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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



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FORM 10-K



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|þ | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ------------------------------------------------------------------------------------

For the fiscal year ended: December 31, 2006

or



| ̈ | 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: 000-51556



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CENTENNIAL BANK HOLDINGS, INC.

(Exact name of registrant as specified in its charter)



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|                                                               |  |                                     
|-------------------------------------------------------------- |  | ------------------------------------
|Delaware                                                       |  | 41-2150446                          
|(State or other jurisdiction of incorporation or organization) |  | (I.R.S. Employer Identification No.)
|1331 Seventeenth Street, Suite 300 Denver, Colorado            |  | 80202                               
|(Address of principal executive offices)                       |  | (Zip code)                          

(303) 296-9600

(Registrants telephone number, including area code)

Securities registered pursuant to
Section 12(b) of the Act:



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|                               |  |                                            
|------------------------------ |  | -------------------------------------------
|Common Stock, $0.001 Par Value |  | The NASDAQ Stock Market LLC                
|(Title of each class)          |  | (Name of each exchange on which registered)

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities
Act.    Yes ̈No  þ

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the
Act.    Yes ̈No  þ

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  þ    No ̈

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of the registrants knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.  þ

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a
non-accelerated filer. See definition of Accelerated Filer and Large Accelerated Filer in Rule 12b-2 of the Act (Check one).

Large Accelerated Filer ̈Accelerated Filer  þ                            Non-accelerated Filer ̈

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

The aggregate market value of the voting common stock
held by non-affiliates of the registrant, computed by reference to the closing price per share of the registrants common stock as of the close of business on June 30, 2006, was approximately $465 million. For purposes of this computation,
all executive officers, directors and 10% beneficial owners of the registrant are assumed to be affiliates. Such determination should not be deemed an admission that such officers, directors and beneficial owners are, in fact, affiliates of the
registrant. Registrant does not have any nonvoting common equities.

As of March 16, 2007, there were 55,414,556 shares of the
registrants common stock outstanding, including 1,699,925 shares of unvested restricted stock and performance stock.

DOCUMENTS
INCORPORATED BY REFERENCE

Portions of the Proxy Statement for the 2007 Annual Meeting of Shareholders of Centennial Bank Holdings, Inc.
to be held on May 8, 2007 are incorporated by reference in this Form 10-K in response to Part III, Items 10, 11, 12, 13 and 14.



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CENTENNIAL BANK HOLDINGS, INC.

ANNUAL REPORT ON FORM 10-K

Table of Contents



|                                                                        |  |                                                                                                              |  |    
|----------------------------------------------------------------------- |  | ------------------------------------------------------------------------------------------------------------ |  | ---
|PART I                                                                  |  | 1                                                                                                           
|                                                                        | 
|Forward-Looking Statements and Factors that Could Affect Future Results |  | 1                                                                                                           
|                                                                        |  |                                                                                                             
|Item 1.                                                                 |  | BUSINESS                                                                                                     |  | 2  
|                                                                        |  |                                                                                                             
|Item 1A.                                                                |  | RISK FACTORS                                                                                                 |  | 14 
|                                                                        |  |                                                                                                             
|Item 1B.                                                                |  | UNRESOLVED STAFF COMMENTS                                                                                    |  | 19 
|                                                                        |  |                                                                                                             
|Item 2.                                                                 |  | PROPERTIES                                                                                                   |  | 20 
|                                                                        |  |                                                                                                             
|Item 3.                                                                 |  | LEGAL PROCEEDINGS                                                                                            |  | 20 
|                                                                        |  |                                                                                                             
|Item 4.                                                                 |  | SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS                                                          |  | 21 
|                                                                        | 
|PART II                                                                 |  | 22                                                                                                          
|                                                                        |  |                                                                                                             
|Item 5.                                                                 |  | MARKET FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES |  | 22 
|                                                                        |  |                                                                                                             
|Item 6.                                                                 |  | SELECTED FINANCIAL DATA                                                                                      |  | 26 
|                                                                        |  |                                                                                                             
|Item 7.                                                                 |  | MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS                        |  | 28 
|                                                                        |  |                                                                                                             
|Item 7A.                                                                |  | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK                                                   |  | 54 
|                                                                        |  |                                                                                                             
|Item 8.                                                                 |  | FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA                                                                  |  | 56 
|                                                                        |  |                                                                                                             
|Item 9.                                                                 |  | CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE                         |  | 107
|                                                                        |  |                                                                                                             
|Item 9A.                                                                |  | CONTROLS AND PROCEDURES                                                                                      |  | 107
|                                                                        |  |                                                                                                             
|Item 9B.                                                                |  | OTHER INFORMATION                                                                                            |  | 108
|                                                                        | 
|PART III                                                                |  | 109                                                                                                         
|                                                                        |  |                                                                                                             
|Item 10.                                                                |  | DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE                                                       |  | 109
|                                                                        |  |                                                                                                             
|Item 11.                                                                |  | EXECUTIVE COMPENSATION                                                                                       |  | 109
|                                                                        |  |                                                                                                             
|Item 12.                                                                |  | SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS               |  | 109
|                                                                        |  |                                                                                                             
|Item 13.                                                                |  | CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE                                    |  | 109
|                                                                        |  |                                                                                                             
|Item 14.                                                                |  | PRINCIPAL ACCOUNTANT FEES AND SERVICES                                                                       |  | 109
|                                                                        | 
|PART IV                                                                 |  | 110                                                                                                         
|                                                                        |  |                                                                                                             
|Item 15.                                                                |  | EXHIBITS AND FINANCIAL STATEMENT SCHEDULES                                                                   |  | 110
|                                                                        | 
|SIGNATURES                                                              |  | 114                                                                                                         
|                                                                        | 
|CERTIFICATIONS                                                          |  |                                                                                                             



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Explanatory Note

As previously reported in the Current Report on Form 8-K filed by the Company on March 16, 2007 (as amended by the Form 8-K/A filed by the Company on March 20, 2007), the Company is restating its previously issued
consolidated statements of cash flows for the year ended December 31, 2005 that was set forth in the Companys Annual Report on Form 10-K for the year ended December 31, 2005, the nine-month periods ended September 30, 2006 and
2005, the six-month periods ended June 30, 2006 and 2005, and the three-month periods ended March 31, 2006 and 2005 that were set forth in the Companys Quarterly Reports on Form 10-Q for the periods ended September 30, 2006, June 30, 2006
and March 31, 2006, respectively. Such restatements, which are disclosed in Note 2(a) to our consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K, do not affect the Companys consolidated statements
of income, consolidated balance sheets or consolidated statements of stockholders equity and comprehensive income (loss) for any of the affected periods. Accordingly, the Companys historical revenues, net income, earnings per share,
total assets and regulatory capital will remain unchanged. For a further discussion of the restatements, including a reevaluation of the effectiveness of our disclosure controls and procedures for the affected periods, see Part II, Item 9A of this
Annual Report on Form 10-K.



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PART I

Forward-Looking Statements and Factors that Could Affect Future Results

Certain statements contained in this
Annual Report on Form 10-K that are not statements of historical fact constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 (the Act), notwithstanding that such statements are
not specifically identified. In addition, certain statements may be contained in our future filings with the SEC, in press releases, and in oral and written statements made by or with our approval that are not statements of historical fact and
constitute forward-looking statements within the meaning of the Act. Examples of forward-looking statements include, but are not limited to: (i) projections of revenues, expenses, income or loss, earnings or loss per share, the payment or
nonpayment of dividends, capital structure and other financial items; (ii) statements of plans, objectives and expectations of the Company or its management or board of directors, including those relating to products or services;
(iii) statements of future economic performance; and (iv) statements of assumptions underlying such statements. Words such as believes, anticipates, expects, intends, targeted,
continue, remain, will, should, may and other similar expressions are intended to identify forward-looking statements but are not the exclusive means of identifying such statements.

Forward-looking statements involve risks and uncertainties that may cause actual results to differ materially from those in such
statements. Factors that could cause actual results to differ from those discussed in the forward-looking statements include, but are not limited to:



| |  |  | Local, regional, national and international economic conditions and the impact they may have on us and our customers, and our assessment of that impact.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Changes in the level of nonperforming assets and charge-offs.
| | - |  | -------------------------------------------------------------



| |  |  | The effects of and changes in trade and monetary and fiscal policies and laws, including the interest rate policies of the Federal Reserve Board.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Inflation and interest rate, securities market and monetary fluctuations.
| | - |  | -------------------------------------------------------------------------



| |  |  | Political instability, acts of war or terrorism and natural disasters.
| | - |  | ----------------------------------------------------------------------



| |  |  | The timely development and acceptance of new products and services and perceived overall value of these products and services by customers.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Revenues are lower than expected.
| | - |  | ---------------------------------



| |  |  | Changes in consumer spending, borrowings and savings habits.
| | - |  | ------------------------------------------------------------



| |  |  | Changes in the financial performance and/or condition of our borrowers.
| | - |  | -----------------------------------------------------------------------



| |  |  | Credit quality deterioration, which could cause an increase in the provision for credit losses.
| | - |  | -----------------------------------------------------------------------------------------------



| |  |  | Technological changes.
| | - |  | ----------------------



| |  |  | Acquisitions of acquired businesses and greater than expected costs or difficulties related to the integration of acquired businesses.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------



| |  |  | The ability to increase market share and control expenses.
| | - |  | ----------------------------------------------------------



| |  |  | Changes in the competitive environment among financial or bank holding companies and other financial service providers.
| | - |  | -----------------------------------------------------------------------------------------------------------------------



| |  |  | The effect of changes in laws and regulations with which we and our subsidiaries must comply.
| | - |  | ---------------------------------------------------------------------------------------------



| |  |  | The effect of changes in accounting policies and practices, as may be adopted by the regulatory agencies, as well as the Public Company Accounting Oversight Board,
the Financial Accounting Standards Board and other accounting standard setters.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Changes in our organization, compensation and benefit plans.
| | - |  | ------------------------------------------------------------



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| |  |  | The costs and effects of legal and regulatory developments including the resolution of legal proceedings or regulatory or other governmental inquiries and the
results of regulatory examinations or reviews.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Our success at managing the risks involved in the foregoing items.
| | - |  | ------------------------------------------------------------------

Forward-looking statements speak only as of the date on which such statements are made. We do not intend to update any forward-looking statement to reflect events or circumstances after the date on which such
statement is made, or to reflect the occurrence of unanticipated events.



|ITEM 1. | BUSINESS
|------- | --------

Centennial Bank Holdings, Inc.

We are a financial holding company and a bank holding company registered under the Bank Holding Company Act of 1956, as amended. Our principal business is
to serve as a holding company for our subsidiaries. As of December 31, 2006, those subsidiaries were Centennial Bank of the West and Guaranty Bank and Trust Company, or Guaranty Bank. On November 1, 2006, we completed the sale of
Collegiate Peaks Bank, which had been classified as held for sale since December 31, 2004. On March 1, 2006, we sold substantially all of the assets of First MainStreet Insurance, Ltd., an independent insurance agency. We refer to
Centennial Bank of the West and Guaranty Bank herein as the Banks, and when we say we, us, our or the Company, we mean the Company on a consolidated basis with the Banks. When we refer to
Centennial or to the holding company, we are referring to the parent company on a standalone basis.

On
March 3, 2004, Centennial was incorporated in Delaware under the name Centennial C Corp. On July 16, 2004, in an acquisition financed by a group of investors led by John M. Eggemeyer, we acquired Centennial Bank of the West and changed our
name to Centennial Bank Holdings, Inc. At the time of the acquisition, Centennial Bank of the West, which traced its origins to Eaton Bank founded in 1937, operated 12 branches in Colorado. On December 31, 2004, we acquired Guaranty
Corporation, a bank holding company and a Colorado corporation, which operated 18 branches in Colorado through its three banks, Guaranty Bank, Collegiate Peaks and First National Bank of Strasburg. On April 14, 2005, we merged First National
Bank of Strasburg into Guaranty Bank. On October 1, 2005, we completed our acquisition of First MainStreet Financial, Ltd., pursuant to which First MainStreet Bank, N.A. was merged into Centennial Bank of the West. On November 1, 2005, we
completed the acquisition of Foothills Bank, which was merged into Guaranty Bank.

At December 31, 2006, we had total assets of $2.7
billion, net loans of $1.9 billion, deposits of $2.0 billion and stockholders equity of $0.6 billion, and we operated 36 branches in Colorado through our two banking subsidiaries.

Our Business

Our Banks are full-service community banks offering an array of banking products and
services to the communities we serve, including accepting time and demand deposits and originating commercial loans (including energy loans), real estate loans (including construction loans and mortgage loans), Small Business Administration
guaranteed loans and consumer loans. Centennial Bank of the West also provides trust services, including personal trust administration, estate settlement, investment management accounts and self-directed IRAs.

We concentrate our lending activities in the following principal areas:

Construction Loans: Our construction loan portfolio is comprised of single-family residential development, investor developer and
owner-occupied properties. The majority of the loans are for pre-sold



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homes. In addition, this category includes loans for the construction of commercial buildings, which are primarily owner occupied. The repayment of
construction loans is dependent upon the successful and timely completion of the construction of the subject property, as well as the sale of the property to third parties or the availability of permanent financing upon completion of all
improvements. Construction loans expose us to the risk that improvements will not be completed on time in accordance with specifications and projected costs. Construction delays, the financial impairment of the builder, interest rate increases or
economic downturn may further impair the borrowers ability to repay the loan. In addition, the ultimate sale or rental of the property may not occur as anticipated.

Commercial Real Estate Loans: This portfolio is comprised of loans secured by commercial real estate. The portfolio is not
concentrated in one area and ranges from owner occupied to motel properties. In addition, multi-family properties are included in this category. Commercial real estate and multi-family loans typically involve large balances to single borrowers or
groups of related borrowers. Since payments on these loans are often dependent on the successful operation or management of the properties, as well as the business and financial condition of the borrower, repayment of such loans may be subject to
adverse conditions in the real estate market, adverse economic conditions or changes in applicable government regulations. If the cash flow from the project decreases, or if leases are not obtained or renewed, the borrowers ability to repay
the loan may be impaired.

Commercial and Industrial Loans: Our commercial and industrial loan portfolio is comprised
of operating loans secured by inventory and receivables. The portfolio is not concentrated in any particular industry. In 2006, the Company started an energy banking group, with a focus on exploration and production, midstream and gas storage
sectors. Repayment of secured commercial and industrial loans depends substantially on the borrowers underlying business, financial condition and cash flows, as well as the sufficiency of the collateral. Compared to real estate, the collateral
may be more difficult to monitor, valuate and sell. It may also depreciate more rapidly than real estate. Such risks can be significantly affected by economic conditions. In addition, commercial business and industrial lending generally requires
substantially greater oversight efforts compared to residential real estate lending.

Consumer and Other Loans: This
category includes miscellaneous consumer loans including overdraft, line-of-credit and indirect auto paper. Our auto paper is originated through established dealers in our market. Consumer loans may be unsecured or secured by rapidly depreciable
assets. Repossessed collateral for a defaulted consumer loan may not provide an adequate source of repayment for the outstanding loan, and the remaining deficiency may not warrant further substantial collection efforts against the borrower. In
addition, consumer loan collections are dependent on the borrowers continued financial stability, which can be adversely affected by job loss, divorce, illness or personal bankruptcy. Furthermore, the application of various federal and state
laws, including federal and state bankruptcy and insolvency laws, may limit the amount which can be recovered on such loans.

Home Equity Lines: Our home equity line portfolio is comprised of home equity lines to customers in our markets. Home equity lines of credit are underwritten in a manner such that they result in credit risk that is substantially
similar to that of residential mortgage loans. Nevertheless, home equity lines of credit have greater credit risk than residential mortgage loans because they are often secured by mortgages that are subordinated to the existing first mortgage on the
property, which we may or may not hold, and they are not covered by private mortgage insurance coverage.

Agriculture
Loans: Our agriculture land secured portfolio is comprised primarily of real estate loans to working farms in Adams, Arapahoe, Elbert, Larimer, Morgan and Weld counties. Our agriculture operating loan portfolio is comprised of operating loans to
working farms in the same counties. Repayments on agricultural mortgage loans are substantially dependent on the successful operation or management of the farm property collateralizing the loan, which is affected by many factors, including weather
and changing market prices, which are outside of the control of the borrower. Payments on agricultural operating loans are dependent on the successful operation or management of the farm property for which the operating loan is generally utilized.
Such loans are similarly subject to farming-related risks, including weather and changing market prices.



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In addition, we provide traditional deposit accounts such as demand, NOW, Money Market, IRA, time
deposits and savings accounts. Our certificate of deposit customers, excluding brokered deposits, represent local relationships. Our branch network enables us to offer a full range of deposits, loans and personalized services to our targeted
commercial and consumer customers.

Through our holding company structure, Centennial creates operating efficiencies for the Banks by
consolidating core administrative, operational and financial functions that serve both Banks. These centralized functions include finance and accounting, legal and compliance, human resources, operations and systems, and credit administration. The
most senior level oversight of these functions is performed at the holding company level for the benefit of the Banks, though each function may have a limited number of Bank employees performing such functions. By consolidating these activities at
the holding company and negotiating with vendors for services on behalf of the Company as a whole, we believe the Company is better able to integrate systems and manage consistently across the organization as well as provide such services for lower
cost than if the Banks were to obtain or perform such services directly. The Banks reimburse the holding company for the cost of the services performed on their behalf, pursuant to an expense allocation agreement.

Our Philosophy and Strategy

We have established a
philosophy of relationship banking: providing highly personalized and responsive services based on exceptional customer service. That philosophy, combined with flexible banking services, is the driving force behind our growth, financial strength and
recognition as a strong competitive business within the communities we serve.

Our strategy is to build a profitable, community-banking
franchise along the Colorado Front Range spanning from Castle Rock to Fort Collins and capitalize on the economic growth in our markets. We strive to be a premier community and business bank with an emphasis on high quality customer service,
commercial banking and low-cost demand deposits, serving the needs of small to medium-sized businesses, the owners and employees of those businesses, as well as other executives and professionals. The strategy for serving our target markets is the
delivery of a finely-focused set of value-added products and services that satisfy the primary needs of our customers, emphasizing superior service and relationships as opposed to transaction volume or low pricing. As a locally managed banking
institution, we believe we are able to provide a superior level of customer service compared to larger regional and super-regional banks.

In addition to building growth through our existing branches, we expect to continue to seek opportunities to acquire small to medium-sized banks that will allow us to expand our franchise in a manner consistent with our deposit strategy and
community-banking focus. Ideally, the banks we will seek to acquire will be in or contiguous to the existing footprint of the current branch networks of our Banks, which would allow us to consolidate duplicative costs and administrative functions
and to rationalize operating expenses. We believe that by streamlining the administrative and operational functions of an acquired bank, we are able to substantially lower operating costs, improve performance and quickly integrate the acquired bank
while maintaining the stability of our franchise as well as that of the bank we acquire.

Our Principal Markets

We currently have two banking subsidiaries: Centennial Bank of the West and Guaranty Bank. We currently operate 15 Centennial Bank of the West branches
located throughout Colorados Northern Front Range. Guaranty Bank operates 21 branches located in the seven-counties included in the Denver metropolitan area.

The Denver metropolitan area is composed of seven counties: Adams, Arapahoe, Boulder, Broomfield, Denver, Douglas and Jefferson. The metropolitan area stretches from the south in Castle Rock through downtown Denver
northward to Boulder and Longmont. The area serves as a major hub of commerce passing from the east coast to the west coast. Denver is the largest city within a 600-mile radius.



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Colorados Northern Front Range region begins just 30 miles north of central Denver in southern
Boulder County. The I-25 corridor north from Denver to Fort Collins is a contiguous stream of small communities/housing developments, open space, farm properties, and both small and large businesses. The region includes the cities of Fort Collins,
Loveland, Greeley and Longmont, all located in Boulder, Larimer and Weld counties. Colorados Northern Front Range has a regional economy that is a diverse mix of agriculture, advanced technology, manufacturing, service firms, government,
education, retail, small business and construction. The region is also the gateway to Rocky Mountain National Park, a year-round tourist destination.

Business Concentrations

No individual or single group of related accounts is considered material in relation to our total
assets, or in relation to the overall business of the Company. Approximately 60% of our loan portfolio held for investment at December 31, 2006 consisted of real estate-related loans, including construction loans, miniperm loans and real estate
mortgage loans. Our business activities are currently focused in the Colorado Front Range. Consequently, our financial condition, results of operations and cash flows depend upon the general trends in the economy of the Colorado Front Range and, in
particular, the residential and commercial real estate markets.

Competition

The banking business in Colorado is highly competitive. The market is characterized by a relatively small number of large financial institutions with a
large number of offices and numerous small to moderate-sized community banks, including de novo banks. Other entities in both the public and private sectors seeking to raise capital through the issuance and sale of debt or equity securities also
provide competition for us in the acquisition of deposits. We also compete with money market funds and issuers of other money market instruments. In recent years, increased competition has also developed from specialized finance and non-finance
companies that offer wholesale finance, credit card and other consumer finance services, including on-line banking services and personal finance software. Competition for deposit and loan products remains strong from both banking and non-banking
firms and this competition directly affects the rates of those products and the terms on which they are offered to consumers.

Technological innovation continues to contribute to greater competition in domestic and international financial services markets. Technological innovation has, for example, made it possible for non-depository institutions to offer customers
automated transfer payment services previously limited to traditional banking products. In addition, customers now expect a choice of several delivery systems and channels, including telephone, mail, home computer, automated teller machines (ATMs),
automated clearing house transactions (ACH), and self-service branches.

Mergers between financial institutions have placed additional
pressure on banks to consolidate their operations, reduce expenses and increase revenues to remain competitive. In addition, competition has intensified due to federal and state interstate banking laws, which permit banking organizations to expand
geographically with fewer restrictions than in the past. These laws allow banks to merge with other banks across state lines, thereby enabling banks to establish or expand banking operations in our market. The competitive environment is also
significantly impacted by federal and state legislation that makes it easier for non-bank financial institutions to compete with us.

Economic factors, along with legislative and technological changes, will have an ongoing impact on the competitive environment within the financial services industry. As an active participant in financial markets, we strive to anticipate
and adapt to dynamic competitive conditions, but we cannot assure you as to their impact on our future business, financial condition, results of operations or cash flows or as to our continued ability to anticipate and adapt to changing conditions.
In order to compete with other competitors in our primary service area, we attempt to use to the fullest extent possible the flexibility that our independent status permits, including an emphasis on specialized services, local promotional activity
and personal contacts.



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Supervision and Regulation

General

Set forth below is a description of the significant elements of the laws and regulations applicable to the Company.
The description is qualified in its entirety by reference to the full text of the statutes, regulations and policies that are described. Also, such statutes, regulations and policies are continually under review by the U.S. Congress and state
legislatures and federal and state regulatory agencies. A change in statutes, regulations or regulatory policies applicable to Centennial or our subsidiaries could have a material effect on our business.

Regulatory Agencies

Centennial is a legal entity
separate and distinct from its subsidiaries. As a financial holding company and a bank holding company, Centennial is regulated under the Bank Holding Company Act of 1956, as amended, or the BHC Act, and is subject to inspection, examination and
supervision by the Board of Governors of the Federal Reserve System, or the Federal Reserve Board. Centennial is also under the jurisdiction of the SEC and is subject to the disclosure and regulatory requirements of the Securities Act of 1933, as
amended, and the Securities Exchange Act of 1934, as amended, as administered by the SEC. Centennial is listed on The NASDAQ Stock Market LLC (Nasdaq) under the trading symbol CBHI, and is subject to the rules of Nasdaq for listed
companies.

As Colorado-chartered banks, Centennial Bank of the West and Guaranty Bank are subject to supervision, periodic examination,
and regulation by the Colorado Division of Banking, or CDB. As members of the Federal Reserve System, Centennial Bank of the West and Guaranty Bank are also subject to regulation, supervision and periodic examination by the Federal Reserve Bank of
Kansas City. If, as a result of an examination of the banks, the Federal Reserve Board or the CDB should determine that the financial condition, capital resources, asset quality, earnings prospects, management, liquidity, or other aspects of its
operations are unsatisfactory or that it or its management is violating or has violated any law or regulation, various remedies are available to the Federal Reserve Board and the CDB. Such remedies include the power to enjoin unsafe or
unsound practices, to require affirmative action to correct any conditions resulting from any violation or practice, to issue an administrative order that can be judicially enforced, to direct an increase in capital, to restrict its growth, to
assess civil monetary penalties, to remove officers and directors, and ultimately to terminate its deposit insurance, which for a Colorado-chartered bank would result in the revocation of its charter.

Bank Holding Company Regulation

In general, the BHC
Act limits the business of bank holding companies to banking, managing or controlling banks and other activities that the Federal Reserve Board has determined to be so closely related to banking as to be a proper incident thereto. As a result of the
Gramm-Leach-Bliley Financial Modernization Act of 1999, or the GLB Act, which amended the BHC Act, bank holding companies that are financial holding companies may engage in any activity, or acquire and retain the shares of a company engaged in any
activity that is either (i) financial in nature or incidental to such financial activity or (ii) complementary to a financial activity and that does not pose a substantial risk to the safety and soundness of depository institutions or the
financial system generally (as solely determined by the Federal Reserve Board). Activities that are financial in nature include securities underwriting and dealing, insurance underwriting and making merchant banking investments.

If a bank holding company seeks to engage in the broader range of activities that are permitted under the BHC Act for financial holding companies,
(i) all of its depository institution subsidiaries must be well capitalized and well managed and (ii) it must file a declaration with the Federal Reserve Board that it elects to be a financial holding
company. A depository institution subsidiary is considered to be well capitalized if it satisfies the requirements for this status discussed in the section captioned Capital Adequacy and Prompt Corrective Action,
included elsewhere in this item. A depository institution subsidiary is considered well managed if it received a composite rating and management rating of at least satisfactory in its most recent examination.



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In order for a financial holding company to commence any new activity permitted by the BHC Act, or to
acquire a company engaged in any new activity permitted by the BHC Act, each insured depository institution subsidiary of the financial holding company must have received a rating of at least satisfactory in its most recent examination
under the Community Reinvestment Act. See the section captioned Community Reinvestment Act included elsewhere in this item.

The BHC Act generally limits acquisitions by bank holding companies that are not qualified as financial holding companies to commercial banks and companies engaged in activities that the Federal Reserve Board has determined to be so closely
related to banking as to be a proper incident thereto. Financial holding companies like us are also permitted to acquire companies engaged in activities that are financial in nature and in activities that are incidental and complementary to
financial activities without prior Federal Reserve Board approval.

The BHC Act, the Bank Merger Act, the Colorado Banking Code and other
federal and state statutes regulate acquisitions of commercial banks. The BHC Act requires the prior approval of the Federal Reserve Board for the direct or indirect acquisition of more than 5.0% of the voting shares of a commercial bank or its
parent holding company. In reviewing applications seeking approval of merger and acquisition transactions, the bank regulatory authorities will consider, among other things, the competitive effect and public benefits of the transactions, the capital
position of the combined organization, the applicants performance record under the Community Reinvestment Act (see the section captioned Community Reinvestment Act included elsewhere in this item) and fair housing laws and the
effectiveness of the subject organizations in combating money laundering activities.

Dividends

The principal source of Centennials cash revenues is from dividends from its subsidiary banks. Our earnings and activities are affected by
legislation, by regulations and by local legislative and administrative bodies and decisions of courts in the jurisdictions in which we and our bank subsidiaries conduct business. For example, these include limitations on the ability of our bank
subsidiaries to pay dividends to us and our ability to pay dividends to our stockholders. It is the policy of the Federal Reserve Board that bank holding companies should pay cash dividends on common stock only out of income available over the past
year and only if prospective earnings retention is consistent with the organizations expected future needs and financial condition. The policy provides that bank holding companies should not maintain a level of cash dividends that undermines
the bank holding companys ability to serve as a source of strength to its banking subsidiaries.

As members of the Federal Reserve
System, each of Centennial Bank of the West and Guaranty Bank is subject to Regulation H, which, among other things, provides that a member bank may not declare or pay a dividend if the total of all dividends declared during the calendar year,
including the proposed dividend, exceeds the sum of the banks net income (as reportable in its Reports of Condition and Income) during the current calendar year and its retained net income for the prior two calendar years, unless the Federal
Reserve has approved the dividend. Regulation H also provides that a member bank may not declare or pay a dividend if the dividend would exceed the banks undivided profits as reportable on its Reports of Condition and Income, unless the
Federal Reserve and holders of at least two-thirds of the outstanding shares of each class of the banks outstanding stock have approved the dividend. Additionally, there are potential additional restrictions and prohibitions if a bank were to
be less than well-capitalized.

Additionally, as Colorado state-chartered banks, the banks are subject to limitations under Colorado law on
the payment of dividends. The Colorado Financial Institutions Code provides that a bank may declare dividends from retained earnings and other components of capital specifically approved by the Banking Board so long as the declaration is made in
compliance with rules established by the Banking Board.

In addition to these explicit limitations, the federal regulatory agencies have
general authority to prohibit a banking subsidiary or bank holding company from engaging in an unsafe or unsound banking practice.



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Depending upon the circumstances, the agencies could take the position that paying a dividend would constitute an unsafe or unsound banking practice.

As part of our capital and cash management practices at the holding company, we will utilize our bank subsidiaries excess capital
above the well-capitalized requirement through the payment of dividends to the holding company.

Affiliate Transactions

There are various restrictions on the ability of Centennial to borrow from, and engage in certain other transactions with, Centennials subsidiary
banks. In general, these restrictions require that any extensions of credit must be secured by designated amounts of specified collateral and are limited, as to transactions with any one of Centennials subsidiary banks, to 10% of
Centennials subsidiary banks capital stock and surplus, and, as to Centennial, to 20% of Centennials subsidiary banks capital stock and surplus.

Federal law also provides that extensions of credit and other transactions between our subsidiary banks and Centennial must be on terms and conditions, including credit standards, that are substantially the same or at
least as favorable to our subsidiary banks as those prevailing at the time for comparable transactions involving other non-affiliated companies or, in the absence of comparable transactions, on terms and conditions, including credit standards, that
in good faith would be offered to, or would apply to, non-affiliated companies.

Source of Strength Doctrine

Federal Reserve Board policy requires bank holding companies to act as a source of financial and managerial strength to their subsidiary banks. Under this
policy, Centennial is expected to commit resources to support its subsidiary banks, including at times when Centennial may not be in a financial position to provide it. Any capital loans by a bank holding company to any of its subsidiary banks are
subordinate in right of payment to deposits and to certain other indebtedness of such subsidiary banks. The BHC Act provides that, in the event of a bank holding companys bankruptcy, any commitment by the bank holding company to a federal bank
regulatory agency to maintain the capital of a subsidiary bank will be assumed by the bankruptcy trustee and entitled to priority of payment.

Capital
Adequacy and Prompt Corrective Action

Banks and bank holding companies are subject to various regulatory capital requirements
administered by state and federal banking agencies. Capital adequacy guidelines and, additionally for banks, 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 about components, risk weighting and other factors.

The Federal Reserve Board has risk-based capital ratio and leverage ratio guidelines for banking organizations, which are intended to ensure that banking
organizations have adequate capital given the risk levels of assets and off-balance sheet financial instruments. Under the guidelines, banking organizations are required to maintain minimum ratios for Tier 1 capital and total capital to total
risk-weighted assets (including certain off-balance sheet items, such as letters of credit). For purposes of calculating the ratios, a banking organizations assets and some of its specified off-balance sheet commitments and obligations are
assigned to various risk categories. A depository institution or holding companys capital, in turn, is classified in one of three tiers, depending on type:



| |  |  | Core Capital (Tier 1). Tier 1 capital includes common equity, retained earnings, qualifying trust preferred securities, qualifying noncumulative perpetual
preferred stock, a limited amount of qualifying cumulative perpetual stock at the holding company level, minority interests in equity accounts of consolidated subsidiaries, less goodwill, most intangible assets and certain other assets.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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| |  |  | Supplementary Capital (Tier 2). Tier 2 capital includes, among other things, perpetual preferred stock and trust preferred securities not meeting the Tier 1
definition, qualifying mandatory convertible debt securities, qualifying subordinated debt, and allowances for possible loan and lease losses, subject to limitations.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Market Risk Capital (Tier 3). Tier 3 capital includes qualifying unsecured subordinated debt.
| | - |  | ---------------------------------------------------------------------------------------------

Centennial, like other bank holding companies, currently is required to maintain Tier 1 capital and total capital (the sum of Tier 1, Tier 2
and Tier 3 capital) equal to at least 4.0% and 8.0%, respectively, of its total risk-weighted assets (including various off-balance-sheet items, such as standby letters of credit). Our subsidiary banks, like other depository institutions, are
required to maintain similar capital levels under capital adequacy guidelines.

Bank holding companies and banks subject to the market risk
capital guidelines are required to incorporate market and interest rate risk components into their risk-based capital standards. Under the market risk capital guidelines, capital is allocated to support the amount of market risk related to a
financial institutions ongoing trading activities.

Bank holding companies and banks are also required to comply with minimum
leverage ratio requirements. The leverage ratio is the ratio of a banking organizations Tier 1 capital to its total adjusted quarterly average assets (as defined for regulatory purposes). The requirements necessitate a minimum leverage ratio
of 3.0% for financial holding companies and banks that either have the highest supervisory rating or have implemented the appropriate federal regulatory authoritys risk-adjusted measure for market risk. All other financial holding companies
and banks are required to maintain a minimum leverage ratio of 4.0%, unless a different minimum is specified by an appropriate regulatory authority. For a depository institution to be considered well capitalized under the regulatory
framework for prompt corrective action, its leverage ratio must be at least 5.0%.

The Federal Deposit Insurance Act, as amended
(FDIA), requires, among other things, the federal banking agencies to take prompt corrective action in respect of depository institutions that do not meet minimum capital requirements. The FDIA sets forth the following five
capital tiers: well capitalized, adequately capitalized, undercapitalized, significantly undercapitalized and critically undercapitalized. A depository institutions capital tier will
depend upon how its capital levels compare with various relevant capital measures and certain other factors, as established by regulation. The relevant capital measures are the total capital ratio, the Tier 1 capital ratio and the leverage ratio.

Under the regulations adopted by the federal regulatory authorities, a bank will be: (i) well capitalized if the
institution has a total risk-based capital ratio of 10.0% or greater, a Tier 1 risk-based capital ratio of 6.0% or greater, and a leverage ratio of 5.0% or greater, and is not subject to any order or written directive by any such regulatory
authority to meet and maintain a specific capital level for any capital measure; (ii) adequately capitalized if the institution has a total risk-based capital ratio of 8.0% or greater, a Tier 1 risk-based capital ratio of 4.0% or
greater, and a leverage ratio of 4.0% or greater (3.0% in certain circumstances) and is not well capitalized; (iii) undercapitalized if the institution has a total risk-based capital ratio that is less than 8.0%, a Tier
1 risk-based capital ratio of less than 4.0% or a leverage ratio of less than 4.0% (3.0% in certain circumstances); (iv) significantly undercapitalized if the institution has a total risk-based capital ratio of less than 6.0%, a
Tier 1 risk-based capital ratio of less than 3.0% or a leverage ratio of less than 3.0%; and (v) critically undercapitalized if the institutions tangible equity is equal to or less than 2.0% of average quarterly tangible
assets. An institution may be downgraded to, or deemed to be in, a capital category that is lower than indicated by its capital ratios if it is determined to be in an unsafe or unsound condition or if it receives an unsatisfactory examination rating
with respect to certain matters. A banks capital category is determined solely for the purpose of applying prompt corrective action regulations, and the capital category may not constitute an accurate representation of the banks overall
financial condition or prospects for other purposes.



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The FDIA generally prohibits a depository institution from making any capital distributions (including
payment of a dividend) or paying any management fee to its parent holding company if the depository institution would thereafter be undercapitalized. Undercapitalized institutions are subject to growth limitations and are required to submit a
capital restoration plan. The agencies may not accept such a plan without determining, among other things, that the plan is based on realistic assumptions and is likely to succeed in restoring the depository institutions capital. In addition,
for a capital restoration plan to be acceptable, the depository institutions parent holding company must guarantee that the institution will comply with such capital restoration plan. The aggregate liability of the parent holding company is
limited to the lesser of (i) an amount equal to 5.0% of the depository institutions total assets at the time it became undercapitalized and (ii) the amount which is necessary (or would have been necessary) to bring the institution
into compliance with all capital standards applicable with respect to such institution as of the time it fails to comply with the plan. If a depository institution fails to submit an acceptable plan, it is treated as if it is significantly
undercapitalized.

Significantly undercapitalized depository institutions may be subject to a number of requirements and
restrictions, including orders to sell sufficient voting stock to become adequately capitalized, requirements to reduce total assets, and cessation of receipt of deposits from correspondent banks. Critically undercapitalized
institutions are subject to the appointment of a receiver or conservator.

For information regarding the capital ratios and leverage ratio
of Centennial and our bank subsidiaries see the discussion under the section captioned Capital included in Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations and Note
21Regulatory Requirements in the notes to consolidated financial statements included in Item 8. Financial Statements and Supplementary Data elsewhere in this report.

The federal bank regulatory authorities risk-based capital guidelines are based upon the 1988 capital accord of the Basel Committee on Banking
Supervision, or the BIS. The BIS is a committee of central banks and bank supervisors/regulators from the major industrialized countries that develops broad policy guidelines for use by each countrys supervisors in determining the supervisory
policies they apply. In 2004, the BIS published a new capital accord to replace its 1988 capital accord, with an update in November 2005 (BIS II).

BIS II provides two approaches for setting capital standards for credit riskan internal ratings-based approach tailored to individual institutions circumstances (which for many asset classes is itself
broken into a foundation approach and an advanced or A-IRB approach, the availability of which is subject to additional restrictions) and a standardized approach that bases risk weightings on external credit assessments to a
much greater extent than permitted in existing risk-based capital guidelines. BIS II also would set capital requirements for operational risk and refine the existing capital requirements for market risk exposures.

The U.S. banking and thrift agencies are developing proposed revisions to their existing capital adequacy regulations and standards based on BIS II. In
September 2006, the agencies issued a notice of proposed rulemaking setting forth a definitive proposal for implementing BIS II in the United States that would apply only to internationally active banking organizationsdefined as those with
consolidated total assets of $250 billion or more or consolidated on-balance sheet foreign exposures of $10 billion or morebut that other U.S. banking organizations could elect but would not be required to apply. In December 2006, the agencies
issued a notice of proposed rulemaking describing proposed amendments to their existing risk-based capital guidelines to make them more risk-sensitive, generally following aspects of the standardized approach of BIS II. These latter proposed
amendments, often referred to as BIS I-A, would apply to banking organizations that are not internationally active banking organizations subject to the A-IRB approach for internationally active banking organizations and do not opt
in to that approach. The agencies previously had issued advance notices of proposed rulemaking on both proposals (in August 2003 regarding the A-IRB approach of BIS II for internationally active banking organizations and in October 2005
regarding BIS II).

The comment periods for both of the agencies notices of proposed rulemakings expire on March 26, 2007. The
agencies have indicated their intent to have the A-IRB provisions for internationally active U.S. banking



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organizations first become effective in March 2009 and that those provisions and the BIS I-A provisions for others will be implemented on similar timeframes.

We are not an internationally active banking organization and have not made a determination as to whether we would opt to apply the A-IRB
provisions applicable to internationally active U.S. banking organizations once they become effective.

Deposit Insurance

The deposits of our bank subsidiaries are insured up to applicable limits by the Deposit Insurance Fund, or the DIF, of the FDIC and are subject to
deposit insurance assessments to maintain the DIF. The FDIC utilizes a risk-based assessment system that imposes insurance premiums based upon a risk matrix that takes into account a banks capital level and supervisory rating. Our bank
subsidiaries were not required to pay any deposit insurance premiums in 2006; however, it is possible that the FDIC could impose assessment rates in the future in connection with declines in the insurance funds or increases in the amount of
insurance coverage. An increase in the assessment rate could have a material adverse effect on our earnings, depending on the amount of the increase.

Because of favorable loss experience and a healthy reserve ratio in the Bank Insurance Fund, or the BIF, of the FDIC, well-capitalized and well-managed banks, including the Banks, have in recent years paid minimal
premiums for FDIC insurance. The FDIC notified banks that beginning in 2007, it will increase the premiums for deposit insurance. Concurrently, a deposit premium refund, in the form of credit offsets, was granted to banks that were in existence on
December 31, 1996 and paid deposit insurance premiums prior to that date. The amount of any future premiums will depend on the BIF loss experience, legislation or regulatory initiatives and other factors, none of which we are in position to
predict at this time.

Depositor Preference

The FDIA provides that, in the event of the liquidation or other resolution of an insured depository institution, the claims of depositors of the institution, including the claims of the FDIC as subrogee of insured depositors,
and certain claims for administrative expenses of the FDIC as a receiver, will have priority over other general unsecured claims against the institution. If an insured depository institution fails, insured and uninsured depositors, along with the
FDIC, will have priority in payment ahead of unsecured, non-deposit creditors, including the parent bank holding company, with respect to any extensions of credit they have made to such insured depository institution.

Liability of Commonly Controlled Institutions

FDIC-insured depository institutions can be held liable for any loss incurred, or reasonably expected to be incurred, by the FDIC due to the default of an FDIC-insured depository institution controlled by the same bank holding company, or
for any assistance provided by the FDIC to an FDIC-insured depository institution controlled by the same bank holding company that is in danger of default. This means that Guaranty Bank could be held liable for such losses due to a default by
Centennial Bank of the West and vice versa because both such depositary institutions are controlled by the holding company. Default means generally the appointment of a conservator or receiver. In danger of default
means generally the existence of certain conditions indicating that default is likely to occur in the absence of regulatory assistance.

Community
Reinvestment Act

The Community Reinvestment Act of 1977, or the CRA, requires depository institutions to assist in meeting the credit
needs of their market areas consistent with safe and sound banking practice. Under the CRA, each



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depository institution is required to help meet the credit needs of its market areas by, among other things, providing credit to low- and moderate-income
individuals and communities. Depository institutions are periodically examined for compliance with the CRA and are assigned ratings. In order for a financial holding company to commence any new activity permitted by the BHC Act, or to acquire any
company engaged in any new activity permitted by the BHC Act, each insured depository institution subsidiary of the financial holding company must have received a rating of at least satisfactory in its most recent examination under the
CRA. Furthermore, banking regulators take into account CRA ratings when considering approval of a proposed transaction.

Financial Privacy

In accordance with the GLB Act, federal banking regulators adopted rules that limit the ability of banks and other financial
institutions to disclose non-public information about consumers to nonaffiliated third parties. These limitations require disclosure of privacy policies to consumers and, in some circumstances, allow consumers to prevent disclosure of certain
personal information to a nonaffiliated third party. The privacy provisions of the GLB Act affect how consumer information is transmitted through diversified financial companies and conveyed to outside vendors.

Anti-Money Laundering Initiatives and the USA Patriot Act

A major focus of governmental policy on financial institutions in recent years has been aimed at combating money laundering and terrorist financing. The USA PATRIOT Act of 2001, or the USA Patriot Act, substantially broadened the scope of
United States anti-money laundering laws and regulations by imposing significant new compliance and due diligence obligations, creating new crimes and penalties and expanding the extra-territorial jurisdiction of the United States. The United States
Treasury Department has issued a number of regulations that apply various requirements of the USA Patriot Act to financial institutions such as our bank subsidiaries. These regulations impose obligations on financial institutions to maintain
appropriate policies, procedures and controls to detect, prevent and report money laundering and terrorist financing and to verify the identity of their customers. Failure of a financial institution to maintain and implement adequate programs to
combat money laundering and terrorist financing, or to comply with all of the relevant laws or regulations, could have serious legal and reputational consequences for the institution.

