Nexity Financial Second Quarter Results

BIRMINGHAM, Ala.--(Business Wire)--
Nexity Financial Corporation (NASDAQ: NXTY):

Second Quarter 2008 Summary:

-- Raised $10 million in trust preferred securities to strengthen
capital ratios which remain well capitalized: Total Risk-Based
Capital 10.53%, Tier 1 Risk-Based Capital 9.23%, Leverage
Ratio 8.40%

-- Net loss of $0.35 in the quarter

-- Proactively identifying and managing problem credits: charged
off $2.9 million in the second quarter and increased
nonperforming assets $30.3 million bringing nonperforming
assets to 4.87% of total assets

-- Strengthened loan loss reserve to 1.62% of net loans at June
30, 2008 versus 1.36% at March 31, 2008

-- Total loans of $729.0 million, up 15.9% from last year and
45.2% annualized from the 1st Quarter

-- Improved liquidity position with total deposit growth of
$107.5 million or 77.1% annualized from the 1st Quarter to
$668.6 million

-- Strong noninterest income growth during the second quarter of
2008 of 378.4% compared with the second quarter of 2007

Nexity Financial Corporation (NASDAQ: NXTY) today reported a
second quarter net loss of $2.75 million, or ($0.35) per diluted share
compared with net income of $1.14 million, or $0.13 per diluted share
for the same period in 2007 and $679,470, or $0.08 per diluted share
for the first quarter in 2008. The decrease in earnings was primarily
related to a higher provision for loan losses related to an increased
level of nonperforming loans and net charge-offs. Net interest income
was up from the first quarter and noninterest income continues to be
strong. Noninterest income was up $2,227,344 or 378.4% from the same
quarter in 2007 primarily due to significantly increased revenue from
our investment division.

During the second quarter of 2008, we issued $10.0 million in
trust preferred securities to strengthen our capital position during
this challenging banking environment. The total risk-based capital,
tier 1 risk-based capital, and leverage ratios at June 30, 2008 were
10.53%, 9.23%, and 8.40%, respectively, compared with 10.93%, 9.94%,
and 8.72%, respectively, at June 30, 2007. Each of these ratios is
above the "well capitalized" regulatory minimums of 10%, 6%, and 5%,
respectively.

We are aggressively addressing our problem credits and have
established a special asset management initiative spear-headed by a
seasoned professional. Individual and unique strategies are being
developed to maximize our recovery efforts for each credit
relationship. As previously stated we believe the middle part of this
year, specifically the second and third quarters of 2008, will prove
to be difficult from a charge-off and non-performing asset standpoint.
These anticipated results are disappointing but not unexpected given
the extreme difficulties being experienced in the markets and
geographies we serve.

Loan growth was outstanding during the quarter as we grew $74.1
million or 45.2% annualized from March 31, 2008. This was the most
favorable loan growth quarter in our history. Loan demand has improved
because community banks are selling more loans to improve their
liquidity and manage their capital levels. These loans included owner
occupied commercial real estate projects with excellent credit quality
characteristics as well as income producing properties; we also
experienced a higher level of loans made directly to banks and bank
holding companies.

"The current difficult economic environment is producing increased
demand from our community bank customers for help with their liquidity
and capital needs," said Greg Lee, Chairman and CEO of Nexity
Financial Corporation. "This translates into an opportunity for Nexity
to selectively grow its loan portfolio in higher quality credits such
as owner occupied and income producing properties, as well as loans
made directly to banks and bank holding companies. We are committed to
continuing to assist our community bank customers during these
difficult times in our industry by providing superior correspondent
banking services and helping them manage their liquidity and capital."

Return on average assets and return on average equity were (1.08%)
and (15.92%), respectively, for the second quarter of 2008 compared
with 0.29% and 3.95% during the first quarter in 2008 and 0.51% and
6.91% for the second quarter of 2007.

For the six months ended June 30, 2008, net loss was $2.15 million
or ($0.27) per diluted share compared to net income of $2.71 million
or $0.31 per diluted share during the same period in 2007. Return on
average assets and return on average equity were (0.43%) and (6.01%),
respectively, for the six months ended June 30, 2008 compared with
0.63% and 8.25% for the same period in 2007.

Total assets grew to $1.10 billion at June 30, 2008, up $173.8
million or 18.8% from the $923.3 million reported at June 30, 2007.
Total loans were $729.0 million at June 30, 2008, up $100.0 million or
15.9% from the $629.0 million reported at June 30, 2007. Total
deposits were $668.6 million at June 30, 2008, down $24.5 million or
3.35% from the $693.1 million reported at June 30, 2007 but were up
$107.5 million or 76.8% annualized from March 31, 2008.

Net interest income was $5.3 million for the second quarter of
2008 up 5.6% annualized from the first quarter of 2008 and down 16.5%
from the same period in 2007. The net interest margin was 2.20%
compared with 2.35% in the first quarter of 2008 and 2.95% for the
same period in 2007. The net interest margin was lower in 2008
primarily due to the declining interest rate environment, write-down
of accrued interest on loans placed on nonaccrual status, and the
level of loans that are on nonaccrual status. The write-down of
accrued interest cost the net interest margin approximately 9 basis
points during the second quarter versus 5 basis points during the
first quarter. The cost to the net interest margin of carrying
nonaccrual loans was approximately 18 basis points in the second
quarter versus 9 basis points in the first quarter. While we have
continued to reprice our maturing CDs lower, competitive pressures
have kept these costs elevated compared to other money market rates
like the federal funds rate.

