- Quarterly Report (10-Q)


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549

FORM 10-Q

(Mark One)

x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.

For the quarterly period ended September 30, 2010

OR

o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.

For the transition period from ____________________________________ to ____________________________________

Commission file number 001-34462

1ST UNITED BANCORP, INC.

(Exact Name of Registrant as specified in its charter)


FLORIDA	65-0925265

(State or Other Jurisdiction of Incorporation or Organization)	(I.R.S. Employer Identification No.)

One North Federal Highway, Boca Raton		33432

(Address of Principal Executive Offices)		(Zip Code)

(561) 362-3400

(Registrant’s Telephone Number, Including Area Code)

N/A

(Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report.)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes o No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):


Large accelerated filer o	Accelerated filer o	Non-accelerated filer o	Smaller reporting company x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes o No x

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.


Class		Outstanding at October 15, 2010

Common stock, $.01 par value		24,781,660

1 ^ST UNITED BANCORP, INC.
September 30, 2010
INDEX


		PAGE NO.

PART I.	FINANCIAL INFORMATION

Item 1.	Consolidated Financial Statements (Unaudited)	5

	Consolidated Balance Sheets (Unaudited) as of September 30, 2010 and December 31, 2009	5

	Consolidated Statement of Operations (Unaudited) for the Three and Nine Months Ended September 30, 2010 and 2009	6

	Consolidated Statements of Changes in Shareholders’ Equity (Unaudited) for the three and nine months ended September 30, 2010 and 2009	7

	Consolidated Statements of Cash Flows (Unaudited) for the Nine Months Ended September 30, 2010 and 2009	9

	Notes to Unaudited Consolidated Financial Statements	10

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	17

Item 4.	Controls and Procedures	37

PART II.	OTHER INFORMATION

Item 1.	Legal Proceedings	37

Item 1A.	Risk Factors	38

Item 5.	Other Information	38

Item 6.	Exhibits	39

SIGNATURES		40

INTRODUCTORY NOTE
Caution Concerning Forward-Looking Statements

The SEC encourages companies to disclose forward-looking information so that investors can better understand a company’s future prospects and make informed investment decisions. This Quarterly Report on Form 10-Q contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include, among others, statements about our beliefs, plans, objectives, goals, expectations, estimates and intentions that are subject to significant risks and uncertainties and are subject to change based on various factors, many of which are beyond our control. The words “may,” “could,” “should,” “would,” “believe,” “anticipate,” “estimate,” “expect,” “intend,” “plan,” “target,” “goal,” and similar expressions are intended to identify forward-looking statements.

All forward-looking statements, by their nature, are subject to risks and uncertainties. Our actual future results may differ materially from those set forth in the forward-looking statements. Our ability to achieve our financial objectives could be adversely affected by the factors discussed in detail in Part I, Item 2., “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and Part II, Item 1A., “Risk Factors” in this Quarterly Report on Form 10-Q, the following sections of our Annual Report on Form 10-K for the year ended December 31, 2009 (the “Annual Report”): (a) “Introductory Note” in Part I, Item 1. “Business;” (b) “Risk Factors” in Part I, Item 1A. as updated in our subsequent quarterly reports on Form 10-Q; and (c) “Introduction” in Management’s Discussion and Analysis of Financial Condition and Results of Operations,” in Part II, Item 7, as well as:


	•	legislative or regulatory changes;

	•	the strength of the United States economy in general and the strength of the local economies in which we conduct operations;

	•	the accuracy of our financial statement estimates and assumptions, including the estimate for our loan loss provision;

	•	the effects of the health and soundness of other financial institutions, including the FDIC’s need to increase Deposit Insurance Fund assessments;

	•	the loss of key personnel;

	•	our ability to comply with the terms of the loss sharing agreements with the FDIC;

	•	our customers’ willingness to make timely payments on their loans;

	•	changes in the securities and real estate markets;

	•	changes in monetary and fiscal policies of the U.S. Government;

	•	inflation, interest rate, market and monetary fluctuations;

	•	the frequency and magnitude of foreclosure of our loans;

	•	fluctuations in loan collateral values;

	•	the effects of our lack of a diversified loan portfolio, including the risks of geographic and industry concentrations;

	•	our need and our ability to incur additional debt or equity financing;

	•	our ability to integrate the business and operations of companies and banks that we have acquired, and those we may acquire in the future;

	•	the failure to achieve expected gains, revenue growth, and/or expense savings from future acquisitions;

	•	the effects of harsh weather conditions, including hurricanes;

	•	our ability to comply with the extensive laws, regulations, and directives to which we are subject;

	•	our customers’ perception of the safety of their deposits at 1 ^st United Bank;

	•	the willingness of clients to accept third-party products and services rather than our products and services and vice versa;

	•	increased competition and its effect on pricing;

	•	technological changes;

	•	the effects of security breaches and computer viruses that may affect our computer systems;

	•	changes in consumer spending and saving habits;

	•	growth and profitability of our noninterest income;

	•	changes in accounting principles, policies, practices or guidelines;


	•	anti-takeover provisions under federal and state law as well as our Articles of Incorporation and our Bylaws;

	•	other risks described from time to time in our filings with the Securities and Exchange Commission; and

	•	our ability to manage the risks involved in the foregoing.

However, other factors besides those listed above could adversely affect our results, and you should not consider any such list of factors to be a complete set of all potential risks or uncertainties. These forward-looking statements are not guarantees of future performance, but reflect the present expectations of future events by our management and are subject to a number of factors and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. Any forward-looking statements made by us speak only as of the date they are made. We do not undertake to update any forward-looking statement, except as required by applicable law.


I TEM 1.	FINANCIAL STATEMENTS

1 ^ST UNITED BANCORP, INC.

C ONSOLIDATED BALANCE SHEETS

(Dollars in thousands)


	September 30, 2010 (unaudited)			December 31, 2009

ASSETS
Cash and due from financial institutions	$	170,070		$	134,504
Federal funds sold		519			737

Cash and cash equivalents		170,589			135,241
Time deposits in other financial institutions		75			75
Securities available for sale		87,187			88,843
Loans held for sale		722			151
Loans, net of allowance of $11,501 and $13,282 at September 30, 2010 and year end 2009		666,708			654,771
Nonmarketable equity securities		10,479			10,233
Premises and equipment, net		9,082			9,228
Other Real Estate Owned		263			635
Company-owned life insurance		4,688			4,566
FDIC loss share receivable		43,432			43,285
Goodwill		45,008			45,008
Core deposit intangible		2,718			3,045
Accrued interest receivable and other assets		22,215			18,786


	$	1,063,166		$	1,013,867


LIABILITIES AND SHAREHOLDERS’ EQUITY
Deposits
Non-interest bearing	$	231,178		$	194,185
Interest bearing		632,209			608,623

Total deposits		863,387			802,808
Federal funds purchased and repurchase agreements		11,882			22,343
Federal Home Loan Bank advances		5,000			5,000
Other borrowings		4,875			5,091
Accrued interest payable and other liabilities		5,449			8,031

Total liabilities		890,593			843,273

Shareholders’ equity
Undesignated preferred stock – no par; 5,000,000 shares authorized; no shares issued and outstanding		—			—
Common stock – $0.01 par value; 60,000,000 shares authorized; 24,781,660 issued and outstanding at September 30, 2010 and year end 2009		248			248
Additional paid-in capital		181,434			180,888
Accumulated deficit		(10,266	)		(10,587	)
Accumulated other comprehensive income		1,157			45


Total shareholders’ equity		172,573			170,594


	$	1,063,166		$	1,013,867

See accompanying notes to the consolidated financial statements.

1 ^ST UNITED BANCORP, INC.

CO NSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

(Dollars in thousands, except per share data)

(unaudited)


	Three months ended September 30,						Nine months ended September 30,

	2010			2009			2010			2009

Interest income:
Loans, including fees	$	10,111		$	6,478		$	31,082		$	19,334
Securities		833			496			2,577			1,455
Federal funds sold and other		157			52			434			132


Total interest income		11,101			7,026			34,093			20,921
Interest expense:
Deposits		1,771			1,633			5,520			4,931
Federal funds purchased and repurchase agreements		6			8			18			30
Federal Home Loan Bank and Federal Reserve Bank borrowings		58			94			175			297
Other borrowings		39			81			175			245


Total interest expense		1,874			1,816			5,888			5,503


Net interest income		9,227			5,210			28,205			15,418
Provision for loan losses		2,870			185			5,620			3,090


Net interest income after provision for loan losses		6,357			5,025			22,585			12,328

Non interest income:
Service charges and fees on deposit accounts		783			325			2,328			976
Net gains on sales of securities		449			100			435			630
Losses on sales of OREO		—			—			(86	)		—
Gains on sales of residential loans		18			17			53			85
Increase in cash surrender value of Company owned life insurance		39			45			122			111
Other		246			93			608			185

Total non-interest income		1,535			580			3,460			1,987


Non interest expense:
Salaries and employee benefits		3,764			2,348			11,837			7,160
Occupancy and equipment		1,509			1,367			4,741			4,540
Data processing		696			461			1,971			1,395
Telephone		203			138			562			427
Stationery and supplies		78			54			247			177
Amortization of Intangibles		107			76			327			237
Professional fees		517			185			1,260			551
Advertising		28			16			107			49
Merger reorganization expenses		—			—			630			—
FDIC Assessment		392			201			1,185			885
Other than temporary loss:
Total impairment losses		—			—			—			120
Loss recognized in other comprehensive income		—			—			—			—
Net impairment loss recognized in earnings		—			—			—			120
Other		953			482			2,617			1,378

Total non interest expense		8,247			5,328			25,484			16,919


Income (loss) before taxes		(355	)		277			561			(2,604	)
Income tax expense (benefit)		(123	)		93			240			(921	)

Net income (loss)		(232	)		184			321			(1,683	)
Preferred stock dividends earned		—			875			—			1,238

Net income (loss) available to common shareholders	$	(232	)	$	(691	)	$	321		$	(2,921	)

Basic earnings (loss) per share	$	(0.01	)	$	(0.06	)	$	0.01		$	(.31	)
Diluted earnings (loss) per share	$	(0.01	)	$	(0.06	)	$	0.01		$	(.31	)

See accompanying notes to the consolidated financial statements

1 ^ST UNITED BANCORP, INC.
C ONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
Three months ended September 30, 2010 and 2009
(Dollars in thousands)
(unaudited)


	Shares of Series B Preferred Stock		Series B Preferred Stock		Shares of Series C Preferred Stock		Series C Preferred Stock		Shares of Series D Preferred Stock		Series D Preferred Stock			Shares of Common Stock		Common Stock		Additional Paid-In Capital		Accumulated Deficit			Accumulated Other Comprehensive Income (loss)			Total Shareholders’ Equity

Balance at July 1, 2009		459,503	$	4,595		10,000	$	9,295		500	$	556			8,670,231	$	87	$	105,768	$	(14,324	)	$	(162	)	$	105,815
Comprehensive income:
Net income (loss)																					184						184
Change in net unrealized gain (loss) on securities available for sale																								604			604

Total comprehensive income (loss)																											788
Dividends declared on preferred stock								705				(56	)								(873	)					(224	)
Stock-based compensation expense																			112								112
Issuance of common stock, net of issuance cost of $4,485															14,000,000		140		65,375								65,515

Balance, September 30, 2009		459,503	$	4,595		10,000	$	10,000		500	$	500			22,670,231	$	227	$	171,255	$	(15,013	)	$	442		$	172,006


Balance at July 1, 2010		—	$	—		—	$	—			$	—			24,781,660	$	248	$	181,250	$	(10,034	)	$	1,520		$	172,984
Comprehensive income:
Net income (loss)																					(232	)					(232	)
Change in net unrealized gain (loss) on securities available for sale																								(363	)		(363	)
Total comprehensive income (loss)																											(595	)
Stock-based compensation expense																			184								184

Balance at September 30, 2010		—	$	—		—	$	—		—	$	—			24,781,660	$	248	$	181,434	$	(10,266	)	$	1,157		$	172,573

See accompanying notes to the consolidated financial statements.