Office of Foreign Assets Control Regulation

The United States has imposed economic sanctions that
affect transactions with designated foreign countries, nationals and others. These are typically known as the OFAC rules based on their administration by the U.S. Treasury Department Office of Foreign Assets Control (OFAC).
The OFAC-administered sanctions targeting countries take many different forms. Generally, however, they contain one or more of the following elements: (i) restrictions on trade with or investment in a sanctioned country, including prohibitions
against direct or indirect imports from and exports to a sanctioned country and prohibitions on U.S. persons engaging in financial transactions relating to making investments in, or providing investment-related advice or assistance to, a
sanctioned country; and (ii) a blocking of assets in which the government or specially designated nationals of the sanctioned country have an interest, by prohibiting transfers of property subject to U.S. jurisdiction (including property in the
possession or control of U.S. persons). Blocked assets (e.g., property and bank deposits) cannot be paid out, withdrawn, set off or transferred in any manner without a license from OFAC. Failure to comply with these sanctions could have serious
legal and reputational consequences.

Sarbanes-Oxley Act

As a publicly traded company, we are subject to the Sarbanes-Oxley Act of 2002 (Sarbanes-Oxley Act). NASDAQ has adopted corporate governance rules intended to allow stockholders to more easily and
effectively monitor the performance of companies and directors. The principal provisions of the Sarbanes-Oxley Act, many



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of which have been implemented or interpreted through regulations, provide for and include, among other things: (i) the creation of an independent
accounting oversight board; (ii) auditor independence provisions that restrict non-audit services that accountants may provide to their audit clients; (iii) additional corporate governance and responsibility measures, including the
requirement that the chief executive officer and chief financial officer of a public company certify financial statements; (iv) the forfeiture of bonuses or other incentive-based compensation and profits from the sale of an issuers
securities by directors and senior officers in the twelve month period following initial publication of any financial statements that later require restatement; (v) an increase in the oversight of, and enhancement of certain requirements
relating to, audit committees of public companies and how they interact with the Companys independent auditors; (vi) requirements that audit committee members must be independent and are barred from accepting consulting, advisory or other
compensatory fees from the issuer; (vii) requirements that companies disclose whether at least one member of the audit committee is a financial expert (as such term is defined by the SEC) and if not discussed, why the audit
committee does not have a financial expert; (viii) expanded disclosure requirements for corporate insiders, including accelerated reporting of stock transactions by insiders and a prohibition on insider trading during pension blackout periods;
(ix) a prohibition on personal loans to directors and officers, except certain loans made by insured financial institutions on nonpreferential terms and in compliance with other bank regulatory requirements; (x) disclosure of a code of
ethics and filing a Form 8-K for a change or waiver of such code; (xi) a range of enhanced penalties for fraud and other violations; and (xii) expanded disclosure and certification relating to an issuers disclosure controls and
procedures and internal controls over financial reporting.

As a result of the Sarbanes-Oxley Act, and its implementing regulations, we
have incurred substantial costs to interpret and ensure compliance with the law and its regulations. Future changes in the laws, regulations, or policies that impact us cannot necessarily be predicted and may have a material effect on our business
and earnings.

Legislative and Regulatory Initiatives

From time to time, various legislative and regulatory initiatives are introduced in the U.S. Congress and state legislatures, as well as by regulatory agencies. Such initiatives may include proposals to expand or
contract the powers of bank holding companies and depository institutions or proposals to substantially change the financial institution regulatory system. Such legislation could change banking statutes and our operating environment in substantial
and unpredictable ways. If enacted, such legislation could increase or decrease the cost of doing business, limit or expand permissible activities or affect the competitive balance among banks, savings associations, credit unions, and other
financial institutions. We cannot predict whether any such legislation will be enacted, and, if enacted, the effect that it, or any implementing regulations, would have on our financial condition or results of operations. A change in statutes,
regulations or regulatory policies applicable to Centennial or any of its subsidiaries could have a material effect on our business.

Employees

At December 31, 2006, we employed 518 full-time equivalent employees. None of our employees are represented by collective bargaining agreements.
We believe our employee relations to be good.

Available Information

Centennial maintains an Internet website at www.cbhi.com. At this website, our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and proxy statements on Schedule 14A and
amendments to such reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act are available, free of charge, as soon as reasonably practicable after such forms are electronically filed with, or furnished to, the SEC. The
public may read and copy any materials we file with the SEC at the SECs Public Reference Room, located at 100 F Street, NE, Washington, D.C. 20549. The public may obtain information on the operation of the Public Reference Room by calling the
SEC at 1-800-SEC-0330. The SEC also maintains an



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Internet site at www.sec.gov that contains reports, proxy and information statements, and other information regarding issuers that file electronically with
the SEC. You may obtain copies of the Companys filings on the SEC site. These documents may also be obtained in print upon request by our stockholders to our Investor Relations Department.

We have adopted a written code of ethics that applies to all directors, officers and employees of the Company, including our principal executive officer
and senior financial officers, in accordance with Section 406 of the Sarbanes-Oxley Act of 2002 and the rules of the Securities and Exchange Commission promulgated thereunder. The code of ethics, which we call our Code of Business Conduct and
Ethics, is available on our corporate website, www.cbhi.com, in the section entitled Corporate Governance. In the event that we make changes in, or provide waivers from, the provisions of this code of ethics that the SEC requires us to
disclose, we intend to disclose these events on our corporate website in such section. In the Corporate Governance section of our corporate website, we have also posted the charters for our Audit Committee and our Compensation, Nominating and
Governance Committee, as well as our Corporate Governance Guidelines. In addition, information concerning purchases and sales of our equity securities by our executive officers and directors is posted on our website.

Our Investor Relations Department can be contacted at Centennial Bank Holdings, Inc., 1331 Seventeenth Street, Suite 300, Denver, CO 80202, Attention:
Investor Relations, telephone 303-296-9600, or via e-mail to investor.relations@cbhi.com.

Except for the documents specifically
incorporated by reference into this document, information contained on Centennials website or information that can be accessed through its website is not incorporated by reference into this document.



|ITEM 1A. | RISK FACTORS
|-------- | ------------

An investment in our common stock is
subject to risks inherent to our business. The material risks and uncertainties that management believes affect us are described below. Before making an investment decision, you should carefully consider the risks and uncertainties described below
together with all of the other information included or incorporated by reference in this report. The risks and uncertainties described below are not the only ones we face. Additional risks and uncertainties that management is not aware of or focused
on or that management currently deems immaterial may also impair our business operations. This report is qualified in its entirety by these risk factors.

If any of the following risks actually occurs, our financial condition and results of operations could be materially and adversely affected. If this were to happen, the value of our common stock could decline
significantly, and you could lose all or part of your investment.

We Are Subject to Interest Rate Risk

Our earnings and cash flows are largely dependent upon our net interest income. Net interest income is the difference between interest income earned on
interest-earning assets such as loans and securities and interest expense paid on interest-bearing liabilities such as deposits and borrowed funds. Interest rates are highly sensitive to many factors that are beyond our control, including general
economic conditions and policies of various governmental and regulatory agencies and, in particular, the Board of Governors of the Federal Reserve System. Changes in monetary policy, including changes in interest rates, could influence not only the
interest we receive on loans and securities and the amount of interest we pay on deposits and borrowings, but such changes could also affect (i) our ability to originate loans and obtain deposits, (ii) the fair value of our financial
assets and liabilities, and (iii) the average duration of our loans and securities which are collateralized by mortgages. If the interest rates paid on deposits and other borrowings increase at a faster rate than the interest rates received on
loans and other investments, our net interest income, and therefore earnings, could be adversely affected.



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Earnings could also be adversely affected if the interest rates received on loans and other investments fall more quickly than the interest rates paid on
deposits and other borrowings.

Any substantial, unexpected, prolonged change in market interest rates could have a material adverse effect
on our financial condition and results of operations. See Item 7A. Quantitative and Qualitative Disclosures about Market Risk located elsewhere in this report for further discussion related to our management of interest rate risk.

We are Subject to Credit Risk

There are inherent
risks associated with our lending activities. These risks include, among other things, the impact of changes in interest rates and changes in the economic conditions in the markets where we operate as well as those across the United States and
abroad. Increases in interest rates and/or weakening economic conditions could adversely impact the ability of borrowers to repay outstanding loans or the value of the collateral securing these loans. We are also subject to various laws and
regulations that affect our lending activities. Failure to comply with applicable laws and regulations could subject us to regulatory enforcement action that could result in the assessment of significant civil money penalties against us.

Our Allowance for Loan Losses May Be Insufficient

We maintain an allowance for loan losses, which is a reserve established through a provision for loan losses charged to expense, that represents managements best estimate of probable losses that may be incurred within the existing
portfolio of loans. The allowance, in the judgment of management, is necessary to reserve for estimated loan losses and risks inherent in the loan portfolio. The level of the allowance reflects managements continuing evaluation of industry
concentrations; specific credit risks; loan loss experience; current loan portfolio quality; present economic, political and regulatory conditions and unidentified losses inherent in the current loan portfolio. The determination of the appropriate
level of the allowance for loan losses inherently involves a high degree of subjectivity and judgment and requires us to make significant estimates of current credit risks and future trends, all of which may undergo material changes. Changes in
economic conditions affecting borrowers, new information regarding existing loans, identification of additional problem loans and other factors, both within and outside of our control, may require an increase in the allowance for loan losses. In
addition, bank regulatory agencies periodically review our allowance for loan losses and may require an increase in the provision for loan losses or the recognition of further loan charge-offs, based on judgments different than those of management.
In addition, if charge-offs in future periods exceed the allowance for loan losses, we will need additional provisions to increase the allowance for loan losses. Any increases in the allowance for loan losses will result in a decrease in net income
and, possibly, capital, and may have a material adverse effect on our financial condition and results of operations. See the section captioned Allowance for Loan Losses in Item 7. Managements Discussion and Analysis of
Financial Condition and Results of Operations located elsewhere in this report for further discussion related to our process for determining the appropriate level of the allowance for loan losses.

A Downturn in Our Real Estate Markets Could Hurt Our Business

A downturn in our real estate markets could hurt our business because many of our loans are secured by real estate. Real estate values and real estate markets are generally affected by changes in national, regional or local economic
conditions, fluctuations in interest rates and the availability of loans to potential purchasers, changes in tax laws and other governmental statutes, regulations and policies and acts of nature. If real estate prices decline, the value of real
estate collateral securing our loans could be reduced. Our ability to recover on defaulted loans by foreclosing and selling the real estate collateral would then be diminished and we would be more likely to suffer losses on defaulted loans. As of
December 31, 2006, approximately 60% of the book value of our loan portfolio consisted of loans collateralized by various types of real estate. Substantially all of our real property collateral is located in Colorado. Any such downturn could
have a material adverse effect on our business, financial condition and results of operations.



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We are Exposed to Risk of Environmental Liabilities with Respect to Properties to Which We Take Title

In the course of our business, we may own or foreclose and take title to real estate, and could be subject to environmental liabilities with respect to
these properties. We may be held liable to a governmental entity or to third parties for property damage, personal injury, investigation and clean-up costs incurred by these parties in connection with environmental contamination, or may be required
to investigate or clean up hazardous or toxic substances, or chemical releases at a property. The costs associated with investigation or remediation activities could be substantial. In addition, as the owner or former owner of a contaminated site,
we may be subject to common law claims by third parties based on damages and costs resulting from environmental contamination emanating from the property. If we ever become subject to significant environmental liabilities, our business, financial
condition, liquidity and results of operations could be materially and adversely affected.

Our Profitability Depends Significantly on Economic
Conditions in the Colorado Front Range

Our success depends primarily on the general economic conditions in the counties in which we
conduct business. Unlike larger banks that are more geographically diversified, we provide banking and financial services to customers primarily in the Colorado Front Range, which includes the Denver metropolitan area. The local economic conditions
in our market area have a significant impact on our loans, the ability of the borrowers to repay these loans and the value of the collateral securing these loans. A significant decline in general economic conditions caused by inflation, natural
disasters, recession, unemployment or other factors beyond our control would affect these local economic conditions and could adversely affect our financial condition and results of operations. In view of the concentration of our operations and the
collateral securing our loan portfolio in Colorados Front Range, we may be particularly susceptible to the adverse effects of any of these consequences, any of which could have a material adverse effect on our business, financial condition,
results of operations and cash flows.

We are Subject To Liquidity Risk

Market conditions or other events could negatively affect the level or cost of liquidity, affecting our ongoing ability to accommodate liability
maturities and deposit withdrawals, meet contractual obligations, and fund asset growth and new business transactions at a reasonable cost, in a timely manner and without adverse consequences. Although management has implemented strategies to
maintain sufficient and diverse sources of funding to accommodate planned as well as unanticipated changes in assets and liabilities under both normal and adverse conditions, any substantial, unexpected and/or prolonged change in the level or cost
of liquidity could have a material adverse effect on our financial condition and results of operations.

We Operate in a Highly Competitive Industry and
Market Area

We face substantial competition in all areas of our operations from a variety of different competitors, many of which are
larger and may have more financial resources. Such competitors primarily include national, regional, and community banks within the various markets we serve. We also face competition from many other types of financial institutions, including,
without limitation, savings and loans, credit unions, finance companies, brokerage firms, insurance companies, factoring companies and other financial intermediaries. The financial services industry could become even more competitive as a result of
legislative, regulatory and technological changes and continued consolidation. Banks, securities firms and insurance companies can merge under the umbrella of a financial holding company, which can offer virtually any type of financial service,
including banking, securities underwriting, insurance (both agency and underwriting) and merchant banking. Also, technology has lowered barriers to entry and made it possible for non-banks to offer products and services traditionally provided by
banks, such as automatic funds transfer and automatic payment systems. Many of our competitors have fewer regulatory constraints and may have lower cost structures. Additionally, due to their size, many competitors may be able to achieve economies
of scale and, as a result, may offer a broader range of products and services as well as better pricing for those products and services than we can.

Our ability to compete successfully depends on a number of factors, including, among other things:



| |  |  | The ability to develop, maintain and build upon long-term customer relationships based on quality service, high ethical standards and safe, sound assets.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------



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| |  |  | The ability to expand our market position.
| | - |  | ------------------------------------------



| |  |  | The scope, relevance and pricing of products and services offered to meet customer needs and demands.
| | - |  | -----------------------------------------------------------------------------------------------------



| |  |  | The rate at which we introduce new products and services relative to our competitors.
| | - |  | -------------------------------------------------------------------------------------



| |  |  | Customer satisfaction with our level of service.
| | - |  | ------------------------------------------------



| |  |  | Industry and general economic trends.
| | - |  | -------------------------------------

Failure to perform in any of these areas could significantly weaken our competitive position, which could adversely affect our growth and profitability, which, in turn, could have a material adverse effect on our financial condition and
results of operations.

We Are Subject to Extensive Government Regulation and Supervision

We are subject to extensive regulation, supervision and examination. Any change in the laws or regulations applicable to us, or in banking
regulators supervisory policies or examination procedures, whether by the Colorado Division of Banking, the FDIC, the Federal Reserve Board, other state or federal regulators, the U.S. Congress or the Colorado legislature could have a material
adverse effect on our business, financial condition, results of operations and cash flows.

Our banks are subject to regulations
promulgated by the Colorado Division of Banking, as their chartering authority, and by the FDIC as the insurer of their deposits up to certain limits. Our banks also belong to the Federal Home Loan Bank System and, as members of such system, they
are subject to certain limited regulations promulgated by the Federal Home Loan Bank of Topeka. In addition, the Federal Reserve Board regulates and oversees Centennial Bank Holdings, Inc. as a bank holding company, and Centennial Bank of the West
and Guaranty Bank as members of the Federal Reserve System.

This regulation and supervision limits the activities in which we may engage.
The purpose of regulation and supervision is primarily to protect the FDICs insurance fund and our depositors and borrowers, rather than our stockholders. Regulatory authorities have extensive discretion in the exercise of their supervisory
and enforcement powers. They may, among other things, impose restrictions on the operation of a banking institution, the classification of assets by such institution and such institutions allowance for loan losses. Regulatory and law
enforcement authorities also have wide discretion and extensive enforcement powers under various consumer protection and civil rights laws, including the Truth-in-Lending Act, the Equal Credit Opportunity Act, the Fair Housing Act, the Real Estate
Settlement Procedures Act and Colorados deceptive acts and practices law. These laws also permit private individual and class action lawsuits and provide for the recovery of attorneys fees in certain instances. No assurance can be given that
the foregoing regulations and supervision will not change so as to affect us adversely.

Our Controls and Procedures May Fail or Be Circumvented

Management regularly reviews and updates our internal controls, disclosure controls and procedures, and corporate governance policies
and procedures. Any system of controls, however well designed and operated, is based in part on certain assumptions and can provide only reasonable, not absolute, assurances that the objectives of the system are met. Any failure or circumvention of
our controls and procedures or failure to comply with regulations related to controls and procedures could have a material adverse effect on our business, results of operations and financial condition.

We Face Risks Associated With Acquisitions

We may
pursue acquisition opportunities in the future. Risks commonly encountered in acquisitions include, among other things:



| |  |  | The difficulty of integrating the operations and personnel of acquired companies and branches.
| | - |  | ----------------------------------------------------------------------------------------------



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| |  |  | The potential disruption of our ongoing business.
| | - |  | -------------------------------------------------



| |  |  | The potential diversion of our managements time and attention.
| | - |  | ---------------------------------------------------------------



| |  |  | The inability of our management to maximize our financial and strategic position by the successful implementation of uniform product offerings and the incorporation
of uniform technology into our product offerings and control systems.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | The inability to maintain uniform standards, controls, procedures and policies and the impairment of relationships with employees and customers as a result of
changes in management.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | The potential exposure to unknown or contingent liabilities of the acquired company.
| | - |  | ------------------------------------------------------------------------------------



| |  |  | Exposure to potential asset quality issues of the acquired company.
| | - |  | -------------------------------------------------------------------



| |  |  | The possible loss of key employees and customers of the acquired company.
| | - |  | -------------------------------------------------------------------------



| |  |  | Difficulty in estimating the value of the acquired company.
| | - |  | -----------------------------------------------------------



| |  |  | Potential changes in banking or tax laws or regulations that may affect the acquired company.
| | - |  | ---------------------------------------------------------------------------------------------

We may not be successful in overcoming these risks or any other problems encountered in connection with acquisitions. Our integration of operations of
banks or branches that we acquire may not be successfully accomplished and may take a significant amount of time. Our inability to improve the operating performance of acquired banks and branches or to integrate successfully their operations could
have a material adverse effect on our business, financial condition, results of operations and cash flows. We expect to hire additional employees and retain consultants to assist with integrating our operations, and we cannot assure you that those
individuals or firms will perform as expected or be successful in addressing these issues.

We Rely on Dividends from Our Subsidiaries for Most of Our
Revenue

Because we are a holding company with no significant assets other than our banks, we currently depend upon dividends from our
banks for a substantial portion of our revenues. Our ability to pay dividends will therefore continue to depend in large part upon our receipt of dividends or other capital distributions from our banks. Our ability to pay dividends is subject to the
restrictions of the Delaware General Corporation Law.

The ability of the banks to pay dividends or make other capital distributions to us
is also subject to the regulatory authority of the Federal Reserve Board and the Colorado Division of Banking, or the CDB, as further described in the Supervision and Regulation section of Item 1 of this report.

From time to time, we may become a party to financing agreements or other contractual arrangements that have the effect of limiting or prohibiting us or
our banks from declaring or paying dividends. Our holding company expenses and obligations with respect to our line of credit with U.S. Bank National Association as well as our trust preferred securities and corresponding subordinated debt
securities issued by us may limit or impair our ability to declare or pay dividends. See Item 5. Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of Equity SecuritiesDividends for
more information on these restrictions.

We are Dependent on Key Personnel and the Loss of One or More of Those Key Personnel Could Harm Our Business

Competition for qualified employees and personnel in the banking industry is intense and there are a limited number of qualified
persons with knowledge of and experience in the Colorado community banking industry. The process of recruiting personnel with the combination of skills and attributes required to carry out our strategies is often lengthy. Our success depends to a
significant degree upon our ability to attract and retain qualified management, loan origination, administrative, marketing and technical personnel and upon the continued contributions of our management and personnel. In particular, our success has
been and continues to



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be highly dependent upon the abilities of our senior executive management, including Daniel M. Quinn, Sherri L. Heronema, Suzanne R. Brennan and Paul W.
Taylor. We believe this management team, comprised of individuals who have worked in the banking industry for many years, is integral to implementing our business plan. The loss of the services of any one of them could harm our business.

Our Information Systems May Experience an Interruption or Breach in Security

We rely heavily on communications and information systems to conduct our business. Any failure, interruption or breach in security of these systems could result in failures or disruptions in our customer relationship
management, general ledger, deposit, loan and other systems. While we have policies and procedures designed to prevent or limit the effect of the failure, interruption or security breach of our information systems, there can be no assurance that any
such failures, interruptions or security breaches will not occur or, if they do occur, that they will be adequately addressed. The occurrence of any failures, interruptions or security breaches of our information systems could damage our reputation,
result in a loss of customer business, subject us to additional regulatory scrutiny, or expose us to civil litigation and possible financial liability, any of which could have a material adverse effect on our financial condition and results of
operations.

We Continually Encounter Technological Change

The financial services industry is continually undergoing rapid technological change with frequent introductions of new technology-driven products and services. The effective use of technology increases efficiency and
enables financial institutions to better serve customers and to reduce costs. Our future success depends, in part, upon our ability to address the needs of our customers by using technology to provide products and services that will satisfy customer
demands, as well as to create additional efficiencies in our operations. Many of our competitors have substantially greater resources to invest in technological improvements. We may not be able to effectively implement new technology-driven products
and services or be successful in marketing these products and services to our customers. Failure to successfully keep pace with technological change affecting the financial services industry could have a material adverse impact on our business and,
in turn, our financial condition and results of operations.

We Are Subject to Claims and Litigation Pertaining to Fiduciary Responsibility

From time to time, customers make claims and take legal action pertaining to our performance of our fiduciary responsibilities. Whether
customer claims and legal action related to our performance of our fiduciary responsibilities are founded or unfounded, if such claims and legal actions are not resolved in a manner favorable to us they may result in significant financial liability
and/or adversely affect the market perception of us and our products and services as well as impact customer demand for our products and services. Any financial liability or reputation damage could have a material adverse effect on our business,
which, in turn, could have a material adverse effect on our financial condition and results of operations.

Severe Weather, Natural Disasters, Acts of
War or Terrorism and Other External Events Could Significantly Impact Our Business

Severe weather, natural disasters, acts of war or
terrorism and other adverse external events could have a significant impact on our ability to conduct business. Such events could affect the stability of our deposit base, impair the ability of borrowers to repay outstanding loans, impair the value
of collateral securing loans, cause significant property damage, result in loss of revenue and/or cause us to incur additional expenses. Although management has established disaster recovery policies and procedures, the occurrence of any such event
could have a material adverse effect on our business, which, in turn, could have a material adverse effect on our financial condition and results of operations.



|ITEM 1B. | UNRESOLVED STAFF COMMENTS
|-------- | -------------------------

None.



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|ITEM 2. | PROPERTIES
|------- | ----------

As of February 28, 2007, we had a
total of 36 branch office properties, 22 of which we owned and 14 of which we leased. All of our properties are located in the Colorado Front Range. Centennial Bank of the West operates through 15 branches, including its principal office located at
4650 Royal Vista Circle, Ft. Collins, Colorado 80528. Guaranty Bank operates through 21 branches, including its principal office located at 1331 Seventeenth Street, Denver, Colorado 80202. Centennials principal office is located at 1331
Seventeenth Street, Suite 300, Denver, Colorado 80202.

We consider our properties to be suitable and adequate for our needs.



|ITEM 3. | LEGAL PROCEEDINGS
|------- | -----------------

On December 31, 2004, an
adversary proceeding was filed against Guaranty Bank and Trust Company in the United States Bankruptcy Court for the District of Colorado, by the trustees of the Will Hoover Company, or the Hoover Company, and William Gordon Hoover, Jr., or Hoover,
seeking to avoid certain transfers that occurred over a four-year period commencing in 1999 under the United States Bankruptcy Code (i.e., the Trustee action). The trustees allege that certain transfers were made by the Hoover Company and
Hoover with actual fraudulent intent, that the transfers were made for less than reasonably equivalent value and occurred at a time when the Hoover Company and Hoover were insolvent, or were rendered insolvent by the transfers, and that certain
other transfers were preferential as to other creditors, were made for less than reasonably equivalent value or were made by the Hoover Company or Hoover with actual fraudulent intent. On September 7, 2005, the Bankruptcy Court granted, in
part, Guaranty Banks initial response and dismissed $8.5 million of the claims relating to alleged transfers for payment of items credited in the check collection process. On November 10, 2005, the trustees filed a motion in District
Court requesting reconsideration of the Bankruptcy Courts order dismissing those claims. The District Court summarily denied the trustees motion on November 21, 2005. The Trustees filed another motion for reconsideration with the
Bankruptcy Court on November 9, 2006, which the court denied. On August 29, 2006, Guaranty Bank filed a motion for partial summary judgment on the trustees claims to recover payments on alleged overdrafts in the amount of
approximately $1.7 million, which the court denied. On September 1, 2006, the trustees amended the complaint to include a claim, based on similar arguments, to recover interest payments on loans to Hoover and the Hoover Company in the amount of
$0.1 million. We continue to vigorously contest the remaining claims, which amount to approximately $2.9 million. We have established a reserve that, after consultation with our counsel, we have determined is appropriate for this litigation.

On July 22, 2005 and August 18, 2005, two separate but similar actions (i.e., the Barnes action and Teper action,
respectively) were filed against Guaranty Bank and a former officer in the Denver District Court, Denver, Colorado by investors who provided funds to Hoover, the Hoover Company or related entities. The investors allege that certain activities of
Guaranty Bank and its former officer with respect to the customer relationship with Hoover, the Hoover Company and related entities aided and abetted Hoover and the Hoover Company in securities violations and violations of the Colorado Organized
Crime Control Act and amounted to a civil conspiracy, causing the investors to incur damages. The court has subsequently dismissed the entire Teper action. The investors in the Barnes action are seeking actual and statutory treble damages, as well
as interest and attorneys fees, against Guaranty Bank and its former officer. The alleged actual losses claimed in connection with the Barnes action are approximately $12.2 million. In a series of preliminary rulings in April 2006, the
District Court dismissed a number of the claims representing alleged damages in excess of $1.0 million. The Company will continue to vigorously defend the Barnes action.

Although the Company has established a reserve for the Trustee action, we cannot determine whether the outcome of each of the above matters will have a material adverse impact on our consolidated financial position or
results of operations. To the extent these suits are not settled or dismissed, the Company will incur ongoing legal costs. If such legal costs will not be covered by insurance, the legal costs incurred could have an adverse impact on our results of
operations.



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In the ordinary course of our business, we are party to various other legal actions, which we believe are
incidental to the operation of our business. Although the ultimate outcome and amount of liability, if any, with respect to these other legal actions to which we are currently a party cannot presently be ascertained with certainty, in the opinion of
management, based upon information currently available to us, any resulting liability is not likely to have a material adverse effect on the Companys consolidated financial position, results of operations or cash flows.



|ITEM 4. | SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
|------- | ---------------------------------------------------

No matters were submitted to a vote of the security holders during the fourth quarter 2006.



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PART II



|ITEM 5. | MARKET FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
|------- | ------------------------------------------------------------------------------------------------------------

Common Stock Market Prices

Our common stock became
publicly traded on October 3, 2005, and is traded on the Nasdaq Global Select Market (Nasdaq) under the symbol CBHI. The table below sets forth the high and low sales prices per share of our common stock as reported by
Nasdaq for each quarter since our common stock became publicly traded. Prior to October 3, 2005, there was no established trading market for our stock.



|               |  |              |       |     |   |      
|-------------- |  | ------------ | ----- | --- | - | -----
|               |  | Sales Prices
|               |  | High         |       | Low
|Year/Quarter:  |  |              |       |     |   |      
|2006           |  |              |       |     |   |      
|Fourth quarter |  | $            | 10.01 |     | $ | 8.60 
|Third quarter  |  |              | 10.73 |     |   | 9.30 
|Second quarter |  |              | 11.90 |     |   | 9.47 
|First quarter  |  |              | 12.62 |     |   | 10.76
|2005           |  |              |       |     |   |      
|Fourth quarter |  |              | 13.05 |     |   | 10.75

On March 16, 2007, the closing price of our common stock on Nasdaq was $8.61 per share. As of
that date, we believe, based on the records of our transfer agent, that there were approximately 360 record holders of our common stock.

Dividends

We have never declared or paid cash dividends on our common stock. Our board of directors reviews the appropriateness of declaring or
paying cash dividends on an ongoing basis. Any determination to declare or pay dividends in the future will be at the discretion of our board of directors. Our board of directors will take into account such matters as general business conditions,
our financial results, capital requirements, contractual, legal and regulatory restrictions on the payment of dividends by us to our stockholders or by our subsidiaries to the holding company, and such other factors as our board of directors may
deem relevant. Our board of directors has determined currently to use our excess capital on repurchases of our common stock. See Repurchases of Common Stock below under this Item 5.

Our ability to pay dividends is subject to the restrictions of the Delaware General Corporation Law. Because we are a holding company with no significant
assets other than our bank subsidiaries, we currently depend upon dividends from our bank subsidiaries for a substantial portion of our revenues. Our ability to pay dividends will therefore continue to depend in large part upon our receipt of
dividends or other capital distributions from our bank subsidiaries. See Supervision and Regulation in Item 1 of this report for a discussion of potential regulatory limitations on the holding companys receipt of funds from
its bank subsidiaries.

The ability of our subsidiary banks to pay dividends or make other capital distributions to us is also subject to
the regulatory authority of the Federal Reserve Board and the Colorado Division of Banking, or the CDB. It is possible, depending upon the financial condition of the bank in question, and other factors, that Federal Reserve Board and/or the CDB
could assert that payment of dividends or other payments is an unsafe or unsound practice. As part of our capital and cash management practices at the holding company, we will utilize our bank subsidiaries excess capital above the
well-capitalized requirement through the payment of dividends to the holding company. See Item 1. BusinessSupervision and RegulationDividends.



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In addition, the Companys ability to pay dividends to its stockholders is limited by certain
provisions of its pledge agreement with U.S. Bank National Association in connection with our line of credit. The agreement provides that if any default occurs and is continuing, all cash dividends distributed by Guaranty Bank shall be delivered to
U.S. Bank and held as collateral under the agreement.

Our ability to pay dividends is also limited by certain covenants contained in the
indentures governing trust preferred securities that have been issued, and in the debentures underlying the trust preferred securities. The indentures provide that if an Event of Default (as defined in the indentures) has occurred and is continuing,
or if we are in default with respect to any obligations under our guarantee agreement which covers payments of the obligations on the trust preferred securities, or if we give notice of any intention to defer payments of interest on the debentures
underlying the trust preferred securities, then we may not, among other restrictions, declare or pay any dividends (other than a dividend payable by the bank subsidiaries to the holding company) with respect to our common stock.

Securities Authorized for Issuance Under Equity Compensation Plans

The following table provides information as of December 31, 2006, regarding securities issued and to be issued under our equity compensation plans that were in effect during the year ended December 31, 2006:



|                                                           |  |                              |  |                                                                                       |     |  |                                                                         |  |                                                                                                                                    |       
|---------------------------------------------------------- |  | ---------------------------- |  | ------------------------------------------------------------------------------------- | --- |  | ----------------------------------------------------------------------- |  | ---------------------------------------------------------------------------------------------------------------------------------- | ------
|                                                           |  | Plan Category                |  | Number ofSecurities to beIssued UponExercise ofOutstandingOptions, Warrantsand
Rights |     |  | Weighted-AverageExercise Priceof OutstandingOptions, Warrantsand Rights |  | Number ofSecuritiesRemainingAvailable forFuture IssuanceUnder
EquityCompensationPlans (ExcludingSecurities Reflectedin Column (a)) |       
|                                                           |  |                              |  | (a)                                                                                   |     |  | (b)                                                                     |  | (c)                                                                                                                                |       
|Equity compensation plans approved by security holders     |  | 2005 Stock Incentive Plan(1) |  |                                                                                      | (2) |  |                                                                        |  | 741,377                                                                                                                            | (3)(4)
|Equity compensation plans not approved by security holders |  | None                         |  |                                                                                      |     |  |                                                                        |  |                                                                                                                                   |       
|                                                           |  |                              |  |                                                                                       |     |  |                                                                         |  |                                                                                                                                    |       
|                                                           |  |                              |  |                                                                                      |     |  |                                                                        |  | 741,377                                                                                                                            |       
|                                                           |  |                              |  |                                                                                       |     |  |                                                                         |  |                                                                                                                                    |       

---

|(1) | The 2005 Stock Incentive Plan (the Incentive Plan) was approved by the stockholders of the Company at our 2005 Annual Meeting of Stockholders.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | Does not include the 1,725,825 shares of unvested stock grants outstanding as of December 31, 2006 with an exercise price of zero.
|--- | ----------------------------------------------------------------------------------------------------------------------------------

|(3) | The total number of shares of common stock that have been approved for issuance pursuant to awards granted or which may be granted in the future under the Incentive Plan is
2,500,000 shares. The number of securities remaining available for future issuance has been reduced by 1,758,623 shares, which represents the sum of the number of vested shares and the number of unvested shares of service and performance stock
awards outstanding at December 31, 2006.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(4) | All of the 741,377 shares remaining available for issuance under the Incentive Plan may be issued not only for future grants of options, warrants and rights, but also for future
stock awards. The Companys current practice is to grant only awards of stock. While the Company has not issued any stock options, warrants or rights, it may do so in the future. In 2007, through March 16, 2007, there were net forfeitures
of 25,900 shares of performance and restricted stock awards, increasing the shares remaining available for issuance under the Incentive Plan to 767,277 shares.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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##### Table of Contents

Repurchases of Common Stock

Stock repurchase programs allow us to proactively manage our capital position and return excess capital to stockholders. The following table provides information with respect to purchases made by or on behalf of the
Company or any affiliated purchaser (as defined in Rule 10b-18(a)(3) under the Securities Exchange Act of 1934) of our common stock during the fourth quarter of 2006.



|                                |  |                       |  |                             |      |                                                                      |           |                                                                                        |          
|------------------------------- |  | --------------------- |  | --------------------------- | ---- | -------------------------------------------------------------------- | --------- | -------------------------------------------------------------------------------------- | ---------
|                                |  | Total SharesPurchased |  | Average Price Paidper Share |      | Total Number ofShares Purchased asPart of PubliclyAnnounced Plans(1) |           | Maximum Numberof Shares that MayYet be PurchasedUnder the Plans atThe End of thePeriod
|October 1 to October 31, 2006   |  | 435,890               |  | $                           | 9.77 |                                                                      | 435,890   |                                                                                        | 2,720,510
|November 1 to November 30, 2006 |  | 790,000               |  | $                           | 9.20 |                                                                      | 790,000   |                                                                                        | 1,930,510
|December 1 to December 31, 2006 |  | 105,000               |  | $                           | 9.52 |                                                                      | 105,000   |                                                                                        | 1,825,510
|                                |  |                       |  |                             |      |                                                                      |           |                                                                                        |          
|Total                           |  | 1,330,890             |  | $                           | 9.41 |                                                                      | 1,330,890 |                                                                                        | 1,825,510
|                                |  |                       |  |                             |      |                                                                      |           |                                                                                        |          

---

|(1) | On March 2, 2006, we announced a stock repurchase program to repurchase up to 3,000,000 shares of our common stock from time to time over a one-year period in the open market
or through private transactions. All shares under this plan were repurchased by November 2006. On October 25, 2006, we announced a new stock repurchase program to repurchase up to 2,500,000 shares of our common stock from time to time over a
one-year period in the open market or through private transactions.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

On February 13, 2007, we announced the
authorization of an additional 924,490 shares to our existing stock repurchase program announced in October 2006, to be purchased from time to time over a one-year period in the open market or through private transactions in accordance with
applicable regulations of the Securities and Exchange Commission. Under the increased program, we are authorized to repurchase up to 2,750,000 shares.



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Performance Graph

Our common stock trades on the NASDAQ Global Select Market under the symbol CBHI. The following graph shows a comparison from October 3, 2005 (the date the Companys common stock commenced
trading on NASDAQ) through December 31, 2006 of cumulative total return for the Companys common stock, the NASDAQ Stock Market (U.S.) Index and NASDAQ Bank Stocks Index. Such returns are based on historical results and are not intended to
suggest future performance. Data for the NASDAQ Stock Market (U.S.) Index and NASDAQ Bank Stocks Index assumes reinvestment of dividends. The Company has never paid dividends on its common stock. The total return on the Companys common stock
is determined based on the change in the price of the Companys common stock and assumes an original investment of $100. The total return on each of the indicated indices also assumes an original investment in the index of $100.

LOGO



|                           |  |          |  |          |  |         
|-------------------------- |  | -------- |  | -------- |  | --------
|                           |  | Date    
|Index                      |  | 10/03/05 |  | 12/30/05 |  | 12/29/06
|NASDAQ Bank Stocks         |  | 100      |  | 102      |  | 114     
|NASDAQ Stock Market (U.S.) |  | 100      |  | 102      |  | 113     
|CBHI                       |  | 100      |  | 102      |  | 78      



25



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##### Table of Contents

|ITEM 6. | SELECTED FINANCIAL DATA
|------- | -----------------------

The following table sets
forth certain of our financial and statistical information for each of the years in the five-year period ended December 31, 2006. This data should be read in conjunction with our audited consolidated financial statements as of December 31,
2006 and 2005, and for each of the years in the three-year period ended December 31, 2006, and related Notes to Consolidated Financial Statements contained in Item 8. Financial Statements and Supplementary Data. The financial
information for Centennial Bank Holdings for the year ended December 31, 2004 separately reflects the activity for the Company for the period July 17, 2004 to December 31, 2004, which we refer to as Successor, and our predecessor for
the period January 1, 2004 to July 16, 2004, which we refer to as Predecessor. All financial information relating to the Company prior to July 17, 2004 is for our Predecessor.



|                                                             |  |                                                             |            |               |                                          |            |                                      |  |      |                         |      |   |           |   |  |   |           |  |   |          
|------------------------------------------------------------ |  | ----------------------------------------------------------- | ---------- | ------------- | ---------------------------------------- | ---------- | ------------------------------------ |  | ---- | ----------------------- | ---- | - | --------- | - |  | - | --------- |  | - | ---------
|                                                             |  | (Successor)                                                 |            | (Predecessor)
|                                                             |  | Year Ended December 31,                                     |            |               | Period July 17, 2004to December 31, 2004 |            | PeriodJanuary 1,2004
toJuly 16, 2004 |  |      | Year Ended December 31,
|                                                             |  | 2006                                                        |            | 2005          |                                          |            |                                      |  | 2003 |                         | 2002
|                                                             |  | (In thousands, except share, per share and percentage data)
|Consolidated Statement of Income Data:                       |  |                                                             |            |               |                                          |            |                                      |  |      |                         |      |   |           |   |  |   |           |  |   |          
|Interest income                                              |  | $                                                           | 173,781    |               | $                                        | 139,563    |                                      |  | $    | 19,052                  |      | $ | 22,912    |   |  | $ | 46,100    |  | $ | 51,179   
|Interest expense                                             |  |                                                             | 57,584     |               |                                          | 31,694     |                                      |  |      | 3,762                   |      |   | 6,797     |   |  |   | 16,605    |  |   | 20,990   
|                                                             |  |                                                             |            |               |                                          |            |                                      |  |      |                         |      |   |           |   |  |   |           |  |   |          
|Net interest income                                          |  |                                                             | 116,197    |               |                                          | 107,869    |                                      |  |      | 15,290                  |      |   | 16,115    |   |  |   | 29,495    |  |   | 30,189   
|Provision for credit losses                                  |  |                                                             | 4,290      |               |                                          | 3,400      |                                      |  |      |                        |      |   | 4,700     |   |  |   | 900       |  |   | 3,950    
|                                                             |  |                                                             |            |               |                                          |            |                                      |  |      |                         |      |   |           |   |  |   |           |  |   |          
|Net interest income after provision for credit losses        |  |                                                             | 111,907    |               |                                          | 104,469    |                                      |  |      | 15,290                  |      |   | 11,415    |   |  |   | 28,595    |  |   | 26,239   
|Noninterest income                                           |  |                                                             | 12,717     |               |                                          | 10,317     |                                      |  |      | 1,784                   |      |   | 2,426     |   |  |   | 4,589     |  |   | 3,589    
|Noninterest expense                                          |  |                                                             | 90,908     |               |                                          | 91,983     |                                      |  |      | 10,947                  |      |   | 14,514    |   |  |   | 22,048    |  |   | 21,724   
|                                                             |  |                                                             |            |               |                                          |            |                                      |  |      |                         |      |   |           |   |  |   |           |  |   |          
|Income (loss) before income taxes                            |  |                                                             | 33,716     |               |                                          | 22,803     |                                      |  |      | 6,127                   |      |   | (673      | ) |  |   | 11,136    |  |   | 8,104    
|Income tax expense                                           |  |                                                             | 11,286     |               |                                          | 7,639      |                                      |  |      | 2,331                   |      |   | 411       |   |  |   | 4,231     |  |   | 3,082    
|                                                             |  |                                                             |            |               |                                          |            |                                      |  |      |                         |      |   |           |   |  |   |           |  |   |          
|Income (loss) from continuing operations                     |  |                                                             | 22,430     |               |                                          | 15,164     |                                      |  |      | 3,796                   |      |   | (1,084    | ) |  |   | 6,905     |  |   | 5,022    
|Income (loss) from discontinued operations, net of tax       |  |                                                             | 1,988      |               |                                          | (482       | )                                    |  |      |                        |      |   |          |   |  |   |          |  |   |         
|                                                             |  |                                                             |            |               |                                          |            |                                      |  |      |                         |      |   |           |   |  |   |           |  |   |          
|Net income (loss)                                            |  | $                                                           | 24,418     |               | $                                        | 14,682     |                                      |  | $    | 3,796                   |      | $ | (1,084    | ) |  | $ | 6,905     |  | $ | 5,022    
|                                                             |  |                                                             |            |               |                                          |            |                                      |  |      |                         |      |   |           |   |  |   |           |  |   |          
|                                                             |  |                                                             |            |               |                                          |           
|Share Data:                                                  |  |                                                             |            |               |                                          |            |                                      |  |      |                         |      |   |           |   |  |   |           |  |   |          
|Basic earnings (loss) per share                              |  | $                                                           | 0.42       |               | $                                        | 0.27       |                                      |  | $    | 0.20                    |      | $ | (0.70     | ) |  | $ | 4.45      |  | $ | 3.22     
|Diluted earnings (loss) per share                            |  | $                                                           | 0.42       |               | $                                        | 0.27       |                                      |  | $    | 0.20                    |      | $ | (0.70     | ) |  | $ | 4.37      |  | $ | 3.16     
|Basic earnings (loss) from continuing operations per share   |  | $                                                           | 0.39       |               | $                                        | 0.28       |                                      |  | $    | 0.20                    |      | $ | (0.70     | ) |  | $ | 4.45      |  | $ | 3.22     
|Diluted earnings (loss) from continuing operations per share |  | $                                                           | 0.39       |               | $                                        | 0.28       |                                      |  | $    | 0.20                    |      | $ | (0.70     | ) |  | $ | 4.37      |  | $ | 3.16     
|Book value per share                                         |  | $                                                           | 10.30      |               | $                                        | 10.13      |                                      |  | $    | 9.85                    |      | $ | 37.17     |   |  | $ | 38.22     |  | $ | 36.46    
|Weighted average shares outstandingbasic                    |  |                                                             | 57,539,996 |               |                                          | 54,222,327 |                                      |  |      | 19,199,601              |      |   | 1,554,873 |   |  |   | 1,550,457 |  |   | 1,558,905
|Weighted average shares outstandingdiluted                  |  |                                                             | 57,636,365 |               |                                          | 54,295,083 |                                      |  |      | 19,199,601              |      |   | 1,554,873 |   |  |   | 1,580,086 |  |   | 1,586,987
|Common shares outstanding at end of period                   |  |                                                             | 57,236,795 |               |                                          | 60,403,764 |                                      |  |      | 52,333,334              |      |   | 1,557,568 |   |  |   | 1,545,948 |  |   | 1,572,146



