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					                           GreenStone Farm Credit Services, ACA




                                                                                                                                   Quarterly Report
                                                                                                                                     June 30, 2011


MANAGEMENT'S DISCUSSION AND ANALYSIS                                           Risk Assets
                                                                               The following table summarizes risk assets (accruing volume includes
                                                                               accrued interest receivable) and delinquency information (in thousands):
The following commentary reviews the consolidated financial position
and consolidated results of operations of GreenStone Farm Credit                                                                  June 30     December 31
Services, ACA and its subsidiaries. The accompanying consolidated              As of:                                              2011             2010
financial statements and notes also contain important information about        Loans:
our financial position and results of operations. Our 2010 annual report        Accruing restructured                                $154            $153
should also be read for a description of our organization, operations
                                                                                Past due 90 days or more still accruing               928             908
and significant accounting policies.
                                                                                Nonaccrual                                         79,610          93,295
AgriBank, FCB’s (AgriBank) financial condition and results of                  Total risk loans                                    80,692          94,356
operations materially affect shareholders' investment in GreenStone            Acquired property                                   56,261          49,644
Farm Credit Services, ACA. To request free copies of the AgriBank and          Total risk assets                                $136,953         $144,000
combined AgriBank, FCB and Affiliated Associations’ financial reports
                                                                               Risk loans as a % of total loans                      1.6%             1.9%
or additional copies of our report contact us at 3515 West Road, East
Lansing, Michigan 48823, (800) 968-0061, or by e-mail to                       Total delinquencies as a % of total loans             1.3%             1.6%
Travis.Jones@greenstonefcs.com, or through our website at
www.greenstonefcs.com. You may also contact AgriBank at 375                    Our risk assets have decreased from December 31, 2010 primarily as a
Jackson Street, St. Paul, Minnesota 55101-1810, (651) 282-8800, or by          result of charge-offs taken during the first half of 2011 in addition to one
e-mail to agribankmn@agribank.com. The AgriBank and combined                   large broiler relationship and several large dairy participations being
AgriBank, FCB and Affiliated Associations’ financial reports are also          sold.
available through AgriBank’s website at www.agribank.com.
                                                                               Based on our analysis, loans past due 90 days or more and still accruing
Loan Portfolio                                                                 interest were adequately secured and in the process of collection and,
                                                                               as such, were eligible to remain in accruing status.
Owned loan volume totaled $4.9 billion at June 30, 2011, a $39.7
million increase from December 31, 2010.                                       Nonaccrual loans decreased from $93.3 million at December 31, 2010
                                                                               to $79.6 million at June 30, 2011. This $13.7 million drop in nonaccrual
Total owned and managed loan volume, including servicing volume                volume was primarily due to sale and payoff of a large broiler
on the real estate loans sold to AgriBank, FCB was $5.4 billion at             relationship totaling $12.4 million at December 31, 2010. As of June 30,
June 30, 2011, a $12.1 million increase from December 31, 2010.                2011, approximately 34% of the nonaccrual loan portfolio was
Our mortgage portfolio increased $86.4 million, or 2.4% from                   comprised of dairy loans, 9% of timber related loans, 9% of greenhouse
December 31, 2010. Our short‐term commercial loan portfolio                    and nursery loans and another 26% comprised of part-time farmers. The
decreased $76.8 million or 4.6% from December 31, 2010. This                   volume of nonaccrual loans at June 30, 2011 represented 1.6% of our
reduction is attributed to three primary causes: normal seasonality of         total portfolio. At June 30, 2011, 51.4% of our nonaccrual loans were
our traditional farm operating loans; the effect of short-term tax             current in their payment status.
planning loans being extended prior to the 2010 year-end and then
being repaid in the first quarter of 2011; and the relatively high level       Portfolio Credit Quality
of general farm profitability in 2010 resulting in early repayment and         Credit quality improved slightly during the first half of 2011. Loan and
reduced short-term borrowing needs. The traditional farm and agri-             lease credit quality as measured under the Uniform Classification
consumer segments experienced modest growth compared with a                    System improved 1.2% during the first six months of 2011 to 92.1%
slight decline in volume in our commercial farm and capital markets            Acceptable as of June 30, 2011, after beginning the year at 90.9%. At
segments.                                                                      June 30, 2010, the percentage classified Acceptable was 88.6%. The
                                                                               level of loan quality is currently above the strategic objective of 90.0% of
                                                                               the portfolio rated Acceptable. Portfolio assets criticized as being less
                                                                               than Acceptable are comprised of 2.5% Other Assets Especially
                                                                               Mentioned (OAEM) and 5.4% Adversely Classified. Adversely classified
                                                                               assets decreased 0.5% from 5.9% of the portfolio at December 31,
                                                                               2010. Adversely classified assets are assets we have identified as
                                                                               showing credit weaknesses outside our credit standards and represent
                                                                               greater than normal risk to the association. We consider portfolio credit
                                                                               quality in assessing the reasonableness of our allowance for loan
                                                                               losses. The resulting level of credit quality, when combined with our
                                                                               earnings and addition to capital surplus, results in an adverse loan to risk
                                                                               funds ratio of 41.1%. This ratio has improved since December 31, 2010
                                                                               and June 30, 2010 when it was 45.0% and 54.8%, respectively. This
                                                                               ratio is a good measure of the association’s risk bearing ability.