1 ^ST UNITED BANCORP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
Nine months ended September 30, 2010 and 2009
(Dollars in thousands)
(unaudited)


	Shares of Series A Preferred Stock			Series A Preferred Stock			Shares of Series B Preferred Stock		Series B Preferred Stock		Shares of Series C Preferred Stock		Series C Preferred Stock		Shares of Series D Preferred Stock

Balance at January 1, 2009		459,503		$	4,595
Comprehensive income:
Net income (loss)								—		—						—
Change in net unrealized gain (loss) on securities available for sale
Total comprehensive income (loss)
Dividends declared on preferred stock													$	730
Stock-based compensation expense
Exchange of Series A Preferred Stock for Series B Preferred Stock		(459,503	)		(4,595	)		459,503		4,595
Issuance of Series C Preferred stock net of issuance cost of $171												10,000		9,270
Issuance of Series D Preferred stock																500
Issuance of common stock net of issuance cost of $4,485

Balance, September 30, 2009		—		$	—			459,503	$	4,595		10,000	$	10,000		500

Balance at January 1, 2010		—		$	—			—	$	—		—	$	—		—
Comprehensive income:
Net income (loss)
Change in net unrealized gain (loss) on securities available for sale
Total comprehensive income (loss)
Stock-based compensation expense
Registration cost on issuance of common stock

Balance at September 30, 2010		—		$	—			—	$	—		—	$	—		—


	Series D Preferred Stock			Shares of Common Stock		Common Stock		Additional Paid-In Capital			Accumulated Deficit			Accumulated Other Comprehensive Income (loss)			Total Shareholders’ Equity

Balance at January 1, 2009					8,670,231	$	87	$	105,581		$	(12,162	)	$	769		$	98,870
Comprehensive income:
Net income (loss)		—										(1,683	)					(1,683	)
Change in net unrealized gain (loss) on securities available for sale															(327	)		(327	)

Total comprehensive income (loss)																		(2,010	)
Dividends declared on preferred stock	$	(59	)									(1,168	)					(497	)
Stock-based compensation expense									299									299
Exchange of Series A Preferred Stock for Series B Preferred Stock
Issuance of Series C Preferred stock net of issuance cost of $171																		9,270
Issuance of Series D Preferred stock		559																559
Issuance of common stock net of issuance cost of $4,485					14,000,000		140		65,375									65,515

Balance, September 30, 2009	$	500			22,670,231	$	227	$	171,255		$	(15,013	)	$	442		$	172,006

Balance at January 1, 2010	$	—			24,781,660	$	248	$	180,888		$	(10,587	)	$	45		$	170,594
Comprehensive income:
Net income (loss)												321						321
Change in net unrealized gain (loss) on securities available for sale															1,112			1,112

Total comprehensive income (loss)																		1,433

Stock-based compensation expense									567									567
Registration cost on issuance of common stock									(21	)								(21	)

Balance at September 30, 2010	$	—			24,781,660	$	248	$	181,434		$	(10,266	)	$	1,157		$	172,573

See accompanying notes to the consolidated financial statements.

1 ^ST UNITED BANCORP, INC.
C ONSOLIDATED STATEMENTS OF CASH FLOWS
Nine months ended September 30, 2010 and 2009
(Dollars in thousands)
(unaudited)


	2010			2009

Cash flows from operating activities
Net income (loss)	$	321		$	(1,683	)
Adjustments to reconcile net income (loss) to net cash from operating activities
Provision for loan losses		5,620			3,090
Depreciation and amortization		1,474			1,571
Net accretion of purchase accounting adjustments		(4,144	)		—
Net amortization of securities		527			149
Impairment of available for sale securities		—			120
Increase in cash surrender value of Company-owned life insurance		(122	)		(111	)
Stock-based compensation expense		567			299
Net (gain) loss on sale of securities		(435	)		(630	)
Net (gain) loss on foreclosed assets		86			0
Net (gain) loss on premises and equipment		3			1
Net (gain) loss on sale of loans held for sale		(53	)		(85	)
Loans originated for sale		(3,033	)		(5,203	)
Proceeds from sale of loans held for sale		2,515			6,488
Net change in:
Deferred income tax		(893	)		(2,515	)
Deferred loan fees		(308	)		56
Other assets		(4,123	)		4,296
Accrued expenses and other liabilities		(2,582	)		(219	)

Net cash from (used for) operating activities		(4,580	)		5,624
Cash flows from investing activities
Proceeds from sales and calls of securities		22,044			20,360
Proceeds from security maturities, and prepayments		13,799			6,786
Purchases of securities		(32,496	)		(42,721	)
Loan originations and payments, net		(12,709	)		(16,386	)
Proceeds from sale of other real estate owned		593			—
Net change in nonmarketable equity securities		(246	)		302
Additions to premises and equipment, net		(746	)		(487	)
Proceeds from surrender of Company-owned life insurance		—			52

Net cash used for investing activities		(9,761	)		(32,094	)
Cash flows from financing activities
Net change in deposits		60,387			22,997
Net change in federal funds purchased and repurchase agreements		(10,461	)		(8,047	)
Net change in short term Federal Home Loan Bank and Federal Reserve Bank borrowings		—			(36,013	)
Net change in other borrowings		(216	)		(250	)
Issuance of preferred stock		—			9,829
Issuance of common stock, net of issuance costs		(21	)		65,515
Dividends paid		—			(497	)

Net cash from financing activities		49,689			53,534


Net change in cash and cash equivalents		35,348			27,064
Beginning cash and cash equivalents		135,241			19,102


Ending cash and cash equivalents	$	170,589		$	46,166


Supplemental cash flow information:
Interest paid		6,001			5,537
Income taxes paid		—			—

Supplemental noncash disclosures:
Transfers from loans to foreclosed assets	$	307		$	365
Transfer from loans to loans held for sale		—			151

See accompanying notes to consolidated financial statements

1 ^ST UNITED BANCORP, INC.
N OTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands)
(unaudited)

NOTE 1 – BASIS OF PRESENTATION

Nature of Operations and Principles of Consolidation : The consolidated financial statements include 1st United Bancorp, Inc. (“Bancorp”) and its wholly-owned subsidiaries, 1st United Bank (“1st United”) and Equitable Equity Lending (“EEL”), together referred to as “the Company.” Intercompany transactions and balances are eliminated in consolidation.

Bancorp’s primary business is the ownership and operation of 1st United. 1st United is a state chartered commercial bank that provides financial services through its four offices in Palm Beach County, four offices in Broward County, four offices in Miami-Dade County and one each in the cities of Vero Beach, Sebastian and Barefoot Bay, Florida. Its primary deposit products are checking, savings, and term certificate accounts, and its primary lending products are commercial and residential mortgages, commercial, and installment loans. Substantially all loans are secured by specific items of collateral including commercial and residential real estate, business assets and consumer assets. Commercial loans are expected to be repaid from cash flow from operations of businesses. Other financial instruments, which potentially represent concentrations of credit risk, include deposit accounts in other financial institutions and federal funds sold.

EEL is a commercial finance subsidiary that from time to time will hold foreclosed assets or performing and non-performing loans transferred from 1 ^st United for disposal and resolution. At September 30, 2010 and December 31, 2009, EEL held $5.2 million in loans.

The accompanying consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and, therefore, do not include all information and notes necessary for a complete presentation of financial position, results of operations and cash flow activity required in accordance with accounting principles generally accepted in the United States. In the opinion of management of the Company, all adjustments (consisting only of normal recurring adjustments) necessary for a fair statement of results for the interim periods have been made. These financial statements and notes should be read in conjunction with the consolidated financial statements and notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2009.

In preparing the consolidated financial statements, management is required to make estimates and assumptions that affect the reported asset and liability balances and revenue and expense amounts and the disclosure of contingent assets and liabilities. Actual results could differ significantly from those estimates. The December 31, 2009 balance sheet was derived from the Company’s December 31, 2009 audited financial statements.

Earnings Per Common Share : Basic earnings per common share is net income available to common shareholders divided by the weighted average number of common shares outstanding during the period. Diluted earnings per share includes the dilutive effect of additional potential common shares issuable under stock options and stock warrants.

The weighted average common shares outstanding for the three months ended September 30, 2010 and September 30, 2009 were 24,781,660 and 10,800,666, respectively, for computing basic earnings (loss) per share and 24,781,660 and 10,800,666, respectively, for computing diluted earnings (loss) per share. Stock options to acquire 2,799,996 and 2,439,221, respectively, shares of common stock were not considered in computing diluted earnings (loss) per share for the quarters ended September 30, 2010 and 2009 because consideration of those instruments would be antidilutive.

NOTE 1 – BASIS OF PRESENTATION (Continued)

The weighted average common shares outstanding for the nine months ended September 30, 2010 and September 30, 2009 were 24,781,660 and 9,388,180, respectively, for computing basic earnings (loss) per share and 24,923,087 and 9,388,180, respectively, for computing diluted earnings (loss) per share. Stock options to acquire 1,072,535 and 2,439,221, respectively, shares of common stock were not considered in computing diluted earnings (loss) per share for 2010 and 2009 because consideration of those instruments would be antidilutive.

NOTE 2 – ACQUISITION

On December 11, 2009, the Company announced that 1 ^st United, had entered into a purchase and assumption agreement (the “Republic Agreement”) with the Federal Deposit Insurance Corporation (“FDIC”), as receiver for Republic Federal Bank, National Association (“Republic”), Miami, Florida. As previously disclosed, the fair values initially assigned to the assets acquired and liabilities assumed were preliminary and subject to refinement for up to one year after the closing date of the acquisition as new information relative to preliminary fair values became available. Preliminary valuation and purchase price allocation adjustments are reflected in the table below.


	December 11, 2009 (As initially reported)			Preliminary Measurement Period Adjustments			December 11, 2009 (As adjusted)

Cash and cash equivalents	$	25,026		$			$	25,026
Securities		33,637						33,637
Federal Reserve Bank and Federal Home Loan Bank stock		5,266						5,266
Loans		198,562			(12,920	)		185,642
Core deposit intangible		1,248						1,248
FDIC loss share receivable		32,900			10,385			43,285
Other assets		3,223			(227	)		2,996

TOTAL ASSETS ACQUIRED	$	299,862		$	(2,762	)	$	297,100


Deposits	$	349,647		$			$	349,647
Repurchase agreements		3,724						3,724
Federal Home Loan Bank advances		78,823						78,823
Other		2,376			(5	)		2,371

TOTAL LIABILITIES ASSUMED	$	434,570		$	(5	)	$	434,565


Excess of liabilities over assets acquired		(134,708	)		(2,757	)		(137,465	)
Cash received from FDIC		158,000			—			158,000

RECORDED GAIN ON ACQUISITION	$	23,292		$	(2,757	)	$	20,535

NOTE 3 – SECURITIES

The amortized cost and fair value of available for sale securities and the related gross unrealized gains and losses recognized in accumulated other comprehensive income were as follows.


	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value

September 30, 2010
U.S. Government and federal agency	$	8,985	$	121	$	—		$	9,106
Mortgage-backed: residential		76,347		1,737		(3	)		78,081
Municipal securities		—		—		—			—


	$	85,332	$	1,858	$	(3	)	$	87,187


December 31, 2009
U.S. Government and federal agency	$	12,490	$	7	$	(80	)	$	12,417
Mortgage-backed: residential		74,292		648		(502	)		74,438
Municipal securities		1,988		—		—			1,988


	$	88,770	$	655	$	(582	)	$	88,843

At September 30, 2010 and year end 2009, there were no holdings of securities of any one issuer, other than the U.S. Government and its agencies, in an amount greater than 10% of shareholders’ equity.

The amortized cost and fair value of debt securities at September 30, 2010 by contractual maturity were as set for in the table below. Securities not due at a single maturity date, primarily mortgage-backed securities, are shown separately.


	Amortized Cost		Fair Value

Due in one year or less	$	—	$	—
Due from one to five years		—		—
Due from five to ten years		4,992		5,101
Due after ten years		3,993		4,005
Residential Mortgage-backed		76,347		78,081

	$	85,332	$	87,187

Securities as of September 30, 2010 and December 31, 2009 with a carrying amount of $34,353 and $41,233, respectively, were pledged to secure public deposits and repurchase agreements.

