1st NC Bank

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Tri-State 1st Banc Inc.
September 29, 2009
For Immediate Release

Tri-State 1st Banc Inc.
16926 St. Clair Ave., P. O. Box 796
East Liverpool, OH 43920
(330) 385-9200

September 29, 2008

Dear Shareholder:

It is with satisfaction that I enclose a check in the amount of $.05 per share on your Series A preferred stock or $.05 per share on your common shares of Tri-State 1st Banc Inc.  The last twelve months have been very difficult times for many of this nation’s top corporations.  Shareholders of many banking companies who received generous dividends a year ago are not receiving any dividend this year, or will receive dividends of as little as $.01 a share this quarter.  The Board of Directors of our company at its August 27, 2009 meeting declared this dividend payable today to our shareholders of record on September 8, 2009. 

The nation’s economy continues to experience lots of pain that has in turn been transmitted to millions of shareholders guilty only of believing in the American dream and trusting those persons who had been responsible for its greatness.  Even the most reliable of industries such as auto, insurance and technology have not been spared, and this includes the ever-reliable banking industry.  Mistakes were made by CEOs, regulators and government officials who certainly should have known better and this is exacerbated by the fact that we are victims to the times.

Quoting Camden R. Fine, President/CEO of the Independent Community Bankers of America in his letter to members dated September 8, 2009, “Average Americans are beginning to understand the difference between Wall Street and Main Street banks.  They understand that community banks didn’t gamble with their assets, their investments and the entire economy.  Most Americans understand that community banks shouldn’t be penalized for the reckless and irresponsible behavior of several mega-Wall Street firms and many non-regulated financial firms, especially if it means that community banks will be forced to restrict the products and services they can offer to their customers.” 

I agree with Mr. Fine’s assessment of the mood of America toward community bankers, but it doesn’t change the fact that banks are all in the same boat together.  Closing of nearly 90 banks in this country (only one in Ohio) at the time of the writing of this letter has depleted the funds in the FDIC and required imposition of large, costly assessments on member banks.  The federal government has often stated that it stands behind the FDIC but while the government bailed out many companies in many industries this year, it has not bailed out the FDIC.  It only raised the amount of the credit line it will loan to FDIC.  This fund is financed entirely from assessments made against member banks.  Special assessments made and to be made in the months ahead on member banks pose a heavy burden on the earnings of those banks and their shareholders. 

Fortunately you have a Board of Directors and a loyal, experienced management team that has been acting prudently and wisely over the years.  They have been taking steps over the years to protect your investment and their investment in the company.

In the last couple years the Bank initiated a program to drastically cut expenses that included such things as consolidation of seven transactional offices into five, delisting company stock from the SEC, offering new products and services (such as Trust and Bounce Protection), converting to a more efficient, less expensive and more customer friendly core processing system to prepare for future growth, and foregoing the opening new branches.  These strategic actions incurred near term expenses limiting profits then in order to realize long term improved earnings in the future.  Much of these benefits have yet to be reflected on the Bank books.

Our new Bank CEO, Steve Sant, brings a raft of knowledge, experience and energy to the job and his leadership style has brought out the best in our seasoned executive officers and dedicated staff.  Steve has inspired a new thrust toward an improvement in customer service, customer prospect calls and credit quality that will stand the Bank in good stead in the years ahead.  In the last two years, that Bank has grown by $20 million or 19.5%, and has now put itself in a position for even greater growth in the future.  Total Assets now stand at $125 million.

Dr. Marc D. Hoffrichter, who founded MDH Investment Management Inc. over twenty-five years ago and continues to serve as its President today, wrote to his clients on September 2, 2009:  “This remains a period where preservation of capital remains uppermost in my mind.  We wait patiently to redeploy your funds at markedly lower levels.  So far so good!”  New clients and other clients who have switched to MDH after losing large sums with other managers have already pushed the assets under management upward so far this year by double digits reaching over $75 million.  This company has historically performed best in down and troubled markets and 2009 has been no exception.  Marc recently added David Bickerton to the MDH staff.  Dave, a graduate of Miami University, has already proven to be a fast learner and will add continuity and strength to the team.

This year Gateminder Corporation that manages about 125 ATM machines and over $20 million in transactions annually for merchants and financial institutions, will not only show remarkable growth in earnings but will become a significant contributor to company income in 2009 for the first time in its history.  The success of the company can be attributed to close attention to costs, addition of new sites, the recession- proof nature of the business and the commitment of its       24 & 7 President, Lance Lang. 

You have one of the finest teams ever assembled working on your behalf at Tri-State 1st Banc.


Charles Boyce Lang, President

1st National Community Bank | 16924 St. Clair Avenue | East Liverpool, OH 43920 | Phone: 330/385-9200 | Fax: 330/386-7452

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