Average interest-earning assets for the second quarter of 2008
increased 14.1% from last year and 36.5% annualized from the first
quarter of 2008. Average earning assets were higher because of strong
growth in loans outstanding. Average loans were up $74.1 million or
12.3% from last year and $41.9 million or 26.5% annualized from the
first quarter of 2008.

The provision for loan losses during the second quarter of 2008
was $5,835,000 versus $900,000 for the first quarter of 2008 and
$440,000 for the same period in 2007. The provision for loan losses
was higher primarily because of net charge-offs and an increase in
nonperforming loans. Net charge-offs for the second quarter of 2008
were $2,864,244 or 1.71% of average loans on an annualized basis
versus a net recovery of $6,742 or 0.00% for the first quarter of 2008
and net charge-offs of $23,231 or 0.02% for the same period in 2007.
Charge-offs were escalated in the second quarter primarily due to a
$2.81 million charge-off on a loan to an individual investor secured
by stock in a bank holding company located in Atlanta, Georgia.

Noninterest income for the second quarter of 2008 was $2,816,041,
up $2.2 million or 378.4% from the $588,697 reported for the same
period in 2007 and down $608,073 or 17.8% from the $3,424,114 reported
for the first quarter of 2008. Noninterest income was up significantly
from a year ago primarily because of an increase in income from the
brokerage and investment services division. Income from this division
reached an all-time high of $3.0 million during the first quarter of
2008 and was $2.3 million in the second quarter of 2008. Income from
bank-owned life insurance, service charges on deposit accounts and
other fee income associated with our clearing and cash management
business with correspondent banks were also up substantially during
the second quarter of 2008.

Noninterest expense for the second quarter of 2008 was $7.26
million, which was up $333,410 or 4.8% from the $6.93 million reported
for the first quarter of 2008 and up $2.3 million or 47.3% from the
$4.93 million reported for the same period in 2007. Noninterest
expense was higher than the first quarter primarily due to a $501,000
increase in the write-down of other real estate owned. Noninterest
expense was higher in 2008 compared with 2007 primarily due to
incentive pay increases related to the significant growth of
investment division revenue and costs related to other real estate
owned and the workout of nonperforming loans.

The efficiency ratio was 89.57% for the second quarter of 2008
which was up from the 80.17% reported for the first quarter of 2008
and the 71.21% reported for the same period in 2007. While noninterest
revenues have grown significantly over the last few quarters, lower
net interest income and higher overhead expense have had an adverse
effect on the efficiency ratio. We expect the efficiency ratio to
improve during the second half of 2008 as the net interest margin
begins to improve and we control the growth of overhead expense.

Credit quality continues to be a challenge in the current credit
environment. Nonperforming loans were $50.7 million or 6.95% of total
loans at June 30, 2008 compared with $19.7 million or 3.01% of total
loans at March 31, 2008. Nonperforming assets were $53.4 million or
4.87% of total assets at June 30, 2008 compared with $23.1 million or
2.32% of total assets at March 31, 2008, and $4.9 million or 0.53% of
total assets at June 30, 2007. Nonperforming loans and assets were up
from the first quarter of 2008 primarily due to the addition of three
land loans totaling $12.3 million located in the Atlanta area and two
condo projects totaling $21.4 million in Florida. While we believe we
are well secured in each of these loans, due to the sharp decrease in
real estate values in each of these market areas we established
specific reserves for these loans totaling $1.5 million. During the
second quarter we reassessed each of our impaired loans and increased
our specific reserves associated with certain of these loans due to
further declines in real estate values. The allowance for loan losses
was 1.62% of total loans at June 30, 2008 compared with 1.36% at March
31, 2008.

Conference Call / Webcast Information

Nexity Financial Corporation will host a conference call on
Friday, August 1 at 10:00 AM Eastern Daylight Time (EDT) to discuss
the second quarter 2008 results. Additional material information,
including forward-looking statements such as trends and projections,
may be discussed during the presentation. To participate in the
conference call or webcast, please follow the instructions listed
below.

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Webcast: Live via the Internet and Windows Media Player
http://www.nexitybank.com/ then to the Investor Relations
section, to conference in via the web
Then click on "Second Quarter 2008 Earnings Release
Conference Call." The Webcast access will be "listen
only."
Webcast URL: http://www.talkpoint.com/viewer/starthere.asp?Pres=122371

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Live via teleconference. To conference in, dial:
1-800-860-2442 (U.S. and Canada)
+1-412-858-4600 (International)

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About Nexity Financial Corporation

Nexity Financial Corporation is a $1.1 billion commercial bank
offering deposit products nationwide consisting of money markets,
checking accounts and online access. Nexity generates the majority of
its income through wholesale correspondent banking activities. Nexity
is headquartered in Birmingham, Alabama. Customer Service
Representatives can be reached at 1-877-738-6391. To learn more about
Nexity Bank please visit www.nexitybank.com.