Proceeds from sales and calls of securities available for sale were $14,152 and $2,903 for the three months ended September 30, 2010 and 2009, and $22,044 and $20,360 for the nine months ended September 30, 2010 and 2009, respectively. Gross gains of $449 and $100 and gross losses of $0 and $0 were realized on these sales during the three months ended September 30, 2010 and 2009, respectively. Gross gains of $503 and $630 and gross losses of $68 and $0 were realized on these sales during the nine months ended September 30, 2010 and 2009, respectively.

Gross unrealized losses at September 30, 2010 and December 31, 2009, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, were as follows:


	Less than 12 Months					12 Months or More				Total

	Fair Value		Unrealized Loss			Fair Value		Unrealized Loss		Fair Value		Unrealized Loss

September 30, 2010
Residential Mortgage-backed		5,039		(3	)		—		—		5,039		(3	)

	$	5,039	$	(3	)	$	—	$	—	$	5,039	$	(3	)

December 31, 2009
U.S. Government and federal agency	$	6,806	$	(80	)	$	—	$	—	$	6,806	$	(80	)
Residential Mortgage-backed		39,319		(502	)		—		—		39,319		(502	)

	$	46,125	$	(582	)	$	—	$	—	$	46,125	$	(582	)

NOTE 3 – SECURITIES (Continued)

In determining other than temporary impairment (“OTTI”) for debt securities, management considers many factors, including: (1) the length of time and the extent to which the fair value has been less than cost, (2) the financial condition and near-term prospects of the issuer, (3) whether the market decline was affected by macroeconomic conditions, and (4) whether the Company has the intent to sell the debt security or more likely than not will be required to sell the debt security before its anticipated recovery. The assessment of whether an other-than-temporary decline exists involves a high degree of subjectivity and judgment and is based on the information available to management at a point in time.

At September 30, 2010, securities with unrealized losses had depreciated 0.1% from the Company’s amortized cost basis. At December 31, 2009, securities with unrealized losses had depreciated 1.3% from the Company’s amortized cost basis. Based on the Company’s assessment, these differences at September 30, 2010 and December 31, 2009, were determined to be temporary.

NOTE 4 - LOANS

Loans at September 30, 2010 and December 31, 2009 were as follows:


	September 30, 2010							December 31, 2009

	Loans Subject to Loss Share Agreements		Loans Not Subject to Loss Share Agreements		Total			Loans Subject to Loss Share Agreements		Loans Not Subject to Loss Share Agreements		Total

Commercial	$	10,871	$	99,556	$	110,427		$	35,876	$	79,905	$	115,781
Real estate:
Residential		82,251		97,667		179,918			85,936		114,941		200,877
Commercial		57,835		270,764		328,599			57,926		225,770		283,696
Construction		807		49,326		50,133			1,108		54,581		55,689
Consumer and other		1,376		7,928		9,304			266		11,607		11,873

	$	153,140	$	525,242	$	678,381		$	181,112	$	486,804	$	667,916

Add (deduct):
Unearned income and net deferred loan (fees) costs						(172	)						137
Allowance for loan losses						(11,501	)						(13,282	)

	$	152,865	$	525,242	$	666,708						$	654,771

At September 30, 2010 and December 31, 2009, the Company had approximately $153,140 and $181,112, respectively, in outstanding loans covered by Loss Share Agreements.

Included in commercial and commercial real estate loans above are loans originated through government guaranteed lending programs totaling $18.5 million and $28.1 million at September 30, 2010 and December 31, 2009, respectively. Of these amounts, approximately $4.1 million and $6.1 million at September 30, 2010 and December 31, 2009, respectively, represent unguaranteed portions retained by the Company.

NOTE 4 - LOANS (continued)

Activity in the allowance for loan losses was as follows:


	Nine Months Ended September 30,

	2010			2009

Beginning balance	$	13,282		$	5,799
Provision for loan losses		5,620			3,090
Loans charged-off		(7,583	)		(1,707	)
Recoveries		182			7


Ending balance	$	11,501		$	7,189

As part of the acquisitions of Republic Federal Bank, National Association in 2009 from the Federal Deposit Insurance Corporation and of Equitable Financial Group, Inc., the Company acquired certain loans for which there was, at acquisition, evidence of deterioration of credit quality since origination of the loans and it was probable, at acquisition, that all contractually required payments would not be collected. The carrying amount of these loans at September 30, 2010 was approximately $34.8 million, net of a discount of $27.0 million. During the three and nine months ended September 30, 2010, approximately $758 and $2.4 million, respectively was accreted into income on these loans and at September 30, 2010 the remaining accretable difference is $6.7 million. In addition, $30.0 million of the $34.8 million is covered by the Loss Share Agreements.

At September 30, 2010, $4.2 million of these loans were included in nonperforming loans, and considered impaired. Further, the Company recorded no change in the allowance for loan losses during the three and nine months ended September 30, 2010 with respect to these loans, and $0 and $320 during the three and nine months ended September 30, 2009, respectively.

NOTE 5 – FAIR VALUES

Carrying amount and estimated fair values of financial instruments were as follows at September 30, 2010 and year end 2009.


	September 30 2010						December 31, 2009

	Carrying Amount			Fair Value			Carrying Amount			Fair Value

Financial assets
Cash and cash equivalents	$	170,589		$	170,589		$	135,241		$	135,241
Time deposits in other financial institutions		75			75			75			75
Securities available for sale		87,187			87,187			88,843			88,843
Loans, net, including loans held for sale		666,708			660,878			654,771			649,251
Nonmarketable equity securities		10,479			N/A			10,233			N/A
Bank owned life insurance		4,688			4,688			4,566			4,566
Accrued interest receivable		3,449			3,449			1,919			1,919

Financial liabilities
Deposits		(863,387	)		(863,750	)		(802,808	)		(804,377	)
Federal funds purchased and repurchase agreements		(11,882	)		(11,882	)		(22,343	)		(22,343	)
Federal Home Loan Bank advances		(5,000	)		(5,000	)		(5,000	)		(5,080	)
Other borrowings		(4,875	)		(4,875	)		(5,091	)		(5,055	)
Accrued interest payable		(782	)		(782	)		(2,021	)		(2,021	)

The methods and assumptions used to estimate fair value are described as follows.

NOTE 5 – FAIR VALUES (continued)

Carrying amount is the estimated fair value for cash and cash equivalents, time deposits in other financial institutions, accrued interest receivable and payable, demand deposits, federal funds purchased and repurchase agreements, and deposits that reprice frequently and fully. Fair value of loans is based on discounted future cash flows using the current rates at which similar loans would be made to borrowers with similar credit ratings and for the same remaining maturities, adjusted for the allowance for loan losses. For deposits with infrequent repricing or repricing limits, fair value is based on discounted cash flows using current market rates applied to the estimated life. Fair value of debt is based on current rates for similar financing. It was not practicable to determine the fair value of nonmarketable equity securities due to restrictions placed on their transferability. The fair value of off-balance-sheet items is not considered material (or is based on the current fees or cost that would be charged to enter into or terminate such arrangements).

Fair Value Option and Fair Value Measurements

ASC 820-10-65 establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The standard describes three levels of inputs that may be used to measure fair value:


		Level 1: Quoted prices (unadjusted) for identical assets or liabilities in active markets that the entity has the ability to access as of the measurement date.

		Level 2: Significant other observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.

		Level 3: Significant unobservable inputs that reflect a reporting entity’s own assumptions about the assumptions that market participants would use in pricing and asset or liability.

The fair values of securities available for sale are determined by obtaining quoted prices on nationally recognized securities exchanges (Level 1 inputs) or matrix pricing, which is a mathematical technique widely used in the industry to value debt securities without relying exclusively on quoted prices for the specific securities but rather by relying on the securities’ relationship to other benchmark quoted securities (Level 2 inputs).

The fair value of impaired loans with specific allocations of the allowance for loan losses is generally based on recent real estate appraisals. These appraisals may utilize a single valuation approach or a combination of approaches including comparable sales and the income approach. Adjustments are routinely made in the appraisal process by the appraisers to adjust for differences between the comparable sales and income data available. Such adjustments are typically significant and result in a Level 3 classification of the inputs for determining fair value.

Assets and liabilities measured at fair value on a recurring basis are summarized below.


	Fair value measurements at September 30, 2010 using:

	September 30, 2010		Quoted prices in active markets for identical assets (Level 1)	Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)

Assets:
U.S. Government and Federal Agency bonds		9,106			9,106

Mortgage-backed: residential	$	78,081	$	$	78,081	$

NOTE 5 – FAIR VALUES (continued)

Assets and liabilities measured at fair value on a non-recurring basis are summarized below.


	Fair value measurements at September 30, 2010 using:

	September 30, 2010		Quoted prices in active markets for identical assets (Level 1)	Significant other observable Inputs (Level 2)	Significant unobservable inputs (Level 3)

Assets:
Impaired loans	$	23,938	$	$	$	23,938
Other real estate owned	$	263	$	$	$	263

Impaired loans, which are measured for impairment using the fair value of the collateral for collateral dependent loans, had a carrying amount of $28,280, with a valuation allowance of $4,342 resulting in additional provision for loan losses of $1,462 and $3,021 for the three and nine months, respectively, ended September 30, 2010.


	Fair value measurements at December 31, 2009 using:

	December 31, 2009		Quoted prices in active markets for identical assets (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)

Assets:
Available for sale securities	$	88,843	$	—	$	88,843	$	—

Assets and liabilities measured at fair value on a non-recurring basis are summarized below.


	Fair value measurements at December 31, 2009 using:

	December 31, 2009		Quoted prices in active markets for identical assets (Level 1)		Significant other observable Inputs (Level 2)		Significant unobservable inputs (Level 3)

Assets:
Impaired loans	$	8,489	$	—	$	—	$	8,489
Other real estate owned	$	635	$	—	$	—	$	635

Impaired loans, which are measured for impairment using the fair value of the collateral for collateral dependent loans, had a carrying amount of $11,100, with a valuation allowance of $2,611 resulting in an additional provision for loan losses of $3,938 for the year ended December 31, 2009.

NOTE 6 - RECENTLY ISSUED AND NOT YET EFFECTIVE ACCOUNTING STANDARDS

Recently Issued Accounting Standards :
In June 2009, the FASB amended previous guidance relating to transfers of financial assets and eliminates the concept of a qualifying special purpose entity. This guidance must be applied as of the beginning of each reporting entity’s first annual reporting period that begins after November 15, 2009, for interim periods within that first annual reporting period and for interim and annual reporting periods thereafter. This guidance must be applied to transfers occurring on or after the effective date. Additionally, on and after the effective date, the concept of a qualifying special-purpose entity is no longer relevant for accounting purposes. Therefore, formerly qualifying special-purpose entities should be evaluated for consolidation by reporting entities on and after the effective date in accordance with the applicable consolidation guidance. The disclosure provisions were also amended and apply to transfers that occurred both before and after the effective date of this guidance. Adoption of this guidance on January 1, 2010 did not have a material effect on the Company’s results of operations or financial position.

NOTE 6 - RECENTLY ISSUED AND NOT YET EFFECTIVE ACCOUNTING STANDARDS (continued)

In June 2009, the FASB amended guidance for consolidation of variable interest entity guidance by replacing the quantitative-based risks and rewards calculation for determining which enterprise, if any, has a controlling financial interest in a variable interest entity with an approach focused on identifying which enterprise has the power to direct the activities of a variable interest entity that most significantly impact the entity’s economic performance and (1) the obligation to absorb losses of the entity or (2) the right to receive benefits from the entity. Additional disclosures about an enterprise’s involvement in variable interest entities are also required. This guidance is effective as of the beginning of each reporting entity’s first annual reporting period that begins after November 15, 2009, for interim periods within that first annual reporting period, and for interim and annual reporting periods thereafter. Early adoption is prohibited. Adoption of this guidance on January 1, 2010 did not have a material effect on the Company’s results of operations or financial position.


I TEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following is management’s discussion and analysis of certain significant factors that have affected our financial condition and operating results during the periods included in the accompanying consolidated financial statements, and should be read in conjunction with such financial statements. Management’s discussion and analysis is divided into subsections entitled “Business Overview,” “Operating Results,” “Financial Condition,” “Capital Resources,” “Cash Flows and Liquidity,” “Off Balance Sheet Arrangements,” and “Critical Accounting Policies.” Our financial condition and operating results principally reflect those of its wholly-owned subsidiaries, 1 ^st United Bank (“1 ^st United”) and Equitable Equity Lending (“EEL”). The consolidated entity is referred to as the “Company,” “Bancorp,” “we,” “us,” or “our.”

The following discussion should be read in conjunction with the condensed consolidated financial statements and notes thereto included in this Quarterly Report on Form 10-Q.

CAUTION CONCERNING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q, including this management’s discussion and analysis, contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include, among others, statements about our beliefs, plans, objectives, goals, expectations, estimates and intentions that are subject to significant risks and uncertainties and are subject to change based on various factors, many of which are beyond our control. The words “may,” “could,” “should,” “would,” “believe,” “anticipate,” “estimate,” “expect,” “intend,” “plan,” “target,” “goal,” and similar expressions are intended to identify forward-looking statements.

All forward-looking statements, by their nature, are subject to risks and uncertainties. Our actual future results may differ materially from those set forth in our forward-looking statements. Please see the Introductory Note and Item 1A. Risk Factors of our Annual Report on Form 10-K, as updated from time to time, and in our other filings made from time to time with the SEC after the date of this report.

However, other factors besides those listed above, or in our Quarterly Report or in our Annual Report, also could adversely affect our results, and you should not consider any such list of factors to be a complete set of all potential risks or uncertainties. Any forward-looking statements made by us or on our behalf speak only as of the date they are made. We do not undertake to update any forward-looking statement, except as required by applicable law.

BUSINESS OVERVIEW

We are a financial holding company headquartered in Boca Raton, Florida.

On December 11, 2009, we announced that 1 ^st United Bank, our banking subsidiary, had entered into a purchase and assumption agreement (the “Republic Agreement”) with the Federal Deposit Insurance Corporation (“FDIC”), as receiver for Republic Federal Bank, National Association (“Republic”), Miami, Florida. According to the terms of the Republic Agreement, 1 ^st United Bank assumed all deposits (except certain brokered deposits)

and borrowings, and acquired certain assets of Republic. Assets acquired included $238 million in loans based on Republic’s carrying value and $64.2 million in cash and investments. All of Republic’s repossessed or foreclosed real estate and substantially all non-performing loans were retained by the FDIC. Republic operated four banking centers in Miami-Dade County, Florida, and had approximately 100 employees. We assumed approximately $349.6 million in deposits in this transaction.

All of the loans acquired are covered by two loss share agreements (the “Loss Share Agreements”) between the FDIC and 1st United Bank, which affords 1st United Bank significant loss protection. Under the Loss Share Agreements, the FDIC will cover 80% of covered loan and foreclosed real estate losses up to $36 million and 95% of losses in excess of that amount. The Loss Share Agreements also cover third party collection costs and 90 days of accrued interest on covered loans. The term for loss sharing and loss recoveries on residential real estate loans is ten years, while the term for loss sharing and loss recoveries on non-residential real estate loans is five years with respect to losses and eight years with respect to loss recoveries. The reimbursable losses from the FDIC are based on the book value of the relevant loan as determined by the FDIC at the date of the transaction. New loans made after that date are not covered by the Loss Share Agreements.

1st United Bank received $34.2 million from the FDIC above the Republic carrying value of the net assets acquired. The acquisition was accounted for under the purchase method of accounting in accordance with FASB ASC 805, “Business Combinations.” The purchased assets and assumed liabilities were recorded at their respective acquisition date fair values, and identifiable intangible assets were recorded at fair value. We recorded an estimated receivable from the FDIC in the amount of $43.3 million which represents the fair value of the FDIC’s portion of the losses that are expected to be incurred and reimbursed to us. The Loss Sharing Agreements are subject to certain servicing procedures as specified in the agreements.

As previously disclosed, the fair value initially assigned to the assets acquired and liabilities assumed were preliminary and subject to refinement for up to one year after the closing date of the acquisition as new information relative to closing date fair values became available. The information included in this MD&A section reflects the affect of the preliminary valuation adjustments at December 31, 2009 and at and for the period ended September 30, 2010.

1 ^st United Bank did not immediately acquire the furniture or equipment of Republic as part of the Republic Agreement. However, 1 ^st United Bank had the option to purchase the furniture and equipment from the FDIC. The term of this option expired March 11, 2010. We agreed to purchase furniture and equipment from the FDIC at fair value for $495,000. 1 ^st United also had until March 11, 2010, to request the FDIC to repudiate all leases entered into by the former Republic or the leases will be assumed. Each of the four banking centers acquired is leased. We assumed (in one case, on a negotiated basis) three banking center leases and requested the FDIC to repudiate all other leases including the lease for the Aventura banking center which was closed on April 23, 2010. This location was within two miles of our North Miami Beach banking center and we determined closing this banking center will have minimal impact on our customers.

As a result of this acquisition, we had 15 banking centers at September 30, 2010, as compared to 12 banking centers at September 30, 2009.

On August 15, 2008, we completed an acquisition of the banking center network, substantially all of the deposits, and selected loans of Citrus Bank, N.A., headquartered in Vero Beach, Florida. We refer to this as the Citrus Acquisition. The Citrus Acquisition resulted in the assumption and acquisition of approximately $87.5 million in deposits and $38 million in net loans. In addition, we expanded our banking centers to Vero Beach, Sebastian, and Barefoot Bay, Florida. As a condition of receiving regulatory approval of the acquisition, we committed not to enter into any additional acquisition agreements unless it is funded with common stock or until we have been profitable for four consecutive quarters.

On February 29, 2008, we completed the merger and acquisition of Equitable Financial Group, Inc. (“Equitable”) and its wholly-owned subsidiaries Equitable Bank and Equitable Equity Lending, which we refer to as the Equitable Merger. We issued 1,928,610 shares of our common stock and paid cash of approximately $27.6

million to the Equitable shareholders and option holders. The Equitable Merger increased our banking centers from 8 to 11 locations at that time. In addition, we acquired approximately $146.9 million in net loans, $29.9 million in cash and securities, $136.0 million in deposits and $25.7 million in repurchase agreements and borrowings in the Equitable Merger. We recorded approximately $37.4 million in goodwill and $1.4 million in core deposit intangibles as a result of the Equitable Merger.

We follow a business plan that emphasizes the delivery of commercial banking services to businesses and individuals in our geographic market who desire a high level of personalized service. The business plan includes business banking, professional market services, real estate lending and private banking, as well as full community banking products and services. The business plan also provides for an emphasis on our Small Business Administration lending program, Export/Import Bank lending programs, as well as on small business lending. We focus on building balanced loan and deposit portfolios, with emphasis on low cost liabilities and variable rate loans.

As is the case with banking institutions generally, our operations are materially and significantly influenced by general economic conditions and by related monetary and fiscal policies of financial institution regulatory agencies, including the Federal Reserve Bank and the FDIC. Deposit flows and costs of funds are influenced by interest rates on competing investments and general market rates of interest. Lending activities are affected by the demand for financing of real estate and other types of loans, which in turn is affected by the interest rates at which such financing may be offered and other factors affecting local demand and availability of funds. We face strong competition in the attraction of deposits (our primary source of lendable funds) and in the origination of loans.

Financial Overview


	•	Net loss for the quarter ended September 30, 2010 was $232,000 compared to a net income of $184,000 for the quarter ended September 30, 2009. Net income for the nine month period ended September 30, 2010 was $321,000 compared to a net loss of $1,683,000 for the nine months ended September 30, 2009.

	•	Net interest margin increased to 3.95% for the quarter ended September 30, 2010, compared to 3.72% for the quarter ended September 30, 2009. Net interest margin increased to 4.11% for the nine months ended September 30, 2010, compared to 3.74% for the nine months ended September 30, 2010.

	•	During the nine months ended September 30, 2010, we incurred approximately $1,390,000 in personnel related and facilities costs that related to the integration of Republic. No integration related costs were expended in the three months ended September 30, 2010, and we expect no such costs in the future.

	•	Nonperforming assets at September 30, 2010 represented 2.38% of total assets compared to 1.60% at December 31, 2009.

	•	Provision for loan losses for the three and nine months ended September 30, 2010, was $2.87 million and $5.62 million, respectively, compared to $185,000 and $3.1 million for the three and nine months ended September 30, 2009. The increase in 2010 was primarily a result of additional loan provisions related to resolutions of non-performing assets in 2010 and the overall increase in classified assets over 2009.

	•	Other changes in operating results for the three and nine month periods ended September 30, 2010, when compared to the three and nine month periods ended September 30, 2009, were substantially a result of the impact of the Republic transaction.

OPERATING RESULTS

For the quarter ended September 30, 2010, we reported a net loss of $232,000 compared to net income of $184,000 for the third quarter of 2009.

For the nine month period ended September 30, 2010, we reported a net income of $321,000 compared to a net loss of $1,683,000 for the nine month period ended September 30, 2009. We have summarized the material variances between periods below.

Analysis of Quarters ended September 30, 2010 and 2009

Net Interest Income – Quarters Ended September 30, 2010 and 2009

The following table reflects the components of net interest income, setting forth for the three month periods ended September 30, 2010 and 2009, (1) average assets, liabilities and shareholders’ equity, (2) interest income earned on interest-earning assets and interest paid on interest-bearing liabilities, (3) average yields earned on interest-earning assets and average rates paid on interest-bearing liabilities, (4) our net interest spread (i.e., the average yield on interest-earning assets less the average rate on interest-bearing liabilities) and (5) our net interest margin (i.e., the net yield on interest earning assets).

Net interest earnings for the three month periods ended September 30, 2010 and 2009 are reflected in the following table (dollars in thousands):


	September 30, 2010								September 30, 2009

	Average Balance			Interest Income/ Expense		Average Rates Earned/ Paid			Average Balance			Interest Income/ Expense		Average Rates Earned/ Paid

Assets
Interest earning assets
Loans	$	678,996		$	10,111		5.97	%	$	504,495		$	6,478		5.15	%
Investment securities		95,797			833		3.48	%		46,028			496		4.31	%

Federal funds sold and securities purchased under resale agreements and other		161,289			157		0.39	%		11,304			52		1.85	%

Total interest earning assets		936,082			11,101		4.76	%		561,827			7,026		5.02	%

Non interest earning assets		136,041								82,749
Allowance for loan losses		(12,791	)							(7,189	)

Total assets	$	1,059,332							$	637,387

Liabilities and Shareholders’ Equity
Interest bearing liabilities
NOW accounts	$	104,356		$	48		0.18	%	$	62,629		$	37		0.24	%
Money market accounts		185,565			429		0.93	%		104,398			274		1.05	%
Savings accounts		38,157			53		0.56	%		14,088			22		0.63	%
Certificates of deposit		301,166			1,242		1.65	%		184,861			1,302		2.82	%
Customer Repurchase Agreements		13,190			6		0.18	%		12,757			8		0.25	%
Other borrowings		9,978			96		3.86	%		39,620			173		1.75	%

Total interest bearing liabilities		652,412			1,874		1.15	%		418,353			1,816		1.74	%

Non interest bearing liabilities
Demand deposit accounts		228,336								103,934
Other liabilities		5,066								3,320

Total non interest bearing liabilities		233,402								107,254

Shareholders’ equity		173,518								111,780


Total liabilities and shareholders’ equity	$	1,059.332							$	637,387


Net interest spread				$	9,227		3.60	%				$	5,210		3.27	%


Net interest on average earning assets - Margin							3.95	%							3.72	%

Our net interest income for the third quarter of 2010 was positively impacted by the increase in average earning assets of $374.3 million as compared to 2009 due primarily as a result of the loans and investments acquired in the Republic transaction. Average loans increased by $174.5 million, or 35%, from $504.5 million for the three month period ended September 30, 2009, to $679 million for the three month period ended September 30, 2010. At September 30, 2010, loans represented 64% of total average assets and 78% of total average deposits and customer repurchase agreements versus 79% of total average assets and 105% of total deposits and customer repurchase agreements at September 30, 2009.