                                                                           1
In some circumstances, we use various governmental guarantee                          Results of Operations
programs to reduce the risk of loss. At June 30, 2011, $297.0 million of
our loans were, to some level, guaranteed under these governmental                    Net income for the six months ended June 30, 2011, totaled $53.3
programs.
                                                                                      million compared to $44.8 million for the same period last year. The
                                                                                      following table illustrates profitability information:
Agricultural and Economic Conditions
The outlook for the remainder of 2011 is one of optimism. Overall, the
                                                                                      As of June 30                                         2011            2010
crop in the Midwest is in a good position despite the early planting
challenges of a cold, wet spring. This has resulted in crop conditions                Return on average assets                             2.1%             1.9%
ranging from fair to excellent. The cool, wet spring did produce a very               Return on average members' equity                   12.1%            11.2%
good first cutting of the hay crop for our dairy customers. The summer
heat has allowed the crop to catch up but we could now use some rain.
                                                                                      The following table summarizes the changes in components of net
Rain at pollination will again be critical this year. The protein sector profit
                                                                                      income for the six months ended June 30, 2011, compared to the same
margins continue to be driven by export levels. Favorable profit margins
                                                                                      period last year (in thousands):
continue to be realized by the hog and dairy industries despite higher
input costs. Dairy prices have been very strong in the first half of the
                                                                                      Increase (decrease) in net income                              2011 vs 2010
year with the outlook for the balance of the year to be above breakeven
for the majority of our producers based on the strong export levels we                Net interest income                                                  $7,912
continue to enjoy. Hog prices through the first half of 2011 were                     Provision for loan losses                                            10,763
excellent with the outlook for the balance of the year to have very                   Patronage income                                                       (436)
favorable margins despite the cost of feed. The broiler industry has                  Financially related services income                                    (432)
experienced negative margins year to date as inventory levels and                     Fee income                                                             (507)
corresponding prices have not allowed the industry to absorb the                      Acquired property net income (loss)                                  (2,406)
increased cost of feed. The bio-fuels industry continues to experience a              Allocated insurance reserve account distribution                     (4,842)
narrow but positive crush margin environment. General economic                        Miscellaneous income, net                                               239
conditions of the United States, and in particular the state of Michigan,             Operating expenses                                                   (2,175)
continue to challenge industries tied to the housing sector (timber,                  Provision for income taxes                                              316
nursery, greenhouse) and our Agri-Consumer portfolio. Early reports
                                                                                      Total change in net income                                           $8,432
from the greenhouse industry are that 2011 will be a breakeven year for
most of our producers as the cold, wet spring limited the sale season in
the Midwest.                                                                          Net interest income was $74.5 million for the six months ended June 30,
                                                                                      2011. The following table quantifies changes in net interest income for
