestment plan							77			1,112											1,112
Cash dividends declared ($0.32 per share)															(5,331	)					(5,331	)
Preferred dividends															(3,169	)					(3,169	)
Accretion of preferred stock discount				803											(803	)					––
Tax benefit realized from exercise of nonqualified stock options							—			73											73
Stock-based compensation							29			449											449
Other comprehensive income																		3,729			3,729

Balances, December 31, 2009	$	65,000		(3,789	)		16,693		$	98,099			4,592		182,908			(4,427	)		342,383

	For the Years Ended December 31,
	2009						2008						2007
($ in thousands, except per share amounts)	Income (Numer-ator)		Shares (Denom-inator)		Per Share Amount		Income (Numer-ator)		Shares (Denom-inator)		Per Share Amount		Income (Numer-ator)		Shares (Denom-inator)		Per Share Amount


Basic EPS
Net income available to common shareholders	$	56,287		16,648,822	$	3.38	$	22,005		15,980,533	$	1.38	$	21,810		14,378,279	$	1.52

Effect of dilutive securities		-		38,058				-		46,611				-		90,695

Diluted EPS per common share	$	56,287		16,686,880	$	3.37	$	22,005		16,027,144	$	1.37	$	21,810		14,468,974	$	1.51

	December 31, 2009			December 31, 2008			December 31, 2007
Unrealized gain on securities available for sale	$	1,832			273			86
Deferred tax liability		(715	)		(106	)		(34	)
Net unrealized gain (loss) on securities available for sale		1,117			167			52

Additional pension liability		(9,164	)		(13,693	)		(7,240	)
Deferred tax asset		3,620			5,370			2,854
Net additional pension liability		(5,544	)		(8,323	)		(4,386	)

Total accumulated other comprehensive income (loss)	$	(4,427	)		(8,156	)		(4,334	)

($ in thousands)	As Recorded by Great Pee Dee			Fair Value Adjustments			As Recorded by the Company
Assets
Cash and cash equivalents	$	3,242			–			3,242
Securities		15,364			–			15,364
Loans, gross		187,309			1,226	(a)		183,840
					(4,695	) (b)
Allowance for loan losses		(2,353	)		(805	) (c)		(3,158	)
Premises and equipment		5,060			(708	) (d)		4,352
Core deposit intangible		355			492	(e)		847
Other		4,285			2,690	(f)		6,975
Total		213,262			(1,800	)		211,462

Liabilities
Deposits	$	146,611			1,098	(g)		147,709
Borrowings		39,337			1,328	(h)		40,665
Other		1,058			–			1,058
Total		187,006			2,426			189,432

Net identifiable assets acquired								22,030

Total cost of acquisition
Value of stock issued				$	37,022
Value of assumed options					587
Direct costs of acquisition					751
Total cost of acquisition								38,360

Goodwill recorded related to acquisition of Great Pee Dee Bancorp							$	16,330

($ in thousands)	Year Ended December 31, 2009			Year Ended December 31, 2008
Interest income – reduced by premium amortization on loans	$	(196	)	$	(147	)
Interest expense – reduced by premium amortization of deposits		(200	)		(898	)
Interest expense – reduced by premium amortization of borrowings		(464	)		(347	)
Impact on net interest income		468			1,098
Amortization of core deposit intangible		114			86
Total effect on income before income taxes		354			1,012
Income taxes		138			395
Total effect on net income of Great Pee Dee purchase accounting adjustments	$	216		$	617

($ in thousands, except share data)	Year Ended December 31, 2008		Year Ended December 31, 2007
Net interest income	$	88,487		87,317
Noninterest income		21,336		19,612
Total revenue		109,823		106,929
Provision for loan losses		10,230		5,444
Noninterest expense		66,646		62,966
Income before income taxes		32,947		38,519
Income tax expense		12,545		14,660
Net income		20,402		23,859
Earnings per share
Basic		1.24		1.45
Diluted		1.23		1.44

($ in thousands)	As Recorded by Cooperative Bank			Fair Value Adjustments			As Recorded by the Company
Assets
Cash and cash equivalents	$	66,096			–			66,096
Securities		40,189			–			40,189
Presold mortgages		3,249			–			3,249
Loans		828,958			(227,854	) (a)		601,104
Core deposit intangible		−			3,798	(b)		3,798
FDIC loss share receivable		−			185,112	(c)		185,112
Foreclosed properties		15,993			(3,534	) (d)		12,459
Other assets		4,178			(137	) (e)		4,041
Total		958,663			(42,615	)		916,048

Liabilities
Deposits	$	706,139			5,922	(f)		712,061
Borrowings		153,056			6,409	(g)		159,465
Other		2,227			160	(e)		2,387
Total		861,422			12,491			873,913

Excess of assets received over liabilities		97,241			(55,106	)		42,135
Less: Asset discount		(123,000	)
Cash received from FDIC at closing		25,759						25,759

Total gain recorded							$	67,894

	2009									2008
	Amortized		Fair		Unrealized					Amortized		Fair		Unrealized
(In thousands)	Cost		Value		Gains		(Losses)			Cost		Value		Gains		(Losses)

Securities available for sale:
Government-sponsored enterprise securities	$	36,106		36,518		412	─				88,951		90,424		1,473	─
Mortgage-backed securities		109,430		111,797		2,423		(56	)		46,340		46,962		779		(157	)
Corporate bonds		15,769		14,436	─			(1,333	)		18,885		16,848		380		(2,417	)
Equity securities		16,618		17,004		417		(31	)		16,744		16,959		280		(65	)
Total available for sale	$	177,923		179,755		3,252		(1,420	)	$	170,920		171,193		2,912		(2,639	)

Securities held to maturity:
State and local governments	$	34,394		34,928		612		(78	)		15,967		15,788		109		(288	)
Other		19		19	─		─				23		23	─		─
Total held to maturity	$	34,413		34,947		612		(78	)		15,990		15,811		109		(288	)