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|                                                 |  |                                                             |           |   |                                                                             |   |           |                                       |      |   |           |      |  |   |         |   |  |        
|------------------------------------------------ |  | ----------------------------------------------------------- | --------- | - | --------------------------------------------------------------------------- | - | --------- | ------------------------------------- | ---- | - | --------- | ---- |  | - | ------- | - |  | -------
|                                                 |  | (Successor)                                                 |           |   | (Predecessor)                                                              
|                                                 |  | At or for the Year Ended December 31,                       |           |   | At December 31, 2004or for the periodfrom July 17, 2004 toDecember 31,
2004 |   |           | At or for the Year Ended December 31,
|                                                 |  | 2006                                                        |           |   | 2005                                                                        |   |           |                                       | 2003 |   |           | 2002
|                                                 |  | (In thousands, except share, per share and percentage data)
|Consolidated Balance Sheet Data:                 |  |                                                             |           |   |                                                                             |   |           |                                       |      |   |           |      |  |   |         |   |  |        
|Cash and cash equivalents                        |  | $                                                           | 49,620    |   |                                                                             | $ | 98,942    |                                       |      | $ | 90,927    |      |  | $ | 23,731  |   |  | $27,202
|Investments and other securities                 |  |                                                             | 200,322   |   |                                                                             |   | 175,753   |                                       |      |   | 145,502   |      |  |   | 33,588  |   |  | 20,547 
|Net loans (including loans held for sale)        |  |                                                             | 1,919,588 |   |                                                                             |   | 2,046,938 |                                       |      |   | 1,624,100 |      |  |   | 619,812 |   |  | 660,628
|Total assets                                     |  |                                                             | 2,720,600 |   |                                                                             |   | 2,980,757 |                                       |      |   | 2,399,201 |      |  |   | 708,677 |   |  | 745,787
|Deposits                                         |  |                                                             | 1,960,105 |   |                                                                             |   | 2,048,352 |                                       |      |   | 1,678,499 |      |  |   | 580,435 |   |  | 639,530
|Debt                                             |  |                                                             | 134,340   |   |                                                                             |   | 215,872   |                                       |      |   | 109,341   |      |  |   | 66,016  |   |  | 44,704 
|Stockholders equity                             |  |                                                             | 589,459   |   |                                                                             |   | 598,748   |                                       |      |   | 515,414   |      |  |   | 59,089  |   |  | 57,316 
|                                                 |  |                                                             |           |   |                                                                            
|Selected Other Balance Sheet Data:               |  |                                                             |           |   |                                                                             |   |           |                                       |      |   |           |      |  |   |         |   |  |        
|Average assets                                   |  |                                                             | 2,850,533 |   |                                                                             |   | 2,558,794 |                                       |      |   | 752,303   |      |  |   | 719,499 |   |  | 727,277
|Average earning assets                           |  |                                                             | 2,172,141 |   |                                                                             |   | 1,956,050 |                                       |      |   | 657,485   |      |  |   | 679,562 |   |  | 684,474
|Average stockholders equity                     |  |                                                             | 597,491   |   |                                                                             |   | 542,684   |                                       |      |   | 119,776   |      |  |   | 58,227  |   |  | 54,629 
|                                                 |  |                                                             |           |   |                                                                            
|Selected Financial Ratios:                       |  |                                                             |           |   |                                                                             |   |           |                                       |      |   |           |      |  |   |         |   |  |        
|Return on average assets (a)                     |  |                                                             | 0.86      | % |                                                                             |   | 0.57      | %                                     |      |   | 0.36      | %(b) |  |   | 0.96    | % |  | 0.69%  
|Return on average stockholders equity (c)       |  |                                                             | 4.09      | % |                                                                             |   | 2.71      | %                                     |      |   | 2.26      | %(d) |  |   | 11.86   | % |  | 9.19%  
|Net interest margin (e)                          |  |                                                             | 5.35      | % |                                                                             |   | 5.51      | %                                     |      |   | 5.06      | %(f) |  |   | 4.34    | % |  | 4.41%  
|Efficiency ratio (g)                             |  |                                                             | 61.35     | % |                                                                             |   | 67.56     | %                                     |      |   | 64.12     | %    |  |   | 64.69   | % |  | 64.13% 
|                                                 |  |                                                             |           |   |                                                                            
|Selected Asset Quality Ratios:                   |  |                                                             |           |   |                                                                             |   |           |                                       |      |   |           |      |  |   |         |   |  |        
|Nonperforming assets to total assets             |  |                                                             | 1.25      | % |                                                                             |   | 1.05      | %                                     |      |   | 0.84      | %    |  |   | 2.74    | % |  | 2.77%  
|Nonperforming loans to total loans               |  |                                                             | 1.69      | % |                                                                             |   | 1.44      | %                                     |      |   | 0.88      | %    |  |   | 2.44    | % |  | 2.69%  
|Allowance for loan losses to total loans         |  |                                                             | 1.43      | % |                                                                             |   | 1.33      | %                                     |      |   | 1.52      | %    |  |   | 1.22    | % |  | 1.38%  
|Allowance for loan losses to nonperforming loans |  |                                                             | 84.91     | % |                                                                             |   | 92.39     | %                                     |      |   | 173.78    | %    |  |   | 49.90   | % |  | 51.28% 
|Net charge-offs to average loans                 |  |                                                             | 0.21      | % |                                                                             |   | 0.23      | %                                     |      |   | 1.15      | %(h) |  |   | 0.38    | % |  | 0.52%  

---

|(a) | Return on average assets is determined by dividing net income by average assets.
|--- | --------------------------------------------------------------------------------

|(b) | Represents net income for the period July 17, 2004 to December 31, 2004 divided by Successor average assets.
|--- | ------------------------------------------------------------------------------------------------------------

|(c) | Return on average stockholders equity is determined by dividing net income by average stockholders equity.
|--- | ------------------------------------------------------------------------------------------------------------

|(d) | Represents Successor net income divided by Successor average stockholders equity.
|--- | ----------------------------------------------------------------------------------

|(e) | Net interest margin is determined by dividing net interest income (fully taxable equivalent) by average interest-earning assets.
|--- | --------------------------------------------------------------------------------------------------------------------------------

|(f) | Represents net income for the period July 17, 2004 to December 31, 2004 divided by Successor average interest-earning assets.
|--- | -----------------------------------------------------------------------------------------------------------------------------

|(g) | Efficiency ratio is determined by dividing total noninterest expense, less amortization expense, by an amount equal to net interest income (fully taxable equivalent) plus
noninterest income.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(h) | Represents net charge-offs for the period July 17, 2004 to December 31, 2004 divided by Successor average loans.
|--- | ----------------------------------------------------------------------------------------------------------------



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|ITEM 7. | MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|------- | -------------------------------------------------------------------------------------

This section should be read in conjunction with the disclosure regarding Forward-Looking Statements and Factors that Could Affect Future
Results set forth in the beginning of Part I of this report, as well as the discussion set forth in Item 1A. Risk Factors and Item 8. Financial Statements and Supplementary Data.

Overview

We are a financial holding company and a
bank holding company providing banking and other financial services throughout our targeted Colorado markets to consumers and to small- and medium-sized businesses, including the owners and employees of those businesses. We offer an array of banking
products and services to the communities we serve, including accepting time and demand deposits, originating commercial loans including energy loans, real estate loans, including construction and mortgage loans, Small Business Administration
guaranteed loans and consumer loans. We derive our income primarily from interest received on real estate related loans, commercial loans and leases and consumer loans and, to a lesser extent, from fees on the sale or referral of loans, interest on
investment securities and fees received in connection with servicing loan and deposit accounts. Our major operating expenses are the interest we pay on deposits and borrowings and general operating expenses. We rely primarily on locally generated
deposits to provide us with funds for making loans.

We are subject to competition from other financial institutions and our operating
results, like those of other financial institutions operating exclusively or primarily in Colorado, are significantly influenced by economic conditions in Colorado, including the strength of the real estate market. In addition, both the fiscal and
regulatory policies of the federal government and regulatory authorities that govern financial institutions and market interest rates also impact our financial condition, results of operations and cash flows.

On July 16, 2004, in a cash purchase funded by the proceeds of our sale of 18,500,000 shares of our common stock, we acquired our Predecessor and
changed our name to Centennial Bank Holdings, Inc. On December 31, 2004, we acquired Guaranty Corporation, including its bank subsidiaries Guaranty Bank and Trust Company, First National Bank of Strasburg and Collegiate Peaks Bank. On
April 14, 2005, we merged First National Bank of Strasburg into Guaranty Bank. We sold Collegiate Peaks Bank on November 1, 2006. We refer to Guaranty Corporation and its subsidiaries as Guaranty and to Guaranty Bank and Trust
Company (including the merged First National Bank of Strasburg) as Guaranty Bank.

The Companys financial statements as
of and for the year ended December 31, 2004 present the consolidated financial position of Centennial at December 31, 2004, which includes Guaranty, and the results of operations of the Predecessor from January 1, 2004 through
July 16, 2004 and the Successor from July 17, 2004 through December 31, 2004. The results of operations for 2004 with respect to either the Successor or Predecessor do not include Guaranty. With respect to the year ended
December 31, 2004, we present results for our Predecessor for the period January 1, 2004 through July 16, 2004, for the Company (Successor) for the period July 17, 2004 through December 31, 2004, and for the year ended
December 31, 2004, combined results of operations of the Company (Successor) and our Predecessor. We believe that presenting combined results of operations information for the year ended December 31, 2004 is helpful to our investors. In
light of the continuity of management from our Predecessor to our Successor, the information for the year ended December 31, 2004 was combined in a manner similar to entities under common control.

On October 1, 2005, we consummated our stock-for-stock acquisition of First MainStreet Financial, Ltd., a financial holding company, pursuant to
which its wholly owned subsidiary, First MainStreet Bank, N.A., merged with and into Centennial Bank of the West. First MainStreet Financials other wholly owned subsidiary, First MainStreet Insurance, Ltd., an independent insurance agency,
became a wholly owned subsidiary of Centennial. We subsequently sold the insurance agency on March 1, 2006. The acquisition of First MainStreet resulted in the issuance of 9,517,727 shares of our common stock. We acquired $245.2 million of
loans and $332.8 million of deposits as a result of the First MainStreet acquisition.



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On November 1, 2005, we completed the acquisition of Foothills Bank, which was merged into Guaranty
Bank. Foothills had $90.8 million in loans and deposits of $114.2 million at consummation of the transaction.

On November 1, 2006, we
consummated the sale of Collegiate Peaks Bank, which had been classified as held for sale since December 31, 2004. The sale of Collegiate Peaks Bank accounted for a decrease in total assets of $98.2 million from December 31, 2005. See
Note 22 of the Notes to Consolidated Financial Statements contained in Item 8. Financial Statements and Supplementary Data.



|                                                                                                                                                                                               |  |                   
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------------
|Acquisitions                                                                                                                                                                                   |  |                   
|Entity                                                                                                                                                                                         |  | Date of Completion
|Centennial Bank Holdings, Inc. (Predecessor)  Centennial Bank of the West                                                                                                                     |  | July 16, 2004     
|Guaranty Corporation  Guaranty Bank and Trust Company  First National Bank of Strasburg (merged into Guaranty Bank on April 14, 2005)  Collegiate Peaks Bank (divested on November 1, 2006) |  | December 31, 2004 
|First MainStreet Financial, Ltd.                                                                                                                                                               |  | October 1, 2005   
| First MainStreet Bank, N.A. (Merged into Centennial Bank of the West)                                                                                                                        |  |                   
| First MainStreet Insurance, Ltd. (divested on March 1, 2006)                                                                                                                                 |  |                   
|Foothills Bank (merged into Guaranty Bank)                                                                                                                                                     |  | November 1, 2005  
|                                                                                                                                                                                               | 
|Divestitures                                                                                                                                                                                   |  |                   
|Entity                                                                                                                                                                                         |  | Date of Completion
|First MainStreet Insurance, Ltd. (asset sale)                                                                                                                                                  |  | March 1, 2006     
|Collegiate Peaks Bank                                                                                                                                                                          |  | November 1, 2006  

Application of Critical Accounting Policies and Accounting Estimates

Our accounting policies are integral to understanding the financial results reported. Our most complex accounting policies require managements
judgment to ascertain the valuation of assets, liabilities, commitments and contingencies. We have established detailed policies and control procedures that are intended to ensure valuation methods are well controlled and consistently applied from
period to period. In addition, the policies and procedures are intended to ensure that the process for changing methodologies occurs in an appropriate manner. The following is a brief description of our current accounting policies that we believe
are critical or involve significant management judgment.

Allowance for Loan Losses

The loan portfolio is the largest category of assets on our balance sheets. We determine probable losses inherent in our loan portfolio and establish an
allowance for those losses by considering factors including characteristics of certain identified classified loans, historical loss rates, expected cash flows and estimated collateral values. In assessing these factors, we use organizational history
and experience with credit decisions and related outcomes. The allowance for loan losses represents our best estimate of losses inherent in the existing loan portfolio. The allowance for loan losses is increased by the provision for loan losses
charged to expense and reduced by loans charged off, net of recoveries. We evaluate our allowance for loan losses quarterly. If our underlying assumptions later prove to be inaccurate based on subsequent loss evaluations, the allowance for loan
losses is adjusted.

We estimate the appropriate level of allowance for loan losses by separately evaluating impaired and nonimpaired
loans. A specific allowance is assigned to an impaired loan when expected cash flows or collateral do not justify the carrying amount of the loan. The methodology used to assign an allowance to a nonimpaired



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loan is much more subjective. Generally, the allowance assigned to nonimpaired loans is determined by applying historical loss rates to existing loans with
similar risk characteristics and by exercising judgment to assess the value of collateral on loans, the impact of factors such as changes in economic conditions, changes in credit policies or underwriting standards, and changes in the level of
credit risk associated with specific industries and markets. Because the economic and business climate in any given industry or market, and its impact on any given borrower, can change rapidly, the risk profile of the loan portfolio is continually
assessed and adjusted when appropriate. Notwithstanding these procedures, there still exists the possibility that our assessment could prove to be significantly incorrect and that an immediate adjustment to the allowance for loan losses would be
required.

We estimate the appropriate level of loan loss allowance by conducting a detailed review of a number of smaller portfolio
segments that comprise our loan portfolios. We segment the loan portfolio into as many components as practical. Each component would normally have similar characteristics, such as risk classification, past due status, type of loan, industry or
collateral. The risk profile of certain segments of the loan portfolio may be improving, while the risk profile of others may be deteriorating. As a result, changes in the appropriate level of the allowance for different segments may offset one
another. Adjustments to the allowance represent the aggregate impact from the analysis of all loan segments.

Investment in Debt and Equity Securities

We classify our investments in debt and equity securities as either held-to-maturity or available-for-sale in accordance with Statement
of Financial Accounting Standards No. 115, Accounting for Certain Investments in Debt and Equity Securities. Securities classified as held-to-maturity are recorded at cost or amortized cost. Available-for-sale securities are carried at fair
value. Fair value calculations are based on quoted market prices when such prices are available. If quoted market prices are not available, estimates of fair value are computed using a variety of techniques, including extrapolation from the quoted
prices of similar instruments or recent trades for thinly traded securities, fundamental analysis, or through obtaining purchase quotes. Due to the subjective nature of the valuation process, it is possible that the actual fair values of these
investments could differ from the estimated amounts, thereby affecting our financial position and results of operations. If the estimated value of investments is less than the cost or amortized cost, we evaluate whether an event or change in
circumstances has occurred that may have a significant adverse effect on the fair value of the investment. If such an event or change has occurred and we determine that the impairment is other-than-temporary, we expense the impairment of the
investment in the period in which the event or change occurred.

Impairment of Goodwill and Intangible Assets

As a result of our acquisition activity, goodwill, an intangible asset with an indefinite life, and core deposit and customer relationships, which are
intangible assets with a finite life, have been added to our balance sheet. Core deposit and customer relationship intangibles arising from our acquisitions are being amortized over their estimated useful lives of up to 15 years. Intangible assets,
including our core deposit intangible assets, with finite lives will be tested for impairment when a change in events or circumstances indicate that its carrying amount may not be recoverable. Goodwill is evaluated for impairment annually, unless
there are factors present that may be indicative of a potential impairment, in which case, a goodwill impairment test is performed more frequently than annually.

The process of evaluating goodwill for impairment requires us to make several assumptions and estimates. We begin the valuation process by identifying the reporting units related to the goodwill. We identified one
reporting unit, banking operations, in relation to our goodwill asset. If our impairment analysis indicates that the fair value of our reporting unit is less than its carrying amount, then we will have to write down the amount of goodwill we carry
on our balance sheet through a charge to our operations.

Our impairment analysis estimated the value of our reporting unit using a market
transaction approach and discounted cash flow model. Each of these valuation methods includes assumptions, including forecasts of future



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earnings of our reporting unit, discount rates, market trends and market multiples of companies engaged in similar lines of business. If any of the
assumptions used in the valuation of our goodwill change over time, the estimated value assigned to our goodwill could differ significantly, including a decrease in the value of goodwill which would result in a charge to our operations. The most
significant element in the goodwill evaluation is the level of our earnings. A decline in our earnings could cause our value to decline, which may not be sufficient to support the carrying value of goodwill.

Deferred Income Tax Assets

Our deferred income tax
assets arise from differences in the dates that items of income and expense enter into our reported income and taxable income. Deferred tax assets are established for these items as they arise based on our judgments that they are realizable. From an
accounting standpoint, we determine whether a deferred tax asset is realizable based on the historical level of our taxable income and estimates of our future taxable income. In most cases, the realization of the deferred tax asset is based on our
future profitability. If we were to experience either reduced profitability or operating losses in a future period, the realization of our deferred tax assets would be questionable. In such an instance, we could be required to increase the valuation
reserve on our deferred tax assets by charging earnings.

Purchase Accounting

In June 2001, the Financial Accounting Standards Board issued SFAS No. 141, Business Combinations (SFAS No. 141), and SFAS No. 142,
Goodwill and Other Intangible Assets (SFAS No. 142). SFAS No. 141 requires that the purchase method of accounting be used for all business combinations initiated after June 30, 2001 as well as all purchase method business combinations
completed after June 30, 2001. SFAS No. 141 also specifies that intangible assets acquired in a purchase method business combination must meet certain criteria to be recognized and reported apart from goodwill. In connection with our
mergers and acquisitions, we estimate the fair value of assets and liabilities as required, including intangible assets, based on various methods, including market prices, discounted cash flows, and other present value valuation techniques. The
valuation methods we use may require management to make numerous estimates and assumptions.

This discussion has highlighted those
accounting policies that we consider to be critical to our financial reporting process. However, all the accounting policies are important, and therefore you are encouraged to review each of the policies included in Note 2 to our consolidated
financial statements to gain a better understanding of how our financial performance is measured and reported.



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RESULTS OF OPERATIONS

The following table presents certain key aspects of our performance. The comparability of these financial measures are significantly impacted by our fourth quarter 2005 acquisitions of First MainStreet and Foothills,
our December 31, 2004 acquisition of Guaranty Corporation and the July 2004 acquisition of our Predecessor. Our operating results for 2004 reflect only the operations of Centennial Bank of the West.



|                                                       |  |                                   |         |   |                                         |   |         |                                       |  |      |                                  |      |             |                           |        |             |  |   |        |      |  |   |        |   |  |   |        |  
|------------------------------------------------------ |  | --------------------------------- | ------- | - | --------------------------------------- | - | ------- | ------------------------------------- |  | ---- | -------------------------------- | ---- | ----------- | ------------------------- | ------ | ----------- |  | - | ------ | ---- |  | - | ------ | - |  | - | ------ | -
|                                                       |  | (Successor)                       |         |   | (Predecessor)                           |   |         |                                       |  |      |                                  |     
|                                                       |  | Year EndedDecember 31,            |         |   | Period July 17,2004
toDecember 31, 2004 |   |         | Period January 1,2004 toJuly
16, 2004 |  |      | CombinedPredecessor andSuccessor |      |             | ChangeIncrease(Decrease) |       
|                                                       |  | 2006                              |         |   | 2005                                    |   |         |                                       |  | 2004 |                                  |      | 2006 v 2005 |                           |        | 2005 v 2004 | 
|                                                       |  | (In thousands, except share data) |        
|Results of Operations:                                 |  |                                   |         |   |                                         |   |         |                                       |  |      |                                  |      |             |                           |        |             |  |   |        |      |  |   |        |   |  |   |        |  
|Interest income                                        |  | $                                 | 173,781 |   |                                         | $ | 139,563 |                                       |  | $    | 19,052                           |      |             | $                         | 22,912 |             |  | $ | 41,964 |      |  | $ | 34,218 |   |  | $ | 97,599 |  
|Interest expense                                       |  |                                   | 57,584  |   |                                         |   | 31,694  |                                       |  |      | 3,762                            |      |             |                           | 6,797  |             |  |   | 10,559 |      |  |   | 25,890 |   |  |   | 21,135 |  
|                                                       |  |                                   |         |   |                                         |   |         |                                       |  |      |                                  |      |             |                           |        |             |  |   |        |      |  |   |        |   |  |   |        |  
|Net interest income                                    |  |                                   | 116,197 |   |                                         |   | 107,869 |                                       |  |      | 15,290                           |      |             |                           | 16,115 |             |  |   | 31,405 |      |  |   | 8,328  |   |  |   | 76,464 |  
|Provision for credit losses                            |  |                                   | 4,290   |   |                                         |   | 3,400   |                                       |  |      |                                 |      |             |                           | 4,700  |             |  |   | 4,700  |      |  |   | 890    |   |  |   | (1,300 | )
|                                                       |  |                                   |         |   |                                         |   |         |                                       |  |      |                                  |      |             |                           |        |             |  |   |        |      |  |   |        |   |  |   |        |  
|Net interest income after provision for credit losses  |  |                                   | 111,907 |   |                                         |   | 104,469 |                                       |  |      | 15,290                           |      |             |                           | 11,415 |             |  |   | 26,705 |      |  |   | 7,438  |   |  |   | 77,764 |  
|Noninterest income                                     |  |                                   | 12,717  |   |                                         |   | 10,317  |                                       |  |      | 1,784                            |      |             |                           | 2,426  |             |  |   | 4,210  |      |  |   | 2,400  |   |  |   | 6,107  |  
|Noninterest expense                                    |  |                                   | 90,908  |   |                                         |   | 91,983  |                                       |  |      | 10,947                           |      |             |                           | 14,514 |             |  |   | 25,461 |      |  |   | (1,075 | ) |  |   | 66,522 |  
|                                                       |  |                                   |         |   |                                         |   |         |                                       |  |      |                                  |      |             |                           |        |             |  |   |        |      |  |   |        |   |  |   |        |  
|Income (loss) before income taxes                      |  |                                   | 33,716  |   |                                         |   | 22,803  |                                       |  |      | 6,127                            |      |             |                           | (673   | )           |  |   | 5,454  |      |  |   | 10,913 |   |  |   | 17,349 |  
|Income tax expense                                     |  |                                   | 11,286  |   |                                         |   | 7,639   |                                       |  |      | 2,331                            |      |             |                           | 411    |             |  |   | 2,742  |      |  |   | 3,647  |   |  |   | 4,897  |  
|                                                       |  |                                   |         |   |                                         |   |         |                                       |  |      |                                  |      |             |                           |        |             |  |   |        |      |  |   |        |   |  |   |        |  
|Income (loss) from continuing operations               |  |                                   | 22,430  |   |                                         |   | 15,164  |                                       |  |      | 3,796                            |      |             |                           | (1,084 | )           |  |   | 2,712  |      |  |   | 7,266  |   |  |   | 12,452 |  
|Income (loss) from discontinued operations, net of tax |  |                                   | 1,988   |   |                                         |   | (482    | )                                     |  |      |                                 |      |             |                           |       |             |  |   |       |      |  |   | 2,470  |   |  |   | (482   | )
|                                                       |  |                                   |         |   |                                         |   |         |                                       |  |      |                                  |      |             |                           |        |             |  |   |        |      |  |   |        |   |  |   |        |  
|Net income (loss)                                      |  | $                                 | 24,418  |   |                                         | $ | 14,682  |                                       |  | $    | 3,796                            |      |             | $                         | (1,084 | )           |  | $ | 2,712  |      |  | $ | 9,736  |   |  | $ | 11,970 |  
|                                                       |  |                                   |         |   |                                         |   |         |                                       |  |      |                                  |      |             |                           |        |             |  |   |        |      |  |   |        |   |  |   |        |  
|Share Data:                                            |  |                                   |         |   |                                         |   |         |                                       |  |      |                                  |      |             |                           |        |             |  |   |        |      |  |   |        |   |  |   |        |  
|Basic and diluted earnings (loss) per share            |  | $                                 | 0.42    |   |                                         | $ | 0.27    |                                       |  | $    | 0.20                             |      |             | $                         | (0.70  | )           |  | $ | 0.14   | (a)  |  | $ | 0.15   |   |  | $ | 0.13   |  
|Return on average assets                               |  |                                   | 0.86    | % |                                         |   | 0.57    | %                                     |  |      | 0.97                             | %(d) |             |                           | (0.29  | )%          |  |   | 0.36   | %(b) |  |   | 0.29   | % |  |   | 0.21   | %
|Return on average equity                               |  |                                   | 4.09    | % |                                         |   | 2.71    | %                                     |  |      | 7.97                             | %(d) |             |                           | (3.28  | )%          |  |   | 2.26   | %(c) |  |   | 1.38   | % |  |   | 0.45   | %

---

|(a) | Represents combined net income of Predecessor and Successor divided by Successor weighted average basic or diluted shares outstanding.
|--- | --------------------------------------------------------------------------------------------------------------------------------------

|(b) | Represents Predecessor and Successor combined net income divided by Successor average assets.
|--- | ---------------------------------------------------------------------------------------------

|(c) | Represents Predecessor and Successor combined net income divided by Successor average stockholders equity.
|--- | -----------------------------------------------------------------------------------------------------------

|(d) | Returns have been annualized.
|--- | -----------------------------



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##### Table of Contents

2006 Compared to 2005

Net income for the year ended December 31, 2006 increased to $24.4 million from $14.7 million for the year ended December 31, 2005. Components
of the increase in net income included an $8.3 million increase in our net interest income, a $2.4 million increase in noninterest income and a $1.1 million decrease in noninterest expense. For 2006, our noninterest expense included $11.8 million,
or $7.3 million after the impact of taxes, of amortization on intangible assets associated with our acquisitions. Our 2005 intangible amortization was $12.5 million, or $7.7 million after the impact of taxes. We also recorded $2.0 million of income
from discontinued operations, which includes a $0.8 million net gain after impairment of assets in the first quarter 2006 on the sale of Collegiate Peaks and $1.2 million of income earned from the 2006 operations of Collegiate Peaks and First
MainStreet Insurance. Our goodwill and other intangible asset balances cause a proportional reduction in our return on average assets and return on average equity when compared to entities with minimal intangible asset balances. Our 2006 return on
average assets and return on average equity both increased from 2005 to 0.9% and 4.1%, respectively. A substantial portion of the changes between 2006 and 2005 financial measures are attributable to our fourth quarter 2005 acquisitions of First
MainStreet and Foothills.

2005 Compared to Combined 2004

Net income increased to $14.7 million for the year ended December 31, 2005 from $2.7 million for the year ended December 31, 2004. Our return on
average assets was 0.6% and return on average stockholders equity was 2.7% for the year ended December 31, 2005, compared to 0.4% and 2.3% for the year ended December 31, 2004. Factors impacting our operations in 2005 consisted of
the inclusion of the operations of Guaranty in 2005 as a result of our acquisition of Guaranty at December 31, 2004, the acquisitions of First MainStreet and Foothills in the fourth quarter of 2005 and expenses incurred to become a publicly
traded company. Due to the significance of these factors, every aspect of our operations was significantly impacted. The acquisitions altered the components of our net interest income by changing the mix of loans and deposits. Our noninterest income
and expenses were significantly impacted as we combined the operations of Guaranty Bank, Centennial Bank of the West and First MainStreet and went through the process of becoming a publicly traded company. In addition to the impact of these factors,
our 2005 interest income and interest expense both increased from 2004 due to a rising rate environment.

Net Interest Income

Net interest income is our primary source of income and represents the difference between income on interest-earning assets and expense on
interest-bearing liabilities.

2006 Compared to 2005

Net interest income for the year ended December 31, 2006 increased by $8.3 million over the year ended December 31, 2005 to $116.2 million. Our net interest margin for the year ended December 31, 2006
was 5.35% compared to 5.51% for the year ended December 31, 2005, which represented a decrease of 16 basis points. Our interest rate spread for the year ended December 31, 2006 was 4.48%, a decrease from the December 31, 2005 interest
rate spread of 4.89%.

Interest income for the year ended December 31, 2006 increased by $34.2 million, or 24.5%, from the prior year.
The rising interest rate environment, which saw four 25 basis point increases in the targeted federal funds rates between January 2006 and June 2006, and the fourth quarter 2005 acquisitions contributed to the increases. Interest income on loans,
including loan fees for the year ended December 31, 2006, increased by $31.6 million to $163.8 million. This change consisted of an increase in interest on loans of $33.1 million to $157.3 million for the year ended December 31, 2006,
while fees on loans, impacted by competitive pressures, decreased by $1.5 million to $6.6 million. Interest income earned on assets other than loans increased to $10.0 million for the year ended December 31, 2006, an increase of $2.6 million
from the prior year, which was primarily driven by a $2.2 million increase in interest earned on tax-exempt securities.



33



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##### Table of Contents

Interest expense for the year ended December 31, 2006 increased by $25.9 million, or 81.7%, from the
prior year. In addition to a rising interest rate environment, our interest expense increased due to increased competition for deposits and the fourth quarter 2005 acquisitions of First MainStreet and Foothills. The increase in our cost of funds
exceeded the increased yield on interest earning assets, which led to the decline in our net interest margin and interest rate spread. Our yield on interest earning assets increased 87 basis points to 8%, while our cost of funds increased by 128
basis points to 3.52%.

The following table presents, for the years indicated, average assets, liabilities and stockholders equity,
as well as the net interest income from average interest-earning assets and the resultant yields expressed in percentages. Non-accrual loans are included in the calculation of average loans and leases while non-accrued interest thereon, is excluded
from the computation of yields earned.



|                                            |  |                         |           |                          |      |                     |  |      |                |  |                          |           |                     |   |         |  |      |  
|------------------------------------------- |  | ----------------------- | --------- | ------------------------ | ---- | ------------------- |  | ---- | -------------- |  | ------------------------ | --------- | ------------------- | - | ------- |  | ---- | -
|                                            |  | Year Ended December 31, |          
|                                            |  | 2006                    |           |                          | 2005 |                    
|                                            |  | AverageBalance          |           | InterestIncome orExpense |      | AverageYield orCost |  |      | AverageBalance |  | InterestIncome orExpense |           | AverageYield orCost |  
|                                            |  | (Dollars in thousands)  |          
|ASSETS:                                     |  |                         |           |                          |      |                     |  |      |                |  |                          |           |                     |   |         |  |      |  
|Interest-earning assets:                    |  |                         |           |                          |      |                     |  |      |                |  |                          |           |                     |   |         |  |      |  
|Gross loans, net of unearned fees (1)(2)(3) |  | $                       | 1,978,003 |                          | $    | 163,830             |  | 8.28 | %              |  | $                        | 1,778,973 |                     | $ | 132,245 |  | 7.43 | %
|Investment securities (1)                   |  |                         |           |                          |      |                     |  |      |                |  |                          |           |                     |   |         |  |      |  
|Taxable                                     |  |                         | 64,628    |                          |      | 2,868               |  | 4.44 | %              |  |                          | 85,466    |                     |   | 1,599   |  | 1.87 | %
|Tax-exempt                                  |  |                         | 93,683    |                          |      | 4,869               |  | 5.20 | %              |  |                          | 53,101    |                     |   | 2,708   |  | 5.10 | %
|Bank stocks (4)                             |  |                         | 30,331    |                          |      | 1,805               |  | 5.95 | %              |  |                          | 18,340    |                     |   | 1,076   |  | 5.87 | %
|Other earning assets                        |  |                         | 5,496     |                          |      | 409                 |  | 7.44 | %              |  |                          | 20,170    |                     |   | 1,935   |  | 9.59 | %
|                                            |  |                         |           |                          |      |                     |  |      |                |  |                          |           |                     |   |         |  |      |  
|Total interest-earning assets               |  |                         | 2,172,141 |                          |      | 173,781             |  | 8.00 | %              |  |                          | 1,956,050 |                     |   | 139,563 |  | 7.13 | %
|Non-earning assets:                         |  |                         |           |                          |      |                     |  |      |                |  |                          |           |                     |   |         |  |      |  
|Cash and due from banks                     |  |                         | 71,562    |                          |      |                     |  |      |                |  |                          | 63,165    |                     |   |         |  |      |  
|Other assets                                |  |                         | 606,830   |                          |      |                     |  |      |                |  |                          | 539,579   |                     |   |         |  |      |  
|                                            |  |                         |           |                          |      |                     |  |      |                |  |                          |           |                     |   |         |  |      |  
|Total assets                                |  | $                       | 2,850,533 |                          |      |                     |  |      |                |  | $                        | 2,558,794 |                     |   |         |  |      |  
|                                            |  |                         |           |                          |      |                     |  |      |                |  |                          |           |                     |   |         |  |      |  
|LIABILITIES AND STOCKHOLDERS EQUITY:       |  |                         |           |                          |      |                     |  |      |                |  |                          |           |                     |   |         |  |      |  
|Interest-bearing liabilities:               |  |                         |           |                          |      |                     |  |      |                |  |                          |           |                     |   |         |  |      |  
|Deposits:                                   |  |                         |           |                          |      |                     |  |      |                |  |                          |           |                     |   |         |  |      |  
|Interest-bearing demand                     |  | $                       | 167,381   |                          | $    | 968                 |  | 0.58 | %              |  | $                        | 122,967   |                     | $ | 436     |  | 0.35 | %
|Money market                                |  |                         | 628,341   |                          |      | 21,429              |  | 3.41 | %              |  |                          | 535,974   |                     |   | 10,141  |  | 1.89 | %
|Savings                                     |  |                         | 93,622    |                          |      | 700                 |  | 0.75 | %              |  |                          | 85,539    |                     |   | 624     |  | 0.73 | %
|Time certificates of deposit                |  |                         | 574,320   |                          |      | 24,240              |  | 4.22 | %              |  |                          | 501,564   |                     |   | 13,672  |  | 2.73 | %
|                                            |  |                         |           |                          |      |                     |  |      |                |  |                          |           |                     |   |         |  |      |  
|Total interest-bearing deposits             |  |                         | 1,463,664 |                          |      | 47,337              |  | 3.23 | %              |  |                          | 1,246,044 |                     |   | 24,873  |  | 2.00 | %
|Borrowings:                                 |  |                         |           |                          |      |                     |  |      |                |  |                          |           |                     |   |         |  |      |  
|Repurchase agreements                       |  |                         | 27,927    |                          |      | 1,231               |  | 4.41 | %              |  |                          | 29,844    |                     |   | 861     |  | 2.89 | %
|Federal funds purchased                     |  |                         | 521       |                          |      | 25                  |  | 4.80 | %              |  |                          | 4,712     |                     |   | 130     |  | 2.76 | %
|Subordinated debentures                     |  |                         | 41,243    |                          |      | 3,666               |  | 8.89 | %              |  |                          | 41,695    |                     |   | 2,515   |  | 6.03 | %
|Borrowings                                  |  |                         | 102,327   |                          |      | 5,325               |  | 5.18 | %              |  |                          | 90,050    |                     |   | 3,315   |  | 3.68 | %
|                                            |  |                         |           |                          |      |                     |  |      |                |  |                          |           |                     |   |         |  |      |  
|Total interest-bearing liabilities          |  |                         | 1,635,682 |                          |      | 57,584              |  | 3.52 | %              |  |                          | 1,412,345 |                     |   | 31,694  |  | 2.24 | %
|Noninterest bearing liabilities:            |  |                         |           |                          |      |                     |  |      |                |  |                          |           |                     |   |         |  |      |  
|Demand deposits                             |  |                         | 519,893   |                          |      |                     |  |      |                |  |                          | 503,868   |                     |   |         |  |      |  
|Other liabilities                           |  |                         | 97,467    |                          |      |                     |  |      |                |  |                          | 99,897    |                     |   |         |  |      |  
|                                            |  |                         |           |                          |      |                     |  |      |                |  |                          |           |                     |   |         |  |      |  
|Total liabilities                           |  |                         | 2,253,042 |                          |      |                     |  |      |                |  |                          | 2,016,110 |                     |   |         |  |      |  
|Stockholders equity                        |  |                         | 597,491   |                          |      |                     |  |      |                |  |                          | 542,684   |                     |   |         |  |      |  
|                                            |  |                         |           |                          |      |                     |  |      |                |  |                          |           |                     |   |         |  |      |  
|Total liabilities and stockholders equity  |  | $                       | 2,850,533 |                          |      |                     |  |      |                |  | $                        | 2,558,794 |                     |   |         |  |      |  
|                                            |  |                         |           |                          |      |                     |  |      |                |  |                          |           |                     |   |         |  |      |  
|Net interest income                         |  |                         |           |                          | $    | 116,197             |  |      |                |  |                          |           |                     | $ | 107,869 |  |      |  
|                                            |  |                         |           |                          |      |                     |  |      |                |  |                          |           |                     |   |         |  |      |  
|Net interest margin                         |  |                         |           |                          |      |                     |  | 5.35 | %              |  |                          |           |                     |   |         |  | 5.51 | %
|                                            |  |                         |           |                          |      |                     |  |      |                |  |                          |           |                     |   |         |  |      |  



34



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##### Table of Contents

---

|(1) | Yields on loans and securities have not been adjusted to a tax-equivalent basis.
|--- | --------------------------------------------------------------------------------

|(2) | Includes average nonaccrual loans of $32.9 million and $14.1 million at December 31, 2006 and 2005, respectively.
|--- | -----------------------------------------------------------------------------------------------------------------

|(3) | Net loan fees of $6.6 million and $8.0 million at December 31, 2006 and 2005, respectively, are included in the yield computation.
|--- | ----------------------------------------------------------------------------------------------------------------------------------

|(4) | Includes Bankers Bank of the West stock, Federal Agricultural Mortgage Corporation (Farmer Mac) stock, Federal Reserve Bank stock and Federal Home Loan Bank stock.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------

The following table presents the dollar amount of changes in interest income and interest expense for the major categories
of our interest-earning assets and interest-bearing liabilities. Information is provided for each category of interest-earning assets and interest-bearing liabilities with respect to (i) changes attributable to changes in volume (i.e., changes
in average balances multiplied by the prior-period average rate) and (ii) changes attributable to rate (i.e., changes in average rate multiplied by prior-period average balances). For purposes of this table, changes attributable to both rate
and volume, which cannot be segregated, have been allocated proportionately to the change due to volume and the change due to rate.



|                                  |  |                                                                     |        |   |      |   |        |        |  |   |        |  
|--------------------------------- |  | ------------------------------------------------------------------- | ------ | - | ---- | - | ------ | ------ |  | - | ------ | -
|                                  |  | Year Ended December 31, 2006Compared to Year EndedDecember 31, 2005 |       
|                                  |  | Net Change                                                          |        |   | Rate |   |        | Volume | 
|                                  |  | (In thousands)                                                      |       
|Interest income:                  |  |                                                                     |        |   |      |   |        |        |  |   |        |  
|Gross loans, net of unearned fees |  | $                                                                   | 31,584 |   |      | $ | 15,952 |        |  | $ | 15,632 |  
|Investment securities             |  |                                                                     |        |   |      |   |        |        |  |   |        |  
|Taxable                           |  |                                                                     | 1,269  |   |      |   | 1,543  |        |  |   | (274   | )
|Tax-exempt                        |  |                                                                     | 2,161  |   |      |   | 53     |        |  |   | 2,108  |  
|Equity securities                 |  |                                                                     | 729    |   |      |   | 16     |        |  |   | 713    |  
|Other earning assets              |  |                                                                     | (1,525 | ) |      |   | (357   | )      |  |   | (1,168 | )
|                                  |  |                                                                     |        |   |      |   |        |        |  |   |        |  
|Total interest income             |  |                                                                     | 34,218 |   |      |   | 17,207 |        |  |   | 17,011 |  
|                                  |  |                                                                     |        |   |      |   |        |        |  |   |        |  
|Interest expense:                 |  |                                                                     |        |   |      |   |        |        |  |   |        |  
|Deposits:                         |  |                                                                     |        |   |      |   |        |        |  |   |        |  
|Interest-bearing demand           |  |                                                                     | 532    |   |      |   | 338    |        |  |   | 194    |  
|Money market                      |  |                                                                     | 11,288 |   |      |   | 9,292  |        |  |   | 1,996  |  
|Savings                           |  |                                                                     | 76     |   |      |   | 16     |        |  |   | 60     |  
|Time certificates of deposit      |  |                                                                     | 10,568 |   |      |   | 8,357  |        |  |   | 2,211  |  
|Repurchase agreements             |  |                                                                     | 370    |   |      |   | 421    |        |  |   | (51    | )
|Federal funds purchased           |  |                                                                     | (105   | ) |      |   | 507    |        |  |   | (612   | )
|Subordinated debentures           |  |                                                                     | 1,151  |   |      |   | 1,178  |        |  |   | (27    | )
|Borrowings                        |  |                                                                     | 2,010  |   |      |   | 1,512  |        |  |   | 498    |  
|                                  |  |                                                                     |        |   |      |   |        |        |  |   |        |  
|Total interest expense            |  |                                                                     | 25,890 |   |      |   | 21,621 |        |  |   | 4,269  |  
|                                  |  |                                                                     |        |   |      |   |        |        |  |   |        |  
|Net interest income               |  | $                                                                   | 8,328  |   |      | $ | (4,414 | )      |  | $ | 12,742 |  
|                                  |  |                                                                     |        |   |      |   |        |        |  |   |        |  

2005 Compared to Combined 2004

Our net interest income for 2005 increased $76.5 million from 2004. The acquisition of Guaranty contributed $71.2 million to this increase. Excluding the
effect of the Guaranty acquisition, interest income increased $10.1 million and interest expense increased $4.8 million. Interest income and interest expense increased as a result of an increasing rate environment in 2005 and the acquisitions of
First MainStreet Bank and Foothills Bank in the fourth quarter of 2005. Average interest-earning assets increased $1.3 billion from $0.7 billion for 2004 to $2.0 billion for 2005. The acquisition of Guaranty represents the majority of this increase.



