1st NC Bank

Investor Relations

Press Releases

16926 St. Clair Ave., P. O. Box 796
East Liverpool, OH 43920
(330) 385-9200

June 25, 2010

Dear Shareholders:

I am pleased to enclose a check for the 2nd Quarter dividend in the amount of $.05 per share. This dividend was declared by your Board of Directors payable to shareholders of record on June 3, 2010 payable June 25, 2010. This is in the same amount paid as dividends in the 2nd Quarter of 2009.

It used to be that paying a dividend quarterly by banks and financial holding companys was “a given”. The only question was - when will the dividends be increased. Unfortunately dividends paid by financial institutions are no longer a certainty. With the increasing importance of preserving capital, the reduction and even deletion of dividends have become common. Your Board hopes that we will soon be able to consider better rewarding the investors for their support and confidence of the company upon the return of better times.

Tri-State crossed over another stepping stone when on April 1st it paid the first annual dividend on the Preferred B stock in the amount of $243,600 for the $3 million capital raised in 2009. This infusion of new capital to the company proved beneficial in many ways, not the least of which was a strengthening of the Bank during very turbulent economic times.

There have been some real positive developments at Tri-State. The company had Net Income of $95,240 in the 1st Quarter of 2010. In 2009 we started off the year with a significant one-time loan charge off at 1st Bank that triggered a $202 thousand loss in the first quarter of that year. Therefore this March 31st the company is nearly $300 thousand ahead in Net Income over the first quarter of the prior year.

More good news! 1st Bank capital on the 31st of March, 2010 stands at almost $10.9 million. That is an increase of $750 thousand since the end of the 1st Quarter of 2009. I am pleased to report that 1st Bank recently underwent its regular 18 month examination by the Office of the Comptroller of the Currency and an annual audit of S. R. Snodgrass A.C. 1st Bank continues to be adjudged safe, sound and well capitalized. The efforts to strengthen the quality of new loan appprovals, increase the effectiveness and timeliness of the collection process, increase the provision for loans to cushion the impact of possible future loan losses, raising standards for reviewing existing loans and better evaluation of collateral are showing results in an improvement in quality of Bank’s assets.

If community banks were animals then they would be on an endangered species list. When I began my career in banking, there were over 14,000 commercial banks in this country. Today there are less than 8,000 banks and that includes thrift (savings & loans) institutions. About 20 mega-financial institutions control over 80% of all deposits in the United States. At a banking conference recently it was reported that while it has been predicted that 200 banks will be closed by the FDIC in 2010 (we are already nearly halfway there), there are typically 7 mergers to each closing. That would mean that there would be fewer than 6,400 banks remaining in 2011 (down 20%). Under the proposed Financial Reform Act that the President intends to sign by July 4th, no new federal thrift charters will be granted in the future.

Surveys show that a large majority of the public want community banks and the personal service they offer to their customers. I feel that this bank has value to its customers and to our shareholders. If you value 1st National Community Bank and community banks generally, you should let your federal elected officials know.

Jeff Bail joined theTrust Department as the Senior Trust Officer replacing me in that capacity. That has freed up my time so that I am able to concentrate on more critical and strategic matters affecting the company. Adding a fulltime Executive Trust Officer became practical following the surge in Trust assets under management that occurred during the last half of 2009 and early 2010 bringing the total to about $50 million. There is every reason to believe that the assets under management will increase by another 10% during the first three months of Jeff’s tenure in the Trust Department. It has really been exciting to see our Trust Department blossom and the growing number of clients in the tri state receiving the benefits of Trust services increase significantly. I encourage you to get acquainted with Jeff and afford him the opportunity to review and counsel with you about your estate and investment program.

A milestone in the company’s chronicles was reached when Cooper Insurance Agency joined Tri-State in May, just 5 years after MDH was acquired. Our newest subsidiary has served the tri-state area for over 104 years providing insurance for property and casualty for homeowners, for automobiles and commercial businesses, and also individual life, disbility, group life, and health insurance. Our companies are both community oriented and excel at servicing the customer. Our uniting of resources affords great opportunity for integrating new services to better meet the needs of those customers. For the first five months of 2010, Cooper Insurance has been bogged down with paperwork detail to accomplish the merger. Even so, President Steve Cooper advises that revenues of the Agency have shown good growth in the 1st Quarter over the prior year and the merger has been met with universal enthusiasm from his customers and insurance carriers. We want to welcome into the Tri-State family President Steve Cooper and wife Joan, Vice President David Hamilton and staff members Pat Allison and Andrea Rohrbaugh.

As a part of the process of acquiring Cooper Insurance, it was advantageous to convert Tri-State into a Financial Holding Company with the Federal Reserve Bank, its regulatory agency. The effect on you as a shareholder is totally transparent, but the new status will make it much simpler, less expensive and time consuming to accomplish future acquisitions. There was no name change or cost in this transformation.

President Marc Hoffrichter continues to show good growth in new clients, revenues and asset value in 2010. While many wallow in indecision and fear in a topsy turvy stock market, Dr. Hoffrichter recognizes opportunity. His investment philosophy and thorough understanding of the stock market have earned him the respect and loyalty of his growing number of satisfied customers. Marc will be acknowledged for his community contributions when he is inducted into the Lou Holtz Upper Ohio Valley Hall of Fame on July 1st. David Bickerton joined MDH as a full time Investment Manager in May of 2009. David is making great progress and has been a great help to Marc this past year dealing with the growing number of accounts under management.

Gateminder continues to exceed the expectations of President Lance Lang in 2010. Its mission of expanding the customer base with more financial institutions continues to reap rewards. Gateminder is on its way to another strong year in 2010.


Charles Boyce Lang, Chairman

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

Copyright 2006 1st National Community Bank. All rights reserved. Equal Housing Lender - Member FDIC.