Net interest income was $9.2 million for the three months ended September 30, 2010, as compared to $5.2 million for the three months ended September 30, 2009, an increase of $4.0 million or 76%. The increase resulted primarily from an increase in average earning assets of $374.3 million or 66% primarily due to the Republic acquisition. In addition, the net interest margin (i.e., net interest income divided by average earning assets) increased 23 basis points from 3.72% during the three months ended September 30, 2009 to 3.95% during the three months ended September 30, 2010, mainly the result of the accretion of a loan discount of $1.0 million during the quarter on acquired loans which added approximately 42 basis points to the September 30, 2010 margin. This amount was partially offset by the decrease of average loans as a percent of earning assets of 73% for the period ended September 30, 2010 compared to 90% for the period ended September 30, 2009.

Noninterest Income, Noninterest Expense, Provision for Loan Losses, and Income Taxes – Quarters Ended September 30, 2010 and 2009

Noninterest income includes service charges on deposit accounts, gains or losses on sales of securities and loans, and all other items of income, other than interest, resulting from our business activities. Noninterest income increased by $955,000, or 165%, when comparing the third quarter of 2010 to the same period last year. The increase is mainly due to an increase of $458,000 (141%) in service charges to $783,000 for the quarter ended September 30, 2010 as compared to $325,000 for the quarter ended September 30, 2009. The increase in service charges was primarily due to an increase of $378 million in average deposits when comparing the three months ended September 30, 2010, with the three months ended September 30, 2009. The increase was primarily a result of the Republic transaction.

During the quarter ended September 30, 2010, we sold $13.1 million in securities for a net gain of $449,000. During the quarter ended September 30, 2009, we sold approximately $3 million of securities for a net gain of $100,000. The sales of these available for sale securities in 2009 were made to take advantage of market conditions.

Other income increased $153,000 to $246,000 for the quarter ended September 30, 2010 as compared to the quarter ended September 30, 2009 primarily as a result of fees received for letter of credits, loan servicing and miscellaneous other income resulting from operations acquired in the Republic transaction.

Our noninterest expense is comprised of salaries, employee benefits, occupancy and equipment expense and other operating expenses incurred in supporting our various business activities. Noninterest expense increased by $2.9 million or 55%, from $5.3 million for the third quarter of 2009 to $8.2 million for the third quarter of 2010.

The following summarizes the changes in non-interest expense accounts for the three months ended September 30, 2010 compared to the three months ended September 30, 2009 (dollars in thousands):


	Three months ended

	September 30, 2010		September 30, 2009		Difference

Salaries and employee benefits	$	3,764	$	2,348	$	1,416
Occupancy and equipment		1,509		1,367		142
Data processing		696		461		235
Telephone		203		138		65
Stationery and supplies		78		54		24
Amortization of Intangibles		107		76		31
Professional fees		517		185		332
Advertising		28		16		12
FDIC Assessment		392		201		191
Other		953		482		471

Total non-interest expense	$	8,247	$	5,328	$	2,919

Salary and employee benefits increased by approximately $1,416,000 to $3,764,000 for the quarter ended September 30, 2010 as compared to the quarter ended September 30, 2009 of $2,348,000 primarily as a result of the acquisition of the Republic operation, including three banking centers at the end of 2009. Full time equivalent employees at the end of September 30, 2010 were 203 compared to 152 at September 30, 2009.

Occupancy and Equipment increased by approximately $142,000 to $1,509,000 for the three month period ended September 30, 2010 as compared to the three month period ended September 30, 2009 of $1,367,000. The increase was primarily a result of the additional banking centers acquired due to the Republic acquisition.

Professional fees increased by $332,000 to $517,000 for the quarter ended September 30, 2010 primarily a result of costs related to the increase in non-performing assets during this period as compared to 2009.

FDIC assessment expense increased by $191,000 to $392,000 for the quarter ended September 30, 2010 as compared to $201,000 for the quarter ended September 30, 2009. The increase of $191,000 for the quarter ended September 30, 2010 was a result of the overall increase in deposits resulting from the Republic transaction and an overall increase in the FDIC assessment rate as compared to 2009.

The other increases in other expenses were primarily due to the Republic acquisition.

We recorded a $2.87 million loan loss provision for the three months ended September 30, 2010, compared to $185,000 for the three months ended September 30, 2009. The provision for the quarter ended September 30, 2010 was primarily a result of: a sale of a non-performing loan during the quarter resulting in an additional provision of $900,000; a discounted payoff anticipated on a $1.1 million non-performing asset expected to close in the fourth quarter resulting in an additional provision of $500,000; and the remaining increase was primarily due to the deterioration of values of underlying collateral on classified assets.

We recorded an income tax benefit of $123,000 for the three months ended September 30, 2010, compared to a $93,000 tax expense for the three months ended September 30, 2009 based on the effective tax rate of our Company.

Analysis for Nine Month Periods ended September 30, 2010 and 2009

Net Interest Income – Nine Month Periods ended September 30, 2010 and 2009

Net interest income, which constitutes our principal source of income, represents the excess of interest income on interest-earning assets over interest expense on interest-bearing liabilities. Our principal interest-earning assets are federal funds sold, investment securities and loans. Our interest-bearing liabilities primarily consist of time deposits, interest-bearing checking accounts (“NOW accounts”), savings deposits, money market accounts, repurchase agreements and borrowings from the Federal Home Loan and Federal Reserve Banks. We invest the funds attracted by these interest-bearing liabilities in interest-earning assets. Accordingly, our net interest income depends upon the volume of average interest-earning assets and average interest-bearing liabilities and the interest rates earned or paid on them.

Net interest earnings for the nine month periods ended September 30, 2010 and 2009 are reflected in the following table (dollars in thousands):


	September 30, 2010								September 30, 2009

	Average Balance			Interest Income/ Expense		Average Rates Earned/ Paid			Average Balance			Interest Income/ Expense		Average Rates Earned/ Paid

Assets
Interest earning assets
Loans	$	673,099		$	31,082		6.17	%	$	499,090		$	19,334		5.18	%
Investment securities		93,173			2,577		3.69	%		42,593			1,455		4.55	%

Federal funds sold and securities purchased under resale agreements and other		151,004			434		4.97	%		10,073			132		1.75	%

Total interest earning assets		917,276			34,093		4.97	%		551,756			20,921		5.07	%

Non interest earning assets		139,187								82,155
Allowance for loan losses		(13,293	)							(6,296	)

Total assets	$	1,043,170							$	627,615

Liabilities and Shareholders’ Equity
Interest bearing liabilities
NOW accounts	$	106,144			146		0.18	%	$	60,001		$	110		0.25	%
Money market accounts		169,927			1,229		0.97	%		102,750			742		0.97	%
Savings accounts		37,319			176		0.63	%		13,809			63		0.61	%
Certificates of deposit		305,661			3,970		1.74	%		181,560			4,016		2.96	%
Customer Repurchase Agreements		14,622			18		0.16	%		14,703			30		0.27	%
Other borrowings		10,008			349		4.66	%		40,834			542		1.77	%

Total interest bearing liabilities		643,681			5,888		1.22	%		413,657			5,503		1.78	%

Non interest bearing liabilities
Demand deposit accounts		220,631								103,636
Other liabilities		6,449								3,247

Total non interest bearing liabilities		227,080								106,883

Shareholders’ equity		172,409								107,075

Total liabilities and shareholders’ equity	$	1,043,170							$	627,615


Net interest spread				$	28,205		3.75	%				$	15,418		3.29	%


Net interest on average earning assets - Margin							4.11	%							3.74	%

Rate Volume Analysis

The following table sets forth certain information regarding changes in our interest income and interest expense for the nine months ended September 30, 2010 as compared to the nine months ended September 30, 2009. For each category of interest-earning assets and interest-bearing liabilities, information is provided on changes attributable to changes in interest rate and changes in the volume. Changes in both volume and rate have been allocated based on the proportionate absolute changes in each category.

Changes in interest earnings for the nine-month periods ended September 30, 2010 and 2009 (dollars in thousands):


	September 30, 2010 and 2009

	Change in Interest Income/ Expense			Variance Due to Volume Changes			Variance Due to Rate Changes

Earning Assets
Loans	$	11,748		$	7,576		$	4,172
Investment securities		1,122			1,444			(322	)
Interest earning assets

Federal funds sold and securities purchased under resale agreements and other		303			481			(178	)

Total interest earning assets	$	13,173		$	9,501		$	3,672


Liabilities and Shareholders’ Equity
Interest bearing liabilities
NOW accounts	$	36		$	69		$	(33	)
Money market accounts		487			486			1
Savings accounts		113			111			2
Certificates of deposit		(46	)		2,039			(2,085	)
Customer Repos		(12	)		—			(12	)
Other borrowings		(193	)		(620	)		427

Total interest bearing liabilities	$	385		$	2,085		$	(1,700	)


Net interest spread	$	12,788		$	7,416		$	5,372

Our net interest income for the nine months ended September 30, 2010 was positively impacted by the increase in average earning assets of $365.5 million as compared to 2009 due primarily as a result of the loans and investments acquired in the Republic transaction. Average loans increased by $174 million, or 35%, from $499.1 million at September 30, 2009 to $673.1 million at September 30, 2010. At September 30, 2010, average loans represented 65% of total average assets and 79% of total average deposits and customer repurchase agreements versus 80% of total average assets and 105% of total average deposits and customer repurchase agreements at September 30, 2009.

Net interest income was $28.2 million for the nine months ended September 30, 2010, as compared to $15.4 million for the nine months ended September 30, 2009, an increase of $12.8 million or 83%. The increase resulted primarily from an increase in average earning assets of $366 million or 66% primarily due to the Republic acquisition. In addition, the net interest margin (i.e., net interest income divided by average earning assets) increased 37 basis points from 3.74% during the nine months ended September 30, 2009 to 4.11% during the nine months ended September 30, 2010, mainly the result of the accretion of a loan discount of $3 million during the nine month period on acquired loans which added approximately 43 basis points to the September 30, 2010 margin of 4.11%. This amount was offset by the decrease of average loans as a percent of earning assets of 17% for the nine month period ended September 30, 2010 compared to 90% for the period ended September 30, 2009.

Noninterest Income, Noninterest Expense, Provision for Loan Losses, and Income Taxes – Nine Month Periods Ended September 30, 2010 and September 30, 2009

The $1.4 million increase in service charges was primarily due to the increase in average deposits of $378 million when comparing the nine months ending September 30, 2010 to the nine months ending September 30, 2009. This increase was primarily a result of an increase in deposits due to the Republic transaction.

During the nine months ended September 30, 2010, we sold $22 million in securities resulting in a net gain of $435,000. During the nine months ended September 30, 2009, we sold approximately $20.4 million in securities for a net gain of $630,000.

Other income increased $424,000 to $609,000 for the nine months ended September 30, 2010 as compared to the nine months ended September 30, 2009 primarily as a result of fees received for letter of credits, loan servicing and miscellaneous other income resulting from operations acquired in the Republic transaction.

Non-interest expense is comprised of salaries, employee benefits, occupancy and equipment expense and other operating expenses incurred in supporting our various business activities. Noninterest expense increased by $8.6 million, or 51%, from $16.9 million for the first three quarters of 2009 to $25.4 million for the same period in 2010.

The following summarizes the changes in non-interest expense accounts for the nine months ended September 30, 2010 compared to the nine months ended September 30, 2009 (dollars in thousands):


	Nine months ended

	September 30, 2010		September 30, 2009		Difference

Salaries and employee benefits	$	11,837	$	7,160	$	4,677
Occupancy and equipment		4,741		4,540		201
Data processing		1,971		1,395		576
Telephone		562		427		135
Stationery and supplies		247		177		70
Amortization of intangibles		327		237		90
Professional fees		1,260		551		709
Advertising		107		49		58
Merger reorganization expenses		630		—		630
FDIC assessment		1,185		885		300
Impairment of available for sale securities		—		120		(120	)
Other		2,617		1,378		1,239

Total non-interest expense	$	25,484	$	16,919	$	8,565

Salaries and employee benefits increased by approximately $4.7 million to $11.8 million for the nine month period ended September 30, 2010 as compared to the nine month period ended September 30, 2009 of $7.2 million primarily as a result of the acquisition of the Republic operation, including three banking centers at the end of 2009. Included in this amount is approximately $510,000 of personnel related costs that were eliminated by June 30, 2010 due to the integration of Republic. Full time equivalent employees at the end of September 30, 2010 were 203 compared to 125 at September 30, 2009.