Improvement in the quality of the loan and lease portfolio will be                    the six months ended June 30, 2011, compared to the same period of
dependent upon the Midwest experiencing a good harvest. We have                       2010 (in thousands):
several large dairy and hog customers in our Commercial Producer
market that continue to recover from the industry challenges in 2007                  Change in net interest income                                  2011 vs 2010
through 2009. Reasonable feed costs in conjunction with a solid sale
price outlook for 2012 will allow us to consider upgrading these key                  Changes in volume                                                    $6,809
accounts. Overall, the Capital Markets portfolio is performing very well.             Changes in rates                                                      1,251
Our one area of focus is the broiler portfolio. While this industry is                Changes in nonaccrual income and other                                 (148)
stressed we do not anticipate that we will experience a significant level
of deterioration in credit quality. We anticipate our Agri-Consumer                   Net change                                                           $7,912
market segment will continue to experience the current level of credit
quality challenges until the overall economic conditions improve in
                                                                                      The decrease in the provision for loan losses is primarily due to several
Michigan and Wisconsin. The Traditional market segment continues to
                                                                                      large charge-offs in the timber and dairy industries during the first half of
perform at exceptional levels.
                                                                                      2010.
Allowance for Loan Losses
                                                                                      The decrease in acquired property net income (loss) is primarily due to
The allowance for loan losses is an estimate of losses on loans in our
                                                                                      the sale of two ethanol plants during the first quarter of 2010 which
portfolio as of the financial statement date. We determine the
                                                                                      resulted in gains of approximately $1.8 million.
appropriate level of allowance for loan losses based on periodic
evaluation of factors such as loan loss history, portfolio quality and
                                                                                      The decrease in allocated insurance reserve account (AIRA) distribution
current economic and environmental conditions.
                                                                                      is due to our share of distributions from AIRA of $4.8 million during the
                                                                                      first quarter of 2010. There has been no distribution in 2011.
Comparative allowance coverage of various loan categories follows:
                                                                                      The increase in operating expenses is primarily related to increases in
                                                   June 30    December 31             salaries and employee benefits.
Allowance as a percentage of:                         2011             2010
Loans                                                 0.9%             0.9%           Changes in our return on average assets and return on average
Nonaccrual loans                                     55.2%            46.4%           members’ equity are directly related to the changes in income discussed
Total risk loans                                     54.5%            45.9%           above, changes in assets discussed in the Loan Portfolio section and
                                                                                      changes in capital discussed in the Funding, Liquidity and Capital
                                                                                      section which follows.
The allowance for loan losses increased $667 thousand from
December 31, 2010 to June 30, 2011. During the first half of 2011,
$7.4 million of provision was recorded, which was off-set by $6.7
million of net charge-offs. The total net charge-offs were primarily due
to charge-offs related to dairy participation loans. In our opinion, the
allowance for loan losses was reasonable in relation to the risk in our
loan portfolio at June 30, 2011.