CAUTION ABOUT FORWARD-LOOKING STATEMENTS

In accordance with the safe harbor provisions of the Private
Securities Litigation Reform Act of 1995, Nexity Financial Corporation
notes that any statements in this press release and elsewhere that are
not historical facts are "forward-looking statements." The words
"expect," "anticipate," "intend," "consider," "plan," "believe,"
"seek," "should," "estimate" and similar expressions are intended to
identify such forward-looking statements, but other statements may
constitute forward-looking statements. The forward-looking statements
involve risks and uncertainties that may cause Nexity's actual results
of operations to differ materially from expected results. For a
discussion of such risks and uncertainties, see Nexity's Annual Report
on Form 10-K for the fiscal year ended December 31, 2007, as well as
its other filings with the U.S. Securities and Exchange Commission.
Nexity assumes no obligation to update any forward-looking statements
contained in this document as a result of new information or future
events or developments.

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Nexity Financial Corporation
Financial Summary (Unaudited)
----------------------------------------------------------------------

Three Months Ended
June 30, Percent
Income Statement Data 2008 2007 Change
----------------------------------------------------------------------

Interest income 13,493,661 $16,265,929 (17.0)%
Interest expense 8,204,957 9,934,285 (17.4)
------------- -----------

Net interest income 5,288,704 6,331,644 (16.5)
Provision for loan losses 5,835,000 440,000 1226.1
------------- -----------

Net interest (expense)
income after provision for
loan losses (546,296) 5,891,644 (109.3)
Net gains on sales of
securities 0 0 0.0
Noninterest income 2,816,041 588,697 378.4
Noninterest expense 7,259,132 4,928,169 47.3
------------- -----------

(Loss) income before income
taxes (4,989,387) 1,552,172 (421.4)
Applicable income tax
(benefit) expense (2,238,794) 408,566 (648.0)
------------- -----------
Net (loss) income ($2,750,593) $ 1,143,606 (340.5)%
============= ===========

Reconciliation of Non-GAAP
measures to GAAP:
Net (loss) income ($2,750,593) $ 1,143,606 (340.5)%
Non-recurring income (after-
tax) (1) 0 0 0.0
------------- -----------
Operating (loss) income ($2,750,593) $ 1,143,606 (340.5)%
============= ===========

Net (loss) income per share
- basic ($0.35) $ 0.14 (357.2)%
Net (loss) income per share
- diluted ($0.35)(2) $ 0.13 (372.4)

Operating (loss) income per
share - basic ($0.35) $ 0.14 (357.2)
Operating (loss) income per
share - diluted ($0.35)(2) $ 0.13 (372.4)

Weighted average shares
outstanding - basic 7,768,339 8,307,779 (6.5)
Weighted average shares
outstanding - diluted 7,768,339 (2) 8,799,494 (11.7)
----------------------------------------------------------------------

Performance Ratios
(Annualized a)
Return on average assets (a) (1.08)% 0.51% (310.2)%
Return on average
stockholders' equity (a) (15.92) 6.91 (330.4)
Net yield on average
interest-earning assets
(tax equivalent) (a) 2.20 2.95 (25.6)
Efficiency ratio 89.57 71.21 25.8
----------------------------------------------------------------------

Selected Average Balances
(In thousands)
Total assets $ 1,024,560 $ 892,870 14.7 %
Interest-earning assets 982,243 860,575 14.1
Loans-net of unearned income 674,495 600,404 12.3
Investment securities 286,464 241,273 18.7
Deposits 617,804 664,677 (7.1)
Noninterest-bearing deposits 8,721 8,312 4.9
Interest-bearing deposits 609,083 656,365 (7.2)
Interest-bearing liabilities 935,524 807,166 15.9
Stockholders' equity 69,487 66,395 4.7
----------------------------------------------------------------------

Six Months Ended
June 30, Percent
Income Statement Data 2008 2007 Change
----------------------------------------------------------------------

Interest income 27,436,855 $31,637,722 (13.3)%
Interest expense 16,932,953 19,205,631 (11.8)
------------ -----------

Net interest income 10,503,902 12,432,091 (15.5)
Provision for loan losses 6,735,000 440,000 1430.7
------------ -----------

Net interest (expense) income
after provision for loan
losses 3,768,902 11,992,091 (68.6)
Net gains on sales of
securities 124,880 0 100.0
Noninterest income 6,240,155 1,209,574 415.9
Noninterest expense 14,184,855 9,338,474 51.9
------------ -----------

(Loss) income before income
taxes (4,050,918) 3,863,191 (204.9)
Applicable income tax (benefit)
expense (1,979,794) 1,153,265 (271.7)
------------ -----------
Net (loss) income (2,071,124) 2,709,926 (176.4)%
============ ===========

Reconciliation of Non-GAAP
measures to GAAP:
Net (loss) income (2,071,124) $ 2,709,926 (176.4)%
Non-recurring income (after-
tax) (1) (82,421) 0 (100.0)
------------ -----------
Operating (loss) income (2,153,545) $ 2,709,926 (179.5)%
============ ===========

Net (loss) income per share -
basic ($0.27) $ 0.32 (182.1)%
Net (loss) income per share -
diluted ($0.27)(2) $ 0.31 (187.0)