Occupancy and equipment increased by approximately $201,000 to $4.7 million for the nine month period ended September 30, 2010 as compared to the period ended September 30, 2009 of $4.5 million. In the period ended September 30, 2009, we terminated a lease resulting in a one time expense for lease termination of $300,000. This decrease was offset by the addition of the three banking centers acquired in December 2009 in the Republic transaction. Included in the $4.7 million of occupancy and equipment expense for the nine months ended

September 30, 2010 is approximately $250,000 of semi-annual expense related to space acquired from the Republic transaction which was eliminated effective July 1, 2010.

Professional fees increased by $709,000 to $1,260,000 for the nine months ended September 30, 2010, primarily due to legal fees on the increase in classified assets and an overall increase in audit related fees.

Merger reorganization expense represents the expense during the nine month period ended September 30, 2010 of stay bonuses for employees whose positions have been eliminated by September 30, 2010. No additional expense for these employees is expected after September 30, 2010 (no expense was booked in the third quarter).

We recorded a $5.62 million loan loss provision for the nine months ended September 30, 2010, compared to $3.1 million for the nine months ended September 30, 2009. The $5.62 million provision for the nine months ended September 30, 2010 was primarily a result of a sale of a non-performing loan during the quarter resulting in an additional provision of $900,000, a discounted payoff anticipated on a $1.1 million non-performing asset expected to close in the fourth quarter resulting in an additional provision of $500,000, and the remaining increase was primarily due to additions to classified assets and reductions in collateral values due to new appraisals on existing classified assets.

We recorded a $240,000 tax expense for the nine months ended September 30, 2010, compared to a tax benefit of $921,000 for the same period in 2009.

FINANCIAL CONDITION

At September 30, 2010, our total assets were $1.063 billion and our net loans were $666.7 million or 63% of total assets. At December 31, 2009, our total assets were $1.01 billion and our net loans were $655 million or 65% of total assets. The growth rate of the loan portfolio has slowed. This is generally a result of an overall slowdown in commercial loan production in the markets served by 1 ^st United Bank, as well as an increased level of commercial loan payoffs.

At September 30, 2010, the allowance for loan losses was $11.5 million or 1.70% of total loans. At December 31, 2009, the allowance for loan losses was $13.3 million or 1.99% of total loans.

At September 30, 2010, our total deposits were $863.4 million, an increase of $60.6 million or 7.5% over December 31, 2009 of $802.8 million. Non-interest bearing deposits represented 27% of total deposits at September 30, 2010 compared to 24% at December 31, 2009. These increases are due to our overall business development efforts.

Loan Quality

Management seeks to maintain a high quality loan portfolio through sound underwriting and lending practices. The banking industry and its regulators view elements of loan concentrations as a concern that can give rise to deterioration in loan quality if not managed effectively.

Loan concentrations are defined as amounts loaned to a number of borrowers engaged in similar activities, and/or located in the same region, sufficient to cause them to be similarly impacted by economic or other conditions. We, on a routine basis, monitor these concentrations in order to consider adjustments in our lending practices to reflect economic conditions, loan-to-deposit ratios, and industry trends. As of September 30, 2010 and December 31, 2009, there were no concentration of loans within any portfolio category to any group of borrowers engaged in similar activities or in a similar business (other than noted below) that exceeded 10% of total loans, except that as of such dates loans collateralized with mortgages on real estate represented 82% and 81%, respectively, of the total loan portfolio and were to a broad base of borrowers in varying activities, businesses, and locations.

At 1 ^st United we consider our focus to be in Business Banking. Through our Business Banking activities we provide commercial purpose real estate secured loans as referenced above and also provides commercial and residential real estate acquisition and construction loans to qualified builders and developers, although this line of

business is subdued at this time in the business cycle. Business banking also provides loan facilities ranging from commercial purpose non-real estate secured loans, to lines of credit, Export/Import Bank loans and SBA loans.

Commercial and Industrial loans, unlike residential mortgage loans (which generally are made on the basis of the borrower’s ability to repay from employment and other income and which are collateralized by real property with values tending to be more readily ascertainable), are non-real estate secured commercial loans typically underwritten on the basis of the borrower’s ability to make repayment from the cash flow of its business and generally are collateralized by a variety of business assets, such as accounts receivable, equipment and inventory. As a result, the availability of funds for the repayment of commercial and industrial loans may be substantially dependent on the success of the business itself, which is subject to adverse conditions in the economy. Commercial and industrial loans are generally repaid from operational earnings, the collection of rent, or conversion of assets. Commercial and industrial loans can also entail certain additional risks when they involve larger loan balances to single borrowers or a related group of borrowers, resulting in a more concentrated loan portfolio. Further, the collateral underlying the loans may depreciate over time, cannot be appraised with as much precision as residential real estate, and may fluctuate in value based on the success of the business.

The following charts illustrate the composition of our loan portfolio as of September 30, 2010 and December 31, 2009.


Loan Portfolio as of September 30, 2010

(Dollars in thousands)

Loan Types	Total Loans		Balance Outstanding		% of Loan Portfolio			% of Total Assets

Commercial Real Estate and Farm Loans		312	$	312,598		46.08	%		29.39	%
Construction and Development Loans		43		50,133		7.39	%		4.71	%
Commercial and Industrial		494		110,290		16.26	%		10.37	%
Closed End First Lien 1-4 Family		354		123,960		18.27	%		11.66	%
Home Equity Line of Credit		259		52,600		7.75	%		4.95	%
Multi-family Loans		34		13,896		2.05	%		1.31	%
Consumer Loans		184		13,463		1.98	%		1.27	%
Closed-End Junior Lien 1-4 Family		19		1,254		0.18	%		0.12	%
Other		—		187		0.03	%		0.02	%

Total		1,699	$	678,381		100.00	%		63.80	%


Loan Portfolio as of December 31, 2009

(Dollars in thousands)

Loan Types	Total Loans		Balance Outstanding		% of Loan Portfolio			% of Total Assets

Commercial Real Estate and Farm Loans		257	$	263,122		39.40	%		25.95	%
Construction and Development Loans		44		55,689		8.34	%		5.48	%
Commercial and Industrial		552		115,781		17.33	%		11.42	%
Closed End First Lien 1-4 Family		437		149,893		22.44	%		14.78	%
Home Equity Line of Credit		251		50,127		7.50	%		4.94	%
Multi-family Loans		39		20,574		3.08	%		2.03	%
Consumer Loans		188		11,736		1.76	%		1.16	%
Closed-End Junior Lien 1-4 Family		16		857		0.13	%		0.08	%
Other		—		137		0.02	%		0.01	%

Total		1,784	$	667,916		100.00	%		65.88	%

The following chart illustrates the composition of our construction and land development loan portfolio as of September 30, 2010, and year-end 2009.


(Dollars in thousands)

	September 30, 2010					December 31, 2009

	Balance		% of Total Loans			Balance		% of Total Loans

Construction
Residential	$	—		0.00	%	$	—		0.00	%
Residential Spec		18,802		2.77	%		20,309		3.03	%
Commercial		—		0.00	%		1,108		0.17	%
Commercial Spec		3,653		0.54	%		3,259		0.49	%
Land Development
Residential		2,016		0.30	%		1,890		0.28	%
Residential Spec		13,093		1.93	%		14,551		2.17	%
Commercial		1,459		0.22	%		—		0.00	%
Commercial Spec		11,110		1.64	%		14,572		2.16	%

Total	$	50,133		7.39	%	$	55,689		8.30	%

Generally, interest on loans accrues and is credited to income based upon the principal balance outstanding. It is management’s policy to discontinue the accrual of interest income and classify a loan as non-accrual when principal or interest is past due 90 days or more unless, in the determination of management, the principal and interest on the loan are well collateralized and in the process of collection. Consumer installment loans are generally charged-off after 90 days of delinquency unless adequately collateralized and in the process of collection. Loans are not returned to accrual status until principal and interest payments are brought current and future payments appear reasonably certain. Interest accrued and unpaid at the time a loan is placed on non-accrual status is charged against interest income.

Real estate acquired by us as a result of foreclosure or by deed in lieu of foreclosure is classified as other real estate owned (“OREO”). OREO properties are recorded at the lower of cost or fair value less estimated selling costs, and the estimated loss, if any, is charged to the allowance for credit losses at the time it is transferred to OREO. Further write-downs in OREO are recorded at the time management believes additional deterioration in value has occurred and are charged to non-interest expense. We had $263,000 in OREO property as of September 30, 2010, as compared to $635,000 at December 31, 2009.

We have identified certain assets as non-performing and troubled debt restructuring assets. These assets include non-accruing loans, foreclosed real estate, loans that are contractually past due 90 days or more as to principal or interest payments and still accruing, and troubled debt restructurings. All non-accruing loans and loans accruing 90 days or more are considered impaired and included in our substandard classification. These assets present more than the normal risk that we will be unable to eventually collect or realize their full carrying value. Our non-performing and troubled debt restructuring assets at September 30, 2010 and December 31, 2009 are as follows:


(Dollars in thousands)	September 30, 2010							December 31, 2009

	Assets Not Subject to Loss Share Agreements		Assets Subject to Loss Share Agreements		Total			Assets Not Subject to Loss Share Agreements		Assets Subject to Loss Share Agreements		Total

Non-Accrual Loans
Residential	$	2,433	$		$	2,433		$	469	$	—	$	469
Home Equity Lines		1,647				1,647			—		—		—
Commercial Real Estate		10,228				10,228			8,566		—		8,566
Construction and Land Development		9,005				9,005			5,258		—		5,258
Commercial and Industrial		775				775			717		560		1,277
Other		34				34			—		—		—

Total	$	24,122	$		$	24,122		$	15,010	$	560	$	15,570


Accruing => 90 days past due
Residential	$	—	$	—	$	—		$	—	$	—	$	—
Home Equity Lines		—		—		—			—		—		—
Commercial Real Estate		—		—		—			—		—		—
Construction and Land Development		—		—		—			—		—		—
Commercial and Industrial		—		942		942			54		—		54
Other		—		—		—			—		—		—

Total	$	—	$	942	$	942		$	54	$	—	$	54


Total non-accruing loans	$	24,122	$	—	$	24,122		$	15,010	$	560	$	15,570
Accruing => 90 days past due		—		942		942			54		—		54
Foreclosed real estate		263		—		263			635		—		635

Total non-performing assets		24,385		942		25,327			15,699		560		16,259

Trouble debt restructured loans		12,499		—		12,499			1,990		—		1,990

Total non-performing assets and restructured loans	$	36,884	$	942	$	37,826		$	17,689	$	560	$	18,249


Ratios
Total non-accruing loans to total loans						3.56	%						2.30	%
Total non-performing assets to total assets						2.38	%						1.60	%
Total non-performing assets and troubled debt restructured loans to total assets						3.56	%						1.80	%

Since December 31, 2009, approximately $4.3 million in non-accrual loans were charged off, and approximately $24.8 million in non-accrual loans were added (excluding assets acquired in the Republic transaction) while $11.9 million in previously classified non-accrual loans paid off, were sold or were placed back on accrual, during the period. The $942,000 in accruing greater than 90 days past due loans acquired in the Republic transaction are all 100% guaranteed by the Export/Import Bank and we do not expect any additional future losses on these assets. Four loans made up a substantial portion of the additions to non-accrual during the year: a $6.4 million (net of a specific reserve of $1.2 million), completed seven-unit water front townhome project in Broward County which was appraised in August 2010 for approximately $6.9 million; a loan of $4.3 million secured by a single family home in Palm Beach County which was subsequently sold in September 2010 for $3.3 million; a $2.2 million loan on a day care facility in Palm Beach County which was appraised in September 2010 for $2.5 million; and a loan of $1.7 million on a single family home in Broward County which was appraised in March 2010 for $4.2 million. Other significant loans included in non-accrual loans not covered by Loss Share Agreements at September 30, 2010 include: $1.7 million (net of a specific reserve of $500,000) secured by new commercial office/warehouse property in Broward County, Florida (appraised January 2010 at $2.5 million), $1.1 million participation loan secured by land in Orlando, Florida (pro rata portion appraised November 2009 at $1.8 million), $1.3 million loan secured by receivables and a commercial building in Broward County, Florida (building appraised in April 2010 at $1.3 million), $1.5 million loan (net of a specific reserve of $200,000) secured by an office building in Boca Raton, Florida (appraised in January 2010 at $1.8 million), and a $810,000 loan (net of a specific reserve of $90,000) on a home in Palm Beach County (appraised in April 2010 at $900,000). The remaining 20 non-accrual loans are each under $750,000. We have specific reserves included in the allowance for loan losses of $2.4 million for potential loan losses related to non-accrual loans that are not covered by Loss Share Agreements. We continue to aggressively work to resolve each of these loans. The total allowance for loan losses to non-performing loans is 46% at September 30, 2010 compared to 85% at December 31, 2009. The decrease in the allowance to non-performing loans ratio is primarily due to charge-offs during the period ended September 30, 2010 and the collateral value coverage on non-performing assets at September 30, 2010.