                                                                                  2
Funding, Liquidity and Capital                                                  Certification

The Farm Credit System is a government-sponsored enterprise that                The undersigned certify they have reviewed GreenStone Farm Credit
has benefited from broad access to domestic and global capital                  Services, ACA’s June 30, 2011, quarterly report. It has been
markets. This access has provided us with a dependable source of                prepared under the oversight of the audit committee and in
competitively priced debt which is critical for supporting our mission          accordance with all applicable statutory or regulatory requirements.
of providing credit to agriculture and rural America. The recent U.S.           The information contained herein is true, accurate, and complete to
Congressional negotiations aimed at raising the government’s                    the best of our knowledge and belief.
borrowing limit and addressing long-term budget imbalances have
further highlighted the risks to the System relating to the U.S. fiscal
situation. These risks include the apparent implied link between the
credit rating of the System and the U.S. government given the
System’s status as a government-sponsored enterprise.
                                                                                Frank S. Engler
On August 2, 2011, Moody’s Investors Service confirmed the AAA
                                                                                Chairperson of the Board
rating of financial institutions directly linked to the U.S. government,
                                                                                GreenStone Farm Credit Services, ACA
including Farm Credit Banks. The government bond rating of the U.S.
government was confirmed AAA following the raising of the statutory
debt limit, with a rating outlook of negative. In conjunction with the
revision of the U.S. government outlook to negative, the rating
outlook for the directly linked issuers, including Farm Credit Banks,
has also been revised to negative. Fitch has also confirmed the AAA
rating of the U.S. government. A reduction in the System’s credit
ratings, if it were to occur in the future, may increase our borrowing          David B. Armstrong
costs and may limit Farm Credit System access to the capital                    Chief Executive Officer
markets, reducing our flexibility to issue debt across the full spectrum        GreenStone Farm Credit Services, ACA
of the yield curve.

We borrow from AgriBank in the form of a line of credit. The repricing
attributes of our line of credit generally correspond to the repricing
attributes of our loan portfolio which significantly reduces our market
interest rate risk.
                                                                                Travis D. Jones
Total members’ equity increased $45.4 million from December 31,                 Chief Financial Officer
2010, primarily due to net income for the period partially offset by            GreenStone Farm Credit Services, ACA
patronage distribution accruals.
                                                                                August 5, 2011
Farm Credit Administration regulations require us to maintain a
permanent capital ratio of at least 7%, a total surplus ratio of at least
7% and a core surplus ratio of at least 3.5%. Refer to Note 8 in our
2010 annual report for a more complete description of these ratios.
As of June 30, 2011, the ratios were as follows:

    The permanent capital ratio was 14.1%.
    The total surplus ratio was 13.7%.
    The core surplus ratio was 13.7%.

The capital adequacy ratios are directly impacted by the changes in
capital as more fully explained above and the changes in assets as
further discussed in the Loan Portfolio section.




                                                                            3
CONSOLIDATED STATEMENTS OF CONDITION
GreenStone Farm Credit Services, ACA
(Dollars in thousands)
(Unaudited)
                                                                         June 30          December 31
                                                                          2011               2010
ASSETS
Loans                                                                    $4,918,586        $4,878,869
Allowance for loan losses                                                    43,960            43,293

  Net loans                                                               4,874,626         4,835,576

Investment in AgriBank, FCB                                                 143,928           143,560
Investment securities                                                        35,701             9,120
Accrued interest receivable                                                  40,142            37,467
Premises and equipment, net                                                  29,480            29,752
Acquired property                                                            56,261            49,644
Other assets                                                                 33,982            45,566

  Total assets                                                           $5,214,120        $5,150,685

LIABILITIES
Note payable to AgriBank, FCB                                            $4,245,867        $4,234,600
Accrued interest payable                                                     20,778            20,848
Net deferred income tax liability                                             1,850             3,851
Patronage distribution payable                                                8,300            18,200
Other liabilities                                                            38,108            19,345
  Total liabilities                                                       4,314,903         4,296,844
Contingencies and commitments                                                      --              --
MEMBERS' EQUITY
Protected members' equity                                                         5                 5
Capital stock and participation certificates                                 18,015            17,599
Unallocated surplus                                                         881,197           836,237
  Total members' equity                                                     899,217           853,841

 Total liabilities and members' equity                                   $5,214,120        $5,150,685

The accompanying notes are an integral part of these consolidated financial statements.