Operating (loss) income per
share - basic ($0.28) $ 0.32 (185.3)
Operating (loss) income per
share - diluted ($0.28)(2) $ 0.31 (190.5)

Weighted average shares
outstanding - basic 7,768,867 8,340,693 (6.9)
Weighted average shares
outstanding - diluted 7,768,867 (2) 8,843,442 (12.2)
----------------------------------------------------------------------

Performance Ratios
(Annualized a)
Return on average assets (a) (0.43)% 0.63% (168.0)%
Return on average stockholders'
equity (a) (6.01) 8.25 (172.8)
Net yield on average interest-
earning assets (tax
equivalent) (a) 2.27 2.96 (23.3)
Efficiency ratio 84.72 68.46 23.8
----------------------------------------------------------------------

Selected Average Balances
(In thousands)
Total assets $ 978,504 $ 872,804 12.1 %
Interest-earning assets 941,164 846,824 11.1
Loans-net of unearned income 653,542 591,295 10.5
Investment securities 270,748 241,209 12.2
Deposits 626,281 652,289 (4.0)
Noninterest-bearing deposits 7,547 7,790 (3.1)
Interest-bearing deposits 618,734 644,499 (4.0)
Interest-bearing liabilities 890,513 788,018 13.0
Stockholders' equity 69,295 66,216 4.7
----------------------------------------------------------------------

(1) Non-recurring income is gains on sales of investment securities.
(2) There is no dilution due to the anitdilutive effect of the net
loss on potential common shares (stock options).

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Nexity Financial Corporation
Financial Summary (Unaudited)
----------------------------------------------------------------------

Selected Financial Data
at Period-End
(In thousands) June 30, 2008 Percent
2008 2007 Change
----------- ---------- --------

Total assets $ 1,097,097 $ 923,295 18.8 %
Interest-earning assets 1,058,782 883,738 19.8
Loans-net of unearned income 728,988 629,008 15.9
Allowance for loan losses 11,839 7,775 52.3
Investment securities 286,923 228,535 25.5
Deposits 668,635 693,094 (3.5)
Stockholders' equity 62,177 62,444 (0.4)

Average loans to average deposits 104.35% 90.65% 15.1 %
Total loans to interest-earning
assets 68.85 70.30 (2.1)
Average stockholders' equity to
average assets 7.08 7.59 (6.7)
Tier 1 capital to average assets
(Leverage ratio) 8.40 8.72 (3.6)
Risk-based capital ratios:
Tier 1 capital 9.23 9.94 (7.1)
Total capital 10.53 10.93 (3.6)
Book value per common share $ 8.00 $ 7.69 4.1
Tangible book value per common
share $ 7.89 $ 7.58 4.1
Total common shares outstanding 7,768,339 8,120,680 (4.3)

Credit Quality Data

Nonperforming assets 53,425,003 4,910,004 988.1 %
Nonperforming loans 50,711,101 0 100.0
Net charge-offs 2,864,244 77,148 3612.7
Nonperforming assets to total
assets 4.87% 0.53% 815.7
Annualized net charge-offs to
average total loans (YTD) 0.88 0.03 3311.5
Allowance for loan losses to total
loans 1.62 1.24 31.4
Allowance for loan losses to
nonperforming loans 23.35 NM 100.0

NM - not meaningful

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Nexity Financial Corporation
Financial Summary (Unaudited)
----------------------------------------------------------------------

Consolidated
Balance Sheets
(In thousands) 6/30/08 3/31/08 12/31/07 9/30/07 6/30/07
----------------------------------------------------------------------

ASSETS
Cash and due
from banks $ 2,718 $ 3,765 $ 9,841 $ 8,481 $ 7,404
Interest-bearing
deposits in
other banks 8,723 5,484 10,121 2,946 13,429
Federal funds
sold 31,179 3,562 8,487 24,089 11,778
Investment
securities
available-for-
sale, at fair
value 286,923 290,910 244,824 246,507 228,535
Trading
securities, at
fair value 2,969 2,796 0 198 989

Loans, net of
unearned income 728,988 654,915 644,864 645,800 629,008
Allowance for
loan losses (11,839) (8,875) (7,969) (7,977) (7,775)
------------------ ---------- -------- --------- -------- --------
Net loans 717,149 646,040 636,895 637,823 621,233
------------------ ---------- -------- --------- -------- --------

Premises and
equipment, net 11,693 11,735 3,382 3,297 3,311
Deferred tax
asset 7,545 3,049 4,037 3,944 5,656
Intangible
assets 911 911 911 911 911
Other real
estate owned 2,714 3,377 3,377 3,551 4,910
Bank owned life
insurance 17,685 17,513 17,337 17,156 16,973
Other assets 6,888 7,358 8,001 8,128 8,166
------------------ ---------- -------- --------- -------- --------
Total assets $1,097,097 $996,500 $ 947,213 $957,031 $923,295
================== ========== ======== ========= ======== ========

LIABILITIES AND
STOCKHOLDERS'
EQUITY
Liabilities:
Deposits:
Demand
Deposits $ 12,956 $ 7,324 $ 4,813 $ 11,608 $ 8,607
NOW and
money
market
accounts 193,044 171,433 276,402 256,137 255,178
Time
deposits
$100,000
and over 156,945 141,860 158,712 159,708 148,039
Other time
and savings
deposits 305,690 240,518 269,230 284,058 281,270
------------------ ----------- -------- --------- -------- --------
Total deposits 668,635 561,135 709,157 711,511 693,094