Delinquent Loans

(Dollars in thousands)


	Accruing 60-89				Non-Accrual and past due 90 days and over and accruing				Total

	Number		Amount		Number		Amount		Number		Amount

As of September 30, 2010
Residential		2	$	317		3	$	2,433		5	$	2,750
Home Equity Lines		—		—		4		1,647		4		1,647
Commercial Real Estate		3		3,243		12		10,228		15		13,471
Construction and Land		—		—		3		9,005		3		9,005
Commercial and Industrial		3		522		9		1,717		12		2,239
Other		—		—		1		34		1		34

Total		8	$	4,082		32	$	25,064		40	$	29,146

Included in the table above as of September 30, 2010 in the non-accrual and 90 day and over category are two loans with a carrying value of $942,000, which are subject to the Loss Share Agreement.

(Dollars in thousands)


	Accruing 60-89				Non-Accrual and 90 days and over past due and accruing				Total

	Number		Amount		Number		Amount		Number		Amount

As of December 31, 2009
Residential		3	$	241		1	$	469		4	$	710
Home Equity Lines		—		—		—		—		—		—
Commercial Real Estate		7		5,384		12		8,566		19		13,950
Construction and Land		1		2,150		3		5,258		4		7,408
Commercial and Industrial		3		1,047		11		1,277		14		2,324
Other		—		—		—		—		—		—

Total		14	$	8,822		27	$	15,570		41	$	24,392

Included in the table above as of December 31, 2009 in the accruing 60 - 89 category are eight loans with a carrying value of $3.9 million, and in the non-accrual and 90 days and over past due and accruing category are three loans with a carrying value of $560,000, which are subject to the Loss Share Agreements.


Impaired Loans	(dollars in thousands)


	September 30, 2010		December 31, 2009

Loans with no allocated allowance for loan losses	$	8,273	$	5,900
Loans with allocation for loan losses		28,280		11,100

Total Impaired	$	36,533	$	17,000


Amount of allowance for loan losses allocated	$	4,342	$	1,522

All non-accrual loans and troubled debt restructurings are included in impaired loans.

At September 30, 2010 and December 31, 2009, we had approximately $12.5 million and $2.0 million, respectively, of loans classified as troubled debt restructurings that are performing in accordance with the restructured terms. All of the Company’s troubled debt restructurings are at current rates at or above prime and generally rate concessions were for periods of less than two years and revert back to the original rate at the end of the concession period.

During the quarters ended September 30, 2010 and 2009, interest income not recognized on non-accrual loans (but would have been recognized if these loans were current) was approximately $513,000 and $168,000, respectively.

For the nine months ended September 30, 2010 and 2009, interest income not recognized on non accrual loans (but would have been recognized if these loans were current) was approximately $831,000 and $382,000, respectively.

Allowance for Loan Losses

At September 30, 2010, the allowance for loan losses was $11.5 million or 1.70% of total loans. At September 30, 2010, no portion of the allowance for loan losses related to the approximately $153.1 million of loans covered under the Loss Share Agreements. At December 31, 2009, the allowance for loan losses was $13.3 million or 1.99% of total loans. In originating loans, we recognize that credit losses will be experienced and the risk of loss will vary with, among other things: general economic conditions; the type of loan being made; the creditworthiness of the borrower over the term of the loan; and, in the case of a collateralized loan, the quality of the collateral for such a loan. The allowance for loan losses represents our estimate of the allowance necessary to provide for probable incurred losses in the loan portfolio. In making this determination, we analyze the ultimate collectability of the loans in our portfolio, feedback provided by internal loan staff, the independent loan review function and information provided by examinations performed by regulatory agencies.

On a quarterly basis, management reviews the adequacy of the allowance for loan losses. Commercial credits are graded by risk management and the loan review function validates the assigned credit risk grades. In the event that a loan is downgraded, it is included in the allowance analysis at the lower grade. To establish the appropriate level of the allowance, we review and classify a sample of loans (including all impaired and nonperforming loans) as to potential loss exposure.

Our analysis of the allowance for loan losses consists of three components: (i) specific credit allocation established for expected losses resulting from analysis developed through specific credit allocations on individual loans for which the recorded investment in the loan exceeds the fair value; (ii) general portfolio allocation based on historical loan loss experience for each loan category; and (iii) qualitative reserves based on general economic conditions as well as specific economic factors in the markets in which we operate.

The specific credit allocation component of the allowance for loan losses is based on a regular analysis of loans where the internal credit rating is at or below the substandard classification and the loan is determined to be impaired as determined by management. The amount of impairment, if any, is determined based on either the present value of expected future cash flows discounted at the loan’s effective interest rate, the market price of the loan, or, if the loan is collateral dependent, the fair value of the underlying collateral less cost of sale. A loan may also be classified as substandard and not be classified as impaired by management. The allowance for these loans is calculated based on historical charge-offs for the substandard loan categories combined with specifically evaluating the underlying credit and collateral of each loan. A loan may be classified as substandard by management if, for example, the primary source of repayment is insufficient, the financial condition of the borrower and/or guarantors has deteriorated or there are chronic delinquencies.


Substandard loans	September 30, 2010

(dollars in thousands)	Loans Not Subject to Loss Share Agreements		Loans Subject to Loss Share Agreements		Total

Substandard – Impaired	$	28,280	$		$	28,280

Substandard – Not Impaired		28,667		1,157		29,824

Total Loans Classified as Substandard	$	56,947	$	1,157	$	58,104


Substandard loans	December 31, 2009

(dollars in thousands)	Loans Not Subject to Loss Share Agreements		Loans Subject to Loss Share Agreements		Total

Substandard – Impaired	$	17,000	$	—	$	17,000

Substandard – Not Impaired		38,296		1,945		40,241

Total Loans Classified as Substandard	$	55,296	$	1,945	$	57,241

All non-accrual loans and troubled debt restructurings are included in substandard loans.

The total of substandard loans, which include all non-accrual loans, totaled $58.1 million at September 30, 2010 (of which $1.2 million are subject to the Loss Share Agreements) and $59.2 million at December 31, 2009. In addition, at September 30, 2010, we identified approximately $28.3 million (or 4% of total loans) in loans we have classified as impaired which are included in our substandard classification. This compares to $17.0 million or 2.5% of total loans at December 31, 2009. At September 30, 2010 and December 31, 2009, the specific credit allocation included in the allowance for loan losses for loans impaired was approximately $4.0 million and $1.5 million, respectively. All loans classified as substandard that are collateralized by real estate are re-appraised at a minimum on an annual basis. The specific credit allocation for loans impaired is adjusted based on the new appraisals.

We also have loans classified as Special Mention. We classify loans as Special Mention if there are declining trends in the borrower’s business, questions regarding condition or value of the collateral, or other weaknesses. At September 30, 2010, we had $28.7 million (4.2% of outstanding loans), which includes $2.5 million in loans subject to loss share agreements in the Special Mention category which compares to $24.0 million (4.8% of outstanding loans) at December 31, 2009. If there is further deterioration on these loans, they may be classified substandard in the future, and depending on the fair value of the loan a specific credit allocation may be needed resulting in increased provisions for loan losses.

At September 30, 2010, we had $34.8 million in loans (net of an accretable difference of $6.7 million and non-accretable difference of $20.2 million) which were acquired in the Republic transaction and the Equitable merger which at the time of acquisition we assessed that it would be improbable of collecting all contractually required payments. Included in the $34.8 million loans is $4.2 million in loans which are included in non-accrual loans as we cannot reasonably estimate cash flows. For the remaining loans we estimate remaining cash flows quarterly and if they are determined to be less than originally estimated, impairment is determined and included in the allowance for loan loss analysis. At September 30, 2010, none of these remaining loans were impaired.

We determine the general portfolio allocation component of the allowance for loan losses statistically using a loss analysis that examines historical loan loss experience adjusted for current environmental factors. We perform the loss analysis quarterly and update loss factors regularly based on actual experience. The general portfolio allocation element of the allowance for loan losses also includes consideration of the amounts necessary for concentrations and changes in portfolio mix and volume.

We base the allowance for loan losses on estimates and ultimate realized losses may vary from current estimates. We review these estimates quarterly, and as adjustments, either positive or negative, become necessary, we make a corresponding increase or decrease in the provision for loan losses. The methodology used to determine the adequacy of the allowance for loan losses is consistent with prior years and there were no reallocations.

Management remains watchful of credit quality issues. Should the economic climate deteriorate from current levels, borrowers may experience difficulty repaying loans and the level of non-performing loans, charge-offs and delinquencies could rise and require further increases in loan loss provisions.

Investment Securities

We manage our consolidated securities portfolio, which represented 10.2% of our earning asset base for the period ended September 30, 2010, as compared to 8.7% at year ended December 31, 2009, to minimize interest rate risk, maintain sufficient liquidity, and maximize return. The portfolio includes callable agency bonds, U.S. Treasury Securities, mortgage-backed securities, and collateralized mortgage obligations. Corporate obligations consist of publicly traded investment grade obligations of corporations. Our financial planning anticipates income streams generated by the securities portfolio based on normal maturity, pay downs and reinvestment.

Deposits

Total deposits increased by $60.6 million from December 31, 2009 to total deposits of $863.4 million at September 30, 2010, due primarily to business development efforts. Broker deposits at September 30, 2010 were

$15.9 million, or 1.8% of deposits. At September 30, 2010, non-interest bearing deposits represented approximately 27% of deposits compared to 24% at December 31, 2009.

CAPITAL RESOURCES

We are subject to regulatory capital requirements administered by federal banking agencies. Capital adequacy guidelines and prompt corrective action regulations involve quantitative measures of assets, liabilities, and certain off-balance-sheet items calculated under regulatory accounting practices. Capital amounts and classifications are also subject to qualitative judgments by regulators. Failure to meet capital requirements can initiate regulatory action.

The Federal banking regulatory authorities have adopted certain “prompt corrective action” rules with respect to depository institutions. The rules establish five capital tiers: “well capitalized,” “adequately capitalized,” “undercapitalized,” “significantly undercapitalized,” and “critically undercapitalized.” The various federal banking regulatory agencies have adopted regulations to implement the capital rules by, among other things, defining the relevant capital measures for the five capital categories. An institution is deemed to be “well capitalized” if it has a total risk-based capital ratio of 10% or greater, a Tier 1 risk-based capital ratio of 6% or greater, and a Tier 1 leverage ratio of 5% or greater and is not subject to a regulatory order, agreement, or directive to meet and maintain a specific capital level. At September 30, 2010, 1st United Bank met the capital ratios of a “well capitalized” financial institution with a total risk-based capital ratio of 24.7%, a Tier 1 risk-based capital ratio of 22.5%, and a Tier 1 leverage ratio of 12.1%. Depository institutions which fall below the “adequately capitalized” category generally are prohibited from making any capital distribution, are subject to growth limitations, and are required to submit a capital restoration plan. There are a number of requirements and restrictions that may be imposed on institutions treated as “significantly undercapitalized” and, if the institution is “critically undercapitalized,” the banking regulatory agencies have the right to appoint a receiver or conservator.