35



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##### Table of Contents

The following table presents, for the years indicated, average assets, liabilities and stockholders
equity, as well as the net interest income from average interest-earning assets and the resultant yields expressed in percentages. Non-accrual loans are included in the calculation of average loans and leases while non-accrued interest thereon, is
excluded from the computation of yields earned.



|                                           |  |                              |           |                        |                                |                |  |      |                |  |                        |         |                |   |        |  |      |  
|------------------------------------------ |  | ---------------------------- | --------- | ---------------------- | ------------------------------ | -------------- |  | ---- | -------------- |  | ---------------------- | ------- | -------------- | - | ------ |  | ---- | -
|                                           |  | Year Ended December 31, 2005 |           |                        | Year Ended December 31, 2004   |               
|                                           |  | Successor                    |           |                        | Combined Successor/Predecessor |               
|                                           |  | AverageBalance               |           | InterestIncome/Expense |                                | YieldsandRates |  |      | AverageBalance |  | InterestIncome/Expense |         | YieldsandRates |  
|                                           |  | (Dollars in thousands)       |          
|ASSETS:                                    |  |                              |           |                        |                                |                |  |      |                |  |                        |         |                |   |        |  |      |  
|Interest-earning assets:                   |  |                              |           |                        |                                |                |  |      |                |  |                        |         |                |   |        |  |      |  
|Loans held for investment (1)(2)(3)        |  | $                            | 1,778,973 |                        | $                              | 132,245        |  | 7.43 | %              |  | $                      | 613,643 |                | $ | 40,580 |  | 6.61 | %
|Investment securities (1)(4)               |  |                              |           |                        |                                |                |  |      |                |  |                        |         |                |   |        |  |      |  
|Taxable                                    |  |                              | 85,466    |                        |                                | 1,599          |  | 1.87 | %              |  |                        | 31,203  |                |   | 961    |  | 3.08 | %
|Tax-exempt                                 |  |                              | 53,101    |                        |                                | 2,708          |  | 5.10 | %              |  |                        | 415     |                |   | 16     |  | 3.86 | %
|Equity securities                          |  |                              | 18,340    |                        |                                | 1,076          |  | 5.87 | %              |  |                        | 5,519   |                |   | 256    |  | 4.64 | %
|Other earning assets                       |  |                              | 20,170    |                        |                                | 1,935          |  | 9.59 | %              |  |                        | 6,705   |                |   | 151    |  | 2.25 | %
|                                           |  |                              |           |                        |                                |                |  |      |                |  |                        |         |                |   |        |  |      |  
|Total interest-earning assets              |  |                              | 1,956,050 |                        |                                | 139,563        |  | 7.13 | %              |  |                        | 657,485 |                |   | 41,964 |  | 6.38 | %
|Non-earning assets:                        |  |                              |           |                        |                                |                |  |      |                |  |                        |         |                |   |        |  |      |  
|Cash and due from banks                    |  |                              | 63,165    |                        |                                |                |  |      |                |  |                        | 19,998  |                |   |        |  |      |  
|Other assets                               |  |                              | 539,579   |                        |                                |                |  |      |                |  |                        | 74,820  |                |   |        |  |      |  
|                                           |  |                              |           |                        |                                |                |  |      |                |  |                        |         |                |   |        |  |      |  
|Total assets                               |  | $                            | 2,558,794 |                        |                                |                |  |      |                |  | $                      | 752,303 |                |   |        |  |      |  
|                                           |  |                              |           |                        |                                |                |  |      |                |  |                        |         |                |   |        |  |      |  
|LIABILITIES AND STOCKHOLDERS EQUITY:      |  |                              |           |                        |                                |                |  |      |                |  |                        |         |                |   |        |  |      |  
|Interest-bearing liabilities:              |  |                              |           |                        |                                |                |  |      |                |  |                        |         |                |   |        |  |      |  
|Deposits:                                  |  |                              |           |                        |                                |                |  |      |                |  |                        |         |                |   |        |  |      |  
|Interest-bearing demand                    |  |                              | 122,967   |                        |                                | 436            |  | 0.35 | %              |  |                        | 49,068  |                |   | 125    |  | 0.25 | %
|Money market                               |  |                              | 535,974   |                        |                                | 10,141         |  | 1.89 | %              |  |                        | 118,677 |                |   | 1,273  |  | 1.07 | %
|Savings                                    |  |                              | 85,539    |                        |                                | 624            |  | 0.73 | %              |  |                        | 26,283  |                |   | 128    |  | 0.49 | %
|Time certificates of deposit               |  |                              | 501,564   |                        |                                | 13,672         |  | 2.73 | %              |  |                        | 282,774 |                |   | 6,456  |  | 2.28 | %
|                                           |  |                              |           |                        |                                |                |  |      |                |  |                        |         |                |   |        |  |      |  
|Total interest-bearing deposits            |  |                              | 1,246,044 |                        |                                | 24,873         |  | 2.00 | %              |  |                        | 476,802 |                |   | 7,982  |  | 1.67 | %
|Borrowings:                                |  |                              |           |                        |                                |                |  |      |                |  |                        |         |                |   |        |  |      |  
|Repurchase agreements                      |  |                              | 29,844    |                        |                                | 861            |  | 2.89 | %              |  |                        | 14,993  |                |   | 190    |  | 1.27 | %
|Federal funds purchased                    |  |                              | 4,712     |                        |                                | 130            |  | 2.76 | %              |  |                        | 1,197   |                |   | 15     |  | 1.25 | %
|Subordinated debentures                    |  |                              | 41,695    |                        |                                | 2,515          |  | 6.03 | %              |  |                        | 27,591  |                |   | 1,764  |  | 6.39 | %
|Borrowings                                 |  |                              | 90,050    |                        |                                | 3,315          |  | 3.68 | %              |  |                        | 15,000  |                |   | 608    |  | 4.05 | %
|                                           |  |                              |           |                        |                                |                |  |      |                |  |                        |         |                |   |        |  |      |  
|Total interest-bearing liabilities         |  |                              | 1,412,345 |                        |                                | 31,694         |  | 2.24 | %              |  |                        | 535,583 |                |   | 10,559 |  | 1.97 | %
|Noninterest bearing liabilities            |  |                              |           |                        |                                |                |  |      |                |  |                        |         |                |   |        |  |      |  
|Demand deposits                            |  |                              | 503,868   |                        |                                |                |  |      |                |  |                        | 92,525  |                |   |        |  |      |  
|Other liabilities                          |  |                              | 99,897    |                        |                                |                |  |      |                |  |                        | 2,758   |                |   |        |  |      |  
|                                           |  |                              |           |                        |                                |                |  |      |                |  |                        |         |                |   |        |  |      |  
|Total liabilities                          |  |                              | 2,016,110 |                        |                                |                |  |      |                |  |                        | 630,866 |                |   |        |  |      |  
|Stockholders equity                       |  |                              | 542,684   |                        |                                |                |  |      |                |  |                        | 121,437 |                |   |        |  |      |  
|                                           |  |                              |           |                        |                                |                |  |      |                |  |                        |         |                |   |        |  |      |  
|Total liabilities and stockholders equity |  | $                            | 2,558,794 |                        |                                |                |  |      |                |  | $                      | 752,303 |                |   |        |  |      |  
|                                           |  |                              |           |                        |                                |                |  |      |                |  |                        |         |                |   |        |  |      |  
|Net interest income                        |  |                              |           |                        | $                              | 107,869        |  |      |                |  |                        |         |                | $ | 31,405 |  |      |  
|                                           |  |                              |           |                        |                                |                |  |      |                |  |                        |         |                |   |        |  |      |  
|Net interest margin                        |  |                              |           |                        |                                |                |  | 5.51 | %              |  |                        |         |                |   |        |  | 4.78 | %
|                                           |  |                              |           |                        |                                |                |  |      |                |  |                        |         |                |   |        |  |      |  

---

|(1) | Yields on loans and securities have not been adjusted to a tax-equivalent basis.
|--- | --------------------------------------------------------------------------------



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|(2) | Includes average nonaccrual loans of $14.1 million and $14.3 million for the years ended December 31, 2005 and 2004, respectively.
|--- | ----------------------------------------------------------------------------------------------------------------------------------

|(3) | Net loan fees of $8.0 million and $3.9 million for the years ended December 31, 2005 and 2004, respectively, are included in the yield computation.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------

|(4) | Includes Bankers Bank of the West stock, Federal Agricultural Mortgage Corporation (Farmer Mac) stock, Federal Reserve Bank stock and Federal Home Loan Bank stock.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------

The average yield on our interest-earning assets increased to 7.1% in 2005 from 6.4% in 2004. The average yield on the loan
portfolio increased 82 basis points from 2004 to 2005 due to increases in interest rates. In addition, the average yield on the investment portfolio increased 98 basis points from 2004 to 2005 due to increases in interest rates and the addition of
the higher yielding investment portfolio of Guaranty.

The cost of our average interest-bearing liabilities increased to 2.2% in 2005 from
2.0% in 2004. This increase was due to increased interest rates paid on deposits in response to intensified competition for deposit dollars as well as the use of higher cost borrowings as a result of our effort to reposition our interest-bearing
deposits. This increase was mitigated by an increase in average non-interest bearing deposit balances to average total deposit balances from 16% in 2004 to 29% in 2005 due to the acquisition of Guaranty. Although the cost of time certificates of
deposit increased to 2.7% in 2005 from 2.3% in 2004, the average time certificates of deposit as a percentage of average total deposits decreased from 50% in 2004 to 29% in 2005, reducing the impact of rising interest rates.

Although our net interest margin declined slightly in the fourth quarter 2005 due to the acquisitions of First MainStreet and Foothills, our net interest
margin increased year over year to 5.5% in 2005 from 4.8% in 2004. This increase was a result of the factors discussed in the preceding paragraphs.



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The following table presents the dollar amount of changes in interest income and interest expense for the
major categories of our interest-earning assets and interest-bearing liabilities. Information is provided for each category of interest-earning assets and interest-bearing liabilities with respect to (i) changes attributable to changes in
volume (i.e., changes in average balances multiplied by the prior-period average rate) and (ii) changes attributable to rate (i.e., changes in average rate multiplied by prior-period average balances). For purposes of this table, changes
attributable to both rate and volume, which cannot be segregated, have been allocated proportionately to the change due to volume and the change due to rate.



|                             |  |                                                                     |        |      |   |       |        |  |   |       
|---------------------------- |  | ------------------------------------------------------------------- | ------ | ---- | - | ----- | ------ |  | - | ------
|                             |  | Year Ended December 31, 2005Compared to Year EndedDecember 31, 2004
|                             |  | Net Change                                                          |        | Rate |   |       | Volume
|Interest income:             |  |                                                                     |        |      |   |       |        |  |   |       
|Loans held for investment    |  | $                                                                   | 91,665 |      | $ | 5,624 |        |  | $ | 86,041
|Investment securities        |  |                                                                     |        |      |   |       |        |  |   |       
|Taxable                      |  |                                                                     | 638    |      |   | (186  | )      |  |   | 824   
|Tax-exempt                   |  |                                                                     | 2,692  |      |   | 7     |        |  |   | 2,685 
|Equity securities            |  |                                                                     | 820    |      |   | 84    |        |  |   | 736   
|Other earning assets         |  |                                                                     | 1,784  |      |   | 1,104 |        |  |   | 680   
|                             |  |                                                                     |        |      |   |       |        |  |   |       
|Total interest income        |  |                                                                     | 97,599 |      |   | 6,633 |        |  |   | 90,966
|Interest expense:            |  |                                                                     |        |      |   |       |        |  |   |       
|Deposits:                    |  |                                                                     |        |      |   |       |        |  |   |       
|Interest-bearing demand      |  |                                                                     | 311    |      |   | 64    |        |  |   | 247   
|Money Market                 |  |                                                                     | 8,868  |      |   | 1,583 |        |  |   | 7,285 
|Savings                      |  |                                                                     | 496    |      |   | 90    |        |  |   | 406   
|Time certificates of deposit |  |                                                                     | 7,216  |      |   | 1,446 |        |  |   | 5,770 
|Borrowings:                  |  |                                                                     |        |      |   |       |        |  |   |       
|Repurchase agreements        |  |                                                                     | 671    |      |   | 378   |        |  |   | 293   
|Federal funds purchased      |  |                                                                     | 115    |      |   | 33    |        |  |   | 82    
|Subordinated debentures      |  |                                                                     | 751    |      |   | (93   | )      |  |   | 844   
|Borrowings                   |  |                                                                     | 2,707  |      |   | (50   | )      |  |   | 2,757 
|                             |  |                                                                     |        |      |   |       |        |  |   |       
|Total interest expense       |  |                                                                     | 21,135 |      |   | 3,451 |        |  |   | 17,684
|                             |  |                                                                     |        |      |   |       |        |  |   |       
|Net interest income          |  | $                                                                   | 76,464 |      | $ | 3,182 |        |  | $ | 73,282
|                             |  |                                                                     |        |      |   |       |        |  |   |       

Provision for Credit Losses

The provision for credit losses in each year represents a charge against earnings. The provision is the amount required to maintain the allowance for loan losses at a level that, in our judgment, is adequate to absorb
probable loan losses in the loan portfolio and losses associated with unfunded commitments to loan to our customers. The provisions for credit losses are based on our reserve methodology and reflect our judgments about the adequacy of the allowance
for loan losses and the reserve for unfunded loan commitments. In determining the amount of the provision, we consider certain quantitative and qualitative factors including our historical loan loss experience, the volume and type of lending we
conduct, the results of our credit review process, the amounts of classified, criticized and nonperforming assets, regulatory policies, general economic conditions, underlying collateral values, off-balance sheet exposures, and other factors
regarding collectibility and impairment. The amount of expected loss on our loan portfolio is influenced by the collateral value associated with our loans. Loans with greater collateral value lessen our exposure to loan loss expense.



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For discussion of impaired loans and associated collateral values and additional analysis of factors
impacting the provision for loan losses, see Financial ConditionNonperforming Assets and Potential Problem Loans below.

2006 Compared to 2005

In response to loan portfolio changes occurring in the third and fourth quarters of 2006, we recorded
a $1.6 million and $2.7 million charge, respectively, to earnings through the provision for credit losses in each of those quarters, for a total of $4.3 million for the year ended December 31, 2006. In 2005, we recorded $3.4 million charge to
earnings through the provision for credit losses, consisting of $1.7 million in both the first and fourth quarters of 2005. The provisions for credit losses recorded in 2006 and 2005 were in response to loan portfolio and unfunded commitment
changes.

2005 Compared to Combined 2004

We recorded a charge to earnings through the provision for loan losses of $3.4 million during 2005 and $4.7 million during 2004. Our 2005 loan charge-offs net of recoveries was $4.1 million compared to $4.6 million in
2004.

During the first quarter of 2005, we downgraded several loans, resulting in the recording of a $1.5 million charge to provision
expense. In addition, we charged our provision for $0.2 million in the first quarter of 2005 for a nonaccrual commercial loan due to the deterioration of collateral value. In the fourth quarter of 2005, we downgraded a $7.2 million construction loan
relationship due to borrowings reaching the fully funded commitment prior to the completion of the construction project.

Noninterest Income

The following table presents our major categories of noninterest income:



|                                  |  |                         |        |             |                                         |   |                                       |   |  |                                  |       |  |             |       |   |             |   |       |   |  |   |       |   |  |   |      
|--------------------------------- |  | ----------------------- | ------ | ----------- | --------------------------------------- | - | ------------------------------------- | - |  | -------------------------------- | ----- |  | ----------- | ----- | - | ----------- | - | ----- | - |  | - | ----- | - |  | - | -----
|                                  |  | Successor               |        | Predecessor |                                         |   |                                       |   |  |                                 
|                                  |  | Year Ended December 31, |        |             | PeriodJuly 17,
2004to December 31, 2004 |   | PeriodJanuary 1, 2004to July 16, 2004 |   |  | CombinedPredecessorand Successor |       |  |             |       |   |            
|                                  |  | 2006                    |        |             | 2005                                    |   |                                       |   |  | 2004                             |       |  | 2006 v 2005 |       |   | 2005 v 2004
|                                  |  | (In thousands)         
|Customer service and other fees   |  | $                       | 7,746  |             |                                         | $ | 5,701                                 |   |  | $                                | 1,305 |  | $           | 1,707 |   |             | $ | 3,012 |   |  | $ | 2,045 |   |  | $ | 2,689
|Gain (loss) on sale of securities |  |                         | (4     | )           |                                         |   | (7                                    | ) |  |                                  | 36    |  |             | (66   | ) |             |   | (30   | ) |  |   | 3     |   |  |   | 23   
|Gain on sale of loans             |  |                         | 719    |             |                                         |   | 1,316                                 |   |  |                                  |      |  |             |      |   |             |   |      |   |  |   | (597  | ) |  |   | 1,316
|Merchant income                   |  |                         | 389    |             |                                         |   | 524                                   |   |  |                                  | 278   |  |             | 221   |   |             |   | 499   |   |  |   | (135  | ) |  |   | 25   
|ATM income                        |  |                         | 873    |             |                                         |   | 453                                   |   |  |                                  | 100   |  |             | 286   |   |             |   | 386   |   |  |   | 420   |   |  |   | 67   
|Other income                      |  |                         | 2,994  |             |                                         |   | 2,330                                 |   |  |                                  | 65    |  |             | 278   |   |             |   | 343   |   |  |   | 664   |   |  |   | 1,987
|                                  |  |                         |        |             |                                         |   |                                       |   |  |                                  |       |  |             |       |   |             |   |       |   |  |   |       |   |  |   |      
|Total noninterest income          |  | $                       | 12,717 |             |                                         | $ | 10,317                                |   |  | $                                | 1,784 |  | $           | 2,426 |   |             | $ | 4,210 |   |  | $ | 2,400 |   |  | $ | 6,107
|                                  |  |                         |        |             |                                         |   |                                       |   |  |                                  |       |  |             |       |   |             |   |       |   |  |   |       |   |  |   |      

2006 Compared to 2005

Our 2006 noninterest income of $12.7 million represented an increase of $2.4 million from 2005. The most significant factor in our noninterest income
increase was the fourth quarter 2005 acquisitions of First MainStreet and Foothills. In addition to the impact of the acquisitions, we experienced declines in our nonsufficient fund charges in the last six months of 2006 compared to the first six
months of 2006. We averaged $714 thousand per



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quarter in the second half of 2006 compared to an average of $853 thousand per quarter in the first half of 2006. As a result of new deposit products and
corresponding service charges implemented in early 2006, our service charge and analysis fees increased through the first three quarters of 2006 from $697 thousand in the first quarter to $765 thousand in the third quarter, with a decline to $670
thousand in the fourth quarter 2006. Our gain on sale of loans decreased in 2006 from 2005 by $0.6 million due primarily to the discontinuation of our residential mortgage group at the end of the third quarter 2006.

2005 Compared to Combined 2004

Noninterest income increased to $10.3 million in 2005 from $4.2 million in 2004 for an increase of $6.1 million. The increase in 2005 was primarily related to the acquisition of Guaranty. Noninterest income of $6.5 million, or 63.1% of the
$10.3 million, is related to noninterest income from Guaranty. Partially offsetting this increase was the decline in service charges in 2005 associated with the increase in interest rates related to earnings credits for business accounts.

Noninterest Expense

The following
table presents the major categories of noninterest expense:



|                                     |  |                        |        |                             |   |        |  |   |        |  
|------------------------------------ |  | ---------------------- | ------ | --------------------------- | - | ------ |  | - | ------ | -
|                                     |  | Year EndedDecember 31, |        | Change Increase/(Decrease) |  
|                                     |  | 2006                   |        | 2005                        |  
|                                     |  | (In thousands)         |       
|Salaries and employee benefits       |  | $                      | 46,185 |                             | $ | 41,426 |  | $ | 4,759  |  
|Occupancy expense                    |  |                        | 7,977  |                             |   | 6,887  |  |   | 1,090  |  
|Furniture and equipment              |  |                        | 4,859  |                             |   | 3,778  |  |   | 1,081  |  
|Amortization                         |  |                        | 11,815 |                             |   | 12,389 |  |   | (574   | )
|Professional services                |  |                        | 5,940  |                             |   | 5,183  |  |   | 757    |  
|Merger, acquisition and transition   |  |                        | 1,866  |                             |   | 10,431 |  |   | (8,565 | )
|Advertising and business development |  |                        | 2,100  |                             |   | 2,348  |  |   | (248   | )
|Technology and processing            |  |                        | 1,586  |                             |   | 2,448  |  |   | (862   | )
|Delivery and postage                 |  |                        | 1,480  |                             |   | 1,274  |  |   | 206    |  
|Insurance, taxes and assessments     |  |                        | 1,851  |                             |   | 1,371  |  |   | 480    |  
|Communications                       |  |                        | 1,237  |                             |   | 905    |  |   | 332    |  
|Office and operating supplies        |  |                        | 937    |                             |   | 1,055  |  |   | (118   | )
|Loan related costs                   |  |                        | 1,811  |                             |   | 1,299  |  |   | 512    |  
|Other                                |  |                        | 1,264  |                             |   | 1,189  |  |   | 75     |  
|                                     |  |                        |        |                             |   |        |  |   |        |  
|Total noninterest expense            |  | $                      | 90,908 |                             | $ | 91,983 |  | $ | (1,075 | )
|                                     |  |                        |        |                             |   |        |  |   |        |  

Our $90.9 million of noninterest expense in 2006 represents a decrease of $1.1 million from 2005.
Our merger, acquisition and transition expense decreased by $8.6 million for 2006. In 2005, we incurred costs associated with the integration of our acquisitions, which included the integration of the 2004 Centennial Bank and Guaranty acquisitions,
and the 2005 First MainStreet and Foothills acquisitions. We had substantially completed the integration and transition efforts associated with the acquisitions by the end of 2005, which resulted in the $8.6 million decrease in expense. The
acquisitions of First MainStreet and Foothills in the fourth quarter 2005 is the primary cause of our increase in most noninterest expense categories in 2006.

During 2006, we experienced a decline in technology and processing costs of $0.9 million from the prior year, while incentive compensation, and advertising and business development expenses decreased by $0.9 million
and $0.2 million, respectively. The decline in technology and processing was primarily the result of the integration of Centennial Bank onto the Guaranty operating platform that was completed in July 2005. Our



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incentive compensation expense decreased due to changes to the compensation plan implemented for 2006 and the decline in our loan portfolio. The improvement
in advertising and business development and office and operating supplies expenses reflected an increased emphasis on cost control, with a portion of the decline in office and operating supplies attributable to one-time costs incurred in connection
with the 2005 acquisitions and integration efforts.

2005 Compared to Combined 2004

Total noninterest expense for 2005 was $92.0 million, representing an increase of $66.5 million from the 2004 combined total of $25.5 million. The primary
cause of the increase was the inclusion of expenses from Guaranty in the 2005 balances. During 2005, we incurred $12.4 million of amortization expense related to core deposit intangible assets and noncompete agreements that resulted from the
acquisition of Predecessor, Guaranty, First MainStreet and Foothills. We also incurred $10.4 million of costs associated with the acquisitions and the integration of the banks into our financial and operational systems. The following table presents
the major categories of noninterest expense:



|                                     |  |                             |        |                                        |   |                                      |  |                                      |        |                             |   |        |  |   |        |  
|------------------------------------ |  | --------------------------- | ------ | -------------------------------------- | - | ------------------------------------ |  | ------------------------------------ | ------ | --------------------------- | - | ------ |  | - | ------ | -
|                                     |  | Successor                   |        | Predecessor                            |   |                                      |  |                                      |       
|                                     |  | Year EndedDecember 31, 2005 |        | PeriodJuly 17,
2004toDecember 31, 2004 |   | PeriodJanuary 1,2004
toJuly 16, 2004 |  | CombinedPredecessorandSuccessor 2004 |        | Change Increase/(Decrease) |  
|                                     |  |                             |        |                                        |   | 2005 v 2004                          | 
|                                     |  | (In thousands)              |       
|Salaries and employee benefits       |  | $                           | 41,426 |                                        | $ | 5,874                                |  | $                                    | 6,104  |                             | $ | 11,978 |  | $ | 29,448 |  
|Occupancy and equipment              |  |                             | 10,665 |                                        |   | 1,634                                |  |                                      | 1,862  |                             |   | 3,496  |  |   | 7,169  |  
|Merger/Acquisition/Transition        |  |                             | 10,431 |                                        |   |                                     |  |                                      |       |                             |   |       |  |   | 10,431 |  
|Data and item processing             |  |                             | 2,448  |                                        |   | 552                                  |  |                                      | 676    |                             |   | 1,228  |  |   | 1,220  |  
|Amortization                         |  |                             | 12,389 |                                        |   | 778                                  |  |                                      |       |                             |   | 778    |  |   | 11,611 |  
|Postage and courier                  |  |                             | 1,274  |                                        |   | 190                                  |  |                                      | 223    |                             |   | 413    |  |   | 861    |  
|Professional fees                    |  |                             | 4,458  |                                        |   | 22                                   |  |                                      | 3,469  |                             |   | 3,491  |  |   | 967    |  
|Directors Fees                      |  |                             | 725    |                                        |   | 139                                  |  |                                      | 190    |                             |   | 329    |  |   | 396    |  
|ATM expenses                         |  |                             | 264    |                                        |   | 166                                  |  |                                      | 215    |                             |   | 381    |  |   | (117   | )
|Administration                       |  |                             | 960    |                                        |   | 466                                  |  |                                      | 556    |                             |   | 1,022  |  |   | (62    | )
|Examinations and assessments         |  |                             | 1,371  |                                        |   | 74                                   |  |                                      | 90     |                             |   | 164    |  |   | 1,207  |  
|Merchant expense                     |  |                             | 367    |                                        |   | 195                                  |  |                                      | 210    |                             |   | 405    |  |   | (38    | )
|Loan related costs                   |  |                             | 1,299  |                                        |   | 397                                  |  |                                      | 356    |                             |   | 753    |  |   | 546    |  
|Advertising and business development |  |                             | 2,348  |                                        |   | 242                                  |  |                                      | 268    |                             |   | 510    |  |   | 1,838  |  
|Operating supplies                   |  |                             | 1,055  |                                        |   | 119                                  |  |                                      | 114    |                             |   | 233    |  |   | 822    |  
|Other                                |  |                             | 503    |                                        |   | 99                                   |  |                                      | 181    |                             |   | 280    |  |   | 223    |  
|                                     |  |                             |        |                                        |   |                                      |  |                                      |        |                             |   |        |  |   |        |  
|Total noninterest expense            |  | $                           | 91,983 |                                        | $ | 10,947                               |  | $                                    | 14,514 |                             | $ | 25,461 |  | $ | 66,522 |  
|                                     |  |                             |        |                                        |   |                                      |  |                                      |        |                             |   |        |  |   |        |  

Income Taxes

2006 Compared to 2005

Our effective tax rate for each of the years ended December 31, 2006 and
2005 was 33.5%, with $11.3 million and $7.6 million, respectively, recorded as tax provision expense. The impact of tax-exempt interest income is the primary reason for an effective rate of 33.5% that is 4.5% less than our 38.0% statutory rate.



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2005 Compared to Combined 2004

Our effective tax rates were 33.5% for 2005 and 50.0% for 2004. The 2005 effective rate was less than the statutory rate of 38.0% primarily due to
tax-exempt interest income. Nondeductible expenses associated with the 2004 acquisitions were the primary cause of the 50% effective tax rate in 2004. We recorded tax provisions of $7.6 million in 2005 and $2.7 million in 2004.

FINANCIAL CONDITION

At December 31, 2006, we
had total assets of $2.7 billion, compared to $3.0 billion and $2.4 billion at December 31, 2005 and 2004, respectively. Collegiate Peak Banks assets, which were sold in November 2006, accounted for a decrease of $98.3 million and $89.6
million of December 31, 2005 and 2004, respectively, in total assets. We acquired assets valued at $595.5 million in the fourth quarter 2005 acquisitions of First MainStreet and Foothills. The following table sets forth certain key consolidated
balance sheet data:



|               |  |                |           |      |   |           |  |   |          
|-------------- |  | -------------- | --------- | ---- | - | --------- |  | - | ---------
|               |  | December 31,  
|               |  | 2006           |           | 2005 |   | 2004     
|               |  | (In thousands)
|Total assets   |  | $              | 2,720,600 |      | $ | 2,980,757 |  | $ | 2,399,201
|Earning Assets |  |                | 2,152,053 |      |   | 2,232,818 |  |   | 1,828,853
|Deposits       |  |                | 1,960,105 |      |   | 2,048,352 |  |   | 1,678,499

Loans

The following table sets forth the amount of our loans outstanding at the dates indicated.



|                                               |  |                        |           |   |             |     |   |        |   |           |           |  |     |        |  |   |           |   |  |        |   |  |           |         |   |        |     |   |           |   |         |   |  |     |  
|---------------------------------------------- |  | ---------------------- | --------- | - | ----------- | --- | - | ------ | - | --------- | --------- |  | --- | ------ |  | - | --------- | - |  | ------ | - |  | --------- | ------- | - | ------ | --- | - | --------- | - | ------- | - |  | --- | -
|                                               |  | Successor              |           |   | Predecessor |    
|                                               |  | 2006                   |           |   | 2005        |     |   | 2004   |   |           | 2003      |  |     | 2002   | 
|                                               |  | Amount                 |           |   | % ofTotal   |     |   | Amount |   |           | % oftotal |  |     | Amount |  |   | % oftotal |   |  | Amount |   |  | % oftotal |         |   | Amount |     |   | % oftotal |  
|                                               |  | (Dollars in thousands) |          
|Real estate:                                   |  |                        |           |   |             |     |   |        |   |           |           |  |     |        |  |   |           |   |  |        |   |  |           |         |   |        |     |   |           |   |         |   |  |     |  
|Mortgage                                       |  | $                      | 742,524   |   |             | 38  | % |        | $ | 654,976   |           |  | 32  | %      |  | $ | 520,485   |   |  | 32     | % |  | $         | 139,695 |   |        | 22  | % |           | $ | 86,767  |   |  | 13  | %
|Construction                                   |  |                        | 427,465   |   |             | 22  | % |        |   | 530,716   |           |  | 26  | %      |  |   | 508,003   |   |  | 31     | % |  |           | 314,586 |   |        | 50  | % |           |   | 352,046 |   |  | 52  | %
|Commercial                                     |  |                        | 647,915   |   |             | 33  | % |        |   | 724,929   |           |  | 35  | %      |  |   | 458,171   |   |  | 28     | % |  |           | 68,867  |   |        | 11  | % |           |   | 91,320  |   |  | 14  | %
|Agricultural                                   |  |                        | 51,338    |   |             | 3   | % |        |   | 71,707    |           |  | 3   | %      |  |   | 62,199    |   |  | 4      | % |  |           | 71,384  |   |        | 11  | % |           |   | 95,729  |   |  | 14  | %
|Consumer                                       |  |                        | 50,222    |   |             | 2   | % |        |   | 63,121    |           |  | 3   | %      |  |   | 64,625    |   |  | 4      | % |  |           | 29,797  |   |        | 5   | % |           |   | 39,168  |   |  | 6   | %
|Leases receivable and other                    |  |                        | 32,144    |   |             | 2   | % |        |   | 27,004    |           |  | 1   | %      |  |   | 28,505    |   |  | 2      | % |  |           | 4,138   |   |        | 1   | % |           |   | 5,843   |   |  | 1   | %
|                                               |  |                        |           |   |             |     |   |        |   |           |           |  |     |        |  |   |           |   |  |        |   |  |           |         |   |        |     |   |           |   |         |   |  |     |  
|Total gross loans                              |  |                        | 1,951,608 |   |             | 100 | % |        |   | 2,072,453 |           |  | 100 | %      |  |   | 1,641,988 |   |  | 100    | % |  |           | 628,467 |   |        | 100 | % |           |   | 670,873 |   |  | 100 | %
|                                               |  |                        |           |   |             |     |   |        |   |           |           |  |     |        |  |   |           |   |  |        |   |  |           |         |   |        |     |   |           |   |         |   |  |     |  
|Less: allowance for loan losses                |  |                        | (27,899   | ) |             |     |   |        |   | (27,475   | )         |  |     |        |  |   | (25,022   | ) |  |        |   |  |           | (7,653  | ) |        |     |   |           |   | (9,257  | ) |  |     |  
|Unearned discount                              |  |                        | (4,121    | ) |             |     |   |        |   | (4,860    | )         |  |     |        |  |   | (167      | ) |  |        |   |  |           | (1,002  | ) |        |     |   |           |   | (988    | ) |  |     |  
|                                               |  |                        |           |   |             |     |   |        |   |           |           |  |     |        |  |   |           |   |  |        |   |  |           |         |   |        |     |   |           |   |         |   |  |     |  
|Net Loans                                      |  | $                      | 1,919,588 |   |             |     |   |        | $ | 2,040,118 |           |  |     |        |  | $ | 1,616,799 |   |  |        |   |  | $         | 619,812 |   |        |     |   |           | $ | 660,628 |   |  |     |  
|                                               |  |                        |           |   |             |     |   |        |   |           |           |  |     |        |  |   |           |   |  |        |   |  |           |         |   |        |     |   |           |   |         |   |  |     |  
|Loans held for sale at lower of cost or market |  | $                      |          |   |             |     |   |        | $ | 6,820     |           |  |     |        |  | $ | 7,301     |   |  |        |   |  | $         |        |   |        |     |   |           | $ |        |   |  |     |  
|                                               |  |                        |           |   |             |     |   |        |   |           |           |  |     |        |  |   |           |   |  |        |   |  |           |         |   |        |     |   |           |   |         |   |  |     |  

We had no foreign loans at December 31, 2006 or 2005.

Our $1.9 billion loan portfolio at December 31, 2006 decreased by $120.5 million from December 31, 2005. The decline is due in part to our
strategy to reduce our concentration in construction, land development and land



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loans. In 2006, construction, land development and land loans included in the real estate portfolio decreased by $90.6 million, which led our real
estateconstruction loans category to decrease as a percentage of our total loan portfolio by 4% to 22%, down from 26% at December 31, 2005. Adjusting for the decrease in construction, land development and land loans, our real estate
portfolio increased by $74.9 million. Our commercial and other loans decreased by $105.1 million, with commercial loans accounting for $77.0 million of that decline. We experienced 84% of the decline in commercial and other loans through
June 30, 2006, with the remaining 16% decline from July 2006 through December 2006. We discontinued our residential mortgage group at the end of the third quarter 2006, which accounted for the elimination of loans held for sale at
December 31, 2006.

Loan maturities

The following table shows the amounts of loans outstanding at December 31, 2006, which, based on remaining scheduled repayments of principal, were due in one year or less, more than one year through five years,
and more than five years. Demand or other loans having no stated maturity and no stated schedule of repayments are reported as due in one year or less. The table also presents, for loans with maturities over one year, an analysis with respect to
fixed interest rate loans and floating interest rate loans.



|                           |  |                 |         |                                                      |   |                |  |       |         |            |   |              |  |   |         |  |   |        
|-------------------------- |  | --------------- | ------- | ---------------------------------------------------- | - | -------------- |  | ----- | ------- | ---------- | - | ------------ |  | - | ------- |  | - | -------
|                           |  | Maturity        |         | Rate Structure forLoans with Maturitiesover One Year
|                           |  | One Yearor Less |         | One throughFive Years                                |   | OverFive Years |  | Total |         | Fixed Rate |   | FloatingRate
|                           |  | (In thousands) 
|Real estatemortgage       |  | $               | 221,871 |                                                      | $ | 316,349        |  | $     | 204,304 |            | $ | 742,524      |  | $ | 171,729 |  | $ | 348,924
|Real estateconstruction   |  |                 | 338,495 |                                                      |   | 67,676         |  |       | 21,294  |            |   | 427,465      |  |   | 21,330  |  |   | 67,639 
|Commercial                 |  |                 | 335,084 |                                                      |   | 181,831        |  |       | 131,000 |            |   | 647,915      |  |   | 107,062 |  |   | 205,769
|Agricultural               |  |                 | 21,496  |                                                      |   | 21,167         |  |       | 8,675   |            |   | 51,338       |  |   | 8,367   |  |   | 21,475 
|Consumer                   |  |                 | 13,261  |                                                      |   | 22,829         |  |       | 14,132  |            |   | 50,222       |  |   | 35,011  |  |   | 1,950  
|Lease receivable and other |  |                 | 6,181   |                                                      |   | 7,610          |  |       | 18,353  |            |   | 32,144       |  |   | 4,061   |  |   | 21,903 
|                           |  |                 |         |                                                      |   |                |  |       |         |            |   |              |  |   |         |  |   |        
|Total                      |  | $               | 936,388 |                                                      | $ | 617,462        |  | $     | 397,758 |            | $ | 1,951,608    |  | $ | 347,560 |  | $ | 667,660
|                           |  |                 |         |                                                      |   |                |  |       |         |            |   |              |  |   |         |  |   |        

Nonperforming Assets and Other Impaired Loans

Credit risk related to nonperforming assets arises as a result of lending activities. To manage this risk, we employ frequent monitoring procedures, and
take prompt corrective action when necessary. We employ a risk rating system that identifies the overall potential amount of risk associated with each loan in our loan portfolio. This monitoring and rating system is designed to help management
determine current and potential problems so that corrective actions can be taken promptly.

Generally, loans are placed on nonaccrual
status when they become 90 days or more past due or at such earlier time as management determines timely recognition of interest to be in doubt. Accrual of interest is discontinued on a loan when we believe, after considering economic and business
conditions and analysis of the borrowers financial condition, that the collection of interest is doubtful.

A loan is impaired when,
based on current information and events, it is probable that we will be unable to collect all amounts due according to the contractual terms of the loan agreement. Impaired loans consist of our nonaccrual loans, loans that are 90 days or more past
due, and other loans for which we determine that noncompliance with contractual terms of the loan agreement is probable. The acquired impaired loans are valued at the present value of expected cash flows at the date of acquisition. Losses on
individually identified impaired loans that are not collateral dependent are measured based on the present value of expected future cash flows discounted at the original effective interest rate of each loan. For loans that are collateral dependent,
impairment



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is measured based on the fair value of the collateral less estimated selling costs. Impaired loans that have been purchased or acquired in a transfer are
considered impaired when, based on current information and events, it is probable that we will be unable to collect all cash flows expected at acquisition.



|                                                                                     |  |                        |        |   |                  |   |         |  
|------------------------------------------------------------------------------------ |  | ---------------------- | ------ | - | ---------------- | - | ------- | -
|                                                                                     |  | December 31,2006       |        |   | December 31,2005 |  
|                                                                                     |  | (Dollars in thousands) |       
|Nonperforming assets:                                                                |  |                        |        |   |                  |   |         |  
|Nonaccrual loans                                                                     |  | $                      | 32,852 |   |                  | $ | 29,608  |  
|Accruing loans past due 90 days or more                                              |  |                        | 3      |   |                  |   | 131     |  
|Other real estate owned                                                              |  |                        | 1,207  |   |                  |   | 1,465   |  
|                                                                                     |  |                        |        |   |                  |   |         |  
|Total nonperforming assets                                                           |  | $                      | 34,062 |   |                  | $ | 31,204  |  
|                                                                                     |  |                        |        |   |                  |   |         |  
|                                                                                     |  |                       
|Impaired loans:                                                                      |  |                        |        |   |                  |   |         |  
|Nonperforming loans                                                                  |  | $                      | 32,855 |   |                  | $ | 29,739  |  
|Other impaired loans                                                                 |  |                        | 5,978  |   |                  |   | 20,551  |  
|                                                                                     |  |                        |        |   |                  |   |         |  
|Total impaired loans                                                                 |  |                        | 38,833 |   |                  |   | 50,290  |  
|Allocated allowance for loan losses                                                  |  |                        | (8,028 | ) |                  |   | (10,360 | )
|                                                                                     |  |                        |        |   |                  |   |         |  
|Net investment in impaired loans                                                     |  | $                      | 30,805 |   |                  | $ | 39,930  |  
|                                                                                     |  |                        |        |   |                  |   |         |  
|Impaired loans with a valuation allowance                                            |  | $                      | 23,616 |   |                  | $ | 44,267  |  
|Impaired loans without a valuation allowance                                         |  |                        | 15,217 |   |                  |   | 6,023   |  
|                                                                                     |  |                        |        |   |                  |   |         |  
|Total impaired loans                                                                 |  | $                      | 38,833 |   |                  | $ | 50,290  |  
|                                                                                     |  |                        |        |   |                  |   |         |  
|Valuation allowance related to impaired loans                                        |  | $                      | 8,028  |   |                  | $ | 10,360  |  
|                                                                                     |  |                        |        |   |                  |   |         |  
|Valuation allowance as a percent of impaired loans                                   |  |                        | 20.7   | % |                  |   | 20.6    | %
|                                                                                     |  |                        |        |   |                  |   |         |  
|                                                                                     |  |                       
|Nonaccrual loans to loans, net of unearned discount                                  |  |                        | 1.69   | % |                  |   | 1.43    | %
|Nonperforming assets to loans, net of unearned discount, and other real estate owned |  |                        | 1.75   | % |                  |   | 1.51    | %
|                                                                                     |  |                       
|Allowance for loan losses to nonperforming loans                                     |  |                        | 84.91  | % |                  |   | 92.39   | %
|Allowance for loan losses to impaired loans                                          |  |                        | 71.84  | % |                  |   | 54.63   | %

Nonperforming assets of $34.1 million at December 31, 2006 reflected an increase of $2.9
million from December 31, 2005. Our nonaccrual loans increased in 2006 by $3.2 million while OREO decreased by $0.3 million. Our December 31, 2006 impaired loans of $38.8 million reflected a decrease of $11.5 million from December 31,
2005. Our percentage of nonaccrual loans to loans increased from 1.4% at December 31, 2005 to 1.7% at December 31, 2006. Our allowance for loan losses as a percentage of nonperforming loans decreased by 7.5%, while our allowance as a
percentage of impaired loans increased by 17.2%. We discuss our allowance further in the following Allowance for Loan Losses section.

The following table presents our nonperforming assets at the dates indicated:



|                                        |  |                        |        |   |             |   |        |      |  |   |        |   |  |      |        |   |  |   |        |  
|--------------------------------------- |  | ---------------------- | ------ | - | ----------- | - | ------ | ---- |  | - | ------ | - |  | ---- | ------ | - |  | - | ------ | -
|                                        |  | At December 31,        |       
|                                        |  | Successor              |        |   | Predecessor |  
|                                        |  | 2006                   |        |   | 2005        |   |        | 2004 |  |   | 2003   |   |  | 2002 |       
|                                        |  | (Dollars in thousands) |       
|Nonaccrual loans, not restructured      |  | $                      | 32,852 |   |             | $ | 29,608 |      |  | $ | 11,905 |   |  | $    | 15,338 |   |  | $ | 18,037 |  
|Accruing loans past due 90 days or more |  |                        | 3      |   |             |   | 131    |      |  |   | 2,494  |   |  |      |       |   |  |   | 16     |  
|                                        |  |                        |        |   |             |   |        |      |  |   |        |   |  |      |        |   |  |   |        |  
|Total nonperforming loans (NPLs)        |  |                        | 32,855 |   |             |   | 29,739 |      |  |   | 14,399 |   |  |      | 15,338 |   |  |   | 18,053 |  
|Other real estate owned                 |  |                        | 1,207  |   |             |   | 1,465  |      |  |   | 5,707  |   |  |      | 4,087  |   |  |   | 2,634  |  
|                                        |  |                        |        |   |             |   |        |      |  |   |        |   |  |      |        |   |  |   |        |  
|Total nonperforming assets (NPAs)       |  | $                      | 34,062 |   |             | $ | 31,204 |      |  | $ | 20,106 |   |  | $    | 19,425 |   |  | $ | 20,687 |  
|                                        |  |                        |        |   |             |   |        |      |  |   |        |   |  |      |        |   |  |   |        |  
|Selected ratios:                        |  |                        |        |   |             |   |        |      |  |   |        |   |  |      |        |   |  |   |        |  
|NPLs to total loans held for investment |  |                        | 1.69   | % |             |   | 1.44   | %    |  |   | 0.88   | % |  |      | 2.44   | % |  |   | 2.69   | %
|NPAs to total assets                    |  |                        | 1.25   | % |             |   | 1.05   | %    |  |   | 0.84   | % |  |      | 2.74   | % |  |   | 2.77   | %



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Allowance for Loan Losses

The allowance for loan losses is maintained at a level that, in our judgment, is adequate to absorb probable loan losses in the loan portfolio. The amount of the allowance is based on managements evaluation of
the collectibility of the loan portfolio, historical loss experience, and other significant factors affecting loan portfolio collectibility, including the level and trends in delinquent, nonaccrual and adversely classified loans, trends in volume
and terms of loans, levels and trends in credit concentrations, effects of changes in underwriting standards, policies, procedures and practices, national and local economic trends and conditions, changes in capabilities and experience of lending
management and staff, and other external factors including industry conditions, competition and regulatory requirements.

Our methodology
for evaluating the adequacy of the allowance for loan losses has two basic elements: first, the specific identification of impaired loans and the measurement of an estimated loss for each individual loan identified; and second, estimating a
nonspecific allowance for probable losses on all other loans. Impaired loans are discussed in the previous section.

In estimating the
nonspecific allowance for loan losses, we group the balance of the loan portfolio into segments that have common characteristics, such as loan type, collateral type or risk rating. Loans typically segregated by risk rating are those that have been
assigned risk ratings using regulatory definitions of special mention, substandard, and doubtful. Loans graded as loss are generally charged off immediately.

For each nonspecific allowance portfolio segment, we apply loss factors to calculate the required allowance. These loss factors are based upon three
years of historical loss rates and adjusted for qualitative factors affecting loan portfolio collectibility as described above.