Federal funds
purchased and
securities
sold under
agreements to
repurchase 141,887 150,383 16,930 35,256 34,986
Short-term
borrowings 32,400 31,400 10,000 0 0
Long-term
borrowings 160,000 160,000 121,400 120,000 110,000
Subordinated
debentures 22,681 12,372 12,372 12,372 12,372
Accrued
expenses and
other
liabilities 9,317 10,894 10,822 10,703 10,399
------------------ ----------- -------- --------- -------- --------
Total
liabilities 1,034,920 926,184 880,681 889,842 860,851
------------------ ---------- -------- --------- -------- --------

Stockholders'
Equity:
Preferred
stock 0 0 0 0 0
Common stock 87 87 87 87 87
Surplus 62,533 62,425 62,339 62,298 62,258
Retained
earnings 12,685 15,436 14,757 13,584 12,149
Accumulated
other
comprehensive
loss (3,301) 2,180 (839) (1,130) (4,678)
Less: Treasury
stock (9,827) (9,812) (9,812) (7,650) (7,372)
------------------ ---------- -------- --------- -------- --------
Total
stockholders'
equity 62,177 70,316 66,532 67,189 62,444
------------------ ---------- -------- --------- -------- --------
Total liabilities
and stockholders'
equity $1,097,097 $996,500 $ 947,213 $957,031 $923,295
================== ========== ======== ========= ======== ========

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Nexity Financial Corporation
Financial Summary (Unaudited)
----------------------------------------------------------------------

Income Statement Data 6/30/08 3/31/08 12/31/07
----------------------------------------------------------------------

Interest income $13,493,661 $13,943,194 $15,910,859
Interest expense 8,204,957 8,727,996 10,153,904
----------- ----------- -----------

Net interest income 5,288,704 5,215,198 5,756,955
Provision for loan losses 5,835,000 900,000 315,000
----------- ----------- -----------

Net interest (expense)
income after provision for
loan losses (546,296) 4,315,198 5,441,955
Net gains (losses) on sales
of securities 0 124,880 292,051
Noninterest income 2,816,041 3,424,114 1,488,386
Noninterest expense 7,259,132 6,925,722 5,588,526
----------- ----------- -----------

(Loss) income before income
taxes (4,989,387) 938,470 1,633,866
Applicable income tax
(benefit) expense (2,238,794) 259,000 461,127
----------- ----------- -----------
Net (loss) income $(2,750,593) $ 679,470 $ 1,172,739
=========== =========== ===========

Reconciliation of Non-GAAP
measures to GAAP:
Net (loss) income $(2,750,593) $ 679,470 $ 1,172,739
Non-recurring (income)
expense (after-tax) (1) 0 (82,421) (9,361)
----------- ----------- -----------
Operating (loss) income $(2,750,593) $ 597,049 $ 1,163,378
=========== =========== ===========

Net (loss) income per share
- basic $ (0.35) $ 0.09 $ 0.15
Net (loss) income per share
- diluted $ (0.35)(2) $ 0.08 $ 0.14

Operating (loss) income per
share - basic $ (0.35) $ 0.08 $ 0.15
Operating (loss) income per
share - diluted $ (0.35)(2) $ 0.07 $ 0.14

Weighted average shares
outstanding - basic 7,768,339 7,769,394 8,014,473
Weighted average shares
outstanding - diluted 7,768,339 (2) 8,032,748 8,357,538
----------------------------------------------------------------------

Performance Ratios
(Annualized a)
Return on average assets (a) (1.08)% 0.29% 0.50%
Return on average
stockholders' equity (a) (15.92) 3.95 6.85
Net yield on average
interest-earning assets
(tax equivalent) (a) 2.20 2.35 2.54
Efficiency ratio 89.57 80.17 73.03
----------------------------------------------------------------------

Income Statement Data 9/30/07 6/30/07
--------------------------------------------------------- ------------

Interest income $16,742,788 $16,265,929
Interest expense 10,533,553 9,934,285
---------- ----------

Net interest income 6,209,235 6,331,644
Provision for loan losses 50,000 440,000
---------- ----------

Net interest (expense) income after
provision for loan losses 6,159,235 5,891,644
Net gains (losses) on sales of securities 0 0
Noninterest income 941,092 588,697
Noninterest expense 5,048,998 4,928,169
---------- ----------

(Loss) income before income taxes 2,051,329 1,552,172
Applicable income tax (benefit) expense 616,199 408,566
---------- ----------
Net (loss) income $ 1,435,130 $ 1,143,606
========== ==========

Reconciliation of Non-GAAP measures to GAAP:
Net (loss) income $ 1,435,130 $ 1,143,606
Non-recurring (income) expense (after-tax)
(1) 0 0
---------- ----------
Operating (loss) income $ 1,435,130 $ 1,143,606
========== ==========

Net (loss) income per share - basic $ 0.18 $ 0.14
Net (loss) income per share - diluted $ 0.17 $ 0.13

Operating (loss) income per share - basic $ 0.18 $ 0.14
Operating (loss) income per share - diluted $ 0.17 $ 0.13

Weighted average shares outstanding - basic 8,115,669 8,307,779
Weighted average shares outstanding -
diluted 8,513,723 8,799,494
--------------------------------------------------------- ------------

Performance Ratios
(Annualized a)
Return on average assets (a) 0.61% 0.51%
Return on average stockholders' equity (a) 8.84 6.91
Net yield on average interest-earning assets
(tax equivalent) (a) 2.76 2.95
Efficiency ratio 70.61 71.21
--------------------------------------------------------- ------------

(1) Non-recurring (income) expense is gains on sales of investment
securities and legal settlement expense of $297,500 recorded as
noninterest expense during the 4th quarter of 2007.
(2) There is no dilution due to the anitdilutive effect of the net
loss on potential common shares (stock options).