The following represents 1 ^st United Bancorp’s and 1 ^st United Bank’s regulatory capital ratios for the respective periods:


	Actual					Minimum for Capital Adequacy					Minimum for Well Capitalized

(Dollars in thousands)	Amount		%			Amount		%			Amount		%

As of September 30, 2010
Total Capital to risk-weighted assets
Consolidated	$	134,796		24.66	%	$	43,726		8.00	%	$	54,657		10.00	%
1st United		89,326		16.48	%		43,359		8.00	%		54,199		10.00	%
Tier I capital to risk-weighted assets
Consolidated		123,906		22.49	%		21,863		4.00	%		32,794		6.00	%
1st United		77,499		14.30	%		21,680		4.00	%		32,519		6.00	%
Tier I capital to total average assets
Consolidated		123,906		12.14	%		40,501		4.00	%		50,626		5.00	%
1st United		77,499		7.69	%		40,317		4.00	%		50,397		5.00	%

As of December 31, 2009
Total Capital to risk-weighted assets
Consolidated	$	132,813		25.45	%	$	41,749		8.00	%	$	52,186		10.00	%
1st United		85,780		16.59	%		41,372		8.00	%		51,715		10.00	%
Tier I capital to risk-weighted assets
Consolidated		122,206		23.23	%		20,875		4.00	%		31,312		6.00	%
1st United		74,238		14.36	%		20,686		4.00	%		31,029		6.00	%
Tier I capital to total average assets
Consolidated		121,206		12.54	%		38,649		4.00	%		48,311		5.00	%
1st United		74,238		7.72	%		37,473		4.00	%		48,091		5.00	%

Book value per common share


	September 30, 2010			December 31, 2009

Shareholders’ equity	$	172,573		$	170,594
Goodwill		(45,008	)		(45,008	)

Core deposits intangible		(2,718	)		(3,045	)

Tangible shareholders’ equity	$	124,847		$	122,541


Book value per common share	$	6.96		$	6.88
Effect of goodwill and core deposits intangible		(1.92	)		(1.94	)

Tangible book value per common share	$	5.04		$	4.94

CASH FLOWS AND LIQUIDITY

Our primary sources of cash are deposit growth, maturities and amortization of loans and investment securities, operations, and borrowing. We use cash from these and other sources to first fund loan growth. Any remaining cash is used primarily to purchase a combination of short, intermediate, and longer-term investment securities.

We manage our liquidity position with the objective of maintaining sufficient funds to respond to the needs of depositors and borrowers and to take advantage of earnings enhancement opportunities. In addition to the normal inflow of funds from core-deposit growth together with repayments and maturities of loans and investments, we use other short-term funding sources such as brokered time deposits, securities sold under agreements to repurchase, overnight federal funds purchased from correspondent banks and the acceptance of short-term deposits from public entities, and Federal Home Loan Bank advances.

We monitor, stress test and manage our liquidity position on several bases, which vary depending upon the time period. As the time period is stress test expanded, other data is factored in, including estimated loan funding requirements, estimated loan payoffs, investment portfolio maturities or calls, and anticipated depository buildups or runoffs.

We classify all of our securities as available-for-sale to maintain significant liquidity. Our liquidity position is further enhanced by structuring our loan portfolio interest payments as monthly, complemented by retail credit and residential mortgage loans in our loan portfolio, resulting in a steady stream of loan repayments. In managing our investment portfolio, we provide for staggered maturities so that cash flows are provided as such investments mature.

Our securities portfolio, federal funds sold, and cash and due from bank deposit balances serve as primary sources of liquidity for 1 ^st United Bank. At September 30, 2010, we had approximately $170.6 million in cash and cash equivalents, and securities not pledged of $52.8 million.

At September 30, 2010, we had short-term borrowings and long-term borrowings of $5 million from the FHLB. At September 30, 2010, we had commitments to originate loans totaling $75.6 million. Scheduled maturities of certificates of deposit during the twelve months following September 30, 2010 totaled $265.5 million, and maturing loans totaled approximately $181.3 million.

Management believes that we have adequate resources to fund all of our commitments, that substantially all of our existing commitments will be funded in the subsequent twelve months and, if so desired, that we can adjust the rates on certificates of deposit and other deposit accounts to retain deposits in a changing interest rate environment. At September 30, 2010, we had short-term lines available from correspondent banks totaling $46 million, FRB discount window availability of $36 million, and borrowing capacity from the FHLB of $56.7 million based on collateral pledged, for a total credit available of $123.3 million. In addition, being “well capitalized,” 1 ^st United Bank can access the wholesale deposits for approximately $248.6 million based on current policy limits.

OFF-BALANCE SHEET ARRANGEMENTS

We do not currently engage in the use of derivative instruments to hedge interest rate risks. However, we are a party to financial instruments with off-balance sheet risks in the normal course of business to meet the financing needs of our clients.

At September 30, 2010, we had $75.6 million in commitments to originate loans and $4.1 million in standby letters of credit. Commitments to extend credit are agreements to lend to a customer so long as there is no violation of any condition established in the contract. Commitments generally have termination clauses and may require payment of a fee. Since many of the commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. Standby letters of credit are conditional commitments issued by us to guarantee the performance of a client to a third party. We use the same credit policies in establishing commitments and issuing letters of credit as we do for on-balance sheet instruments.

If commitments arising from these financial instruments continue to require funding at historical levels, management does not anticipate that such funding will adversely impact our ability to meet on-going obligations. In the event these commitments require funding in excess of historical levels, management believes current liquidity, available lines of credit from the FHLB, investment security maturities and our revolving credit facility provide a sufficient source of funds to meet these commitments.

CRITICAL ACCOUNTING POLICIES

Allowance for Loan Losses

The allowance for loan losses is established as losses are estimated to have occurred through a provision for loan losses charged to earnings. Loan losses are charged against the allowance when management believes the uncollectibility of a loan balance is confirmed. Subsequent recoveries, if any, are credited to the allowance.

The allowance for loan losses is evaluated on a regular basis by management and is based upon management’s periodic review of the collectibility of the loans in light of historical experience, the nature and volume of the loan portfolio, adverse situations that may affect the borrower’s ability to repay, estimated value of any underlying collateral and prevailing economic conditions. This evaluation is inherently subjective as it requires estimates that are susceptible to significant revision as more information becomes available.

The allowance consists of specific and general components. The specific component relates to loans that are classified as either loss, doubtful, substandard or special mention. For such loans that are also classified as impaired, an allowance is established when the discounted cash flows (or collateral value or observable market price) of the impaired loan is lower than the carrying value of that loan. The general component covers nonclassified loans and is based on historical loss experience adjusted for qualitative factors.

A loan is considered impaired when, based on current information and events, it is probable that we will be unable to collect the scheduled payments of principal or interest when due according to the contractual terms of the loan agreement. Factors considered by management in determining impairment include payment status, collateral value, and the probability of collecting scheduled principal and interest payments when due. Loans that experience insignificant payment delays and payment shortfalls generally are not classified as impaired. Management determines the significance of payment delays and payment shortfalls on a case-by-case basis, taking into consideration all of the circumstances surrounding the loan and the borrower, including the length of the delay, the reasons for the delay, the borrower’s prior payment record, and the amount of the shortfall in relation to the principal and interest owed. Impairment is measured on a loan by loan basis for commercial and commercial real estate loans by either the present value of expected future cash flows discounted at the loan’s effective interest rate, the loan’s obtainable market price, or the fair value of the collateral if the loan is collateral dependent.

Large groups of smaller balance homogeneous loans are collectively evaluated for impairment. Accordingly, we do not separately identify individual consumer and residential loans for impairment disclosures.

Goodwill and Intangible Assets

Goodwill represents the excess of cost over fair value of assets of business acquired. Goodwill and intangible assets acquired in a purchase business combination and determined to have an indefinite useful life are not amortized, but instead tested for impairment at least annually. Intangible assets with estimable useful lives are amortized over their respective estimated useful lives to their estimated residual values. We acquired First Western Bank, on April 7, 2004, Equitable on February 29, 2008 and Citrus on August 15, 2008. Consequently, we were required to record the assets acquired, including identified intangible assets, and liabilities assumed at their fair value, which involves estimates based on third party valuations, such as appraisals, internal valuations based on discounted cash flow analyses or other valuation techniques. The determination of the useful lives of intangible assets is subjective, as is the appropriate amortization period for such intangible assets. In addition, purchase acquisitions typically result in recording goodwill, which is subject to ongoing periodic impairment tests based on the fair value of the reporting unit compared to its carrying amount, including goodwill. As of December 31, 2009, the required annual impairment test of goodwill was performed and no impairment existed as of the valuation date. If for any future period we determine that there has been impairment in the carrying value of our goodwill balances, we will record a charge to our earnings, which could have a material adverse effect on our net income, but not to our risk based capital ratios.

Income Taxes

Deferred income tax assets and liabilities are recorded to reflect the tax consequences on future years of temporary differences between revenues and expenses reported for financial statements and those reported for income tax purposes. Deferred tax assets and liabilities are measured using the enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be realized or settled. Valuation allowances are provided against assets which are not likely to be realized.


I TEM 4.	CONTROLS AND PROCEDURES


(a)	Evaluation of Disclosure Controls and Procedures

Our Chief Executive Officer, Rudy E. Schupp, and Chief Financial Officer, John Marino, have evaluated our disclosure controls and procedures, as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended (the “Act”), as of the end of the period covered by this report. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer each have concluded that our disclosure controls and procedures are effective in ensuring that information required to be disclosed by us in the reports that we file or submit under the Act is recorded, processed, summarized, and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms. Such controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed is accumulated and communicated to our management, including our principal executive and principal financial officers, to allow timely decisions regarding disclosure.

(b)	Changes in Internal Control Over Financial Reporting

Our management, including our Chief Executive Officer and Chief Financial Officer, has reviewed our internal control over financial reporting, as defined in Rule 13a-15(f) under the Act. There were no changes in internal control over financial reporting that occurred during the fiscal quarter covered by this report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.


P ART II.	OTHER INFORMATION


I TEM 1.	LEGAL PROCEEDINGS

From time-to-time we may be involved in litigation that arises in the normal course of business. As of the date of this Form 10-Q, we are not a party to any litigation that management believes could reasonably be expected to have a material adverse effect on our financial position or results of operations for an annual period.


I TEM 1A.	RISK FACTORS

In addition to the other information set forth in this Quarterly Report, you should carefully consider the factors discussed in Part I, Item 1A. “Risk Factors” in our Annual Report, as updated in our subsequent quarterly reports. The risks described in our Annual Report are not the only risks facing us. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition and/or operating results.

I TEM 5.	OTHER INFORMATION

On October 25, 2010, we announced via press release our financial results for the three and nine-month period ended September 30, 2010. A copy of our press release is included herein as Exhibit 99.1 and incorporated herein by reference.

The information furnished under Part II, Item 5 of this Quarterly Report, including Exhibit 99.1, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, except as shall be expressly set forth by specific reference in such filing.


I TEM 6.	EXHIBITS


(a)	The following exhibits are included herein:


Exhibit No.			Name


31.1			Certification Pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, as amended.

31.2			Certification Pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, as amended.

32			Certification Pursuant to 18 U.S.C. Section 1350

99.1			Press release to announce earnings, dated October 25, 2010.

S IGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


		1 ^ST UNITED BANCORP, INC.
		(Registrant)

Date:	October 25, 2010	By: /s/ John Marino

		JOHN MARINO
		PRESIDENT AND CHIEF FINANCIAL OFFICER
		(Mr. Marino is the principal financial officer and has been duly authorized to sign on behalf of the Registrant)

EXHIBIT INDEX


EXHIBIT		DESCRIPTION


31.1		Certification Pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, as amended.

31.2		Certification Pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, as amended.

32		Certification Pursuant to 18 U.S.C. Section 1350

99.1		Press release to announce earnings, dated October 25, 2010