The
specific allowance for impaired loans and the allowance calculated for probable losses on other loans are combined to determine the required allowance for loan losses. The amount calculated is compared to the actual allowance for loan losses at each
quarter end and any shortfall is covered by an additional provision for loan losses.



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The table below summarizes loans held for investment, average loans held for investment, nonperforming
loans and changes in the allowance for loan losses arising from loan losses and additions to the allowance from provisions charged to operating expense:



|                                                                  |  |                        |           |   |             |   |           |      |  |   |           |   |  |      |         |   |  |   |         |  
|----------------------------------------------------------------- |  | ---------------------- | --------- | - | ----------- | - | --------- | ---- |  | - | --------- | - |  | ---- | ------- | - |  | - | ------- | -
|                                                                  |  | Successor              |           |   | Predecessor |  
|                                                                  |  | 2006                   |           |   | 2005        |   |           | 2004 |  |   | 2003      |   |  | 2002 |        
|                                                                  |  | (Dollars in thousands) |          
|Balance, beginning of period                                      |  | $                      | 27,475    |   |             | $ | 25,022    |      |  | $ | 7,653     |   |  | $    | 9,257   |   |  | $ | 8,701   |  
|Allowance acquired through acquisition                            |  |                        |          |   |             |   | 3,855     |      |  |   | 17,304    |   |  |      |        |   |  |   |        |  
|Unfunded commitment allowance (1)                                 |  |                        |          |   |             |   | (718      | )    |  |   |          |   |  |      |        |   |  |   |        |  
|Loan charge-offs:                                                 |  |                        |           |   |             |   |           |      |  |   |           |   |  |      |         |   |  |   |         |  
|Real estatemortgage                                              |  |                        | 2,186     |   |             |   | 1,740     |      |  |   | 1,232     |   |  |      | 708     |   |  |   | 710     |  
|Real estateconstruction                                          |  |                        | 2,044     |   |             |   | 200       |      |  |   | 67        |   |  |      | 207     |   |  |   | 185     |  
|Commercial                                                        |  |                        | 1,154     |   |             |   | 2,848     |      |  |   | 2,413     |   |  |      | 975     |   |  |   | 1,500   |  
|Agricultural                                                      |  |                        | 40        |   |             |   | 35        |      |  |   | 709       |   |  |      | 810     |   |  |   | 1,083   |  
|Consumer                                                          |  |                        | 477       |   |             |   | 670       |      |  |   | 867       |   |  |      | 719     |   |  |   | 554     |  
|Lease receivable and other                                        |  |                        | 26        |   |             |   | 48        |      |  |   | 23        |   |  |      | 182     |   |  |   | 167     |  
|                                                                  |  |                        |           |   |             |   |           |      |  |   |           |   |  |      |         |   |  |   |         |  
|Total loan charge-offs:                                           |  |                        | 5,927     |   |             |   | 5,541     |      |  |   | 5,311     |   |  |      | 3,601   |   |  |   | 4,199   |  
|                                                                  |  |                        |           |   |             |   |           |      |  |   |           |   |  |      |         |   |  |   |         |  
|Recoveries:                                                       |  |                        |           |   |             |   |           |      |  |   |           |   |  |      |         |   |  |   |         |  
|Real estatemortgage                                              |  |                        | 359       |   |             |   | 188       |      |  |   | 36        |   |  |      | 78      |   |  |   | 271     |  
|Real estateconstruction                                          |  |                        | 65        |   |             |   | 135       |      |  |   | 9         |   |  |      | 194     |   |  |   | 11      |  
|Commercial                                                        |  |                        | 1,023     |   |             |   | 802       |      |  |   | 302       |   |  |      | 523     |   |  |   | 332     |  
|Agricultural                                                      |  |                        | 84        |   |             |   | 73        |      |  |   | 190       |   |  |      | 116     |   |  |   | 8       |  
|Consumer                                                          |  |                        | 223       |   |             |   | 133       |      |  |   | 126       |   |  |      | 166     |   |  |   | 149     |  
|Lease receivable and other                                        |  |                        |          |   |             |   | 126       |      |  |   | 13        |   |  |      | 20      |   |  |   | 34      |  
|                                                                  |  |                        |           |   |             |   |           |      |  |   |           |   |  |      |         |   |  |   |         |  
|Total loan recoveries                                             |  |                        | 1,754     |   |             |   | 1,457     |      |  |   | 676       |   |  |      | 1,097   |   |  |   | 805     |  
|                                                                  |  |                        |           |   |             |   |           |      |  |   |           |   |  |      |         |   |  |   |         |  
|Net loan charge-offs                                              |  |                        | 4,173     |   |             |   | 4,084     |      |  |   | 4,635     |   |  |      | 2,504   |   |  |   | 3,394   |  
|                                                                  |  |                        |           |   |             |   |           |      |  |   |           |   |  |      |         |   |  |   |         |  
|Provision for loan losses (2)                                     |  |                        | 4,597     |   |             |   | 3,400     |      |  |   | 4,700     |   |  |      | 900     |   |  |   | 3,950   |  
|                                                                  |  |                        |           |   |             |   |           |      |  |   |           |   |  |      |         |   |  |   |         |  
|Balance, end of period                                            |  | $                      | 27,899    |   |             | $ | 27,475    |      |  | $ | 25,022    |   |  | $    | 7,653   |   |  | $ | 9,257   |  
|                                                                  |  |                        |           |   |             |   |           |      |  |   |           |   |  |      |         |   |  |   |         |  
|Loans held for investment                                         |  | $                      | 1,947,487 |   |             | $ | 2,067,593 |      |  | $ | 1,641,821 |   |  | $    | 627,465 |   |  | $ | 669,885 |  
|Average loans held for investment                                 |  |                        | 1,975,055 |   |             |   | 1,774,241 |      |  |   | 614,543   |   |  |      | 652,046 |   |  |   | 658,378 |  
|Non-performing loans                                              |  |                        | 32,855    |   |             |   | 29,739    |      |  |   | 14,339    |   |  |      | 15,338  |   |  |   | 18,053  |  
|Selected ratios:                                                  |  |                        |           |   |             |   |           |      |  |   |           |   |  |      |         |   |  |   |         |  
|Net charge-offs to average loans held for investment              |  |                        | 0.21      | % |             |   | 0.23      | %    |  |   | 0.76      | % |  |      | 0.38    | % |  |   | 0.52    | %
|Provision for the allowance for loans to average loans            |  |                        | 0.23      | % |             |   | 0.19      | %    |  |   | 0.76      | % |  |      | 0.14    | % |  |   | 0.60    | %
|Allowance for loans to loans held for investment at end of period |  |                        | 1.43      | % |             |   | 1.33      | %    |  |   | 1.52      | % |  |      | 1.22    | % |  |   | 1.38    | %
|Allowance for loans to non-performing loans                       |  |                        | 84.91     | % |             |   | 92.39     | %    |  |   | 173.78    | % |  |      | 49.90   | % |  |   | 51.28   | %

---

|(1) | The reserve for unfunded loan commitments was reclassified from the allowance for loan losses to other liabilities at December 31, 2005.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------

|(2) | The provision for credit losses noted in the financials statements includes provision for loan losses of $4,597,000 and a recovery on the reserve for unfunded commitments of
$307,000 for the year ended December 31, 2006.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

At December 31, 2006, the allowance for loan losses was $27.9
million, which represents an increase of $0.4 million from December 31, 2005. The ratio of the allowance for loan losses to nonperforming loans was 84.9% at December 31, 2006, and represented a decrease of 7.5 percentage points from
December 31, 2005. The



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ratio of the allowance for loan losses to loans, net of unearned discount, was 1.43% at December 31, 2006, as compared to 1.33% at December 31,
2005. For the year ended December 31, 2006, we had net charge-offs of $4.2 million and provision for credit losses of $4.3 million. The Companys loss exposure on its substandard loans continues to be mitigated by collateral positions on
these loans. Management continues to monitor the allowance for loan losses closely and will adjust the allowance when necessary, based on its analysis, which includes ongoing evaluation of substandard loans and their collateral positions.

The following table allocates the allowance for loan losses based on our judgment of inherent losses in the respective categories. While
we have allocated the allowance to various portfolio segments for purposes of this table, the allowance for loan losses is general and is available for the portfolio in its entirety:



|                            |  |                           |        |                                             |             |   |                           |      |                                             |  |       |                           |  |                                             |        |  |                           |   |                                             |   |       |                           |       |                                             |  |   |       |  |       |  
|--------------------------- |  | ------------------------- | ------ | ------------------------------------------- | ----------- | - | ------------------------- | ---- | ------------------------------------------- |  | ----- | ------------------------- |  | ------------------------------------------- | ------ |  | ------------------------- | - | ------------------------------------------- | - | ----- | ------------------------- | ----- | ------------------------------------------- |  | - | ----- |  | ----- | -
|                            |  | At December 31,           |       
|                            |  | Successor                 |        |                                             | Predecessor |  
|                            |  | 2006                      |        |                                             | 2005        |   |                           | 2004 |                                             |  | 2003  |                           |  | 2002                                        |       
|                            |  | Allocationof theAllowance |        | Percentof Loansin EachCategoryto TotalLoans |             |   | Allocationof theAllowance |      | Percentof Loansin EachCategoryto TotalLoans |  |       | Allocationof theAllowance |  | Percentof Loansin EachCategoryto TotalLoans |        |  | Allocationof theAllowance |   | Percentof Loansin EachCategoryto TotalLoans |   |       | Allocationof theAllowance |       | Percentof Loansin EachCategoryto TotalLoans | 
|                            |  | (Dollars in thousands)    |       
|Real estatemortgage        |  | $                         | 6,150  |                                             | 22.0        | % |                           | $    | 10,611                                      |  | 38.6  | %                         |  | $                                           | 7,139  |  | 28.5                      | % |                                             | $ | 3,703 |                           | 54.6  | %                                           |  | $ | 4,575 |  | 46.3  | %
|Real estateconstruction    |  |                           | 8,520  |                                             | 30.5        | % |                           |      | 1,928                                       |  | 7.0   | %                         |  |                                             | 2,844  |  | 11.4                      | % |                                             |   | 1,012 |                           | 17.6  | %                                           |  |   | 1,208 |  | 19.1  | %
|Commercial                  |  |                           | 8,452  |                                             | 30.3        | % |                           |      | 9,115                                       |  | 33.2  | %                         |  |                                             | 6,185  |  | 24.7                      | % |                                             |   | 1,635 |                           | 11.0  | %                                           |  |   | 1,550 |  | 13.6  | %
|Agricultural                |  |                           | 2,071  |                                             | 7.4         | % |                           |      | 477                                         |  | 1.7   | %                         |  |                                             | 1,463  |  | 5.8                       | % |                                             |   | 385   |                           | 11.4  | %                                           |  |   | 580   |  | 14.3  | %
|Consumer                    |  |                           | 2,027  |                                             | 7.3         | % |                           |      | 721                                         |  | 2.6   | %                         |  |                                             | 1,458  |  | 5.8                       | % |                                             |   | 549   |                           | 4.7   | %                                           |  |   | 748   |  | 5.8   | %
|Leases receivable and other |  |                           | 679    |                                             | 2.5         | % |                           |      | 8                                           |  | 0.0   | %                         |  |                                             | 137    |  | 0.5                       | % |                                             |   | 41    |                           | 0.7   | %                                           |  |   | 49    |  | 0.9   | %
|Unallocated (a)             |  |                           |       |                                             | 0.0         | % |                           |      | 4,615                                       |  | 16.9  | %                         |  |                                             | 5,796  |  | 23.3                      | % |                                             |   | 328   |                           | 0.0   | %                                           |  |   | 547   |  | 0.0   | %
|                            |  |                           |        |                                             |             |   |                           |      |                                             |  |       |                           |  |                                             |        |  |                           |   |                                             |   |       |                           |       |                                             |  |   |       |  |       |  
|Total                       |  | $                         | 27,899 |                                             | 100.0       | % |                           | $    | 27,475                                      |  | 100.0 | %                         |  | $                                           | 25,022 |  | 100.0                     | % |                                             | $ | 7,653 |                           | 100.0 | %                                           |  | $ | 9,257 |  | 100.0 | %
|                            |  |                           |        |                                             |             |   |                           |      |                                             |  |       |                           |  |                                             |        |  |                           |   |                                             |   |       |                           |       |                                             |  |   |       |  |       |  

---

|(a) | Represents our estimate of probable loss associated with general economic conditions and portfolio concentrations that are not directly correlated to a specific loan classification.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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##### Table of Contents

Securities

We manage our investment portfolio principally to provide liquidity and to balance our overall interest rate risk. To a lesser extent, we manage our investment portfolio to provide earnings with a view to minimizing credit risk. The
carrying value of our portfolio of investment securities at December 31, 2006, 2005 and 2004 was as follows:



|                                                 |  |                 |         |      |   |         |  |   |        
|------------------------------------------------ |  | --------------- | ------- | ---- | - | ------- |  | - | -------
|                                                 |  | At December 31,
|                                                 |  | Successor      
|                                                 |  | 2006            |         | 2005 |   | 2004   
|                                                 |  | (In thousands) 
|Securities available-for-sale:                   |  |                 |         |      |   |         |  |   |        
|U.S. Treasury securities                         |  | $               |        |      | $ | 13,076  |  | $ | 38,170 
|U.S. Government agencies                         |  |                 | 2,408   |      |   | 5,367   |  |   | 8,479  
|Obligations of states and political subdivisions |  |                 | 115,571 |      |   | 72,893  |  |   | 34,321 
|Mortgage backed securities                       |  |                 | 38,440  |      |   | 50,043  |  |   | 43,713 
|Other securities                                 |  |                 | 841     |      |   | 1,702   |  |   | 1,004  
|                                                 |  |                 |         |      |   |         |  |   |        
|Total securities available-for-sale              |  | $               | 157,260 |      | $ | 143,081 |  | $ | 125,687
|                                                 |  |                 |         |      |   |         |  |   |        
|Securities held-to-maturity:                     |  |                 |         |      |   |         |  |   |        
|Mortgage-backed securities                       |  | $               | 11,217  |      | $ | 5,798   |  | $ | 640    
|                                                 |  |                 |         |      |   |         |  |   |        
|Bank stocks at cost                              |  | $               | 31,845  |      | $ | 26,874  |  | $ | 12,770 
|                                                 |  |                 |         |      |   |         |  |   |        

The carrying value of our investment securities at December 31, 2006 totaled $200.3 million
compared to $175.8 million at December 31, 2005. The makeup of our investment portfolio shifted during 2006 away from U.S. government securities to obligations of states and political subdivisions, which have a higher yield and earn tax-exempt
income. In 2006, we financed a hospital construction project through the purchase of $40 million of the hospitals bonds, which is recorded as an available-for-sale security. At December 31, 2006 and 2005, we had $62.5 million and $20.0
million, respectively, of million of lending arrangements structured as investment securities and carried as obligations of states and political subdivisions at December 31, 2006.

The following table shows the maturities of investment securities at December 31, 2006, and the weighted average yields of such securities,
excluding the benefit of tax-exempt securities:



|                                                 |  |                        |       |       |                                      |   |        |                                       |        |  |                 |        |  |       |        |  |        |   |       |   |        |  |      |  
|------------------------------------------------ |  | ---------------------- | ----- | ----- | ------------------------------------ | - | ------ | ------------------------------------- | ------ |  | --------------- | ------ |  | ----- | ------ |  | ------ | - | ----- | - | ------ |  | ---- | -
|                                                 |  | At December 31, 2006   |      
|                                                 |  | Within OneYear         |       |       | After One Year but
within Five Years |   |        | After Five Years but within Ten Years |        |  | After Ten Years |       
|                                                 |  |                        |       |      
|                                                 |  | Amount                 |       | Yield |                                      |   | Amount |                                       | Yield  |  |                 | Amount |  | Yield |        |  | Amount |   | Yield |  
|                                                 |  | (Dollars in Thousands) |      
|Securities available-for-sale:                   |  |                        |       |       |                                      |   |        |                                       |        |  |                 |        |  |       |        |  |        |   |       |   |        |  |      |  
|U.S. Government agencies                         |  | $                      |      |       | 0.00                                 | % |        | $                                     | 2,408  |  | 4.56            | %      |  | $     |       |  | 0.00   | % |       | $ |       |  | 0.00 | %
|Obligations of states and political subdivisions |  |                        | 2,908 |       | 5.89                                 | % |        |                                       | 44,118 |  | 8.43            | %      |  |       | 10,334 |  | 5.94   | % |       |   | 58,211 |  | 7.20 | %
|Mortgage backed securities                       |  |                        |      |       | 0.00                                 | % |        |                                       | 1,404  |  | 4.36            | %      |  |       | 16,338 |  | 4.67   | % |       |   | 20,698 |  | 4.78 | %
|Other securities                                 |  |                        |      |       | 0.00                                 | % |        |                                       | 841    |  | 23.74           | %      |  |       |       |  | 0.00   | % |       |   |       |  | 0.00 | %
|                                                 |  |                        |       |       |                                      |   |        |                                       |        |  |                 |        |  |       |        |  |        |   |       |   |        |  |      |  
|Total securities available-for-sale              |  | $                      | 2,908 |       | 5.89                                 | % |        | $                                     | 48,771 |  | 8.39            | %      |  | $     | 26,672 |  | 5.16   | % |       | $ | 78,909 |  | 6.57 | %
|                                                 |  |                        |       |       |                                      |   |        |                                       |        |  |                 |        |  |       |        |  |        |   |       |   |        |  |      |  
|Securities held-to-maturity:                     |  |                        |       |       |                                      |   |        |                                       |        |  |                 |        |  |       |        |  |        |   |       |   |        |  |      |  
|                                                 |  |                        |       |       |                                      |   |        |                                      
|Mortgage-backed                                  |  | $                      |      |       | 0.00                                 | % |        | $                                     |       |  | 0.00            | %      |  | $     |       |  | 0.00   | % |       | $ | 11,217 |  | 5.49 | %
|                                                 |  |                        |       |       |                                      |   |        |                                       |        |  |                 |        |  |       |        |  |        |   |       |   |        |  |      |  

At December 31, 2006 and 2005, we held $31.8 million and $26.9 million, respectively, of
other securities consisting of equity securities with no maturity date, which are not reflected in the above schedule.



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##### Table of Contents

Deposits

Total deposits were $2.0 billion at both December 31, 2006 and 2005. Our 2006 average noninterest bearing deposits constituted 26.2% of our 2006 average total average deposits, which compares to 2005 average noninterest bearing
deposits to 2005 total average deposits of 28.8%. Our noninterest-bearing demand deposits decreased by $76.2 million, while our interest bearing demand deposits, including money market and savings accounts, increased by $43.3 million. Our
certificates of deposit decreased by $55.4 million to $577.6 million at December 31, 2006, or 29.5% of total deposits, compared to 30.9% at December 31, 2005. Our 2006 cost on interest-bearing liabilities increased to 3.2% from 2.0% for
2005. We increased the interest rates paid on money market accounts and certificates of deposit in response to increased competition for deposits and a rising interest rate environment through June 2006.

The following table shows the average amount and average rate paid on the categories of deposits for each of the periods indicated:



|                             |  |                        |           |             |                                   |   |                |      |             |  |      |                |  |             |         |  |      |  
|---------------------------- |  | ---------------------- | --------- | ----------- | --------------------------------- | - | -------------- | ---- | ----------- |  | ---- | -------------- |  | ----------- | ------- |  | ---- | -
|                             |  | At December 31,        |          
|                             |  | Successor              |           |             | Combined Successorand Predecessor |  
|                             |  | 2006                   |           |             | 2005                              |   |                | 2004 |            
|                             |  | AverageBalance         |           | AverageRate |                                   |   | AverageBalance |      | AverageRate |  |      | AverageBalance |  | AverageRate |        
|                             |  | (Dollars in thousands) |          
|Interest bearing demand      |  | $                      | 167,381   |             | 0.58                              | % |                | $    | 122,967     |  | 0.35 | %              |  | $           | 49,068  |  | 0.25 | %
|Money market                 |  |                        | 628,342   |             | 3.41                              | % |                |      | 535,974     |  | 1.89 | %              |  |             | 118,677 |  | 1.07 | %
|Savings                      |  |                        | 93,622    |             | 0.75                              | % |                |      | 85,539      |  | 0.73 | %              |  |             | 26,283  |  | 0.49 | %
|Time                         |  |                        | 574,320   |             | 4.22                              | % |                |      | 501,564     |  | 2.73 | %              |  |             | 282,774 |  | 2.28 | %
|Noninterest bearing deposits |  |                        | 519,893   |             | 0.00                              | % |                |      | 503,868     |  | 0.00 | %              |  |             | 92,525  |  | 0.00 | %
|                             |  |                        |           |             |                                   |   |                |      |             |  |      |                |  |             |         |  |      |  
|Totals                       |  | $                      | 1,983,558 |             | 3.23                              | % |                | $    | 1,749,912   |  | 2.00 | %              |  | $           | 569,327 |  | 1.67 | %
|                             |  |                        |           |             |                                   |   |                |      |             |  |      |                |  |             |         |  |      |  

Additionally, the following table shows the maturities of time certificates of deposit and other
time deposits of $100,000 or more at December 31, 2006 and December 31, 2005.



|                                             |  |                 |         |      |   |        
|-------------------------------------------- |  | --------------- | ------- | ---- | - | -------
|                                             |  | At December 31,
|                                             |  | 2006            |         | 2005
|                                             |  | (In thousands) 
|Due in three months or less                  |  | $               | 102,070 |      | $ | 169,729
|Due in over three months through six months  |  |                 | 63,637  |      |   | 79,289 
|Due in over six months through twelve months |  |                 | 138,009 |      |   | 91,578 
|Due in over twelve months                    |  |                 | 58,638  |      |   | 30,202 
|                                             |  |                 |         |      |   |        
|Totals                                       |  | $               | 362,354 |      | $ | 370,798
|                                             |  |                 |         |      |   |        

The following table presents the mix of our deposits by type based on average balances for each of
the periods indicated. Our acquisitions were the primary driver in the 2004 to 2005 change of deposit mix.



|                             |  |                        |           |           |                                   |   |                |      |           |  |        |                |  |           |         |  |        |  
|---------------------------- |  | ---------------------- | --------- | --------- | --------------------------------- | - | -------------- | ---- | --------- |  | ------ | -------------- |  | --------- | ------- |  | ------ | -
|                             |  | At December 31,        |          
|                             |  | Successor              |           |           | Combined Successorand Predecessor |  
|                             |  | 2006                   |           |           | 2005                              |   |                | 2004 |          
|                             |  | AverageBalance         |           | % ofTotal |                                   |   | AverageBalance |      | % ofTotal |  |        | AverageBalance |  | % ofTotal |        
|                             |  | (Dollars in thousands) |          
|Interest bearing demand      |  | $                      | 167,381   |           | 8.44                              | % |                | $    | 122,967   |  | 7.03   | %              |  | $         | 49,068  |  | 8.62   | %
|Money market                 |  |                        | 628,342   |           | 31.68                             | % |                |      | 535,974   |  | 30.63  | %              |  |           | 118,677 |  | 20.85  | %
|Savings                      |  |                        | 93,622    |           | 4.72                              | % |                |      | 85,539    |  | 4.89   | %              |  |           | 26,283  |  | 4.62   | %
|Time                         |  |                        | 574,320   |           | 28.95                             | % |                |      | 501,564   |  | 28.66  | %              |  |           | 282,774 |  | 49.67  | %
|Noninterest bearing deposits |  |                        | 519,893   |           | 26.21                             | % |                |      | 503,868   |  | 28.79  | %              |  |           | 92,525  |  | 16.24  | %
|                             |  |                        |           |           |                                   |   |                |      |           |  |        |                |  |           |         |  |        |  
|Totals                       |  | $                      | 1,983,558 |           | 100.00                            | % |                | $    | 1,749,912 |  | 100.00 | %              |  | $         | 569,327 |  | 100.00 | %
|                             |  |                        |           |           |                                   |   |                |      |           |  |        |                |  |           |         |  |        |  



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##### Table of Contents

Borrowings

Subordinated Debentures and Trust Preferred Securities

In September 2000, our Predecessor formed CenBank Statutory Trust I
and completed an offering of $10.0 million 10.6% Cumulative Trust Preferred Securities, which are guaranteed by us. The Trust also issued common securities to Predecessor and used the net proceeds from the offering to purchase $10.3 million in
principal amount of 10.6% Subordinated Debentures issued by our predecessor. Interest paid on the 10.6% Debentures will be distributed to the holders of the 10.6% Preferred Securities. Distributions payable on the 10.6% Preferred Securities are
recorded as interest expense in the consolidated statements of income. These 10.6% Debentures are unsecured, junior rank and are subordinate in right of payment to all senior debt of the Company. The 10.6% Preferred Securities are subject to
mandatory redemption upon repayment of the 10.6% Debentures. We have the right, subject to events of default, to defer payments of interest on the 10.6% Debentures at any time by extending the interest payment period for a period not exceeding 10
consecutive semi-annual periods with respect to each deferral period, provided that no extension period may extend beyond the redemption or maturity date of the 10.6% Debentures. The 10.6% Debentures mature on September 7, 2030, which may be
shortened by us to not earlier than September 7, 2010, if certain conditions are met, or at any time upon the occurrence and continuation of certain changes in either the tax treatment or the capital treatment of the Trust, the 10.6% Debentures
or the 10.6% Preferred Securities.

In February 2001, our Predecessor formed CenBank Statutory Trust II and completed an offering of $5.0
million 10.2% Cumulative Trust Preferred Securities, which are guaranteed by us. The Trust also issued common securities to Predecessor and used the net proceeds from the offering to purchase $5.2 million in principal amount of 10.2% Subordinated
Debentures issued by our predecessor. Interest paid on the 10.2% Debentures will be distributed to the holders of the 10.2% Preferred Securities. Terms and conditions of the 10.2% Debentures are substantially similar to those as described under the
CenBank Statutory Trust I. The 10.2% Debentures mature on February 22, 2031, which may be shortened by us to not earlier than February 22, 2011, if certain conditions are met, or at any time upon the occurrence and continuation of certain
changes in either the tax treatment or the capital treatment of the Trust, the 10.2% Debentures or the 10.2% Preferred Securities.

In
April 2004, our Predecessor formed CenBank Statutory Trust III and completed an offering of $15.0 million LIBOR plus 2.65% Cumulative Trust Preferred Securities, which are guaranteed by us. The Trust also issued common securities to Predecessor and
used the net proceeds from the offering to purchase $15.5 million in principal amount of floating rate Subordinated Debentures issued by our predecessor. Interest paid on the floating rate Debentures will be distributed to the holders of the
floating rate Preferred Securities. Terms and conditions of the floating rate Debentures are substantially similar to those as described under the CenBank Statutory Trust I. The floating rate Debentures mature on April 15, 2034, which may be
shortened by us to not earlier than April 15, 2009, if certain conditions are met, or at any time upon the occurrence and continuation of certain changes in either the tax treatment or the capital treatment of the Trust, the floating rate
Debentures or the floating rate Preferred Securities.

In June 2003, Guaranty Corporation formed Guaranty Capital Trust III and completed
an offering of $10.0 million LIBOR plus 3.10% Cumulative Trust Preferred Securities, which are guaranteed by us. The Trust also issued common securities to Guaranty and used the net proceeds from the offering to purchase $10.3 million in principal
amount of Junior Subordinated Debt Securities issued by Guaranty. We assumed Guarantys obligations relating to such securities upon our acquisition of Guaranty. Interest paid on the debt securities will be distributed to the holders of the
Preferred Securities. We have the right, subject to events of default, to defer payments of interest on the subordinated debt securities at any time by extending the interest payment period for a period not exceeding 20 consecutive quarterly periods
with respect to each deferral period, provided that no extension period may extend beyond the redemption or maturity date of the subordinated debt securities. The subordinated debt securities mature on July 7, 2033, which may be shortened by us
to not earlier than July 7, 2008, if certain conditions are met, or at any time upon the occurrence and continuation of certain changes in either the tax treatment or the capital treatment of the trust, the subordinated debt securities or the
trust preferred securities.



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##### Table of Contents

For financial reporting purposes, the trusts were treated as our non-banking subsidiaries and
consolidated in the consolidated financial statements prior to December 31, 2003. Since our adoption of FIN 46R on December 31, 2003, the trusts are treated as investments and not consolidated in the consolidated financial statements.
Although the securities issued by each of the trusts are not included as a component of stockholders equity in the consolidated balance sheets, the securities are treated as capital for regulatory purposes. Specifically, under applicable
regulatory guidelines, the securities issued by the trusts qualify as Tier 1 capital up to a maximum of 25% of Tier 1 capital on an aggregate basis. Any amount that exceeds 25% qualifies as Tier 2 capital. At December 31, 2006, all of the
trusts securities outstanding qualified as Tier 1 capital.

In March 2005, the Federal Reserve Board issued a final rule that
continues to allow the inclusion of trust preferred securities in Tier 1 capital, but with stricter quantitative limits. Under the final rule, after a five-year transition period ending March 31, 2009, the aggregate amount of trust preferred
securities and certain other capital elements would be limited to 25% of Tier 1 capital elements, net of goodwill, less any associated deferred tax liability. The amount of trust preferred securities and certain other elements in excess of the limit
could be included in Tier 2 capital, subject to restrictions.

Other Borrowings

We have a revolving line of credit and several term notes with the Federal Home Loan Bank. At December 31, 2006, we had $55.2 million and $9.1
million, respectively. The maximum credit allowance for future borrowings was $301.0 million at December 31, 2006 and includes term notes and the line of credit. The interest rate on the line of credit varies daily with the federal funds rate.
The term notes have fixed interest rates that range from 2.52% to 6.22%. We have executed a blanket pledge and security agreement with the Federal Home Loan Bank, which encompasses certain loans and securities as collateral for these borrowings.

We have a $70 million revolving credit agreement, as amended, with U.S. Bank National Association that contains financial covenants,
including maintaining a minimum return on average assets, a maximum nonperforming assets to total loans ratio, and regulatory capital ratios that qualify the Company as well-capitalized. As of December 31, 2006, we had an outstanding balance of
$2.5 million and were in compliance with all debt covenants. The line of credit has a variable rate based on the federal funds rate, which was 6.7% at December 31, 2006. The line of credit is secured by the stock of Guaranty Bank. U.S. Bank
performs various commercial banking services for the Company for which they receive usual and customary fees.



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##### Table of Contents

CAPITAL

Current risk-based regulatory capital standards generally require banks and bank holding companies to maintain a ratio of core or Tier 1 capital to total risk-weighted assets of at least 4%, a ratio of Tier 1 capital
to total average assets (leverage ratio) of at least 4% and a ratio of total capital (which includes Tier 1 capital plus certain forms of subordinated debt, a portion of the allowance for loan and lease losses and preferred stock) to total
risk-weighted assets of at least 8%. Total risk-weighted assets are calculated by multiplying the balance in each category of assets by a risk factor, which ranges from zero for cash assets and certain government obligations to 100% for high risk
loans, and adding the products together.



|                                            |  |                          |   |  |                           |   |  |                                                    |  
|------------------------------------------- |  | ------------------------ | - |  | ------------------------- | - |  | -------------------------------------------------- | -
|                                            |  | Ratio atDecember 31,2006 |   |  | MinimumCapitalRequirement |   |  | MinimumRequirementfor WellCapitalizedInstitution |  
|Total Risk-Based Capital Ratio              |  |                          |   |  |                           |   |  |                                                    |  
|Consolidated Centennial Bank Holdings, Inc. |  | 11.17                    | % |  | 8.00                      | % |  | 10.00                                              | %
|Centennial Bank of the West                 |  | 11.36                    | % |  | 8.00                      | % |  | 10.00                                              | %
|Guaranty Bank and Trust Company             |  | 10.93                    | % |  | 8.00                      | % |  | 10.00                                              | %
|                                            |  |                          |  
|Tier 1 Risk Based Capital Ratio             |  |                          |   |  |                           |   |  |                                                    |  
|Consolidated Centennial Bank Holdings, Inc. |  | 9.92                     | % |  | 4.00                      | % |  | 6.00                                               | %
|Centennial Bank of the West                 |  | 10.10                    | % |  | 4.00                      | % |  | 6.00                                               | %
|Guaranty Bank and Trust Company             |  | 9.82                     | % |  | 4.00                      | % |  | 6.00                                               | %
|                                            |  |                          |  
|Leverage Ratio                              |  |                          |   |  |                           |   |  |                                                    |  
|Consolidated Centennial Bank Holdings, Inc. |  | 8.93                     | % |  | 4.00                      | % |  | 5.00                                               | %
|Centennial Bank of the West                 |  | 8.90                     | % |  | 4.00                      | % |  | 5.00                                               | %
|Guaranty Bank and Trust Company             |  | 9.14                     | % |  | 4.00                      | % |  | 5.00                                               | %

LIQUIDITY

Based on our existing business plan, we believe that our level of liquid assets is sufficient to meet our current and presently anticipated funding needs.

We rely on dividends, management fees, and charges for services from our subsidiary banks as primary sources of liquidity for the holding company. We
plan to continue to utilize the available dividends from the Banks for holding company operations, subject to regulatory and other restrictions. In general, the Banks are able to dividend earnings to the holding company, subject to the Banks
maintaining capital ratios that meet the minimum requirement for classification for well-capitalized institutions. In addition to our bank subsidiaries, we also utilize our $70 million revolving credit agreement for liquidity management purposes.
All lines of credit are expected to be renewed. We require liquidity for the payment of interest on the subordinated debentures, for operating expenses, principally salaries and benefits, for repurchases of our common stock, and, if declared by our
board of directors, for the payment of dividends to our stockholders.

The Banks rely on deposits as their principal source of funds and,
therefore, must be in a position to service depositors needs as they arise. In addition, while fluctuations in the balances of large depositors may cause temporary increases and decreases in liquidity from time to time, we have not experienced
difficulty in dealing with such fluctuations from existing liquidity sources.

Liquid assets represented approximately 7.6% of total assets
at December 31, 2006. We believe that if the level of liquid assets (our primary liquidity) does not meet our liquidity needs, other available sources of liquid assets (our secondary liquidity), including the purchase of federal funds, sales of
securities under agreements to repurchase, sales of loans, discount window borrowings from the Federal Reserve Bank and our lines of credit with the Federal Home Loan Bank of Topeka and U.S. Bank, could be employed to meet those current and
presently anticipated funding needs.



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OFF BALANCE SHEET ARRANGEMENTS, COMMITMENTS, GUARANTEES, AND CONTRACTUAL OBLIGATIONS

Contractual Obligations

The following
table sets forth our significant contractual obligations at December 31, 2006:



|                                   |  |                        |         |                  |   |             |  |             |        |             |   |        |  |   |       
|---------------------------------- |  | ---------------------- | ------- | ---------------- | - | ----------- |  | ----------- | ------ | ----------- | - | ------ |  | - | ------
|                                   |  | Payments Due by Period
|                                   |  | Totals                 |         | Less Than 1 Year |   | 1 - 3 Years |  | 4 - 5 Years |        | Over 5Years
|                                   |  | (In thousands)        
|Contractual Obligations            |  |                        |         |                  |   |             |  |             |        |             |   |        |  |   |       
|Subordinated Debentures            |  | $                      | 41,239  |                  | $ |            |  | $           |       |             | $ |       |  | $ | 41,239
|Treasury Tax and Loan note         |  |                        | 867     |                  |   |            |  |             |       |             |   |       |  |   | 867   
|U.S. Bank Line of Credit           |  |                        | 2,450   |                  |   | 2,450       |  |             |       |             |   |       |  |   |      
|Federal Home Loan Bank Obligations |  |                        | 64,315  |                  |   | 56,504      |  |             | 2,922  |             |   | 4,485  |  |   | 404   
|Operating Lease Obligations        |  |                        | 23,463  |                  |   | 3,226       |  |             | 5,817  |             |   | 5,476  |  |   | 8,944 
|Purchase Obligations               |  |                        | 6,336   |                  |   | 2,333       |  |             | 3,547  |             |   | 456    |  |   |      
|                                   |  |                        |         |                  |   |             |  |             |        |             |   |        |  |   |       
|Totals                             |  | $                      | 138,670 |                  | $ | 64,513      |  | $           | 12,286 |             | $ | 10,417 |  | $ | 51,454
|                                   |  |                        |         |                  |   |             |  |             |        |             |   |        |  |   |       

Off-Balance Sheet Arrangements



|                             |  |                        |         |                 |   |             |  |             |         |             |   |        |  |   |      
|---------------------------- |  | ---------------------- | ------- | --------------- | - | ----------- |  | ----------- | ------- | ----------- | - | ------ |  | - | -----
|                             |  | Payments Due by Period
|                             |  | Totals                 |         | Less Than1 Year |   | 1 - 3 Years |  | 4 - 5 Years |         | Over 5Years
|                             |  | (In thousands)        
|Commitments                  |  |                        |         |                 |   |             |  |             |         |             |   |        |  |   |      
|Commitments to extend credit |  | $                      | 555,757 |                 | $ | 370,864     |  | $           | 164,420 |             | $ | 15,009 |  | $ | 5,464
|Standby letters of credit    |  |                        | 32,382  |                 |   | 28,723      |  |             | 3,636   |             |   | 5      |  |   | 18   
|Commercial letters of credit |  |                        | 274     |                 |   | 274         |  |             |        |             |   |       |  |   |     
|                             |  |                        |         |                 |   |             |  |             |         |             |   |        |  |   |      
|Totals                       |  | $                      | 588,413 |                 | $ | 399,861     |  | $           | 168,056 |             | $ | 15,014 |  | $ | 5,482
|                             |  |                        |         |                 |   |             |  |             |         |             |   |        |  |   |      

Recently Issued Accounting Pronouncements

See Note 2 of the Notes to Consolidated Financial Statements contained in Item 8. Financial Statements and Supplementary Data for information
on recent accounting pronouncements and their impact, if any, on our consolidated financial statements.



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|ITEM 7A. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|-------- | ----------------------------------------------------------

Market risk is the risk of loss in a financial instrument arising from adverse changes in market prices and rates, foreign currency exchange rates, commodity prices and equity prices. Our market risk arises primarily from interest rate risk
inherent in our lending and deposit taking activities. To that end, management actively monitors and manages our interest rate risk exposure. We have not entered into any market risk sensitive instruments for trading purposes. We manage our interest
rate sensitivity by matching the re-pricing opportunities on our earning assets to those on our funding liabilities. We use various asset/liability strategies to manage the re-pricing characteristics of our assets and liabilities designed to ensure
that exposure to interest rate fluctuations is limited within our guidelines of acceptable levels of risk-taking. Hedging strategies, including the terms and pricing of loans and deposits and managing the deployment of our securities are used to
reduce mismatches in interest rate re-pricing opportunities of portfolio assets and their funding sources.

Our Asset Liability Management
Committee, or ALCO, addresses interest rate risk. The committee is composed of members of our senior management. The ALCO monitors interest rate risk by analyzing the potential impact on the net portfolio of equity value and net interest income from
potential changes in interest rates, and considers the impact of alternative strategies or changes in balance sheet structure. The ALCO manages our balance sheet in part to maintain the potential impact on net portfolio value and net interest income
within acceptable ranges despite changes in interest rates.

Our exposure to interest rate risk is reviewed on at least a quarterly basis
by the ALCO and our board of directors. Interest rate risk exposure is measured using interest rate sensitivity analysis to determine our change in net portfolio value and net interest income in the event of hypothetical changes in interest rates.
If potential changes to net portfolio value and net interest income resulting from hypothetical interest rate changes are not within board-approved limits, the board may direct management to adjust the asset and liability mix to bring interest rate
risk within board-approved limits.

We monitor and evaluate our interest rate risk position on a quarterly basis using traditional gap
analysis, earnings at risk analysis and economic value at risk analysis under 100 and 200 basis point change scenarios. Each of these analyses measures different interest rate risk factors inherent in the balance sheet. Traditional gap analysis,
although not a complete view of these risks, provides a fair representation of our current interest rate risk exposure.

Gap Analysis

A traditional measure of a financial institutions interest rate risk is the static gap analysis. Traditional gap analysis
calculates the dollar amount of mismatches between assets and liabilities, at certain time periods, whose interest rates are subject to repricing at their contractual maturity date or repricing period. A static gap is the difference between the
amount of assets and liabilities that are expected to mature or re-price within a specific period. Generally, a positive gap benefits an institution during periods of rising interest rates, and a negative gap benefits an institution during periods
of declining interest rates.



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At December 31, 2006, we had a negative gap of $109.7 million, or negative 4.0% of our total assets,
that would be subject to re-pricing within one year, with a total positive gap of $512.3 million, or 18.8% of our total assets. The following table sets forth information concerning re-pricing opportunities for our interest-earning assets and
interest bearing liabilities as of December 31, 2006. The amount of assets and liabilities shown within a particular period were determined in accordance with their contractual maturities, except that adjustable rate products are included in
the period in which they are first scheduled to adjust and not in the period in which they mature. Such assets and liabilities are classified by the earlier of their maturity or re-pricing date:



|                                                               |  |                        |           |   |                   |   |          |             |  |   |             |   |  |                          |         |   |       |   |           |   |  |   |          
|-------------------------------------------------------------- |  | ---------------------- | --------- | - | ----------------- | - | -------- | ----------- |  | - | ----------- | - |  | ------------------------ | ------- | - | ----- | - | --------- | - |  | - | ---------
|                                                               |  | Less Than3 Months      |           |   | 3 Monthsto 1 Year |   |          | 1 to 5Years |  |   | Over5 Years |   |  | NotInterestRateSensitive |         |   | Total
|                                                               |  | (Dollars in thousands)
|Interest-bearing cash and cash equivalents                     |  | $                      | 4,244     |   |                   | $ |         |             |  | $ |            |   |  | $                        |        |   |       | $ |          |   |  | $ | 4,244    
|Investment securities                                          |  |                        | 24,456    |   |                   |   | 12,696   |             |  |   | 30,131      |   |  |                          | 101,194 |   |       |   | 31,845    |   |  |   | 200,322  
|Loans, gross                                                   |  |                        | 1,095,217 |   |                   |   | 191,560  |             |  |   | 468,955     |   |  |                          | 160,658 |   |       |   | 31,097    |   |  |   | 1,947,487
|All other assets                                               |  |                        |          |   |                   |   |         |             |  |   |            |   |  |                          |        |   |       |   | 568,547   |   |  |   | 568,547  
|                                                               |  |                        |           |   |                   |   |          |             |  |   |             |   |  |                          |         |   |       |   |           |   |  |   |          
|Totals                                                         |  | $                      | 1,123,917 |   |                   | $ | 204,256  |             |  | $ | 499,086     |   |  | $                        | 261,852 |   |       | $ | 631,489   |   |  | $ | 2,720,600
|                                                               |  |                        |           |   |                   |   |          |             |  |   |             |   |  |                          |         |   |       |   |           |   |  |   |          
|Deposits                                                       |  | $                      | 1,006,650 |   |                   | $ | 345,904  |             |  | $ | 89,939      |   |  | $                        |        |   |       | $ | 517,612   |   |  | $ | 1,960,105
|Assets under repurchase agreements and federal funds purchases |  |                        | 25,469    |   |                   |   |         |             |  |   |            |   |  |                          |        |   |       |   |          |   |  |   | 25,469   
|Borrowings                                                     |  |                        | 57,371    |   |                   |   | 2,450    |             |  |   | 7,407       |   |  |                          | 404     |   |       |   |          |   |  |   | 67,632   
|Subordinated debentures                                        |  |                        |          |   |                   |   |         |             |  |   |            |   |  |                          | 41,239  |   |       |   |          |   |  |   | 41,239   
|All other liabilities                                          |  |                        |          |   |                   |   |         |             |  |   |            |   |  |                          |        |   |       |   | 36,696    |   |  |   | 36,696   
|Stockholders equity                                           |  |                        |          |   |                   |   |         |             |  |   |            |   |  |                          |        |   |       |   | 589,459   |   |  |   | 589,459  
|                                                               |  |                        |           |   |                   |   |          |             |  |   |             |   |  |                          |         |   |       |   |           |   |  |   |          
|Totals                                                         |  | $                      | 1,089,490 |   |                   | $ | 348,354  |             |  | $ | 97,346      |   |  | $                        | 41,643  |   |       | $ | 1,143,767 |   |  | $ | 2,720,600
|                                                               |  |                        |           |   |                   |   |          |             |  |   |             |   |  |                          |         |   |       |   |           |   |  |   |          
|Period gap (assets minus liabilities)                          |  | $                      | 34,427    |   |                   | $ | (144,098 | )           |  | $ | 401,740     |   |  | $                        | 220,209 |   |       | $ | (512,278  | ) |  |   |          
|Cumulative gap                                                 |  |                        | 34,427    |   |                   |   | (109,671 | )           |  |   | 292,069     |   |  |                          | 512,278 |   |       |   |           |   |  |   |          
|Cumulative rate sensitive gap %                                |  |                        | 1.3       | % |                   |   | (4.0     | )%          |  |   | 10.7        | % |  |                          | 18.8    | % |       |   |           |   |  |   |          

At December 31, 2006, we had approximately $1.3 billion in assets and $1.4 billion in
liabilities repricing within one year, with our rate sensitive liabilities exceeding our risk sensitive assets by $109.7 million, or 4.0% of total assets. This means that $109.7 million more of our interest rate sensitive liabilities than our
interest rate sensitive assets will change to the then current rate (changes occur due to the instruments being at a variable rate or because the maturity of the instrument requires its replacement at the then current rate). This analysis indicates
that at December 31, 2006, if interest rates were to increase, the gap would tend to result in a lower net interest margin. However, changes in the mix of earning assets or supporting liabilities can either increase or decrease the net interest
margin without affecting interest rate sensitivity. In addition, the interest rate spread between an asset and its supporting liability can vary significantly while the timing of re-pricing of both the asset and its supporting liability can remain
the same, thus impacting net interest income. This characteristic is referred to as basis risk, and generally relates to the re-pricing characteristics of short-term funding sources such as certificates of deposit.