                                                  4
CONSOLIDATED STATEMENTS OF INCOME
GreenStone Farm Credit Services, ACA
(Dollars in thousands)
(Unaudited)
                                                            Three Months                       Six Months
Period ended June 30                                       2011          2010               2011        2010

Interest income                                            $58,823       $56,648          $115,845    $112,516
Interest expense                                            20,779        23,137            41,329      45,912

 Net interest income                                        38,044         33,511           74,516      66,604

Provision for loan losses                                     695          13,012            7,405      18,168

 Net interest income after
  provision for loan losses                                 37,349         20,499           67,111      48,436

Other income
Patronage income                                             5,250          4,975           10,130      10,566
Financially related services income                          1,920          2,281            4,885       5,317
Fee income                                                     806          1,170            1,800       2,307
Acquired property net (loss) income                           (537)           223             (368)      2,038
Allocated insurance reserve account distribution                 --             --               --      4,842
Miscellaneous income, net                                      420            278            1,062         823

 Total other income                                          7,859          8,927           17,509      25,893

Operating expenses
Salaries and employee benefits                               9,281          8,192           18,654      16,696
Other operating                                              5,608          4,706           10,663      10,446

 Total operating expenses                                   14,889         12,898           29,317      27,142

Income before income taxes                                  30,319         16,528           55,303      47,187

Provision for income taxes                                   2,034            251            2,047       2,363

 Net income                                                $28,285       $16,277           $53,256     $44,824

The accompanying notes are an integral part of these consolidated financial statements.




                                                       5
CONSOLIDATED STATEMENTS OF CHANGES IN MEMBERS' EQUITY
GreenStone Farm Credit Services, ACA
(Dollars in thousands)
(Unaudited)

                                                                                  Capital
                                                               Protected        Stock and                      Total
                                                               Members'         Participation   Unallocated   Members'
                                                                Equity          Certificates      Surplus      Equity

Balance at December 31, 2009                                       $6              $16,305       $760,938     $777,249
Net income                                                          --                   --        44,824       44,824
Unallocated surplus designated for patronage distributions          --                   --        (7,246)      (7,246)
Capital stock/participation certificates issued                     --               1,143              --       1,143
Capital stock/participation certificates retired                   (1)                (545)             --        (546)

Balance at June 30, 2010                                           $5              $16,903       $798,516     $815,424

Balance at December 31, 2010                                       $5              $17,599       $836,237     $853,841
Net income                                                          --                   --        53,256       53,256
Unallocated surplus designated for patronage distributions          --                   --        (8,296)      (8,296)
Capital stock/participation certificates issued                     --               1,000              --       1,000
Capital stock/participation certificates retired                    --                (584)             --        (584)

Balance at June 30, 2011                                           $5              $18,015       $881,197     $899,217

The accompanying notes are an integral part of these consolidated financial statements.




