FSNM First State Bncp (MM)

The deficiency letter, dated December 14, 2009, states that First State has a grace period of 180 calendar days in which to regain compliance. If at anytime during this grace period the bid price of First State's common stock closes at $1.00 per share or more for a minimum of ten consecutive business days, Nasdaq will provide First State written confirmation of compliance. In the event that First State does not regain compliance prior to the expiration of the grace period, Nasdaq will provide written notification that First State's common stock is subject to delisting. First State may apply for the transfer of its common stock to The Nasdaq Capital Market prior to the delisting date if it satisfies all of the requirements, other than the minimum bid price requirement, for initial listing on The Nasdaq Capital Market as set forth in Listing Rule 5505. If First State elects to apply for such transfer, and the application is approved, First State would be eligible for an additional 180 calendar day grace period. The requirements for initial listing on The Nasdaq Capital Market include a minimum market value of publicly held shares of $15 million, which First State does not currently meet.

First State is evaluating all of its options following receipt of this notification and intends to work diligently to attempt to retain listing of its common stock on Nasdaq. Management believes that improved financial performance that results in an increased stock price, much closer to First State's tangible book value, is the best potential solution for regaining compliance with the minimum bid price requirement.