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Nexity Financial Corporation
Financial Summary (Unaudited)
----------------------------------------------------------------------

Summary of Capital and Capital
Ratios 6/30/08 3/31/08 12/31/07
----------------------------------------------------------------------

Regulatory Capital (In
thousands)
Tier 1 Capital $ 86,090 $ 79,226 $ 78,460
Tier 2 Capital 12,146 8,875 7,969
---------- ----------- ----------
Total risk-based capital 98,236 88,101 86,429
---------- ----------- ----------
Total risk-weighted assets 932,671 845,449 803,777

Capital Ratios
Total risk-based capital 10.53% 10.42% 10.75%
Tier 1 risk-based capital 9.23 9.37 9.76
Leverage ratio 8.40 8.51 8.37

Book value per common share $ 8.00 $ 9.05 $ 8.55
Tangible book value per common
share $ 7.89 $ 8.93 $ 8.43
Total common shares outstanding 7,768,339 7,769,394 7,783,680

Credit Quality Data
Nonperforming assets $53,425,003 $23,085,835 $12,963,411
Nonperforming loans 50,711,101 19,708,365 9,585,941
Net charge-offs (recoveries) 2,864,244 (6,742) 323,313

Nonperforming loans to total
loans 6.95% 3.01% 1.49%
Nonperforming assets to total
assets 4.87 2.32 1.37
Annualized net charge-offs to
average total loans (QTD) 1.71 0.00 0.20
Allowance for loan losses to
total loans 1.62 1.36 1.24
Allowance for loan losses to
nonperforming loans 23.35 45.03 83.13

Summary of Capital and Capital Ratios 9/30/07 6/30/07
----------------------------------------------------------------------

Regulatory Capital (In thousands)
Tier 1 Capital $ 79,408 $ 78,200
Tier 2 Capital 7,977 7,775
--------- ---------
Total risk-based capital 87,385 85,975
--------- ---------
Total risk-weighted assets 797,300 786,896

Capital Ratios
Total risk-based capital 10.96% 10.93%
Tier 1 risk-based capital 9.96 9.94
Leverage ratio 8.50 8.72

Book value per common share $ 8.31 $ 7.69
Tangible book value per common share $ 8.20 $ 7.58
Total common shares outstanding 8,086,680 8,120,680

Credit Quality Data
Nonperforming assets $6,786,310 $4,910,004
Nonperforming loans 3,234,910 0
Net charge-offs (recoveries) 23,007 23,231

Nonperforming loans to total loans 0.50% 0.00%
Nonperforming assets to total assets 0.71 0.53
Annualized net charge-offs to average total
loans (QTD) 0.01 0.02
Allowance for loan losses to total loans 1.24 1.24
Allowance for loan losses to nonperforming
loans 246.59 NM

NM - not meaningful

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Nexity Financial Corporation
Financial Summary (Unaudited)
----------------------------------------------------------------------

Comparative Average Balance Sheets
- Yields and Costs Three Months Ended
-----------------------------------
6/30/08
-----------------------------------
Average Revenue/ Yield/
Balance Expense Rate
-----------------------------------
Interest-earning assets:
Loans (1) $ 674,494,737 $ 9,488,805 5.66%
Investment securities (2)
Taxable 267,015,436 3,664,184 5.52
Non Taxable (3) 19,448,482 286,611 5.93
Interest-bearing balances due
from banks 8,718,823 63,325 2.92
Trading securities 3,859,622 42,404 4.42
Federal funds sold and
securities purchased under
agreements to resell 8,705,508 45,780 2.12
-----------------------------------
Total interest-earning assets 982,242,608 13,591,109 5.57%
-----------------------------------

Noninterest-earning assets:
Cash and due from banks 5,324,014
Premises and equipment 11,787,855
Other, less allowance for loan
losses 25,205,848
--------------
Total noninterest-earning
assets 42,317,717
--------------

TOTAL ASSETS $1,024,560,325
==============

Interest-bearing liabilities:
Interest-bearing deposits:
Interest checking $ 3,640,774 8,911 0.98%
Savings 286,034 880 1.24
Money market 174,756,527 929,760 2.14
Time deposits 430,399,953 4,633,253 4.33
-----------------------------------
Total interest-bearing deposits 609,083,288 5,572,804 3.68
Federal funds purchased and
securities sold under
agreements to repurchase 145,340,650 824,608 2.28
Short-term debt 7,509,890 74,978 4.02
Long-term debt 160,000,000 1,544,129 3.88
Subordinated debentures 13,590,670 210,412 6.23
-----------------------------------
Total interest-bearing liabilities 935,524,498 8,226,931 3.54%
-----------------------------------