                                                               6
                                                                                  Losses.” This guidance is intended to provide additional information
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                                        to assist financial statement users in assessing an entity’s credit risk
                                                                                  exposures and evaluating the adequacy of its allowance for credit
                                                                                  losses. Existing disclosures are amended to include additional
                                                                                  disclosures of financing receivables on a disaggregated basis and
NOTE 1: Organization and Significant Accounting Policies                          also calls for new disclosures. For non-public entities, the disclosures
                                                                                  are effective for interim and annual reporting periods ending on or
Our 2010 annual report contains a description of our organization and             after December 15, 2011. The adoption of this guidance will have no
operations, significant accounting policies followed, and financial               impact on our financial condition or results of operations, but it will
condition and results of operations as of and for the year ended                  result in additional disclosures.
December 31, 2010. These unaudited second quarter 2011
consolidated financial statements should be read in conjunction with              NOTE 2: Investment Securities
the 2010 annual report.
                                                                                  We held investment securities of $35.7 million at June 30, 2011, and
The accompanying consolidated financial statements contain all                    $9.1 million at December 31, 2010, consisting of investment securities
adjustments necessary for a fair presentation of the interim                      made up of a portion of loans guaranteed by the Small Business
consolidated financial condition and consolidated results of                      Administration (SBA). The securities have been classified as held-to
operations. Our accounting and reporting policies conform to                      maturity. The investment portfolio is evaluated for other-than-temporary
accounting principles generally accepted in the United States of                  impairment. To date, we have not recognized any impairment on our
America and the prevailing practices within the financial services                investment portfolio.
industry. The results of the six months ended June 30, 2011, are not
necessarily indicative of the results to be expected for the year ended           The following table presents the amortized cost, unrealized gains and
December 31, 2011.                                                                losses, and fair value of the investment securities (in thousands):
The consolidated financial statements present the consolidated
                                                                                                                             June 30        December 31
financial results of GreenStone Farm Credit Services, ACA (the
parent) and GreenStone Farm Credit Services, FLCA and                             As of:                                        2011             2010
GreenStone Farm Credit Services, PCA (the subsidiaries). All                      Amortized cost                               $35,701           $9,120
material intercompany transactions and balances have been
                                                                                  Unrealized gains                                 102               72
eliminated in consolidation.
                                                                                  Unrealized losses                               (276)               --
Recent Accounting Developments                                                    Fair value                                   $35,527           $9,192
In May 2011, the Financial Accounting Standards Board (FASB)
issued guidance entitled, “Fair Value Measurement – Amendments to                 Weighted average yield                           2.1%            2.3%
Achieve Common Fair Value Measurements and Disclosure
Requirements in U.S. GAAP and IFRSs.” The new guidance results
in a consistent definition of fair value and common requirements for              The increase in investment securities is due to the purchase of seven
measurement of and disclosure about fair value between U.S. GAAP                  SBA pools during the first half of 2011.
and IFRS. The amendments include the following:
                                                                                  Investment income is recorded in “Interest income” on the Consolidated
                                                                                  Statements of Income and totaled $221 thousand for the six month
          Application of the highest and best use and valuation
                                                                                  period ended June 30, 2011, compared to $43 thousand for the same
           premise is only relevant when measuring the fair value of
                                                                                  period last year.
           nonfinancial assets.
          An exception to the requirement for measuring fair value
           when a reporting entity manages its financial instruments              NOTE 3: Allowance for Loan Losses
           on the basis of its net exposure, rather than its gross
           exposure, to market risks such as interest rate risk and               A summary of changes in the allowance for loan losses follows (in
           credit risk of counterparties.                                         thousands):
          Expansion of the disclosures about fair value
           measurements. New disclosures are required about the                   Six months ended June 30                        2011             2010
           use of a nonfinancial asset measured or disclosed at fair              Balance at beginning of year                   $43,293          $35,326
           value if its use differs from its highest and best use. In             Provision for loan losses                        7,405           18,168
           addition, entities must report the level in the fair value             Loan recoveries                                  1,866              903
           hierarchy of assets and liabilities not recorded at fair value         Loan charge-offs                                (8,604)         (17,382)
           but where fair value is disclosed.
                                                                                  Balance at end of period                       $43,960          $37,015
The amendments are to be applied prospectively. The amendments
are effective during interim and annual periods beginning after                   The allowance for loan losses increased $667 thousand from
December 15, 2011. Early application is not permitted. The adoption               December 31, 2010 to June 30, 2011. During the first half of 2011,
of this guidance is not expected to have a significant impact on our              $7.4 million of provision was recorded, which was off-set by $6.7
financial condition or results of operations, but will result in additional       million of net charge-offs. The total net charge-offs were primarily due
disclosures.                                                                      to charge-offs related to dairy participation loans. In our opinion, the
                                                                                  allowance for loan losses was reasonable in relation to the risk in our
In April 2011, the FASB issued guidance entitled “A Creditor's                    loan portfolio at June 30, 2011.
Determination of Whether a Restructuring Is a Troubled Debt
Restructuring”. This guidance provides additional clarification to
creditors for evaluating whether a modification or restructuring of a
receivable is a troubled debt restructuring. The guidance is effective
for non-public entities for annual periods ending on or after December
15, 2012, including interim periods within those annual periods. The
adoption of this guidance is not expected to have a significant impact
on our financial condition or results of operations, but will result in
additional disclosures.