Gap analysis has certain limitations. Measuring the volume of re-pricing or maturing assets and liabilities does not always measure the full impact on
the portfolio value of equity or net interest income. Gap analysis does not account for rate caps on products, dynamic changes such as increasing prepayment speeds as interest rates decrease, basis risk, embedded options or the benefit of no-rate
funding sources. The relation between product rate re-pricing and market rate changes (basis risk) is not the same for all products. The majority of interest-earning assets generally re-price along with a movement in market rates, while nonterm
deposit rates in general move more slowly and usually incorporate only a fraction of the change in market rates. Products categorized as nonrate sensitive, such as our noninterest-bearing demand deposits, in the gap analysis behave like long term
fixed rate funding sources. Both of these factors tend to make our actual behavior more asset sensitive than is indicated in the gap analysis. In fact, we have experienced higher net interest income when rates rise, and lower net interest income
when rates fall, in contrast to what is indicated by the gap analysis. Therefore, management uses income simulation, net interest income rate shocks and market value of portfolio equity as its primary interest rate risk management tools.



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|ITEM 8. | FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
|------- | -------------------------------------------

INDEX TO FINANCIAL STATEMENTS



|                                                                                                                                                                                                                                                  |  |   
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | --
|Centennial Bank Holdings, Inc. and Subsidiaries                                                                                                                                                                                                   |  |   
|                                                                                                                                                                                                                                                  | 
|Managements Report On Internal Control Over Financial Reporting                                                                                                                                                                                  |  | 57
|                                                                                                                                                                                                                                                  | 
|Reports of Independent Registered Public Accounting Firm                                                                                                                                                                                          |  | 58
|                                                                                                                                                                                                                                                  | 
|Consolidated Balance Sheets at December 31, 2006 and 2005                                                                                                                                                                                         |  | 60
|                                                                                                                                                                                                                                                  | 
|Consolidated Statements of Income, Years Ended December 31, 2006 and 2005, the Period July 17, 2004 to December 31, 2004 (Successor), and the Period January 1, 2004 to July 16, 2004 (Predecessor)                                               |  | 61
|                                                                                                                                                                                                                                                  | 
|Consolidated Statements of Stockholders Equity and Comprehensive Income (Loss), Years Ended December 31, 2006 and 2005, the Period July 17, 2004 to December 31, 2004 (Successor), and the Period
January 1, 2004 to July 16, 2004 (Predecessor) |  | 62
|                                                                                                                                                                                                                                                  | 
|Consolidated Statements of Cash Flows, Years Ended December 31, 2006 and 2005 (restated), the Period July 17, 2004 to December 31, 2004 (Successor), and the Period January 1, 2004 to July 16, 2004
(Predecessor)                                |  | 63
|                                                                                                                                                                                                                                                  | 
|Notes to Consolidated Financial Statements                                                                                                                                                                                                        |  | 65



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Managements Report On Internal Control Over Financial Reporting

The management of Centennial Bank
Holdings, Inc., including its consolidated subsidiaries, is responsible for establishing and maintaining adequate internal control over financial reporting. The Companys internal control system was designed to provide reasonable assurance to
the Companys management and Board of Directors regarding the preparation and fair presentation of published financial statements in accordance with U.S. generally accepted accounting principles. All internal control systems, no matter how well
designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation.

Management maintains a comprehensive system of controls intended to ensure that transactions are executed in accordance with managements
authorization, assets are safeguarded, and financial records are reliable. Management also takes steps to see that information and communication flows are effective and to monitor performance, including performance of internal control procedures.

As of December 31, 2006, Centennial Bank Holdings, Inc. management assessed the effectiveness of the Companys internal control
over financial reporting based on the framework established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on this assessment, management has determined
that the Companys internal control over financial reporting as of December 31, 2006, is effective.

Because of its inherent
limitations, internal control over financial reporting may not prevent or detect misstatements should they occur. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate
because of changes in conditions, or that the degree or compliance with the control procedures may deteriorate.

KPMG LLP, the independent
registered public accounting firm that audited the Companys consolidated financial statements included in this Annual Report on Form 10-K, have issued a report on managements assessment of the effectiveness of the Companys internal
control over financial reporting as of December 31, 2006. The report, which expresses unqualified opinions on managements assessment and on the effectiveness of the Companys internal control over financial reporting as of
December 31, 2006, is included in this Item under the heading Report of Independent Registered Public Accounting Firm on Internal Control Over Financial Reporting.



|                                                     |  |  |  |                                                                   
|---------------------------------------------------- |  |  |  | ------------------------------------------------------------------
|                                                     |  | 
|/s/    DANIEL M. QUINN                               |  |  |  | /s/    PAUL W. TAYLOR                                             
|Daniel M. QuinnPresident and Chief Executive Officer |  |  |  | Paul W. Taylor Executive Vice President andChief Financial Officer

March 23, 2007



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Report of Independent Registered Public Accounting Firm

on Internal Control over Financial Reporting

The
Board of Directors and Stockholders

Centennial Bank Holdings, Inc.:

We have audited managements assessment, included in the accompanying Managements Report on Internal Control over Financial Reporting, that Centennial Bank Holdings, Inc. and subsidiaries (the Company)
maintained effective internal control over financial reporting as of December 31, 2006, based on criteria established in Internal ControlIntegrated Framework issued by the Committee of Sponsoring Organizations of the Treadway
Commission (COSO). The Companys management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting. Our responsibility is to
express an opinion on managements assessment and an opinion on the effectiveness of the Companys internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about
whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, evaluating managements assessment, testing and
evaluating the design and operating effectiveness of internal control, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A companys internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A companys internal control over financial reporting includes those policies and procedures that (1)
pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit
preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and
(3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the companys assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any
evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, managements assessment that Centennial Bank Holdings, Inc. and subsidiaries maintained effective internal control over financial
reporting as of December 31, 2006, is fairly stated, in all material respects, based on criteria established in Internal ControlIntegrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
Also, in our opinion, Centennial Bank Holdings, Inc. and subsidiaries maintained, in all material respects, effective internal control over financial reporting as of December 31, 2006, based on criteria established in Internal
ControlIntegrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

We also have
audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of Centennial Bank Holdings, Inc. and subsidiaries as of December 31, 2006 and 2005, and the related
consolidated statements of income, stockholders equity and comprehensive income (loss), and cash flows for the years ended December 31, 2006 and 2005, and the periods July 17, 2004 to December 31, 2004 (Successor) and January 1, 2004 to July
16, 2004 (Predecessor), and our report dated March 23, 2007, expressed an unqualified opinion on those consolidated financial statements.

KPMG LLP

Denver, Colorado

March 23, 2007



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Report of Independent Registered Public Accounting Firm

The Board of Directors and Stockholders

Centennial Bank Holdings, Inc.:

We have audited the
accompanying consolidated balance sheets of Centennial Bank Holdings, Inc. and subsidiaries (the Company) as of December 31, 2006 and 2005, and the related consolidated statements of income, stockholders equity and comprehensive income
(loss), and cash flows for the years ended December 31, 2006 and 2005 and the periods July 17, 2004 to December 31, 2004 (Successor) and January 1, 2004 to July 16, 2004 (Predecessor). These consolidated financial statements
are the responsibility of the Companys management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Centennial
Bank Holdings, Inc. and subsidiaries as of December 31, 2006 and 2005, and the results of their operations and their cash flows for the years ended December 31, 2006 and 2005 and the periods July 17, 2004 to December 31, 2004
(Successor), and January 1, 2004 to July 16, 2004 (Predecessor), in conformity with U.S. generally accepted accounting principles.

As discussed in Note 2(a) to the consolidated financial statements, the consolidated statement of cash flows for the year ended December 31, 2005 has been restated.

We have also audited, in accordance with the standards of Public Company Accounting Oversight Board (United States), the effectiveness of Centennial Bank
Holdings, Inc. and subsidiaries internal control over financial reporting as of December 31, 2006, based on criteria established in Internal ControlIntegrated Framework issued by the Committee of Sponsoring Organizations of
the Treadway Commission (COSO), and our report dated March 23, 2007, expressed an unqualified opinion on managements assessment of, and the effective operation of, internal control over financial reporting.

KPMG LLP

Denver, Colorado

March 23, 2007



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##### Table of Contents

CENTENNIAL BANK HOLDINGS, INC. AND SUBSIDIARIES

Consolidated Balance Sheets

December 31, 2006 and 2005



|                                                                                                                                                                                                                                                                                                                                          |  |                                      |           |   |      |   |           |  
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------------------------------ | --------- | - | ---- | - | --------- | -
|                                                                                                                                                                                                                                                                                                                                          |  | 2006                                 |           |   | 2005 |  
|                                                                                                                                                                                                                                                                                                                                          |  | (In thousands, except pershare data) |          
|Assets                                                                                                                                                                                                                                                                                                                                    |  |                                      |           |   |      |   |           |  
|Cash and due from banks                                                                                                                                                                                                                                                                                                                   |  | $                                    | 45,409    |   |      | $ | 88,852    |  
|Federal funds sold                                                                                                                                                                                                                                                                                                                        |  |                                      | 4,211     |   |      |   | 10,090    |  
|                                                                                                                                                                                                                                                                                                                                          |  |                                      |           |   |      |   |           |  
|Cash and cash equivalents                                                                                                                                                                                                                                                                                                                 |  |                                      | 49,620    |   |      |   | 98,942    |  
|                                                                                                                                                                                                                                                                                                                                          |  |                                      |           |   |      |   |           |  
|Securities available for sale, at fair value                                                                                                                                                                                                                                                                                              |  |                                      | 157,260   |   |      |   | 143,081   |  
|Securities held to maturity (fair value of $11,157 and $5,686 at December 31, 2006 and 2005)                                                                                                                                                                                                                                              |  |                                      | 11,217    |   |      |   | 5,798     |  
|Bank stocks, at cost                                                                                                                                                                                                                                                                                                                      |  |                                      | 31,845    |   |      |   | 26,874    |  
|                                                                                                                                                                                                                                                                                                                                          |  |                                      |           |   |      |   |           |  
|Total investments                                                                                                                                                                                                                                                                                                                         |  |                                      | 200,322   |   |      |   | 175,753   |  
|                                                                                                                                                                                                                                                                                                                                          |  |                                      |           |   |      |   |           |  
|Loans, net of unearned discount                                                                                                                                                                                                                                                                                                           |  |                                      | 1,947,487 |   |      |   | 2,067,593 |  
|Less allowance for loan losses                                                                                                                                                                                                                                                                                                            |  |                                      | (27,899   | ) |      |   | (27,475   | )
|                                                                                                                                                                                                                                                                                                                                          |  |                                      |           |   |      |   |           |  
|Net loans                                                                                                                                                                                                                                                                                                                                 |  |                                      | 1,919,588 |   |      |   | 2,040,118 |  
|                                                                                                                                                                                                                                                                                                                                          |  |                                      |           |   |      |   |           |  
|Loans held for sale                                                                                                                                                                                                                                                                                                                       |  |                                      |          |   |      |   | 6,820     |  
|Premises and equipment, net                                                                                                                                                                                                                                                                                                               |  |                                      | 74,166    |   |      |   | 73,429    |  
|Other real estate owned and foreclosed assets                                                                                                                                                                                                                                                                                             |  |                                      | 1,207     |   |      |   | 1,465     |  
|Goodwill                                                                                                                                                                                                                                                                                                                                  |  |                                      | 392,958   |   |      |   | 392,507   |  
|Other intangible assets, net                                                                                                                                                                                                                                                                                                              |  |                                      | 41,599    |   |      |   | 54,922    |  
|Other assets                                                                                                                                                                                                                                                                                                                              |  |                                      | 41,140    |   |      |   | 38,531    |  
|Assets held for sale                                                                                                                                                                                                                                                                                                                      |  |                                      |          |   |      |   | 98,270    |  
|                                                                                                                                                                                                                                                                                                                                          |  |                                      |           |   |      |   |           |  
|Total assets                                                                                                                                                                                                                                                                                                                              |  | $                                    | 2,720,600 |   |      | $ | 2,980,757 |  
|                                                                                                                                                                                                                                                                                                                                          |  |                                      |           |   |      |   |           |  
|Liabilities and Stockholders Equity                                                                                                                                                                                                                                                                                                      |  |                                      |           |   |      |   |           |  
|Liabilities:                                                                                                                                                                                                                                                                                                                              |  |                                      |           |   |      |   |           |  
|Deposits:                                                                                                                                                                                                                                                                                                                                 |  |                                      |           |   |      |   |           |  
|Noninterest-bearing demand                                                                                                                                                                                                                                                                                                                |  | $                                    | 517,612   |   |      | $ | 593,811   |  
|Interest-bearing demand                                                                                                                                                                                                                                                                                                                   |  |                                      | 777,579   |   |      |   | 722,030   |  
|Savings                                                                                                                                                                                                                                                                                                                                   |  |                                      | 87,265    |   |      |   | 99,496    |  
|Time                                                                                                                                                                                                                                                                                                                                      |  |                                      | 577,649   |   |      |   | 633,015   |  
|                                                                                                                                                                                                                                                                                                                                          |  |                                      |           |   |      |   |           |  
|Total deposits                                                                                                                                                                                                                                                                                                                            |  |                                      | 1,960,105 |   |      |   | 2,048,352 |  
|Securities sold under agreements to repurchase and federal funds purchased                                                                                                                                                                                                                                                                |  |                                      | 25,469    |   |      |   | 44,399    |  
|Borrowings                                                                                                                                                                                                                                                                                                                                |  |                                      | 67,632    |   |      |   | 130,198   |  
|Subordinated debentures                                                                                                                                                                                                                                                                                                                   |  |                                      | 41,239    |   |      |   | 41,275    |  
|Interest payable and other liabilities                                                                                                                                                                                                                                                                                                    |  |                                      | 36,696    |   |      |   | 37,368    |  
|Liabilities associated with assets held for sale                                                                                                                                                                                                                                                                                          |  |                                      |          |   |      |   | 80,417    |  
|                                                                                                                                                                                                                                                                                                                                          |  |                                      |           |   |      |   |           |  
|Total liabilities                                                                                                                                                                                                                                                                                                                         |  |                                      | 2,131,141 |   |      |   | 2,382,009 |  
|                                                                                                                                                                                                                                                                                                                                          |  |                                      |           |   |      |   |           |  
|Stockholders equity:                                                                                                                                                                                                                                                                                                                     |  |                                      |           |   |      |   |           |  
|Common stock$.001 par value; 100,000,000 shares authorized, 64,154,950 shares issued, 57,236,795 shares outstanding at December 31,
2006 (includes 1,725,825 shares of unvested restricted stock); 63,159,692 shares issued, 60,403,764 shares outstanding at December 31, 2005 (includes 1,278,631 shares of unvested restricted stock) |  |                                      | 64        |   |      |   | 63        |  
|Additional paid-in capital                                                                                                                                                                                                                                                                                                                |  |                                      | 614,489   |   |      |   | 612,089   |  
|Shares to be issued for deferred compensation obligations                                                                                                                                                                                                                                                                                 |  |                                      | 775       |   |      |   |          |  
|Retained earnings                                                                                                                                                                                                                                                                                                                         |  |                                      | 42,896    |   |      |   | 18,478    |  
|Accumulated other comprehensive income                                                                                                                                                                                                                                                                                                    |  |                                      | 809       |   |      |   | 93        |  
|Treasury Stock, at cost, 6,450,418 and 2,755,928, respectively                                                                                                                                                                                                                                                                            |  |                                      | (69,574   | ) |      |   | (31,975   | )
|                                                                                                                                                                                                                                                                                                                                          |  |                                      |           |   |      |   |           |  
|Total stockholders equity                                                                                                                                                                                                                                                                                                                |  |                                      | 589,459   |   |      |   | 598,748   |  
|                                                                                                                                                                                                                                                                                                                                          |  |                                      |           |   |      |   |           |  
|Total liabilities and stockholders equity                                                                                                                                                                                                                                                                                                |  | $                                    | 2,720,600 |   |      | $ | 2,980,757 |  
|                                                                                                                                                                                                                                                                                                                                          |  |                                      |           |   |      |   |           |  

See Notes to Consolidated Financial Statements.



60



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##### Table of Contents

CENTENNIAL BANK HOLDINGS, INC. AND SUBSIDIARIES

Consolidated Statements of Income

Years ended December 31, 2006 and 2005, the Period July 17, 2004 to December 31, 2004 (Successor), and the Period January 1, 2004 to
July 16, 2004 (Predecessor)



|                                                       |  |                                       |         |               |                                   |   |                                 |   |  |   |        |  |   |        |  
|------------------------------------------------------ |  | ------------------------------------- | ------- | ------------- | --------------------------------- | - | ------------------------------- | - |  | - | ------ |  | - | ------ | -
|                                                       |  | (Successor)                           |         | (Predecessor) |                                  
|                                                       |  | Year EndedDecember 31,                |         |               | July 17, 2004 toDecember 31, 2004 |   | January 1, 2004to July 16, 2004 |  
|                                                       |  | 2006                                  |         |               | 2005                              |   |                                 |  
|                                                       |  | (In thousands, except per share data) |        
|Interest income:                                       |  |                                       |         |               |                                   |   |                                 |   |  |   |        |  |   |        |  
|Loans, including fees                                  |  | $                                     | 163,830 |               |                                   | $ | 132,245                         |   |  | $ | 18,320 |  | $ | 22,260 |  
|Investment securities:                                 |  |                                       |         |               |                                   |   |                                 |   |  |   |        |  |   |        |  
|Taxable                                                |  |                                       | 2,868   |               |                                   |   | 2,955                           |   |  |   | 453    |  |   | 508    |  
|Tax-exempt                                             |  |                                       | 4,869   |               |                                   |   | 2,708                           |   |  |   | 6      |  |   | 10     |  
|Dividends                                              |  |                                       | 1,805   |               |                                   |   | 1,076                           |   |  |   | 126    |  |   | 130    |  
|Federal funds sold and other                           |  |                                       | 409     |               |                                   |   | 579                             |   |  |   | 147    |  |   | 4      |  
|                                                       |  |                                       |         |               |                                   |   |                                 |   |  |   |        |  |   |        |  
|Total interest income                                  |  |                                       | 173,781 |               |                                   |   | 139,563                         |   |  |   | 19,052 |  |   | 22,912 |  
|                                                       |  |                                       |         |               |                                   |   |                                 |   |  |   |        |  |   |        |  
|Interest expense:                                      |  |                                       |         |               |                                   |   |                                 |   |  |   |        |  |   |        |  
|Deposits                                               |  |                                       | 47,337  |               |                                   |   | 24,873                          |   |  |   | 2,642  |  |   | 5,340  |  
|Federal funds purchased and repurchase agreements      |  |                                       | 1,274   |               |                                   |   | 991                             |   |  |   | 155    |  |   | 50     |  
|Subordinated debentures                                |  |                                       | 3,666   |               |                                   |   | 2,515                           |   |  |   | 710    |  |   | 1,054  |  
|Borrowings                                             |  |                                       | 5,307   |               |                                   |   | 3,315                           |   |  |   | 255    |  |   | 353    |  
|                                                       |  |                                       |         |               |                                   |   |                                 |   |  |   |        |  |   |        |  
|Total interest expense                                 |  |                                       | 57,584  |               |                                   |   | 31,694                          |   |  |   | 3,762  |  |   | 6,797  |  
|                                                       |  |                                       |         |               |                                   |   |                                 |   |  |   |        |  |   |        |  
|Net interest income                                    |  |                                       | 116,197 |               |                                   |   | 107,869                         |   |  |   | 15,290 |  |   | 16,115 |  
|Provision for credit losses                            |  |                                       | 4,290   |               |                                   |   | 3,400                           |   |  |   |       |  |   | 4,700  |  
|                                                       |  |                                       |         |               |                                   |   |                                 |   |  |   |        |  |   |        |  
|Net interest income, after provision for credit losses |  |                                       | 111,907 |               |                                   |   | 104,469                         |   |  |   | 15,290 |  |   | 11,415 |  
|Noninterest income:                                    |  |                                       |         |               |                                   |   |                                 |   |  |   |        |  |   |        |  
|Customer service and other fees                        |  |                                       | 10,385  |               |                                   |   | 8,481                           |   |  |   | 1,314  |  |   | 1,698  |  
|Gain (loss) on sale of securities                      |  |                                       | (4      | )             |                                   |   | (7                              | ) |  |   | 36     |  |   | (66    | )
|Gain on sale of mortgages                              |  |                                       | 719     |               |                                   |   | 1,316                           |   |  |   |       |  |   |       |  
|Other                                                  |  |                                       | 1,617   |               |                                   |   | 527                             |   |  |   | 470    |  |   | 728    |  
|                                                       |  |                                       |         |               |                                   |   |                                 |   |  |   |        |  |   |        |  
|Total noninterest income                               |  |                                       | 12,717  |               |                                   |   | 10,317                          |   |  |   | 1,784  |  |   | 2,426  |  
|Noninterest expense:                                   |  |                                       |         |               |                                   |   |                                 |   |  |   |        |  |   |        |  
|Salaries and employee benefits                         |  |                                       | 46,185  |               |                                   |   | 41,426                          |   |  |   | 5,375  |  |   | 6,604  |  
|Occupancy expense                                      |  |                                       | 7,977   |               |                                   |   | 6,887                           |   |  |   | 1,101  |  |   | 1,200  |  
|Furniture and equipment                                |  |                                       | 4,859   |               |                                   |   | 3,778                           |   |  |   | 533    |  |   | 662    |  
|Amortization of intangible assets                      |  |                                       | 11,815  |               |                                   |   | 12,389                          |   |  |   | 777    |  |   |       |  
|Merger, acquisition and transition expenses            |  |                                       | 1,866   |               |                                   |   | 10,431                          |   |  |   |       |  |   |       |  
|Other general and administrative                       |  |                                       | 18,206  |               |                                   |   | 17,072                          |   |  |   | 3,161  |  |   | 6,048  |  
|                                                       |  |                                       |         |               |                                   |   |                                 |   |  |   |        |  |   |        |  
|Total noninterest expense                              |  |                                       | 90,908  |               |                                   |   | 91,983                          |   |  |   | 10,947 |  |   | 14,514 |  
|                                                       |  |                                       |         |               |                                   |   |                                 |   |  |   |        |  |   |        |  
|Income (loss) before income taxes                      |  |                                       | 33,716  |               |                                   |   | 22,803                          |   |  |   | 6,127  |  |   | (673   | )
|Income tax expense                                     |  |                                       | 11,286  |               |                                   |   | 7,639                           |   |  |   | 2,331  |  |   | 411    |  
|                                                       |  |                                       |         |               |                                   |   |                                 |   |  |   |        |  |   |        |  
|Income (loss) from continuing operations               |  |                                       | 22,430  |               |                                   |   | 15,164                          |   |  |   | 3,796  |  |   | (1,084 | )
|Income (loss) from discontinued operations, net of tax |  |                                       | 1,988   |               |                                   |   | (482                            | ) |  |   |       |  |   |       |  
|                                                       |  |                                       |         |               |                                   |   |                                 |   |  |   |        |  |   |        |  
|Net income (loss)                                      |  | $                                     | 24,418  |               |                                   | $ | 14,682                          |   |  | $ | 3,796  |  | $ | (1,084 | )
|                                                       |  |                                       |         |               |                                   |   |                                 |   |  |   |        |  |   |        |  
|Earnings (loss) per sharebasic:                       |  |                                       |         |               |                                   |   |                                 |   |  |   |        |  |   |        |  
|Income (loss) from continuing operations               |  | $                                     | 0.39    |               |                                   | $ | 0.28                            |   |  | $ | 0.20   |  | $ | (0.70  | )
|Income (loss) from discontinued operations, net of tax |  |                                       | 0.03    |               |                                   |   | (0.01                           | ) |  |   |       |  |   |       |  
|Net income (loss)                                      |  |                                       | 0.42    |               |                                   |   | 0.27                            |   |  |   | 0.20   |  |   | (0.70  | )
|Earnings (loss) per sharediluted:                     |  |                                       |         |               |                                   |   |                                 |   |  |   |        |  |   |        |  
|Income (loss) from continuing operations               |  | $                                     | 0.39    |               |                                   | $ | 0.28                            |   |  | $ | 0.20   |  | $ | (0.70  | )
|Income (loss) from discontinued operations, net of tax |  |                                       | 0.03    |               |                                   |   | (0.01                           | ) |  |   |       |  |   |       |  
|Net income (loss)                                      |  |                                       | 0.42    |               |                                   |   | 0.27                            |   |  |   | 0.20   |  |   | (0.70  | )

See Notes to Consolidated Financial Statements.



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##### Table of Contents

CENTENNIAL BANK HOLDINGS, INC. AND SUBSIDIARIES

Consolidated Statements Stockholders Equity and
Comprehensive Income (Loss)

Years ended December 31, 2006 and 2005, the Period July 17, 2004 to December 31, 2004
(Successor),

and the Period January 1, 2004 to July 16, 2004 (Predecessor)



|                                                               |  |                                   |   |  |                                         |         |   |                   |   |               |  |   |                  |   |  |                                            |        |   |        |   |     |   |  |   |         |  
|-------------------------------------------------------------- |  | --------------------------------- | - |  | --------------------------------------- | ------- | - | ----------------- | - | ------------- |  | - | ---------------- | - |  | ------------------------------------------ | ------ | - | ------ | - | --- | - |  | - | ------- | -
|                                                               |  | Shares ofCommon Stock             |   |  | CommonStock andAdditionalPaid-inCapital |         |   | Sharesto beIssued |   | TreasuryStock |  |   | RetainedEarnings |   |  | AccumulatedOtherComprehensiveIncome (Loss) |        |   | Totals |  
|                                                               |  | (In thousands, except share data) |  
|Predecessor:                                                   |  |                                   |   |  |                                         |         |   |                   |   |               |  |   |                  |   |  |                                            |        |   |        |   |     |   |  |   |         |  
|Balance, December 31, 2003                                     |  | 1,545,948                         |   |  | $                                       | 24,782  |   |                   | $ |              |  | $ |                 |   |  | $                                          | 34,228 |   |        | $ | 79  |   |  | $ | 59,089  |  
|Comprehensive loss:                                            |  |                                   |   |  |                                         |         |   |                   |   |               |  |   |                  |   |  |                                            |        |   |        |   |     |   |  |   |         |  
|Net loss                                                       |  |                                  |   |  |                                         |        |   |                   |   |              |  |   |                 |   |  |                                            | (1,084 | ) |        |   |    |   |  |   | (1,084  | )
|Change in net unrealized loss on securities available for sale |  |                                  |   |  |                                         |        |   |                   |   |              |  |   |                 |   |  |                                            |       |   |        |   | (66 | ) |  |   | (66     | )
|                                                               |  |                                   |   |  |                                         |         |   |                   |   |               |  |   |                  |   |  |                                            |        |   |        |   |     |   |  |   |         |  
|Total comprehensive loss                                       |  |                                   |   |  |                                         |         |   |                   |   |               |  |   |                  |   |  |                                            |        |   |        |   |     |   |  |   | (1,150  | )
|Repurchase of common stock                                     |  |                                  |   |  |                                         | (2,716  | ) |                   |   |              |  |   |                 |   |  |                                            |       |   |        |   |    |   |  |   | (2,716  | )
|Issuance of common stock                                       |  | 11,620                            |   |  |                                         | 2,186   |   |                   |   |              |  |   |                 |   |  |                                            |       |   |        |   |    |   |  |   | 2,186   |  
|Tax effect of stock options exercised                          |  |                                  |   |  |                                         | 480     |   |                   |   |              |  |   |                 |   |  |                                            |       |   |        |   |    |   |  |   | 480     |  
|                                                               |  |                                   |   |  |                                         |         |   |                   |   |               |  |   |                  |   |  |                                            |        |   |        |   |     |   |  |   |         |  
|Balance, July 16, 2004                                         |  | 1,557,568                         |   |  | $                                       | 24,732  |   |                   | $ |              |  | $ |                 |   |  | $                                          | 33,144 |   |        | $ | 13  |   |  | $ | 57,889  |  
|                                                               |  |                                   |   |  |                                         |         |   |                   |   |               |  |   |                  |   |  |                                            |        |   |        |   |     |   |  |   |         |  
|Successor:                                                     |  |                                   |   |  |                                         |         |   |                   |   |               |  |   |                  |   |  |                                            |        |   |        |   |     |   |  |   |         |  
|Comprehensive income (loss):                                   |  |                                   |   |  |                                         |         |   |                   |   |               |  |   |                  |   |  |                                            |        |   |        |   |     |   |  |   |         |  
|Net income                                                     |  |                                  |   |  | $                                       |        |   |                   | $ |              |  | $ |                 |   |  | $                                          | 3,796  |   |        | $ |    |   |  | $ | 3,796   |  
|Change in net unrealized loss on securities available for sale |  |                                  |   |  |                                         |        |   |                   |   |              |  |   |                 |   |  |                                            |       |   |        |   | (22 | ) |  |   | (22     | )
|                                                               |  |                                   |   |  |                                         |         |   |                   |   |               |  |   |                  |   |  |                                            |        |   |        |   |     |   |  |   |         |  
|Total comprehensive income                                     |  |                                   |   |  |                                         |         |   |                   |   |               |  |   |                  |   |  |                                            |        |   |        |   |     |   |  |   | 3,774   |  
|Issuance of common stock                                       |  | 52,333,334                        |   |  |                                         | 511,640 |   |                   |   |              |  |   |                 |   |  |                                            |       |   |        |   |    |   |  |   | 511,640 |  
|                                                               |  |                                   |   |  |                                         |         |   |                   |   |               |  |   |                  |   |  |                                            |        |   |        |   |     |   |  |   |         |  
|Balance, December 31, 2004                                     |  | 52,333,334                        |   |  |                                         | 511,640 |   |                   |   |              |  |   |                 |   |  |                                            | 3,796  |   |        |   | (22 | ) |  |   | 515,414 |  
|Comprehensive income:                                          |  |                                   |   |  |                                         |         |   |                   |   |               |  |   |                  |   |  |                                            |        |   |        |   |     |   |  |   |         |  
|Net income                                                     |  |                                  |   |  |                                         |        |   |                   |   |              |  |   |                 |   |  |                                            | 14,682 |   |        |   |    |   |  |   | 14,682  |  
|Change in net unrealized loss on securities available for sale |  |                                  |   |  |                                         |        |   |                   |   |              |  |   |                 |   |  |                                            |       |   |        |   | 115 |   |  |   | 115     |  
|                                                               |  |                                   |   |  |                                         |         |   |                   |   |               |  |   |                  |   |  |                                            |        |   |        |   |     |   |  |   |         |  
|Total comprehensive income                                     |  |                                   |   |  |                                         |         |   |                   |   |               |  |   |                  |   |  |                                            |        |   |        |   |     |   |  |   | 14,797  |  
|Stock compensation awards, net                                 |  | 1,278,631                         |   |  |                                         |        |   |                   |   |              |  |   |                 |   |  |                                            |       |   |        |   |    |   |  |   |        |  
|Earned stock award compensation                                |  |                                  |   |  |                                         | 800     |   |                   |   |              |  |   |                 |   |  |                                            |       |   |        |   |    |   |  |   | 800     |  
|Repurchase of common stock                                     |  | (2,725,928                        | ) |  |                                         |        |   |                   |   |              |  |   | (31,975          | ) |  |                                            |       |   |        |   |    |   |  |   | (31,975 | )
|Deferred compensation                                          |  | 9,517,727                         |   |  |                                         | 99,936  |   |                   |   |              |  |   |                 |   |  |                                            |       |   |        |   |    |   |  |   | 99,936  |  
|Costs associated with issuance of common stock                 |  |                                  |   |  |                                         | (504    | ) |                   |   |              |  |   |                 |   |  |                                            |       |   |        |   |    |   |  |   | (504    | )
|Tax effect of stock options exercised                          |  |                                  |   |  |                                         | 280     |   |                   |   |              |  |   |                 |   |  |                                            |       |   |        |   |    |   |  |   | 280     |  
|                                                               |  |                                   |   |  |                                         |         |   |                   |   |               |  |   |                  |   |  |                                            |        |   |        |   |     |   |  |   |         |  
|Balance, December 31, 2005                                     |  | 60,403,764                        |   |  |                                         | 612,152 |   |                   |   |              |  |   | (31,975          | ) |  |                                            | 18,478 |   |        |   | 93  |   |  |   | 598,748 |  
|Comprehensive income:                                          |  |                                   |   |  |                                         |         |   |                   |   |               |  |   |                  |   |  |                                            |        |   |        |   |     |   |  |   |         |  
|Net income                                                     |  |                                  |   |  |                                         |        |   |                   |   |              |  |   |                 |   |  |                                            | 24,418 |   |        |   |    |   |  |   | 24,418  |  
|Change in net unrealized loss on securities available for sale |  |                                  |   |  |                                         |        |   |                   |   |              |  |   |                 |   |  |                                            |       |   |        |   | 716 |   |  |   | 716     |  
|                                                               |  |                                   |   |  |                                         |         |   |                   |   |               |  |   |                  |   |  |                                            |        |   |        |   |     |   |  |   |         |  
|Total comprehensive income                                     |  |                                   |   |  |                                         |         |   |                   |   |               |  |   |                  |   |  |                                            |        |   |        |   |     |   |  |   | 25,134  |  
|Stock compensation awards, net                                 |  | 479,992                           |   |  |                                         |        |   |                   |   |              |  |   |                 |   |  |                                            |       |   |        |   |    |   |  |   |        |  
|Earned stock award compensation                                |  |                                  |   |  |                                         | 2,899   |   |                   |   |              |  |   |                 |   |  |                                            |       |   |        |   |    |   |  |   | 2,899   |  
|Repurchase of common stock                                     |  | (3,724,500                        | ) |  |                                         |        |   |                   |   |              |  |   | (37,599          | ) |  |                                            |       |   |        |   |    |   |  |   | (37,599 | )
|Deferred compensation                                          |  | 77,539                            |   |  |                                         | (500    | ) |                   |   | 775           |  |   |                 |   |  |                                            |       |   |        |   |    |   |  |   | 275     |  
|Tax effect of stock options exercised                          |  |                                  |   |  |                                         | 2       |   |                   |   |              |  |   |                 |   |  |                                            |       |   |        |   |    |   |  |   | 2       |  
|                                                               |  |                                   |   |  |                                         |         |   |                   |   |               |  |   |                  |   |  |                                            |        |   |        |   |     |   |  |   |         |  
|Balance, December 31, 2006                                     |  | 57,236,795                        |   |  | $                                       | 614,553 |   |                   | $ | 775           |  | $ | (69,574          | ) |  | $                                          | 42,896 |   |        | $ | 809 |   |  | $ | 589,459 |  
|                                                               |  |                                   |   |  |                                         |         |   |                   |   |               |  |   |                  |   |  |                                            |        |   |        |   |     |   |  |   |         |  

See Notes to Consolidated Financial Statements.



62



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CENTENNIAL BANK HOLDINGS, INC. AND SUBSIDIARIES

Consolidated Statements of Cash Flows

Years ended December 31, 2006 and 2005, the Period July 17, 2004 to December 31, 2004 (Successor),

and the Period January 1, 2004 to July 16, 2004 (Predecessor)



|                                                                                         |  |                         |          |   |                                     |   |          |                                  |  |   |          |   |  |   |          |  
|---------------------------------------------------------------------------------------- |  | ----------------------- | -------- | - | ----------------------------------- | - | -------- | -------------------------------- |  | - | -------- | - |  | - | -------- | -
|                                                                                         |  | (Successor)             |          |   | (Predecessor)                       |  
|                                                                                         |  | Year Ended December 31, |          |   | July 17, 2004 to December 31, 2004* |   |          | January 1, 2004 to
July 16, 2004 | 
|                                                                                         |  |                         |          |   | Restated                            |   |          |                                 
|                                                                                         |  | 2006                    |          |   | 2005                                |   |          |                                 
|                                                                                         |  | (In thousands)          |         
|Cash flows from operating activities:                                                    |  |                         |          |   |                                     |   |          |                                  |  |   |          |   |  |   |          |  
|Net income (loss)                                                                        |  | $                       | 24,418   |   |                                     | $ | 14,682   |                                  |  | $ | 3,796    |   |  | $ | (1,084   | )
|Adjustments to reconcile net income (loss) to net cash provided by operating activities: |  |                         |          |   |                                     |   |          |                                  |  |   |          |   |  |   |          |  
|Depreciation and amortization                                                            |  |                         | 18,107   |   |                                     |   | 17,620   |                                  |  |   | 823      |   |  |   | 600      |  
|Provision for credit losses                                                              |  |                         | 4,390    |   |                                     |   | 3,484    |                                  |  |   |         |   |  |   | 4,700    |  
|Stock compensation                                                                       |  |                         | 2,899    |   |                                     |   | 800      |                                  |  |   |         |   |  |   |         |  
|Appreciation of bank owned life insurance                                                |  |                         | (523     | ) |                                     |   |         |                                  |  |   |         |   |  |   |         |  
|Loss (gain) on sale of securities                                                        |  |                         | 4        |   |                                     |   | 7        |                                  |  |   | (36      | ) |  |   | 66       |  
|Gain on sale of real estate owned and assets                                             |  |                         | (329     | ) |                                     |   | (441     | )                                |  |   | (8       | ) |  |   | (33      | )
|Real estate valuation adjustments                                                        |  |                         | 910      |   |                                     |   | 567      |                                  |  |   |         |   |  |   |         |  
|(Gain) loss on discontinued operations                                                   |  |                         | (838     | ) |                                     |   | 1,542    |                                  |  |   |         |   |  |   |         |  
|Other                                                                                    |  |                         | (1,052   | ) |                                     |   | (1,040   | )                                |  |   | (30      | ) |  |   | (78      | )
|Proceeds from sales of loans held for sale                                               |  |                         | 58,128   |   |                                     |   | 95,462   |                                  |  |   |         |   |  |   |         |  
|Originations of loans held for sale                                                      |  |                         | (50,589  | ) |                                     |   | (93,658  | )                                |  |   |         |   |  |   |         |  
|Net change in:                                                                           |  |                         |          |   |                                     |   |          |                                  |  |   |          |   |  |   |          |  
|Accrued interest receivable and other assets                                             |  |                         | 139      |   |                                     |   | (10,633  | )                                |  |   | 1,757    |   |  |   | (991     | )
|Accrued interest payable and other liabilities                                           |  |                         | (4,877   | ) |                                     |   | 6,291    |                                  |  |   | 608      |   |  |   | 59       |  
|                                                                                         |  |                         |          |   |                                     |   |          |                                  |  |   |          |   |  |   |          |  
|Net cash provided by operating activities                                                |  |                         | 50,787   |   |                                     |   | 34,683   |                                  |  |   | 6,910    |   |  |   | 3,239    |  
|                                                                                         |  |                         |          |   |                                     |   |          |                                  |  |   |          |   |  |   |          |  
|Cash flows from investing activities:                                                    |  |                         |          |   |                                     |   |          |                                  |  |   |          |   |  |   |          |  
|Net cash and cash equivalents acquired (paid) in acquisitions                            |  |                         |         |   |                                     |   | 36,075   |                                  |  |   | (380,057 | ) |  |   |         |  
|Activity in available-for-sale securities:                                               |  |                         |          |   |                                     |   |          |                                  |  |   |          |   |  |   |          |  
|Maturities, prepayments, and calls                                                       |  |                         | 85,245   |   |                                     |   | 219,330  |                                  |  |   | 42,202   |   |  |   | 151,089  |  
|Purchases                                                                                |  |                         | (103,333 | ) |                                     |   | (172,942 | )                                |  |   | (43,487  | ) |  |   | (153,116 | )
|Activity in held-to-maturity securities and bank stocks:                                 |  |                         |          |   |                                     |   |          |                                  |  |   |          |   |  |   |          |  
|Maturities, prepayments, and calls                                                       |  |                         | 553      |   |                                     |   | 254      |                                  |  |   | 250      |   |  |   | 174      |  
|Purchases                                                                                |  |                         | (5,725   | ) |                                     |   | (1,155   | )                                |  |   |         |   |  |   |         |  
|Loan originations and principal collections, net                                         |  |                         | 108,319  |   |                                     |   | (95,140  | )                                |  |   | 10,695   |   |  |   | 12,676   |  
|Proceeds from sales of foreclosed assets                                                 |  |                         | 5,689    |   |                                     |   | 7,247    |                                  |  |   | 1,014    |   |  |   | 4,260    |  
|Proceeds from sales of premises and equipment                                            |  |                         | 9,238    |   |                                     |   | 1,964    |                                  |  |   |         |   |  |   | 172      |  
|Additions to premises and equipment                                                      |  |                         | (14,745  | ) |                                     |   | (9,261   | )                                |  |   | (184     | ) |  |   | (187     | )
|Net cash and cash equivalents transferred in sale of subsidiary                          |  |                         | (19,391  | ) |                                     |   |         |                                  |  |   |         |   |  |   |         |  
|                                                                                         |  |                         |          |   |                                     |   |          |                                  |  |   |          |   |  |   |          |  
|Net cash provided (used) by investing activities                                         |  |                         | 65,850   |   |                                     |   | (13,628  | )                                |  |   | 369,567  |   |  |   | 15,068   |  
|                                                                                         |  |                         |          |   |                                     |   |          |                                  |  |   |          |   |  |   |          |  



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CENTENNIAL BANK HOLDINGS, INC. AND SUBSIDIARIES

Consolidated Statements of Cash Flows(Continued)

Years ended December 31, 2006 and 2005, the Period July 17, 2004 to December 31, 2004 (Successor),

and the Period January 1, 2004 to July 16, 2004 (Predecessor)



|                                                                                                                           |  |                         |          |   |                                     |   |         |                                  |  |   |         |   |  |   |         |  
|-------------------------------------------------------------------------------------------------------------------------- |  | ----------------------- | -------- | - | ----------------------------------- | - | ------- | -------------------------------- |  | - | ------- | - |  | - | ------- | -
|                                                                                                                           |  | (Successor)             |          |   | (Predecessor)                       |  
|                                                                                                                           |  | Year Ended December 31, |          |   | July 17, 2004 to December 31, 2004* |   |         | January 1, 2004 to
July 16, 2004 | 
|                                                                                                                           |  |                         |          |   | Restated                            |   |         |                                 
|                                                                                                                           |  | 2006                    |          |   | 2005                                |   |         |                                 
|                                                                                                                           |  | (In thousands)          |         
|Cash flows from financing activities:                                                                                      |  |                         |          |   |                                     |   |         |                                  |  |   |         |   |  |   |         |  
|Net decrease in deposits                                                                                                   |  |                         | (73,086  | ) |                                     |   | (68,535 | )                                |  |   | (83,918 | ) |  |   | (16,986 | )
|Net change in short-term borrowings                                                                                        |  |                         | (56,666  | ) |                                     |   | 84,226  |                                  |  |   | 13,278  |   |  |   | (21,570 | )
|Proceeds from issuance of debt                                                                                             |  |                         |         |   |                                     |   |        |                                  |  |   |        |   |  |   | 4,200   |  
|Repayment of long-term debt                                                                                                |  |                         | (5,877   | ) |                                     |   | (659    | )                                |  |   | (213    | ) |  |   | (241    | )
|Net change in federal funds purchased and repurchase agreements                                                            |  |                         | (10,597  | ) |                                     |   | 17,415  |                                  |  |   | 19,123  |   |  |   | (2,976  | )
|Proceeds from sale of common stock                                                                                         |  |                         |         |   |                                     |   |        |                                  |  |   | 511,640 |   |  |   | 2,186   |  
|Repurchase of common stock                                                                                                 |  |                         | (37,854  | ) |                                     |   | (31,720 | )                                |  |   |        |   |  |   | (2,716  | )
|Tax benefit from vesting of stock compensation                                                                             |  |                         | 2        |   |                                     |   | 280     |                                  |  |   |        |   |  |   |        |  
|Costs associated with issuance of common stock                                                                             |  |                         | (1,750   | ) |                                     |   | (504    | )                                |  |   |        |   |  |   |        |  
|Issuance of subordinated debentures                                                                                        |  |                         |         |   |                                     |   |        |                                  |  |   |        |   |  |   | 15,464  |  
|                                                                                                                           |  |                         |          |   |                                     |   |         |                                  |  |   |         |   |  |   |         |  
|Net cash provided (used) by financing activities                                                                           |  |                         | (185,828 | ) |                                     |   | 503     |                                  |  |   | 459,910 |   |  |   | (22,639 | )
|                                                                                                                           |  |                         |          |   |                                     |   |         |                                  |  |   |         |   |  |   |         |  
|Net change in cash and cash equivalents                                                                                    |  |                         | (69,191  | ) |                                     |   | 21,558  |                                  |  |   | 97,253  |   |  |   | (4,332  | )
|Cash and cash equivalents, beginning of period                                                                             |  |                         | 118,811  |   |                                     |   | 97,253  |                                  |  |   |        |   |  |   | 23,731  |  
|                                                                                                                           |  |                         |          |   |                                     |   |         |                                  |  |   |         |   |  |   |         |  
|Cash and cash equivalents, end of period                                                                                   |  | $                       | 49,620   |   |                                     | $ | 118,811 |                                  |  | $ | 97,253  |   |  | $ | 19,399  |  
|                                                                                                                           |  |                         |          |   |                                     |   |         |                                  |  |   |         |   |  |   |         |  
|Cash and cash equivalents  consolidated statements of cash flows                                                          |  | $                       | 49,620   |   |                                     | $ | 118,811 |                                  |  | $ | 97,253  |   |  | $ | 19,399  |  
|Cash and cash equivalents from discontinued operations recorded in assets held for sale on the consolidated balance sheets |  |                         |         |   |                                     |   | (19,869 | )                                |  |   | (6,326  | ) |  |   |        |  
|                                                                                                                           |  |                         |          |   |                                     |   |         |                                  |  |   |         |   |  |   |         |  
|Cash and cash equivalents  consolidated balance sheets                                                                    |  | $                       | 49,620   |   |                                     | $ | 98,942  |                                  |  | $ | 90,927  |   |  | $ | 19,399  |  
|                                                                                                                           |  |                         |          |   |                                     |   |         |                                  |  |   |         |   |  |   |         |  

See Note 23 to Consolidated Financial Statements for supplemental cash flows disclosures.



|* | See Note 2(a) to Consolidated Financial Statements.
|- | ---------------------------------------------------

See
Notes to Consolidated Financial Statements.