Noninterest-bearing liabilities:
Demand deposits 8,720,567
Other liabilities 10,827,808
--------------
Total noninterest-bearing
liabilities 19,548,375
--------------
Stockholders' equity 69,487,452
--------------

TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $1,024,560,325
==============

Net interest income $ 5,364,178
===========

Interest income/earning assets 5.57%
Interest expense/earning assets 3.37
--------

Net interest income/earning assets 2.20%
========

(1) Average loan balances are stated net of unearned income and
include nonaccrual loans.
(2) The weighted average yields on securities are calculated on the
basis of the yield to maturity based on the book cost of each
security.
(3) Non-taxable income has been adjusted to a tax-equivalent basis
using a federal tax rate of approximately 34%

Comparative Average Balance Sheets
- Yields and Costs Three Months Ended
-----------------------------------
3/31/08
- ---------------------------------
Average Revenue/ Yield/
Balance Expense Rate
- ---------------------------------
Interest-earning assets:
Loans (1) $632,589,505 $10,486,183 6.67%
Investment securities (2)
Taxable 246,129,764 3,233,370 5.28
Non Taxable (3) 8,903,268 132,792 6.00
Interest-bearing balances due
from banks 8,848,479 104,665 4.76
Trading securities 1,257,603 10,578 3.38
Federal funds sold and securities
purchased under agreements to
resell 2,357,511 20,756 3.54
---------------------------------
Total interest-earning assets 900,086,130 13,988,344 6.25%
---------------------------------

Noninterest-earning assets:
Cash and due from banks 3,477,210
Premises and equipment 3,489,835
Other, less allowance for loan
losses 25,393,882
------------
Total noninterest-earning
assets 32,360,927
------------

TOTAL ASSETS $932,447,057
============

Interest-bearing liabilities:
Interest-bearing deposits:
Interest checking $ 3,966,194 9,616 0.98%
Savings 270,535 834 1.24
Money market 220,454,537 1,589,015 2.90
Time deposits 403,694,010 5,070,106 5.05
---------------------------------
Total interest-bearing deposits 628,385,276 6,669,571 4.27
Federal funds purchased and
securities sold under agreements
to repurchase 68,508,565 459,765 2.70
Short-term debt 439,561 2,744 2.51
Long-term debt 135,795,604 1,375,176 4.07
Subordinated debentures 12,372,000 220,739 7.18
---------------------------------
Total interest-bearing liabilities 845,501,006 8,727,995 4.15%
---------------------------------

Noninterest-bearing liabilities:
Demand deposits 6,373,042
Other liabilities 11,469,537
------------
Total noninterest-bearing
liabilities 17,842,579
------------
Stockholders' equity 69,103,472
------------

TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $932,447,057
============

Net interest income $ 5,260,349
===========

Interest income/earning assets 6.25%
Interest expense/earning assets 3.90
--------

Net interest income/earning assets 2.35%
========

(1) Average loan balances are stated net of unearned income and
include nonaccrual loans.
(2) The weighted average yields on securities are calculated on the
basis of the yield to maturity based on the book cost of each
security.
(3) Non-taxable income has been adjusted to a tax-equivalent basis
using a federal tax rate of approximately 34%

Comparative Average Balance Sheets
- Yields and Costs Three Months Ended
----------------------------------
12/31/07
- --------------------------------
Average Revenue/ Yield/
Balance Expense Rate
- --------------------------------
Interest-earning assets:
Loans (1) $636,141,637 $12,570,444 7.84%
Investment securities (2)
Taxable 242,832,254 3,055,520 4.99
Non Taxable (3) 3,333,670 52,685 6.27
Interest-bearing balances due from
banks 7,604,652 108,377 5.65
Trading securities 825,068 6,545 3.15
Federal funds sold and securities
purchased under agreements to
resell 10,278,715 135,200 5.22
--------------------------------
Total interest-earning assets 901,015,996 15,928,771 7.01%
--------------------------------

Noninterest-earning assets:
Cash and due from banks 6,134,184
Premises and equipment 3,322,698
Other, less allowance for loan
losses 24,253,831
------------
Total noninterest-earning
assets 33,710,713
------------

TOTAL ASSETS $934,726,709
============

Interest-bearing liabilities:
Interest-bearing deposits:
Interest checking $ 4,073,639 11,989 1.17%
Savings 259,588 808 1.24
Money market 259,789,203 2,638,547 4.03
Time deposits 441,116,821 5,831,097 5.24
--------------------------------
Total interest-bearing deposits 705,239,251 8,482,441 4.77
Federal funds purchased and
securities sold under agreements
to repurchase 11,245,069 128,278 4.53
Short-term debt 108,696 978 3.57
Long-term debt 120,091,304 1,286,209 4.25
Subordinated debentures 12,372,000 255,998 8.21
--------------------------------
Total interest-bearing liabilities 849,056,320 10,153,904 4.74%
--------------------------------

Noninterest-bearing liabilities:
Demand deposits 6,249,349
Other liabilities 11,449,378
------------
Total noninterest-bearing
liabilities 17,698,727
------------
Stockholders' equity 67,971,662
------------

TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $934,726,709
============

Net interest income $ 5,774,867
===========

Interest income/earning assets 7.01%
Interest expense/earning assets 4.47
-------

Net interest income/earning assets 2.54%
=======

(1) Average loan balances are stated net of unearned income and
include nonaccrual loans.
(2) The weighted average yields on securities are calculated on the
basis of the yield to maturity based on the book cost of each
security.
(3) Non-taxable income has been adjusted to a tax-equivalent basis
using a federal tax rate of approximately 34%

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Nexity Financial Corporation
Financial Summary (Unaudited)
----------------------------------------------------------------------

Comparative Average Balance Sheets
- Yields and Costs Three Months Ended
---------------------------------
9/30/07
---------------------------------
Average Revenue/ Yield/
Balance Expense Rate
---------------------------------
Interest-earning assets:
Loans (1) $631,254,233 $13,441,971 8.45%
Investment securities, taxable (2)
Taxable 240,934,188 2,998,839 4.94
Non Taxable (3) 2,651,838 41,755 6.25
Interest-bearing balances due from
banks 7,703,039 111,867 5.76
Trading securities 1,332,373 5,895 1.76
Federal funds sold and securities
purchased under agreements to
resell 11,680,810 156,658 5.32
---------------------------------
Total interest-earning assets 895,556,481 16,756,985 7.42%
---------------------------------

Noninterest-earning assets:
Cash and due from banks 9,052,949
Premises and equipment 3,280,370
Other, less allowance for loan
losses 21,783,319
------------
Total noninterest-earning assets 34,116,638
------------

TOTAL ASSETS $929,673,119
============

Interest-bearing liabilities:
Interest-bearing deposits:
Interest checking $ 3,656,848 11,194 1.21%
Savings 279,810 872 1.24
Money market 259,856,523 3,028,658 4.62
Time deposits 434,692,025 5,813,465 5.31
---------------------------------
Total interest-bearing deposits 698,485,206 8,854,189 5.03
Federal funds purchased and
securities sold under agreements
to repurchase 15,523,477 209,574 5.36
Short-term debt 0 0 0.00
Long-term debt 116,521,739 1,208,808 4.12
Subordinated debentures 12,372,000 260,982 8.37
---------------------------------
Total interest-bearing liabilities 842,902,422 10,533,553 4.96%
---------------------------------

Noninterest-bearing liabilities:
Demand deposits 10,786,506
Other liabilities 11,550,231
------------
Total noninterest-bearing
liabilities 22,336,737
------------
Stockholders' equity 64,433,960
------------

TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $929,673,119
============

Net interest income $ 6,223,431
===========

Interest income/earning assets 7.42%
Interest expense/earning assets 4.67
--------

Net interest income/earning assets 2.76%
========

Comparative Average Balance Sheets
- Yields and Costs Three Months Ended
----------------------------------
6/30/07
----------------------------------
Average Revenue/ Yield/
Balance Expense Rate
----------------------------------
Interest-earning assets:
Loans (1) $600,404,019 $12,958,613 8.66%
Investment securities, taxable (2)
Taxable 241,272,975 3,015,548 5.01
Non Taxable (3) 0 0 0.00
Interest-bearing balances due from
banks 8,177,955 132,678 6.51
Trading securities 1,110,207 32,927 11.90
Federal funds sold and securities
purchased under agreements to
resell 9,609,706 126,163 5.27
----------------------------------
Total interest-earning assets 860,574,862 16,265,929 7.58%
----------------------------------

Noninterest-earning assets:
Cash and due from banks 7,216,686
Premises and equipment 3,344,524
Other, less allowance for loan
losses 21,733,792
------------
Total noninterest-earning assets 32,295,002
------------

TOTAL ASSETS $892,869,864
============

Interest-bearing liabilities:
Interest-bearing deposits:
Interest checking $ 3,648,428 11,028 1.21%
Savings 320,070 952 1.19
Money market 234,125,073 2,686,820 4.60
Time deposits 418,271,659 5,508,570 5.28
----------------------------------
Total interest-bearing deposits 656,365,230 8,207,370 5.02
Federal funds purchased and
securities sold under agreements
to repurchase 28,429,229 365,067 5.15
Short-term debt 0 0 0.00
Long-term debt 110,000,000 1,103,783 4.02
Subordinated debentures 12,372,000 258,065 8.37
----------------------------------
Total interest-bearing liabilities 807,166,459 9,934,285 4.94%
----------------------------------

Noninterest-bearing liabilities:
Demand deposits 8,311,537
Other liabilities 10,996,625
------------
Total noninterest-bearing
liabilities 19,308,162
------------
Stockholders' equity 66,395,243
------------

TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $892,869,864
============

Net interest income $ 6,331,644
===========

Interest income/earning assets 7.58%
Interest expense/earning assets 4.63
-------

Net interest income/earning assets 2.95%
=======

(1) Average loan balances are stated net of unearned income and
include nonaccrual loans.
(2) The weighted average yields on securities are calculated on the
basis of the yield to maturity based on the book value of each
security.

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Nexity Financial Corporation
John J. Moran, EVP & CFO, 843-213-0999

Copyright Business Wire 2008