In July 2010, the FASB issued guidance on “Disclosures about the
Credit Quality of Financing Receivables and the Allowance for Credit

                                                                              7
The following table presents information concerning risk loans (in                        Loans: Represents the carrying amount and related write-downs of
thousands):                                                                               loans which were evaluated for individual impairment based on the
                                                                                          appraised value of the underlying collateral. The fair value
                                             June 30      December 31                     measurement would fall under level 2 of the hierarchy if the process
As of:                                         2011              2010                     uses independent appraisals and other market-based information.
                                                                                          The fair value measurement would fall under level 3 of the hierarchy
Volume with specific reserves                  $40,956          $49,490                   if the process requires significant input based on management’s
Volume without specific reserves                39,736           44,866                   knowledge of and judgment about current market conditions, specific
Total risk loans                               $80,692          $94,356                   issues relating to the collateral, and other matters. When the value of
Total specific reserves                        $11,631          $20,477                   the collateral, less estimated costs to sell, is less than the principal
                                                                                          balance of the loan, a specific reserve is established.
Six months ended June 30                        2011             2010
                                                                                          Acquired Property: Represents the fair value and related gains
Income on accrual risk loans                       $44                $100
                                                                                          (losses) of foreclosed assets that were measured at fair value
Income on nonaccrual loans                         624                 955
                                                                                          subsequent to their initial classification as acquired property.
Total income on risk loans                        $668           $1,055
Average recorded investment                    $82,807        $157,922                    NOTE 6: Subsequent Events

Risk loans decreased primarily due to sale and payoff of a large broiler                  We have evaluated subsequent events through August 5, 2011,
relationship totaling $12.4 million at December 31, 2010.                                 which is the date the financial statements were available to be
                                                                                          issued. There have been no material subsequent events that would
                                                                                          require recognition in our quarterly report or disclosure in the Notes to
NOTE 4: Contingencies and Commitments
                                                                                          those financial statements.
In the normal course of business, we have various contingent
liabilities and commitments outstanding, primarily commitments to
extend credit, which may not be reflected in the accompanying
consolidated financial statements. We do not anticipate any material
losses because of these contingencies or commitments.

From time to time, we may be named as a defendant in certain
lawsuits or legal actions in the normal course of business. At the date
of these consolidated financial statements, we were not aware of any
such actions that would have a material impact on our financial
condition. However, such actions could arise in the future.

NOTE 5: Fair Value Measurements

The FASB guidance on “Fair Value Measurements and Disclosures”
defines fair value as the exchange price that would be received for an
asset or paid to transfer a liability in the principal or most
advantageous market for the asset or liability. The guidance also
establishes a fair value hierarchy, with three levels of inputs that may
be used to measure fair value. Refer to Notes 2 and 13 in our 2010
annual report for a more complete description.

We do not have any assets or liabilities measured at fair value on a
recurring basis at June 30, 2011, or December 31, 2010. We may be
required, from time to time, to measure certain assets at fair value on
a non-recurring basis. The following table provides information on
assets measured at fair value on a non-recurring basis and the gains
(losses) recognized on these assets during the periods ended June
30, 2011 and December 31, 2010 (in thousands):

                                                                          Total
                    Fair Value Measurement Using         Total Fair       Gains
                    Level 1       Level 2    Level 3       Value        (Losses)
June 30, 2011
 Loans                    $ --     $16,547    $14,261      $30,808           $8,846
 Acquired
  property                   --     44,784     12,796       57,580             (506)
December 31, 2010
 Loans                    $ --     $21,180     $9,361      $30,541           ($377)
 Acquired
   property                  --     38,309     14,721       53,030            1,566




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