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##### Table of Contents

CENTENNIAL BANK HOLDINGS, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(1) Organization and Operations

Centennial Bank
Holdings, Inc. is a financial holding company and a bank holding company registered under the Bank Holding Company Act of 1956, as amended. Our principal business is to serve as a holding company for our subsidiaries. As of December 31, 2006,
those subsidiaries were Guaranty Bank and Trust Company and Centennial Bank of the West. At December 31, 2005, those subsidiaries were Guaranty Bank and Trust Company, Centennial Bank of the West, Collegiate Peaks Bank, which was held for sale
as of December 31, 2005 and sold on November 1, 2006, and First MainStreet Insurance, Ltd, which was sold on March 1, 2006, which we sometimes refer to as Guaranty Bank, CBW, Collegiate Peaks and First MainStreet Insurance,
respectively. Reference to Banks means Guaranty Bank and CBW, we or Company means the Company on a consolidated basis with the Banks, Collegiate Peaks and First MainStreet Insurance as applicable. Reference to
Centennial or to the holding company, we are referring to the parent company on a standalone basis.

The Banks are full-service
community banks offering an array of banking products and services to the communities we serve, including accepting time and demand deposits and originating commercial loans (including energy loans), real estate loans (including construction loans
and mortgage loans), Small Business Administration guaranteed loans and consumer loans. Centennial Bank of the West also provides trust services, including personal trust administration, estate settlement, investment management accounts and
self-directed IRAs.

(2) Summary of Significant Accounting Policies

(a) Restatement of Consolidated Statements of Cash Flows

The Company has restated its
previously issued consolidated statements of cash flows for the year ended December 31, 2005 as set forth in the Companys Annual Report on Form 10-K for the year ended December 31, 2005, the nine-month periods ended
September 30, 2006 and 2005, the six-month periods ended June 30, 2006 and 2005, and the three-month periods ended March 31, 2006 and 2005 as set forth in the Companys Quarterly Reports on Form 10-Q for the periods ended
September 30, 2006, June 30, 2006 and March 31, 2006, respectively. The restatements did not affect the Companys consolidated statements of income, consolidated balance sheets or consolidated statements of
stockholders equity and comprehensive income (loss) for any of the affected periods. Accordingly, the historical revenues, net income, earnings per share, total assets and regulatory capital remain unchanged.

The cash flow restatements solely relate to the presentation of cash and cash equivalents held at Collegiate Peaks Bank (Collegiate Peaks),
which the Company acquired in December 2004 and sold in November 2006. The cash and cash equivalents presented on the consolidated statements of cash flows should have included the cash and cash equivalents of Collegiate Peaks, which are classified
as assets held for sale on the Companys consolidated balance sheet. The restatements for the year ended December 31, 2005, and the year to date periods ended March 31, 2006, June 30, 2006 and September 30, 2006, solely affect
the presentation of cash flows from operating activities, the total change in cash and cash equivalents, and the total cash and cash equivalents presented in the affected consolidated statements of cash flows of the Company. The restatements for the
year to date periods ended March 31, 2005, June 30, 2005 and September 30, 2005, affect the amounts reflected in the operating activities, investing activities and financing activities sections of the statements of cash flows, the total change in
cash and cash equivalents, and the total cash and cash equivalents presented in the affected consolidated statements of cash flows.

The
Company also restated the caption Net cash and cash equivalents acquired (paid) in acquisitions for the period July 17, 2004 to December 31, 2004. The amount of that restatement is immaterial to the consolidated financial statements.

The consolidated statements of cash flows for the year ended December 31, 2005, the period July 17, 2004 to December 31,
2004, the nine-month periods ended September 30, 2006 and 2005, the six-month periods ended June 30, 2006 and 2005, and the three-month periods ended March 31, 2006 and 2005, as previously reported and as restated, are reflected on
the following pages.



65



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CENTENNIAL BANK HOLDINGS, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements(Continued)



|                                                                                                                           |  |                                                 |          |   |                                     |   |          |                                                       |  |   |                                           |   |  |   |          |  
|-------------------------------------------------------------------------------------------------------------------------- |  | ----------------------------------------------- | -------- | - | ----------------------------------- | - | -------- | ----------------------------------------------------- |  | - | ----------------------------------------- | - |  | - | -------- | -
|                                                                                                                           |  | Year EndedDecember 31, 2005-Previously Reported |          |   | Year EndedDecember 31,2005-Restated |   |          | July 17, 2004 toDecember 31, 2004-Previously Reported |  |   | July 17, 2004 toDecember 31,2004-Restated |  
|                                                                                                                           |  | (In thousands)                                  |         
|Cash flows from operating activities:                                                                                      |  |                                                 |          |   |                                     |   |          |                                                       |  |   |                                           |   |  |   |          |  
|Net income                                                                                                                 |  | $                                               | 14,682   |   |                                     | $ | 14,682   |                                                       |  | $ | 3,796                                     |   |  | $ | 3,796    |  
|Adjustments to reconcile net income to net cash provided by operating activities:                                          |  |                                                 |          |   |                                     |   |          |                                                       |  |   |                                           |   |  |   |          |  
|Depreciation and amortization                                                                                              |  |                                                 | 17,620   |   |                                     |   | 17,620   |                                                       |  |   | 823                                       |   |  |   | 823      |  
|Provision for loan losses                                                                                                  |  |                                                 | 3,484    |   |                                     |   | 3,484    |                                                       |  |   |                                          |   |  |   |         |  
|Stock Compensation                                                                                                         |  |                                                 | 800      |   |                                     |   | 800      |                                                       |  |   |                                          |   |  |   |         |  
|(Gain) loss on sale of securities                                                                                          |  |                                                 | 7        |   |                                     |   | 7        |                                                       |  |   | (36                                       | ) |  |   | (36      | )
|Gain on sale of real estate owned and assets                                                                               |  |                                                 | (441     | ) |                                     |   | (441     | )                                                     |  |   | (8                                        | ) |  |   | (8       | )
|Real estate valuation adjustments                                                                                          |  |                                                 | 567      |   |                                     |   | 567      |                                                       |  |   |                                          |   |  |   |         |  
|Loss on discontinued operations                                                                                            |  |                                                 | 1,542    |   |                                     |   | 1,542    |                                                       |  |   |                                          |   |  |   |         |  
|Other                                                                                                                      |  |                                                 | (1,040   | ) |                                     |   | (1,040   | )                                                     |  |   | (30                                       | ) |  |   | (30      | )
|Proceeds from sales of loans held for sale                                                                                 |  |                                                 | 95,462   |   |                                     |   | 95,462   |                                                       |  |   |                                          |   |  |   |         |  
|Originations of loans held for sale                                                                                        |  |                                                 | (93,658  | ) |                                     |   | (93,658  | )                                                     |  |   |                                          |   |  |   |         |  
|Net change in:                                                                                                             |  |                                                 |          |   |                                     |   |          |                                                       |  |   |                                           |   |  |   |          |  
|Accrued interest receivable and other assets                                                                               |  |                                                 | (24,176  | ) |                                     |   | (10,633  | )                                                     |  |   | 1,757                                     |   |  |   | 1,757    |  
|Accrued interest payable and other liabilities                                                                             |  |                                                 | 6,291    |   |                                     |   | 6,291    |                                                       |  |   | 608                                       |   |  |   | 608      |  
|                                                                                                                           |  |                                                 |          |   |                                     |   |          |                                                       |  |   |                                           |   |  |   |          |  
|Net cash provided by operating activities                                                                                  |  |                                                 | 21,140   |   |                                     |   | 34,683   |                                                       |  |   | 6,910                                     |   |  |   | 6,910    |  
|                                                                                                                           |  |                                                 |          |   |                                     |   |          |                                                       |  |   |                                           |   |  |   |          |  
|Cash flows from investing activities:                                                                                      |  |                                                 |          |   |                                     |   |          |                                                       |  |   |                                           |   |  |   |          |  
|Net cash and cash equivalents acquired (paid) in acquisitions                                                              |  |                                                 | 36,075   |   |                                     |   | 36,075   |                                                       |  |   | (386,383                                  | ) |  |   | (380,057 | )
|Activity in available-for-sale securities:                                                                                 |  |                                                 |          |   |                                     |   |          |                                                       |  |   |                                           |   |  |   |          |  
|Maturities, prepayments, and calls                                                                                         |  |                                                 | 219,330  |   |                                     |   | 219,330  |                                                       |  |   | 42,202                                    |   |  |   | 42,202   |  
|Purchases                                                                                                                  |  |                                                 | (172,942 | ) |                                     |   | (172,942 | )                                                     |  |   | (43,487                                   | ) |  |   | (43,487  | )
|Activity in held-to-maturity securities and bank stocks:                                                                   |  |                                                 |          |   |                                     |   |          |                                                       |  |   |                                           |   |  |   |          |  
|Maturities, prepayments, and calls                                                                                         |  |                                                 | 254      |   |                                     |   | 254      |                                                       |  |   | 250                                       |   |  |   | 250      |  
|Purchases                                                                                                                  |  |                                                 | (1,155   | ) |                                     |   | (1,155   | )                                                     |  |   |                                          |   |  |   |         |  
|Loan originations and principal collections, net                                                                           |  |                                                 | (95,140  | ) |                                     |   | (95,140  | )                                                     |  |   | 10,695                                    |   |  |   | 10,695   |  
|Proceeds from sales of foreclosed assets                                                                                   |  |                                                 | 7,247    |   |                                     |   | 7,247    |                                                       |  |   | 1,014                                     |   |  |   | 1,014    |  
|Proceeds from sales of premises and equipment                                                                              |  |                                                 | 1,964    |   |                                     |   | 1,964    |                                                       |  |   |                                          |   |  |   |         |  
|Additions to premises and equipment                                                                                        |  |                                                 | (9,261   | ) |                                     |   | (9,261   | )                                                     |  |   | (184                                      | ) |  |   | (184     | )
|Proceeds from sale of subsidiary                                                                                           |  |                                                 |         |   |                                     |   |         |                                                       |  |   |                                          |   |  |   |         |  
|                                                                                                                           |  |                                                 |          |   |                                     |   |          |                                                       |  |   |                                           |   |  |   |          |  
|Net cash used by investing activities                                                                                      |  |                                                 | (13,628  | ) |                                     |   | (13,628  | )                                                     |  |   | (375,893                                  | ) |  |   | (369,567 | )
|                                                                                                                           |  |                                                 |          |   |                                     |   |          |                                                       |  |   |                                           |   |  |   |          |  
|Cash flows from financing activities:                                                                                      |  |                                                 |          |   |                                     |   |          |                                                       |  |   |                                           |   |  |   |          |  
|Net decrease in deposits                                                                                                   |  |                                                 | (68,535  | ) |                                     |   | (68,535  | )                                                     |  |   | (83,918                                   | ) |  |   | (83,918  | )
|Net change in short-term borrowings                                                                                        |  |                                                 | 84,226   |   |                                     |   | 84,226   |                                                       |  |   | 13,278                                    |   |  |   | 13,278   |  
|Repayment of long-term debt                                                                                                |  |                                                 | (659     | ) |                                     |   | (659     | )                                                     |  |   | (213                                      | ) |  |   | (213     | )
|Net change in federal funds purchased and repurchase agreements                                                            |  |                                                 | 17,415   |   |                                     |   | 17,415   |                                                       |  |   | 19,123                                    |   |  |   | 19,123   |  
|Repurchase of common stock                                                                                                 |  |                                                 | (31,720  | ) |                                     |   | (31,720  | )                                                     |  |   |                                          |   |  |   |         |  
|Proceeds from issuance of common stock                                                                                     |  |                                                 |         |   |                                     |   |         |                                                       |  |   | 511,640                                   |   |  |   | 511,640  |  
|Costs associated with issuance of common stock                                                                             |  |                                                 | (504     | ) |                                     |   | (504     | )                                                     |  |   |                                          |   |  |   |         |  
|Tax benefit from vesting of stock compensation                                                                             |  |                                                 | 280      |   |                                     |   | 280      |                                                       |  |   |                                          |   |  |   |         |  
|                                                                                                                           |  |                                                 |          |   |                                     |   |          |                                                       |  |   |                                           |   |  |   |          |  
|Net cash provided by financing activities                                                                                  |  |                                                 | 503      |   |                                     |   | 503      |                                                       |  |   | 459,910                                   |   |  |   | 459,910  |  
|                                                                                                                           |  |                                                 |          |   |                                     |   |          |                                                       |  |   |                                           |   |  |   |          |  
|Net change in cash and cash equivalents                                                                                    |  |                                                 | 8,015    |   |                                     |   | 21,558   |                                                       |  |   | 90,927                                    |   |  |   | 97,253   |  
|Cash and cash equivalents, beginning of period                                                                             |  |                                                 | 90,927   |   |                                     |   | 97,253   |                                                       |  |   |                                          |   |  |   |         |  
|                                                                                                                           |  |                                                 |          |   |                                     |   |          |                                                       |  |   |                                           |   |  |   |          |  
|Cash and cash equivalents, end of period                                                                                   |  | $                                               | 98,942   |   |                                     | $ | 118,811  |                                                       |  | $ | 90,927                                    |   |  | $ | 97,253   |  
|                                                                                                                           |  |                                                 |          |   |                                     |   |          |                                                       |  |   |                                           |   |  |   |          |  
|Cash and cash equivalentsconsolidated statements of cash flows                                                            |  |                                                 |          |   |                                     | $ | 118,811  |                                                       |  |   |                                           |   |  | $ | 97,253   |  
|Cash and cash equivalents from discontinued operations recorded in assets held for sale on the consolidated balance sheets |  |                                                 |          |   |                                     |   | (19,869  | )                                                     |  |   |                                           |   |  |   | (6,326   | )
|                                                                                                                           |  |                                                 |          |   |                                     |   |          |                                                       |  |   |                                           |   |  |   |          |  
|Cash and cash equivalentsconsolidated balance sheets                                                                      |  |                                                 |          |   |                                     | $ | 98,842   |                                                       |  |   |                                           |   |  | $ | 90,927   |  
|                                                                                                                           |  |                                                 |          |   |                                     |   |          |                                                       |  |   |                                           |   |  |   |          |  
|Supplemental disclosure of cash flow activity:                                                                             |  |                                                 |          |   |                                     |   |          |                                                       |  |   |                                           |   |  |   |          |  
|Interest paid on deposits and borrowed funds                                                                               |  | $                                               | 34,609   |   |                                     | $ | 31,985   |                                                       |  | $ | 3,631                                     |   |  | $ | 3,631    |  
|Income taxes paid                                                                                                          |  |                                                 | 11,505   |   |                                     |   | 12,288   |                                                       |  |   | 1,436                                     |   |  |   | 1,436    |  
|Supplemental disclosure of noncash activities:                                                                             |  |                                                 |          |   |                                     |   |          |                                                       |  |   |                                           |   |  |   |          |  
|Loans transferred to other real estate owned                                                                               |  |                                                 | 2,547    |   |                                     |   | 2,547    |                                                       |  |   | 2,007                                     |   |  |   | 2,007    |  



66



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##### Table of Contents

CENTENNIAL BANK HOLDINGS, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements(Continued)



|                                                                                                                           |  |                                                         |          |   |                                              |   |          |                                                         |  |   |                                              |   |  |   |          |  
|-------------------------------------------------------------------------------------------------------------------------- |  | ------------------------------------------------------- | -------- | - | -------------------------------------------- | - | -------- | ------------------------------------------------------- |  | - | -------------------------------------------- | - |  | - | -------- | -
|                                                                                                                           |  | Unaudited                                               |         
|                                                                                                                           |  | Nine Months EndedSeptember 30, 2006-Previously Reported |          |   | Nine Months EndedSeptember 30, 2006-Restated |   |          | Nine Months EndedSeptember 30, 2005-Previously Reported |  |   | Nine Months EndedSeptember 30, 2005-Restated |  
|                                                                                                                           |  | (In thousands)                                          |         
|Cash flows from operating activities:                                                                                      |  |                                                         |          |   |                                              |   |          |                                                         |  |   |                                              |   |  |   |          |  
|Net income                                                                                                                 |  | $                                                       | 18,975   |   |                                              | $ | 18,975   |                                                         |  | $ | 9,817                                        |   |  | $ | 9,817    |  
|Adjustments to reconcile net income to net cash provided by operating activities:                                          |  |                                                         |          |   |                                              |   |          |                                                         |  |   |                                              |   |  |   |          |  
|Depreciation and amortization                                                                                              |  |                                                         | 13,370   |   |                                              |   | 13,370   |                                                         |  |   | 12,339                                       |   |  |   | 12,409   |  
|Provision for loan losses                                                                                                  |  |                                                         | 1,588    |   |                                              |   | 1,588    |                                                         |  |   | 1,700                                        |   |  |   | 1,756    |  
|Stock Compensation                                                                                                         |  |                                                         | 2,382    |   |                                              |   | 2,382    |                                                         |  |   | 275                                          |   |  |   | 275      |  
|Gain on sale of securities                                                                                                 |  |                                                         | (1       | ) |                                              |   | (1       | )                                                       |  |   | (1,071                                       | ) |  |   | (1,071   | )
|Gain on sale of real estate owned and assets                                                                               |  |                                                         | (196     | ) |                                              |   | (196     | )                                                       |  |   | (601                                         | ) |  |   | (601     | )
|Real estate valuation adjustments                                                                                          |  |                                                         |         |   |                                              |   |         |                                                         |  |   | 265                                          |   |  |   | 265      |  
|Loss on discontinued operations                                                                                            |  |                                                         | 201      |   |                                              |   | 201      |                                                         |  |   | 1,584                                        |   |  |   | 1,584    |  
|Other                                                                                                                      |  |                                                         | (1,208   | ) |                                              |   | (1,208   | )                                                       |  |   | 425                                          |   |  |   | 342      |  
|Proceeds from sales of loans held for sale                                                                                 |  |                                                         | 55,390   |   |                                              |   | 55,390   |                                                         |  |   | 78,056                                       |   |  |   | 78,056   |  
|Originations of loans held for sale                                                                                        |  |                                                         | (49,896  | ) |                                              |   | (49,896  | )                                                       |  |   | (75,708                                      | ) |  |   | (75,708  | )
|Net change in:                                                                                                             |  |                                                         |          |   |                                              |   |          |                                                         |  |   |                                              |   |  |   |          |  
|Accrued interest receivable and other assets                                                                               |  |                                                         | 4,301    |   |                                              |   | (262     | )                                                       |  |   | (15,553                                      | ) |  |   | (5,137   | )
|Accrued interest payable and other liabilities                                                                             |  |                                                         | (8,355   | ) |                                              |   | (8,355   | )                                                       |  |   | 9,346                                        |   |  |   | (534     | )
|                                                                                                                           |  |                                                         |          |   |                                              |   |          |                                                         |  |   |                                              |   |  |   |          |  
|Net cash provided by operating activities                                                                                  |  |                                                         | 36,551   |   |                                              |   | 31,988   |                                                         |  |   | 20,874                                       |   |  |   | 21,453   |  
|                                                                                                                           |  |                                                         |          |   |                                              |   |          |                                                         |  |   |                                              |   |  |   |          |  
|Cash flows from investing activities:                                                                                      |  |                                                         |          |   |                                              |   |          |                                                         |  |   |                                              |   |  |   |          |  
|Activity in available-for-sale securities:                                                                                 |  |                                                         |          |   |                                              |   |          |                                                         |  |   |                                              |   |  |   |          |  
|Maturities, prepayments, and calls                                                                                         |  |                                                         | 70,981   |   |                                              |   | 70,981   |                                                         |  |   | 135,374                                      |   |  |   | 144,666  |  
|Purchases                                                                                                                  |  |                                                         | (96,679  | ) |                                              |   | (96,679  | )                                                       |  |   | (143,164                                     | ) |  |   | (151,093 | )
|Activity in held-to-maturity securities and bank stocks:                                                                   |  |                                                         |          |   |                                              |   |          |                                                         |  |   |                                              |   |  |   |          |  
|Maturities, prepayments, and calls                                                                                         |  |                                                         | 297      |   |                                              |   | 297      |                                                         |  |   | 250                                          |   |  |   | 250      |  
|Purchases                                                                                                                  |  |                                                         | (4,395   | ) |                                              |   | (4,395   | )                                                       |  |   |                                             |   |  |   |         |  
|Loan originations and principal collections, net                                                                           |  |                                                         | 76,324   |   |                                              |   | 76,324   |                                                         |  |   | (125,525                                     | ) |  |   | (125,908 | )
|Proceeds from sales of foreclosed assets                                                                                   |  |                                                         | 1,784    |   |                                              |   | 1,784    |                                                         |  |   | 5,204                                        |   |  |   | 5,204    |  
|Proceeds from sales of premises and equipment                                                                              |  |                                                         | 6,382    |   |                                              |   | 6,382    |                                                         |  |   | 1,889                                        |   |  |   | 1,893    |  
|Additions to premises and equipment                                                                                        |  |                                                         | (13,318  | ) |                                              |   | (13,318  | )                                                       |  |   | (11,984                                      | ) |  |   | (12,034  | )
|Proceeds from sale of subsidiary                                                                                           |  |                                                         | 1,835    |   |                                              |   | 1,835    |                                                         |  |   |                                             |   |  |   |         |  
|                                                                                                                           |  |                                                         |          |   |                                              |   |          |                                                         |  |   |                                              |   |  |   |          |  
|Net cash provided (used) by investing activities                                                                           |  |                                                         | 43,211   |   |                                              |   | 43,211   |                                                         |  |   | (137,956                                     | ) |  |   | (137,022 | )
|                                                                                                                           |  |                                                         |          |   |                                              |   |          |                                                         |  |   |                                              |   |  |   |          |  
|Cash flows from financing activities:                                                                                      |  |                                                         |          |   |                                              |   |          |                                                         |  |   |                                              |   |  |   |          |  
|Net increase (decrease) in deposits                                                                                        |  |                                                         | (83,754  | ) |                                              |   | (83,754  | )                                                       |  |   | 42,466                                       |   |  |   | 51,246   |  
|Net change in short-term borrowings                                                                                        |  |                                                         | 7,170    |   |                                              |   | 7,170    |                                                         |  |   | 58,125                                       |   |  |   | 58,125   |  
|(Repayment of) proceeds from long-term debt                                                                                |  |                                                         | (388     | ) |                                              |   | (388     | )                                                       |  |   | 20,163                                       |   |  |   | 20,163   |  
|Net change in federal funds purchased and repurchase agreements                                                            |  |                                                         | (4,824   | ) |                                              |   | (4,824   | )                                                       |  |   | 3,813                                        |   |  |   | 4,368    |  
|Repurchase of common stock                                                                                                 |  |                                                         | (25,328  | ) |                                              |   | (25,328  | )                                                       |  |   | (4,659                                       | ) |  |   | (4,659   | )
|Tax benefit from vesting of stock compensation                                                                             |  |                                                         | 2        |   |                                              |   | 2        |                                                         |  |   | 280                                          |   |  |   | 280      |  
|                                                                                                                           |  |                                                         |          |   |                                              |   |          |                                                         |  |   |                                              |   |  |   |          |  
|Net cash provided (used) by financing activities                                                                           |  |                                                         | (107,122 | ) |                                              |   | (107,122 | )                                                       |  |   | 120,188                                      |   |  |   | 129,523  |  
|                                                                                                                           |  |                                                         |          |   |                                              |   |          |                                                         |  |   |                                              |   |  |   |          |  
|Net change in cash and cash equivalents                                                                                    |  |                                                         | (27,360  | ) |                                              |   | (31,924  | )                                                       |  |   | 3,106                                        |   |  |   | 13,954   |  
|Cash and cash equivalents, beginning of period                                                                             |  |                                                         | 98,942   |   |                                              |   | 118,811  |                                                         |  |   | 90,927                                       |   |  |   | 97,253   |  
|                                                                                                                           |  |                                                         |          |   |                                              |   |          |                                                         |  |   |                                              |   |  |   |          |  
|Cash and cash equivalents, end of period                                                                                   |  | $                                                       | 71,582   |   |                                              | $ | 86,887   |                                                         |  | $ | 94,033                                       |   |  | $ | 111,207  |  
|                                                                                                                           |  |                                                         |          |   |                                              |   |          |                                                         |  |   |                                              |   |  |   |          |  
|Cash and cash equivalentsconsolidated statements of cash flows                                                            |  |                                                         |          |   |                                              | $ | 86,887   |                                                         |  |   |                                              |   |  | $ | 111,207  |  
|Cash and cash equivalents from discontinued operations recorded in assets held for sale on the consolidated balance sheets |  |                                                         |          |   |                                              |   | (15,305  | )                                                       |  |   |                                              |   |  |   | (17,174  | )
|                                                                                                                           |  |                                                         |          |   |                                              |   |          |                                                         |  |   |                                              |   |  |   |          |  
|Cash and cash equivalentsconsolidated balance sheets                                                                      |  |                                                         |          |   |                                              | $ | 71,582   |                                                         |  |   |                                              |   |  | $ | 94,033   |  
|                                                                                                                           |  |                                                         |          |   |                                              |   |          |                                                         |  |   |                                              |   |  |   |          |  
|Supplemental disclosure of cash flow activity:                                                                             |  |                                                         |          |   |                                              |   |          |                                                         |  |   |                                              |   |  |   |          |  
|Interest paid on deposits and borrowed funds                                                                               |  | $                                                       | 42,776   |   |                                              | $ | 42,776   |                                                         |  | $ | 20,236                                       |   |  | $ | 20,747   |  
|Income taxes paid                                                                                                          |  |                                                         | 18,393   |   |                                              |   | 18,393   |                                                         |  |   | 5,798                                        |   |  |   | 5,798    |  
|Supplemental disclosure of noncash activities:                                                                             |  |                                                         |          |   |                                              |   |          |                                                         |  |   |                                              |   |  |   |          |  
|Loans transferred to other real estate owned                                                                               |  |                                                         | 5,094    |   |                                              |   | 5,094    |                                                         |  |   | 1,791                                        |   |  |   | 1,791    |  



67



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##### Table of Contents

CENTENNIAL BANK HOLDINGS, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements(Continued)



|                                                                                                                           |  |                                                   |          |   |                                        |   |          |                                                 |  |   |                                        |   |  |   |          |  
|-------------------------------------------------------------------------------------------------------------------------- |  | ------------------------------------------------- | -------- | - | -------------------------------------- | - | -------- | ----------------------------------------------- |  | - | -------------------------------------- | - |  | - | -------- | -
|                                                                                                                           |  | Unaudited                                         |         
|                                                                                                                           |  | Six Months EndedJune 30, 2006-Previously Reported |          |   | Six Months EndedJune 30, 2006-Restated |   |          | Six MonthsEnded June 30,2005-PreviouslyReported |  |   | Six Months EndedJune 30, 2005-Restated |  
|                                                                                                                           |  | (In thousands)                                    |         
|Cash flows from operating activities:                                                                                      |  |                                                   |          |   |                                        |   |          |                                                 |  |   |                                        |   |  |   |          |  
|Net income                                                                                                                 |  | $                                                 | 13,155   |   |                                        | $ | 13,155   |                                                 |  | $ | 4,687                                  |   |  | $ | 4,687    |  
|Adjustments to reconcile net income to net cash provided by operating activities:                                          |  |                                                   |          |   |                                        |   |          |                                                 |  |   |                                        |   |  |   |          |  
|Depreciation and amortization                                                                                              |  |                                                   | 9,009    |   |                                        |   | 9,009    |                                                 |  |   | 7,519                                  |   |  |   | 7,565    |  
|Provision for loan losses                                                                                                  |  |                                                   | 15       |   |                                        |   | 15       |                                                 |  |   | 1,700                                  |   |  |   | 1,732    |  
|Stock Compensation                                                                                                         |  |                                                   | 1,508    |   |                                        |   | 1,508    |                                                 |  |   |                                       |   |  |   |         |  
|(Gain) loss on sale of securities                                                                                          |  |                                                   | 5        |   |                                        |   | 5        |                                                 |  |   | (635                                   | ) |  |   | (635     | )
|Gain on sale of real estate owned and assets                                                                               |  |                                                   | (50      | ) |                                        |   | (50      | )                                               |  |   | (348                                   | ) |  |   | (348     | )
|Loss on discontinued operations                                                                                            |  |                                                   | 201      |   |                                        |   | 201      |                                                 |  |   | 1,244                                  |   |  |   | 1,244    |  
|Other                                                                                                                      |  |                                                   | (718     | ) |                                        |   | (718     | )                                               |  |   | 373                                    |   |  |   | 320      |  
|Proceeds from sales of loans held for sale                                                                                 |  |                                                   | 39,711   |   |                                        |   | 39,711   |                                                 |  |   | 47,185                                 |   |  |   | 47,185   |  
|Originations of loans held for sale                                                                                        |  |                                                   | (36,935  | ) |                                        |   | (36,935  | )                                               |  |   | (45,287                                | ) |  |   | (45,287  | )
|Net change in:                                                                                                             |  |                                                   |          |   |                                        |   |          |                                                 |  |   |                                        |   |  |   |          |  
|Accrued interest receivable and other assets                                                                               |  |                                                   | 8,835    |   |                                        |   | 3,669    |                                                 |  |   | (9,521                                 | ) |  |   | (4,260   | )
|Accrued interest payable and other liabilities                                                                             |  |                                                   | (6,182   | ) |                                        |   | (6,182   | )                                               |  |   | 5,095                                  |   |  |   | 371      |  
|                                                                                                                           |  |                                                   |          |   |                                        |   |          |                                                 |  |   |                                        |   |  |   |          |  
|Net cash provided by operating activities                                                                                  |  |                                                   | 28,554   |   |                                        |   | 23,388   |                                                 |  |   | 12,012                                 |   |  |   | 12,574   |  
|                                                                                                                           |  |                                                   |          |   |                                        |   |          |                                                 |  |   |                                        |   |  |   |          |  
|Cash flows from investing activities:                                                                                      |  |                                                   |          |   |                                        |   |          |                                                 |  |   |                                        |   |  |   |          |  
|Activity in available-for-sale securities:                                                                                 |  |                                                   |          |   |                                        |   |          |                                                 |  |   |                                        |   |  |   |          |  
|Maturities, prepayments, and calls                                                                                         |  |                                                   | 20,652   |   |                                        |   | 20,652   |                                                 |  |   | 100,252                                |   |  |   | 105,544  |  
|Purchases                                                                                                                  |  |                                                   | (53,735  | ) |                                        |   | (53,735  | )                                               |  |   | (108,064                               | ) |  |   | (112,027 | )
|Activity in held-to-maturity securities and bank stocks:                                                                   |  |                                                   |          |   |                                        |   |          |                                                 |  |   |                                        |   |  |   |          |  
|Maturities, prepayments, and calls                                                                                         |  |                                                   | 10       |   |                                        |   | 10       |                                                 |  |   | 130                                    |   |  |   | 130      |  
|Loan originations and principal collections, net                                                                           |  |                                                   | 137,316  |   |                                        |   | 137,316  |                                                 |  |   | (79,629                                | ) |  |   | (81,696  | )
|Proceeds from sales of foreclosed assets                                                                                   |  |                                                   | 1,213    |   |                                        |   | 1,213    |                                                 |  |   | 3,290                                  |   |  |   | 3,290    |  
|Proceeds from sales of premises and equipment                                                                              |  |                                                   | 189      |   |                                        |   | 189      |                                                 |  |   | 1,889                                  |   |  |   | 1,892    |  
|Additions to premises and equipment                                                                                        |  |                                                   | (6,035   | ) |                                        |   | (6,035   | )                                               |  |   | (4,806                                 | ) |  |   | (4,832   | )
|Proceeds from sale of subsidiary                                                                                           |  |                                                   | 1,835    |   |                                        |   | 1,835    |                                                 |  |   |                                       |   |  |   |         |  
|                                                                                                                           |  |                                                   |          |   |                                        |   |          |                                                 |  |   |                                        |   |  |   |          |  
|Net cash provided (used) by investing activities                                                                           |  |                                                   | 101,445  |   |                                        |   | 101,445  |                                                 |  |   | (86,938                                | ) |  |   | (87,699  | )
|                                                                                                                           |  |                                                   |          |   |                                        |   |          |                                                 |  |   |                                        |   |  |   |          |  
|Cash flows from financing activities:                                                                                      |  |                                                   |          |   |                                        |   |          |                                                 |  |   |                                        |   |  |   |          |  
|Net increase (decrease) in deposits                                                                                        |  |                                                   | (54,817  | ) |                                        |   | (54,817  | )                                               |  |   | (88,945                                | ) |  |   | (85,844  | )
|Net change in short-term borrowings                                                                                        |  |                                                   | (53,547  | ) |                                        |   | (53,547  | )                                               |  |   | 90,627                                 |   |  |   | 90,627   |  
|(Repayments of) proceeds from long-term debt                                                                               |  |                                                   | (265     | ) |                                        |   | (265     | )                                               |  |   | 31,267                                 |   |  |   | 31,267   |  
|Net change in federal funds purchased and repurchase agreements                                                            |  |                                                   | (12,480  | ) |                                        |   | (12,480  | )                                               |  |   | 23,806                                 |   |  |   | 24,879   |  
|Repurchase of common stock                                                                                                 |  |                                                   | (17,135  | ) |                                        |   | (17,135  | )                                               |  |   | (4,659                                 | ) |  |   | (4,659   | )
|Tax benefit from vesting of stock compensation                                                                             |  |                                                   | 2        |   |                                        |   | 2        |                                                 |  |   | 280                                    |   |  |   | 280      |  
|                                                                                                                           |  |                                                   |          |   |                                        |   |          |                                                 |  |   |                                        |   |  |   |          |  
|Net cash provided (used) by financing activities                                                                           |  |                                                   | (138,242 | ) |                                        |   | (138,242 | )                                               |  |   | 52,376                                 |   |  |   | 56,550   |  
|                                                                                                                           |  |                                                   |          |   |                                        |   |          |                                                 |  |   |                                        |   |  |   |          |  
|Net change in cash and cash equivalents                                                                                    |  |                                                   | (8,243   | ) |                                        |   | (13,409  | )                                               |  |   | (22,550                                | ) |  |   | (18,575  | )
|Cash and cash equivalents, beginning of period                                                                             |  |                                                   | 98,942   |   |                                        |   | 118,811  |                                                 |  |   | 90,927                                 |   |  |   | 97,253   |  
|                                                                                                                           |  |                                                   |          |   |                                        |   |          |                                                 |  |   |                                        |   |  |   |          |  
|Cash and cash equivalents, end of period                                                                                   |  | $                                                 | 90,699   |   |                                        | $ | 105,402  |                                                 |  | $ | 68,377                                 |   |  | $ | 78,678   |  
|                                                                                                                           |  |                                                   |          |   |                                        |   |          |                                                 |  |   |                                        |   |  |   |          |  
|Cash and cash equivalentsconsolidated statements of cash flows                                                            |  |                                                   |          |   |                                        | $ | 105,402  |                                                 |  |   |                                        |   |  | $ | 78,678   |  
|Cash and cash equivalents from discontinued operations recorded in assets held for sale on the consolidated balance sheets |  |                                                   |          |   |                                        |   | (14,703  | )                                               |  |   |                                        |   |  |   | (10,301  | )
|                                                                                                                           |  |                                                   |          |   |                                        |   |          |                                                 |  |   |                                        |   |  |   |          |  
|Cash and cash equivalentsconsolidated balance sheets                                                                      |  |                                                   |          |   |                                        | $ | 90,699   |                                                 |  |   |                                        |   |  | $ | 68,377   |  
|                                                                                                                           |  |                                                   |          |   |                                        |   |          |                                                 |  |   |                                        |   |  |   |          |  
|Supplemental disclosure of cash flow activity:                                                                             |  |                                                   |          |   |                                        |   |          |                                                 |  |   |                                        |   |  |   |          |  
|Interest paid on deposits and borrowed funds                                                                               |  | $                                                 | 27,002   |   |                                        | $ | 27,002   |                                                 |  | $ | 11,369                                 |   |  | $ | 11,681   |  
|Income taxes paid                                                                                                          |  |                                                   | 10,933   |   |                                        |   | 10,933   |                                                 |  |   | 1,044                                  |   |  |   | 1,044    |  
|Supplemental disclosure of noncash activities:                                                                             |  |                                                   |          |   |                                        |   |          |                                                 |  |   |                                        |   |  |   |          |  
|Loans transferred to other real estate owned                                                                               |  |                                                   | 524      |   |                                        |   | 524      |                                                 |  |   | 1,770                                  |   |  |   | 1,770    |  



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Notes to Consolidated Financial Statements(Continued)



|                                                                                                                           |  |                                                      |         |   |                                          |   |         |                                                      |  |   |                                          |   |  |   |         |  
|-------------------------------------------------------------------------------------------------------------------------- |  | ---------------------------------------------------- | ------- | - | ---------------------------------------- | - | ------- | ---------------------------------------------------- |  | - | ---------------------------------------- | - |  | - | ------- | -
|                                                                                                                           |  | Unaudited                                            |        
|                                                                                                                           |  | Three Months EndedMarch 31, 2006-Previously Reported |         |   | Three MonthsEnded March 31,2006-Restated |   |         | Three Months EndedMarch 31, 2005-Previously Reported |  |   | Three MonthsEnded March 31,2005-Restated |  
|                                                                                                                           |  | (In thousands)                                       |        
|Cash flows from operating activities:                                                                                      |  |                                                      |         |   |                                          |   |         |                                                      |  |   |                                          |   |  |   |         |  
|Net income                                                                                                                 |  | $                                                    | 7,429   |   |                                          | $ | 7,429   |                                                      |  | $ | 1,097                                    |   |  | $ | 1,097   |  
|Adjustments to reconcile net income to net cash provided by operating activities:                                          |  |                                                      |         |   |                                          |   |         |                                                      |  |   |                                          |   |  |   |         |  
|Depreciation and amortization                                                                                              |  |                                                      | 4,460   |   |                                          |   | 4,460   |                                                      |  |   | 3,720                                    |   |  |   | 3,744   |  
|Provision for loan losses                                                                                                  |  |                                                      | 8       |   |                                          |   | 8       |                                                      |  |   | 1,700                                    |   |  |   | 1,714   |  
|Stock Compensation                                                                                                         |  |                                                      | 700     |   |                                          |   | 700     |                                                      |  |   |                                         |   |  |   |        |  
|(Gain) loss on sale of securities                                                                                          |  |                                                      | 5       |   |                                          |   | 5       |                                                      |  |   | (393                                     | ) |  |   | (393    | )
|(Gain) loss on sale of real estate owned and assets                                                                        |  |                                                      | 122     |   |                                          |   | 122     |                                                      |  |   | (250                                     | ) |  |   | (250    | )
|Loss on discontinued operations                                                                                            |  |                                                      | 201     |   |                                          |   | 201     |                                                      |  |   |                                         |   |  |   |        |  
|Other                                                                                                                      |  |                                                      | (377    | ) |                                          |   | (377    | )                                                    |  |   | 227                                      |   |  |   | 199     |  
|Proceeds from sales of loans held for sale                                                                                 |  |                                                      | 21,991  |   |                                          |   | 21,991  |                                                      |  |   | 28,305                                   |   |  |   | 28,305  |  
|Originations of loans held for sale                                                                                        |  |                                                      | (20,586 | ) |                                          |   | (20,586 | )                                                    |  |   | (24,817                                  | ) |  |   | (24,817 | )
|Net change in:                                                                                                             |  |                                                      |         |   |                                          |   |         |                                                      |  |   |                                          |   |  |   |         |  
|Accrued interest receivable and other assets                                                                               |  |                                                      | 8,905   |   |                                          |   | 1,906   |                                                      |  |   | (11,289                                  | ) |  |   | (5,152  | )
|Accrued interest payable and other liabilities                                                                             |  |                                                      | 2,213   |   |                                          |   | 2,213   |                                                      |  |   | 4,436                                    |   |  |   | (1,807  | )
|                                                                                                                           |  |                                                      |         |   |                                          |   |         |                                                      |  |   |                                          |   |  |   |         |  
|Net cash provided by operating activities                                                                                  |  |                                                      | 25,071  |   |                                          |   | 18,072  |                                                      |  |   | 2,736                                    |   |  |   | 2,640   |  
|                                                                                                                           |  |                                                      |         |   |                                          |   |         |                                                      |  |   |                                          |   |  |   |         |  
|Cash flows from investing activities:                                                                                      |  |                                                      |         |   |                                          |   |         |                                                      |  |   |                                          |   |  |   |         |  
|Activity in available-for-sale securities:                                                                                 |  |                                                      |         |   |                                          |   |         |                                                      |  |   |                                          |   |  |   |         |  
|Maturities, prepayments, and calls                                                                                         |  |                                                      | 9,956   |   |                                          |   | 9,956   |                                                      |  |   | 54,599                                   |   |  |   | 57,891  |  
|Purchases                                                                                                                  |  |                                                      | (6,569  | ) |                                          |   | (6,569  | )                                                    |  |   | (63,681                                  | ) |  |   | (65,657 | )
|Activity in held-to-maturity securities and bank stocks:                                                                   |  |                                                      |         |   |                                          |   |         |                                                      |  |   |                                          |   |  |   |         |  
|Maturities, prepayments, and calls                                                                                         |  |                                                      |        |   |                                          |   |        |                                                      |  |   | 3                                        |   |  |   | 3       |  
|Loan originations and principal collections, net                                                                           |  |                                                      | 63,918  |   |                                          |   | 63,918  |                                                      |  |   | (18,939                                  | ) |  |   | (21,366 | )
|Proceeds from sales of foreclosed assets                                                                                   |  |                                                      | 453     |   |                                          |   | 453     |                                                      |  |   | 3,178                                    |   |  |   | 3,178   |  
|Proceeds from sales of premises and equipment                                                                              |  |                                                      | 115     |   |                                          |   | 115     |                                                      |  |   | 52                                       |   |  |   | 52      |  
|Additions to premises and equipment                                                                                        |  |                                                      | (4,730  | ) |                                          |   | (4,730  | )                                                    |  |   | (2,569                                   | ) |  |   | (2,593  | )
|Proceeds from sale of subsidiary                                                                                           |  |                                                      | 1,835   |   |                                          |   | 1,835   |                                                      |  |   |                                         |   |  |   |        |  
|                                                                                                                           |  |                                                      |         |   |                                          |   |         |                                                      |  |   |                                          |   |  |   |         |  
|Net cash provided (used) by investing activities                                                                           |  |                                                      | 64,978  |   |                                          |   | 64,978  |                                                      |  |   | (27,357                                  | ) |  |   | (28,492 | )
|                                                                                                                           |  |                                                      |         |   |                                          |   |         |                                                      |  |   |                                          |   |  |   |         |  
|Cash flows from financing activities:                                                                                      |  |                                                      |         |   |                                          |   |         |                                                      |  |   |                                          |   |  |   |         |  
|Net increase (decrease) in deposits                                                                                        |  |                                                      | 20,791  |   |                                          |   | 20,791  |                                                      |  |   | (11,337                                  | ) |  |   | (5,518  | )
|Net change in short-term borrowings                                                                                        |  |                                                      | (72,985 | ) |                                          |   | (72,985 | )                                                    |  |   | (14,780                                  | ) |  |   | (14,780 | )
|Proceeds from long-term debt                                                                                               |  |                                                      |        |   |                                          |   |        |                                                      |  |   | 24,974                                   |   |  |   | 24,974  |  
|Net change in federal funds purchased and repurchase agreements                                                            |  |                                                      | (18,483 | ) |                                          |   | (18,483 | )                                                    |  |   | 9,681                                    |   |  |   | 9,639   |  
|Repurchase of common stock                                                                                                 |  |                                                      | (3,603  | ) |                                          |   | (3,603  | )                                                    |  |   | (319                                     | ) |  |   | (319    | )
|Tax benefit from vesting of stock compensation                                                                             |  |                                                      |        |   |                                          |   |        |                                                      |  |   | 280                                      |   |  |   | 280     |  
|                                                                                                                           |  |                                                      |         |   |                                          |   |         |                                                      |  |   |                                          |   |  |   |         |  
|Net cash provided (used) by financing activities                                                                           |  |                                                      | (74,280 | ) |                                          |   | (74,280 | )                                                    |  |   | 8,499                                    |   |  |   | 14,276  |  
|                                                                                                                           |  |                                                      |         |   |                                          |   |         |                                                      |  |   |                                          |   |  |   |         |  
|Net change in cash and cash equivalents                                                                                    |  |                                                      | 15,769  |   |                                          |   | 8,770   |                                                      |  |   | (16,122                                  | ) |  |   | (11,576 | )
|Cash and cash equivalents, beginning of period                                                                             |  |                                                      | 98,942  |   |                                          |   | 118,811 |                                                      |  |   | 90,927                                   |   |  |   | 97,253  |  
|                                                                                                                           |  |                                                      |         |   |                                          |   |         |                                                      |  |   |                                          |   |  |   |         |  
|Cash and cash equivalents, end of period                                                                                   |  | $                                                    | 114,711 |   |                                          | $ | 127,581 |                                                      |  | $ | 74,805                                   |   |  | $ | 85,677  |  
|                                                                                                                           |  |                                                      |         |   |                                          |   |         |                                                      |  |   |                                          |   |  |   |         |  
|Cash and cash equivalentsconsolidated statements of cash flows                                                            |  |                                                      |         |   |                                          | $ | 127,581 |                                                      |  |   |                                          |   |  | $ | 85,677  |  
|Cash and cash equivalents from discontinued operations recorded in assets held for sale on the consolidated balance sheets |  |                                                      |         |   |                                          |   | (12,870 | )                                                    |  |   |                                          |   |  |   | (10,872 | )
|                                                                                                                           |  |                                                      |         |   |                                          |   |         |                                                      |  |   |                                          |   |  |   |         |  
|Cash and cash equivalentsconsolidated balance sheets                                                                      |  |                                                      |         |   |                                          | $ | 114,711 |                                                      |  |   |                                          |   |  | $ | 74,805  |  
|                                                                                                                           |  |                                                      |         |   |                                          |   |         |                                                      |  |   |                                          |   |  |   |         |  
|Supplemental disclosure of cash flow activity:                                                                             |  |                                                      |         |   |                                          |   |         |                                                      |  |   |                                          |   |  |   |         |  
|Interest paid on deposits and borrowed funds                                                                               |  | $                                                    | 14,077  |   |                                          | $ | 14,077  |                                                      |  | $ | 5,383                                    |   |  | $ | 5,538   |  
|Income taxes paid                                                                                                          |  |                                                      |        |   |                                          |   |        |                                                      |  |   |                                         |   |  |   |        |  
|Supplemental disclosure of noncash activities:                                                                             |  |                                                      |         |   |                                          |   |         |                                                      |  |   |                                          |   |  |   |         |  
|Loans transferred to other real estate owned                                                                               |  |                                                      | 162     |   |                                          |   | 162     |                                                      |  |   | 79                                       |   |  |   | 79      |  



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CENTENNIAL BANK HOLDINGS, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements(Continued)



(b) Basis of Presentation

On July 16, 2004, Centennial Bank Holdings, Inc. and its wholly owned subsidiary, Centennial Bank of the West (Predecessor), were acquired by
Centennial C Corp (CCC) in a cash purchase funded by the proceeds of CCCs sale of 18,500,000 shares of its common stock. Centennial Bank Holdings, Inc. was then merged with and into CCC, which then changed its name to Centennial Bank Holdings,
Inc. (Successor). On December 31, 2004, Centennial Bank Holdings, Inc. acquired Guaranty Corporation. Guaranty Corporations subsidiaries included Guaranty Bank and Trust Company, First National Bank of Strasburg and Collegiate Peaks Bank.
On April 14, 2005, First National Bank of Strasburg was merged into Guaranty Bank. The acquisitions, as well as our acquisitions in 2005 (see Note 3), were recorded using the purchase method of accounting in accordance with SFAS No. 141,
Business Combinations and SFAS No. 142, Goodwill and Other Intangible Assets.

For presentation purposes, consolidated
statements of income, stockholders equity and comprehensive income (loss), and cash flows are presented for the years ended December 31, 2006 and 2005, the period July 17, 2004 to December 31, 2004 (Successor), and the period
January 1, 2004 to July 16, 2004 (Predecessor). The consolidated balance sheet as of December 31, 2004 (Successor) includes the accounts of Guaranty Corporation and subsidiaries. The results of operations for 2004 do not include
Guaranty Corporation and subsidiaries. All significant intercompany transactions have been eliminated.

In connection with the sale of
First MainStreet Insurance on March 1, 2006, the Company revised its 2005 statement of income to segregate the First MainStreet Insurance results of operations as of and for the year ended December 31, 2005 as discontinued operations. The
financial position and results of operations of Collegiate Peaks Bank have been segregated as discontinued operations since December 31, 2004. Collegiate Peaks Bank was sold on November 1, 2006.

The accounting and reporting policies of the Company conform to accounting principles generally accepted in the United States of America.

(c) Use of Estimates

The
preparation of the consolidated financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the dates of
the consolidated balance sheet and income and expense for the periods presented. Actual results could differ significantly from those estimates. Material estimates that are particularly susceptible to significant changes include the assessment for
impairment of certain investment securities, the allowance for loan losses, deferred tax assets and liabilities, goodwill and other intangible assets, and stock compensation expense. Assumptions and factors used in the estimate of stock compensation
costs are evaluated on an annual basis or whenever events or changes in circumstance indicate that the previous assumptions and factors have changed. The result of the analysis could result in adjustments to the estimates.

(d) Cash and Cash Equivalents

Cash and cash equivalents on the Companys consolidated balance sheets include cash, balances due from banks and federal funds sold that have an original maturity of three months or less. The Companys statements of cash flows
include cash activity of the Companys wholly owned subsidiary, Collegiate Peaks, which was classified as held for sale since its acquisition on December 31, 2004 through its sale on November 1, 2006.

(e) Securities

We determine
the classification of securities at the time of purchase. If we have the intent and the ability at the time of purchase to hold securities until maturity, they are classified as held-to-maturity. Investment



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Notes to Consolidated Financial Statements(Continued)



securities held-to-maturity are stated at amortized cost. Securities to be held for indefinite periods of time, but not necessarily to be held-to-maturity or
on a long-term basis, are classified as available-for-sale and carried at fair value with unrealized gains or losses reported as a separate component of stockholders equity in accumulated other comprehensive income (loss), net of applicable
income taxes. Purchase premiums and discounts are recognized in interest income using the interest method over the terms of the securities. If a decline in the fair value of a security below its amortized cost is judged by management to be other
than temporary, the cost basis of the security is written down to fair value and the amount of the write-down is included in operations. Gains and losses on the sale of securities are recorded on the trade date and are determined using the specific
identification method.

(f) Loans Held for Sale

At December 31, 2005, loans originated without the intent to hold to maturity are classified as held for sale. At December 31, 2006, the Company had no loans classified as held for sale. Loans held for sale
are carried at the lower of aggregate cost, net of discounts or premiums and a valuation allowance, or estimated fair market value. Estimated fair market value is determined using forward commitments to sell loans to permanent investors, or current
market rates for loans of similar quality and type. Net unrealized losses, if any, are recognized in a valuation allowance by charges to income. Statement of Financial Accounting Standards (SFAS) No. 91, Accounting for Nonrefundable Fees and
Costs Associated with Originating or Acquiring Loans and Initial Direct Costs of Leases, requires discounts or premiums on loans held for sale be deferred until the related loan is sold. Loans held for sale consist of mortgage loans originated
and are secured by residential real estate. Loans held for sale are sold with servicing rights.

Loans are considered sold when the Company
surrenders control over the transferred assets to the purchaser, with standard representations and warranties. At such time, the loan is removed from the loan portfolio and a gain or loss is recorded on the sale. Gains and losses on loan sales are
determined based on the difference between the cost basis of the assets sold, the estimated fair value of any assets or liabilities that are newly created as a result of the transaction, and the proceeds from the sale. Losses related to asset
quality are recorded against the allowance for valuation losses at the time the loss is probable and quantifiable.

(g) Loans

The Company grants real estate, commercial, agricultural and consumer loans to customers. A substantial portion of the loan
portfolio is represented by real estate and commercial loans throughout the Front Range of Colorado. The ability of the Companys borrowers to honor their contracts is dependent upon the real estate and general economic conditions of Colorado,
among other factors.

Loans that management has the intent and ability to hold for the foreseeable future or until maturity or pay-off are
reported at their outstanding unpaid principal balances adjusted for charge-offs, the allowance for loan losses, and any deferred fees or costs on originated loans. Loans purchased and loans acquired in business combinations that have evidence of
credit deterioration are recorded at the present value of expected amounts of principal and interest to be received, i.e., fair value. Interest income is accrued on the unpaid principal balance. Loan origination fees, net of certain direct
origination costs, are deferred and recognized as an adjustment of the related loan yield using the interest method.

The accrual of
interest on loans is discontinued at the time the loan is 90 days delinquent unless the credit is well secured and in process of collection. In all cases, loans are placed on nonaccrual or charged-off at an earlier date if collection of principal or
interest is considered doubtful.



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Notes to Consolidated Financial Statements(Continued)



All interest accrued but not collected for loans that are placed on nonaccrual or charged off is
reversed against interest income. The interest on nonaccrual loans is accounted for on the cash-basis method, until qualifying for a return to accrual basis of accounting. Loans are returned to accrual status when all the principal and interest
amounts contractually due are brought current and future payments are reasonably assured.

(h) Allowance for Credit Losses

The allowance for loan losses and the reserve for unfunded loan commitments when combined are referred to as the allowance for
credit losses. The allowance for loan losses is reported as a reduction of outstanding loan balances and the reserve for unfunded loan commitments is included within interest payable and other liabilities.

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 borrowers 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.

An allowance for credit losses is maintained at a level deemed appropriate by management to adequately provide for known and inherent risks in the loan portfolio and other extensions of credit. The allowance is based upon a continuing
review of the portfolio, past loan loss experience, current economic conditions that may affect the borrowers ability to pay, and the underlying collateral value of the loans. Loans that are deemed to be uncollectible are charged off and
deducted from the allowance. The provision for loan losses and recoveries on loans previously charged off are added to the allowance.

A
loan is considered impaired when, based on current information and events, it is probable that the Company 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, 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. The required allowance for impaired loans is measured on a loan-by-loan basis for commercial, real estate and agricultural 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. Groups of smaller balance homogenous loans are collectively evaluated for impairment.

Various regulatory agencies, as an integral part of their examination process, periodically review the Companys allowance for loan losses and
the reserve for unfunded loan commitments. These agencies may require the Company to recognize additions to the allowance and/or the reserve based on their judgments related to information available to them at the time of their examinations.

(i) Other Real Estate Owned and Foreclosed Assets

Assets acquired through, or in lieu of, loan foreclosure are held for sale and are initially recorded at the lower of cost basis or fair value at the date
of foreclosure, less estimated costs of disposition. Prior to foreclosure, the value of the underlying loan is written down to the fair value of the assets to be acquired by a charge to the



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Notes to Consolidated Financial Statements(Continued)



allowance for loan losses, if necessary. Subsequent to foreclosure, management periodically performs analysis of fair value and the assets are carried at the
lower of carrying amount or fair value less cost to sell. Revenue and expenses of such assets, changes in the value of the assets, and gain and losses on their disposition are included in noninterest expense.

(j) Premises and Equipment

Land is carried at cost. Buildings, equipment and software are carried at cost, less accumulated depreciation and amortization computed on the straight-line method over the useful lives of the assets. Leasehold improvements are depreciated
over the shorter of their estimated useful life or the lease term. Buildings and leasehold improvements carry an estimated useful life of five to forty years and equipment and software carry an estimated useful life of one to fifteen years. Repairs
and maintenance are charged to operations as incurred.

(k) Stock Incentive Plan

The Companys Amended and Restated 2005 Stock Incentive Plan (Plan) provides for up to 2,500,000 grants of stock options, stock awards,
stock units awards, performance stock awards, stock appreciation rights, and other equity-based awards to key employees, nonemployee directors, consultants and prospective employees. As of December 31, 2006, the Company has only granted stock
awards. The Company accounts for the equity-based compensation using the provisions of Statement of Financial Accounting Standards (SFAS) No. 123R, Share-Based Payment. The Company recognizes expense for services received in
a share-based payment transaction as services are received. That cost is recognized on a straight-line basis over the period during which an employee or director provides service in exchange for the award. The Company has issued stock awards that
vest based on service periods from one to four years, and performance conditions. The performance-based share awards expire December 31, 2012. In 2006, the Company added service vesting conditions to certain performance-based share awards (but
not with respect to awards held by executive officers). There was no incremental cost associated with this change in vesting conditions. The compensation cost of employee and director services received in exchange for stock awards is based on the
grant-date fair value of the award (as determined by quoted market prices). The stock compensation expense recognized reflects estimated forfeitures, adjusted as necessary based on actual forfeitures.

(l) Income Taxes

Income taxes
are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and
liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary
differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.

(m) Goodwill and Other Intangible Assets

Goodwill represents the excess of cost over the fair value of the net assets of businesses 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 definite useful lives are amortized over their estimated useful lives to their estimated residual values. Goodwill is our only intangible
asset with an indefinite life. The annual impairment analysis of goodwill includes identification of reporting units, the determination of the carrying value of each reporting unit, including the existing goodwill and



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Notes to Consolidated Financial Statements(Continued)



intangible assets, and estimating the fair value of each reporting unit. We have identified one significant reporting unitbanking operations. We
determined the fair value of our reporting unit and compare it to its carrying amount. If the carrying amount of a reporting unit exceeds its fair value, we are required to perform a second step to the impairment test. Our impairment analysis
indicated that there was no impairment in our goodwill.

Core deposit intangible assets, which we refer to as CDI, and other definite-lived
intangible assets are recognized apart from goodwill at the time of acquisition based on valuations prepared by independent third parties or other estimates of fair value. In preparing such valuations, the third parties consider variables such as
deposit servicing costs, attrition rates, and market discount rates. CDI assets are amortized to expense over their useful lives, which we have estimated to range from 7 years to 15 years. The other definite-lived intangible assets are amortized
over their useful lives that range from 1 year to 7 years.

(n) Impairment of Long-Lived Assets

Long-lived assets, such as premises and equipment, and definite-lived intangible assets subject to amortization, are reviewed for impairment whenever
events or changes in circumstance indicate that the carrying value of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying value of the asset to the estimated undiscounted future
cash flows expected to be generated by the asset. If the carrying value of an asset exceeds its estimated undiscounted future cash flows, an impairment charge is recognized by the amount by which the carrying value of the asset exceeds the fair
value of the asset, less costs to sell. Assets to be disposed are separately presented in the balance sheet and reported at the lower of the carrying value or fair value less costs to sell, and are no longer depreciated. The assets and liabilities
of a disposed group classified as held for sale are presented separately in the appropriate asset and liability sections of the consolidated balance sheet. The gain or loss and income from a disposal group are recorded as discontinued operations on
the statement of income.

(o) Segments of an Enterprise and Related Information

The Company operates as one segment. The operating information used by the Companys chief executive officer for purposes of assessing performance
and making operating decisions about the Company is the consolidated financial statements presented in this report. For the year ended December 31, 2006, the Company had two active operating subsidiaries, Centennial Bank of the West and Guaranty
Bank and Trust Company. For the year ended 2005, the Company had three active operating subsidiaries, Centennial Bank of the West, Guaranty Bank and Trust Company and First MainStreet Insurance, and one operating subsidiary that was held for sale,
Collegiate Peaks Bank. The Company applies the provisions of SFAS No. 131, Disclosures about Segments of an Enterprise and Related Information, in determining its reportable segments and related disclosures. The Company has determined
that banking is its one reportable business segment. The Companys nonbanking subsidiary, which was sold in 2006, did not meet the 10% threshold for disclosure as an operating segment under SFAS No. 131.

(p) Earnings (loss) per Common Share

Basic earnings per share represents income (loss) available to common shareholders divided by the weighted average number of common shares outstanding during the period. Diluted earnings (loss) per share reflects additional common shares
that would have been outstanding if potential dilutive common shares had been issued. In accordance with SFAS No. 128 (As Amended), Earnings per Share, the Companys obligation to issue shares of stock to participants in its
deferred compensation plan has been treated as outstanding shares of stock in the basic earnings per share calculation. Dilutive common shares that may be issued by the Company



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Notes to Consolidated Financial Statements(Continued)



relate to unvested common share grants subject to a service condition for the years ended December 31, 2006 and 2005, the Period July 17, 2004 to
December 31, 2004 (Successor), and outstanding stock options that are determined using the treasury stock method for the period January 1, 2004 to July 16, 2004 (Predecessor). Earnings (loss) per common share have been computed based
on the following:



|                                                                            |  |                            |  |                            |  |                                          |  |                                                      |    
|--------------------------------------------------------------------------- |  | -------------------------- |  | -------------------------- |  | ---------------------------------------- |  | ---------------------------------------------------- | ---
|                                                                            |  | Year EndedDecember 31,2006 |  | Year EndedDecember 31,2005 |  | Period July 17, 2004 toDecember 31, 2004 |  | Period January 1, 2004to
July 16, 2004 (Predecessor) |    
|                                                                            |  | (Successor)                | 
|Average common shares outstanding                                           |  | 57,539,986                 |  | 54,222,327                 |  | 19,199,601                               |  | 1,554,873                                            |    
|Effect of dilutive unvested stock grants                                    |  | 96,369                     |  | 72,756                     |  |                                         |  |                                                     |    
|Effect of dilutive options                                                  |  |                           |  |                           |  |                                         |  |                                                     | (a)
|                                                                            |  |                            |  |                            |  |                                          |  |                                                      |    
|Average shares outstanding and calculated diluted earnings per common share |  | 57,636,355                 |  | 54,295,083                 |  | 19,199,601                               |  | 1,554,873                                            |    
|                                                                            |  |                            |  |                            |  |                                          |  |                                                      |    

---

|(a) | Impact of options is antidilutive due to the net loss for the period.
|--- | ---------------------------------------------------------------------

(q) Comprehensive Income (Loss)

Accounting principles require that recognized revenue,
expenses, gains and losses be included in net income. Although certain changes in assets and liabilities, such as unrealized gains and losses on available-for-sale securities, are reported as a separate component of the equity section of the balance
sheet, such items, along with net income, are components of comprehensive income (loss).

Following are the components of other accumulated
comprehensive income (loss) and related tax effects for the periods indicated (in thousands):



|                                                                    |  |                         |       |   |                                                |   |     |                                               |  |   |     |   |  |   |      |  
|------------------------------------------------------------------- |  | ----------------------- | ----- | - | ---------------------------------------------- | - | --- | --------------------------------------------- |  | - | --- | - |  | - | ---- | -
|                                                                    |  | Year Ended December 31, |       |   | July 17, 2004 to December 31, 2004
(Successor) |   |     | January 1, 2004 toJuly 16, 2004 (Predecessor) | 
|                                                                    |  | 2006 (Successor)        |       |   | 2005 (Successor)                               |   |     |                                              
|                                                                    |  |                         |       |  
|Holdings gains (losses) on available for sale securities            |  | $                       | 1,647 |   |                                                | $ | 149 |                                               |  | $ | 1   |   |  | $ | (171 | )
|Reclassification adjustment for gains and losses realized in income |  |                         | (342  | ) |                                                |   | 2   |                                               |  |   | (36 | ) |  |   | 66   |  
|                                                                    |  |                         |       |   |                                                |   |     |                                               |  |   |     |   |  |   |      |  
|Net unrealized gains (losses)                                       |  |                         | 1,305 |   |                                                |   | 151 |                                               |  |   | (35 | ) |  |   | (105 | )
|Tax effect                                                          |  |                         | (496  | ) |                                                |   | (58 | )                                             |  |   | 13  |   |  |   | 39   |  
|                                                                    |  |                         |       |   |                                                |   |     |                                               |  |   |     |   |  |   |      |  
|Net unrealized gains (losses), net of tax                           |  | $                       | 809   |   |                                                | $ | 93  |                                               |  | $ | (22 | ) |  | $ | (66  | )
|                                                                    |  |                         |       |   |                                                |   |     |                                               |  |   |     |   |  |   |      |  

(r) Deferred Compensation Plans

The Company has Deferred Compensation Plans (the Plans) that allow directors and certain key employees to voluntarily defer compensation.
Compensation expense is recorded for the deferred compensation and a related liability is recognized. Participants may elect designated investment options for the notional investment of their deferred compensation. The recorded obligations are
adjusted for deemed income or loss related to the investments selected. Participants in the 2005 Deferred Compensation Plan (2005 Plan) are given



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CENTENNIAL BANK HOLDINGS, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements(Continued)



the opportunity to elect to have all or a portion of their deferred compensation earn a rate of return equal to the total return on the Companys common
stock. The 2005 Plan does not provide for diversification of a participants assets allocated to Company common stock and assets allocated to Company common stock can only be settled with a fixed number of shares of stock. In accordance with
Emerging Issues Task Force Issue 97-14, Accounting for Deferred Compensation Arrangements Where Amounts Earned Are Held in a Rabbi Trust and Invested, the deferred compensation obligation associated with Company common stock is classified as
a component of stockholders equity. Subsequent changes in the fair value of the common stock are not reflected in earnings or stockholders equity of the Company. Company common stock held by the Company for the satisfaction of
obligations of the 2005 Plan is classified as treasury stock. The Company held 77,366 and 50,000 shares of Company common stock for deferred compensation plan obligations at December 31, 2006, and 2005, respectively, which are recorded as
treasury stock.

(s) Recently Issued Accounting Standards

Accounting for Uncertainty in Income Taxes: In June 2006, the FASB issued Interpretation No. 48 (FIN 48), Accounting for Uncertainty in
Income Taxes, an interpretation of SFAS 109, Accounting for Income Taxes. FIN 48 prescribes a comprehensive model for how companies should recognize, measure, present, and disclose in their financial statements uncertain tax positions taken or
expected to be taken on a tax return. Under FIN 48, tax positions shall initially be recognized in the financial statements when it is more likely than not that the position will be sustained upon examination by the tax authorities. Such tax
positions shall initially and subsequently be measured as the largest amount of tax benefit that is greater than 50% likely of being realized upon ultimate settlement with the tax authority assuming full knowledge of the position and all relevant
facts. FIN 48 also revises disclosure requirements to include an annual tabular rollforward of unrecognized tax benefits. The provisions of this interpretation are required to be adopted for fiscal periods beginning after December 15, 2006. The
Company will be required to apply the provisions of FIN 48 to all tax positions upon initial adoption with any cumulative effect adjustment to be recognized as an adjustment to retained earnings. We do not expect there to be any material effect on
our financial position or results of operations from the adoption of FIN 48.

The Fair Value Option for Financial Assets and Financial
Liabilities: The FASB issued SFAS No. 159, The Fair Value Option for Financial Assets and Financial Liabilities, in February 2007. This Statement permits companies to choose to measure many financial instruments and
certain other items at fair value. Once a company chooses to report an item at fair value, changes in fair value would be reported in earnings at each reporting date. SFAS No. 159 is effective for us on January 1, 2008. We are presently
evaluating this Statement and have not yet decided whether we will or will not adopt it.

Fair Value Measurements: In September
2006, the FASB issued SFAS No. 157, Fair Value Measurements, which upon adoption will replace various definitions of fair value in existing accounting literature with a single definition, will establish a framework for measuring fair
value, and will require additional disclosures about fair value measurements. The Statement clarifies that fair value is the price that would be received to sell an asset or the price paid to transfer a liability in the most advantageous market
available to the entity and emphasizes that fair value is a market-based measurement and should be based on the assumptions market participants would use. The Statement also creates a three-level hierarchy under which individual fair value estimates
are to be ranked based on the relative reliability of the inputs used in the valuation. This hierarchy is the basis for the disclosure requirements, with fair value estimates based on the least reliable inputs requiring more extensive disclosures
about the valuation method used and the gains and losses associated with those estimates. SFAS No. 157 is required to be applied whenever another financial accounting standard requires or permits an asset or liability to be measured at fair
value. The statement does not expand the use of fair value to any new circumstances. The Company will be required to apply the new guidance beginning January 1, 2008, and does not expect it to have a material impact on its financial position or
results of operations.



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CENTENNIAL BANK HOLDINGS, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements(Continued)



Accounting for Servicing of Financial Assets: In March 2006, the FASB issued SFAS
No. 156, Accounting for Servicing of Financial Assets, an amendment of SFAS No. 140. This standard requires entities to separately recognize a servicing asset or liability whenever it undertakes an obligation to service financial
assets and also requires all separately recognized servicing assets or liabilities to be initially measured at fair value.

Additionally,
this standard permits entities to choose among two alternatives, the amortization method or fair value measurement method, for the subsequent measurement of each class of separately recognized servicing assets and liabilities. Under the amortization
method, an entity shall amortize the value of servicing assets or liabilities in proportion to and over the period of estimated net servicing income or net servicing loss and assess servicing assets or liabilities for impairment or increased
obligation based on fair value at each reporting date. Under the fair value measurement method, an entity shall measure servicing assets or liabilities at fair value at each reporting date and report changes in fair value in earnings in the period
in which the changes occur. SFAS No. 156 is effective as of the beginning of the first fiscal year beginning after September 15, 2006. The adoption of this standard did not have a material impact on the Companys financial position or
results of operations.

Accounting for Certain Hybrid Financial Instruments: In February 2006, the FASB issued SFAS No. 155,
Accounting for Certain Hybrid Financial Instruments,which amends SFAS 133, Accounting for Derivative Instruments and Hedging Activities,and SFAS No. 140, Accounting for Transfers and Servicing of Financial Assets and
Extinguishments of Liabilities.SFAS No. 155 requires entities to evaluate and identify whether interests in securitized financial assets are freestanding derivatives, hybrid financial instruments that contain an embedded derivative
requiring bifurcation, or hybrid financial instruments that contain embedded derivatives that do not require bifurcation. SFAS No. 155 also permits fair value measurement for any hybrid financial instrument that contains an embedded derivative
that otherwise would require bifurcation. This statement will be effective for all financial instruments acquired or issued by the Company on or after January 1, 2007. The adoption of this standard did not have a material impact on the
Companys financial position or results of operations.

Considering the Effects of Prior Year Misstatements when Quantifying
Misstatements in Current Year Financial Statements: In September 2006, the SEC issued Staff Accounting Bulletin 108, (SAB 108), Financial StatementsConsidering the Effects of Prior Year Misstatements when
Quantifying Misstatements in Current Year Financial Statements. SAB 108 provides guidance on the consideration of prior year misstatements in determining whether the current years financial statements are materially misstated. The SEC
staff indicates that registrants should quantify the impact of correcting all misstatements, including both the carryover and reversing effects of prior year misstatements, on the current year financial statements. SAB 108 is effective for
fiscal years ending after November 15, 2006. Registrants may either restate their financials for any material misstatements arising from the application of this SAB or recognize a cumulative effect of applying SAB 108 within the current year
opening balance in retained earnings. Application of the guidance in SAB 108 had no impact on our 2006 financial statements.

(t)
Reclassifications

Certain reclassifications of prior year balances have been made to conform to the current year presentation.
These reclassifications had no impact on the Companys consolidated financial position, results of operations or net change in cash and cash equivalents.



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Notes to Consolidated Financial Statements(Continued)



(3) Acquisitions

On July 16, 2004, CCC acquired 100% of the stock of Centennial Bank Holdings, Inc. and its wholly-owned subsidiary, Centennial Bank of the West (Predecessor), in a cash acquisition funded by CCCs sale of
its common stock. Centennial Bank Holdings, Inc. was then merged with and into CCC, which then changed its name to Centennial Bank Holdings, Inc. (Successor). On December 31, 2004, the Company acquired the stock of Guaranty Corporation. On
October 1, 2005, the Company issued 9,517,727 shares of common stock, valued at $99,432,000, to acquire 100% of the stock of First MainStreet Financial, Ltd. (FMS). The value of the shares issued was determined based on Company
equity transactions in proximity to the negotiations to purchase FMS and the signing of the related definitive purchase agreement. On November 1, 2005, the Company purchased the stock of Foothills Bank. These acquisitions were recorded using
the purchase method of accounting, and accordingly, their operating results have been included in the consolidated financial statements from their respective acquisition dates. For these acquisitions, the Company allocated the purchase price based
on the estimated fair values of the tangible and intangible assets and liabilities acquired.

(4) Securities

The amortized cost and estimated fair value of securities are as follows:



|                               |  |                   |         |                      |   |                       |  |   |            |   |  |   |        
|------------------------------ |  | ----------------- | ------- | -------------------- | - | --------------------- |  | - | ---------- | - |  | - | -------
|                               |  | Amortizedcost     |         | Grossunrealizedgains |   | Grossunrealizedlosses |  |   | Fair value
|                               |  | (In thousands)   
|                               | 
|                               |  | December 31, 2006
|Securities available for sale: |  |                   |         |                      |   |                       |  |   |            |   |  |   |        
|U.S. government agencies       |  | $                 | 2,426   |                      | $ |                      |  | $ | (18        | ) |  | $ | 2,408  
|State and municipal            |  |                   | 113,649 |                      |   | 1,998                 |  |   | (76        | ) |  |   | 115,571
|Mortgage-backed                |  |                   | 39,039  |                      |   | 38                    |  |   | (637       | ) |  |   | 38,440 
|Other securities               |  |                   | 841     |                      |   |                      |  |   |           |   |  |   | 841    
|                               |  |                   |         |                      |   |                       |  |   |            |   |  |   |        
|Securities available for sale  |  | $                 | 155,955 |                      | $ | 2,036                 |  | $ | (731       | ) |  | $ | 157,260
|                               |  |                   |         |                      |   |                       |  |   |            |   |  |   |        
|Securities held to maturity:   |  |                   |         |                      |   |                       |  |   |            |   |  |   |        
|Mortgage-backed                |  | $                 | 11,217  |                      | $ | 38                    |  | $ | (98        | ) |  | $ | 11,157 
|                               |  |                   |         |                      |   |                       |  |   |            |   |  |   |        
|                               | 
|                               |  | December 31, 2005
|Securities available for sale: |  |                   |         |                      |   |                       |  |   |            |   |  |   |        
|U.S. treasuries                |  | $                 | 13,165  |                      | $ |                      |  | $ | (89        | ) |  | $ | 13,076 
|U.S. government agencies       |  |                   | 5,391   |                      |   |                      |  |   | (24        | ) |  |   | 5,367  
|State and municipal            |  |                   | 72,110  |                      |   | 949                   |  |   | (166       | ) |  |   | 72,893 
|Mortgage-backed                |  |                   | 50,797  |                      |   | 29                    |  |   | (783       | ) |  |   | 50,043 
|Other securities               |  |                   | 1,697   |                      |   | 5                     |  |   |           |   |  |   | 1,702  
|                               |  |                   |         |                      |   |                       |  |   |            |   |  |   |        
|Securities available for sale  |  | $                 | 143,160 |                      | $ | 983                   |  | $ | (1,062     | ) |  | $ | 143,081
|                               |  |                   |         |                      |   |                       |  |   |            |   |  |   |        
|Securities held to maturity:   |  |                   |         |                      |   |                       |  |   |            |   |  |   |        
|Mortgage-backed                |  | $                 | 5,798   |                      | $ |                      |  | $ | (112       | ) |  | $ | 5,686  
|                               |  |                   |         |                      |   |                       |  |   |            |   |  |   |        



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CENTENNIAL BANK HOLDINGS, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements(Continued)



The amortized cost and estimated fair value of available for sale debt securities by contractual
maturity at December 31, 2006 are shown below. Expected maturities will differ from contractual maturities because borrowers may have the rights to prepay obligations with or without prepayment penalties.



|                                                               |  |                    |         |            |   |        
|-------------------------------------------------------------- |  | ------------------ | ------- | ---------- | - | -------
|                                                               |  | Available for sale
|                                                               |  | Amortizedcost      |         | Fair value
|                                                               |  | (In thousands)    
|Securities available for sale:                                 |  |                    |         |            |   |        
|Due in one year or less                                        |  | $                  | 2,905   |            | $ | 2,908  
|Due after one year through five years                          |  |                    | 46,096  |            |   | 47,366 
|Due after five years through ten years                         |  |                    | 10,221  |            |   | 10,334 
|Due after ten years                                            |  |                    | 57,694  |            |   | 58,212 
|                                                               |  |                    |         |            |   |        
|Total available for sale, excluding mortgage-backed securities |  |                    | 116,916 |            |   | 118,820
|Mortgage-backed securities                                     |  |                    | 39,039  |            |   | 38,440 
|                                                               |  |                    |         |            |   |        
|Total available for sale                                       |  | $                  | 155,955 |            | $ | 157,260
|                                                               |  |                    |         |            |   |        
|                                                               | 
|                                                               |  | Held to maturity  
|                                                               |  | Amortizedcost      |         | Fair value
|                                                               |  | (In thousands)    
|Securities held to maturity:                                   |  |                    |         |            |   |        
|Mortgage-backed securities                                     |  | $                  | 11,217  |            | $ | 11,157 
|                                                               |  |                    |         |            |   |        

The following table presents the fair value and the unrealized loss on securities that were
temporarily impaired as of December 31, 2006:



|                                      |  |                     |       |                  |                   |     |           |       |                  |        |  |           |      |                  |  |   |        |  |   |      |  
|------------------------------------- |  | ------------------- | ----- | ---------------- | ----------------- | --- | --------- | ----- | ---------------- | ------ |  | --------- | ---- | ---------------- |  | - | ------ |  | - | ---- | -
|                                      |  | Less than 12 months |       |                  | 12 months or more |     |           | Total |                 
|                                      |  | Fairvalue           |       | Unrealizedlosses |                   |     | Fairvalue |       | Unrealizedlosses |        |  | Fairvalue |      | Unrealizedlosses | 
|                                      |  |                     |       |                  | (In thousands)    |     |           |       |                 
|U.S. government agencies              |  | $                   |      |                  | $                 |    |           |       | $                | 2,408  |  | $         | (18  | )                |  | $ | 2,408  |  | $ | (18  | )
|State and municipal                   |  |                     | 6,746 |                  |                   | (15 | )         |       |                  | 9,527  |  |           | (61  | )                |  |   | 16,273 |  |   | (76  | )
|Mortgage-backed                       |  |                     | 1,195 |                  |                   | (17 | )         |       |                  | 36,623 |  |           | (718 | )                |  |   | 37,818 |  |   | (735 | )
|                                      |  |                     |       |                  |                   |     |           |       |                  |        |  |           |      |                  |  |   |        |  |   |      |  
|Total temporarily impaired securities |  | $                   | 7,941 |                  | $                 | (32 | )         |       | $                | 48,558 |  | $         | (797 | )                |  | $ | 56,499 |  | $ | (829 | )
|                                      |  |                     |       |                  |                   |     |           |       |                  |        |  |           |      |                  |  |   |        |  |   |      |  

All individual securities that have been in a continuous unrealized loss position for 12 months or
longer at December 31, 2006, were securities that have been issued by U.S. government agencies and government-sponsored entities and have a AAA credit rating as determined by various rating agencies. These securities have fluctuated in value
since their purchase dates as a result of changes in market interest rates. We concluded that the continuous unrealized loss positions on these securities is a result of the level of market interest rates and not a result of the underlying
issuers ability to repay. In addition, we have the ability and intent to hold these securities until their fair value recovers to their cost. Accordingly, we have not recognized the temporary impairment in our consolidated statements of
income.

The Company had realized losses of $4,000 on the sale of investment securities for the year ended December 31, 2006, realized
gains of $14,000 and realized losses of $21,000 on the sale of investment securities



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Notes to Consolidated Financial Statements(Continued)



for the year ended December 31, 2005 (Successor), realized gains of $36,000 on the sale of investment securities for the period July 17, 2004 to
December 31, 2004 (Successor) and realized gains of $10,000 and realized losses of $76,000 on the sale of investment securities for the period January 1, 2004 to July 16, 2004 (Predecessor).

Investment securities with carrying values of $105,387,000 and $105,388,000 were pledged at December 31, 2006 and 2005, respectively, as collateral
for public deposits and for other purposes as required or permitted by law.

(5) Bank Stocks

The Company, through its subsidiary banks, is a member of both the Federal Reserve Bank of Kansas City and the Federal Home Loan Bank of Topeka, and is
required to maintain an investment in the capital stock of each. The Federal Reserve, Federal Home Loan Bank and other bank stock are restricted in that they can only be redeemed by the issuer at par value. The Companys investment at
December 31 was as follows:



|                                    |  |                |        |      |   |       
|----------------------------------- |  | -------------- | ------ | ---- | - | ------
|                                    |  | 2006           |        | 2005
|                                    |  | (In thousands)
|Federal Reserve Bank of Kansas City |  | $              | 18,362 |      | $ | 15,578
|Federal Home Loan Bank of Topeka    |  |                | 12,722 |      |   | 10,534
|Other bank stocks securities        |  |                | 761    |      |   | 762   
|                                    |  |                |        |      |   |       
|Totals                              |  | $              | 31,845 |      | $ | 26,874
|                                    |  |                |        |      |   |       

(6) Loans

A summary of the balances of loans at December 31 follows:



|                                    |  |                |           |   |      |   |           |  
|----------------------------------- |  | -------------- | --------- | - | ---- | - | --------- | -
|                                    |  | 2006           |           |   | 2005 |  
|                                    |  | (In thousands) |          
|Loans on real estate:               |  |                |           |   |      |   |           |  
|Residential and commercial mortgage |  | $              | 686,056   |   |      | $ | 584,590   |  
|Construction                        |  |                | 427,465   |   |      |   | 530,716   |  
|Equity lines of credit              |  |                | 56,468    |   |      |   | 70,386    |  
|Commercial loans                    |  |                | 647,915   |   |      |   | 724,929   |  
|Agricultural loans                  |  |                | 51,338    |   |      |   | 71,707    |  
|Lease financing                     |  |                | 6,704     |   |      |   | 677       |  
|Installment loans to individuals    |  |                | 50,222    |   |      |   | 63,121    |  
|Overdrafts                          |  |                | 4,319     |   |      |   | 2,006     |  
|SBA and other                       |  |                | 21,121    |   |      |   | 24,321    |  
|                                    |  |                |           |   |      |   |           |  
|                                    |  |                | 1,951,608 |   |      |   | 2,072,453 |  
|Less:                               |  |                |           |   |      |   |           |  
|Allowance for loan losses           |  |                | (27,899   | ) |      |   | (27,475   | )
|Unearned discount                   |  |                | (4,121    | ) |      |   | (4,860    | )
|                                    |  |                |           |   |      |   |           |  
|Net loans                           |  | $              | 1,919,588 |   |      | $ | 2,040,118 |  
|                                    |  |                |           |   |      |   |           |  



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CENTENNIAL BANK HOLDINGS, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements(Continued)



A summary of the allowance for loan losses is as follows:



|                                           |  |                                        |        |   |                                        |   |        |                                              |  |   |                                              |   |  |   |        |  
|------------------------------------------ |  | -------------------------------------- | ------ | - | -------------------------------------- | - | ------ | -------------------------------------------- |  | - | -------------------------------------------- | - |  | - | ------ | -
|                                           |  | Year EndedDecember 31, 2006(Successor) |        |   | Year EndedDecember 31, 2005(Successor) |   |        | July 17, 2004 toDecember 31, 2004(Successor) |  |   | January 1, 2004 toJuly 16, 2004(Predecessor) |  
|                                           |  | (In thousands)                         |       
|Balance, beginning of period               |  | $                                      | 27,475 |   |                                        | $ | 25,022 |                                              |  | $ |                                             |   |  | $ | 7,653  |  
|Provision for loan losses (1)              |  |                                        | 4,597  |   |                                        |   | 3,400  |                                              |  |   |                                             |   |  |   | 4,700  |  
|Loans charged off                          |  |                                        | (5,927 | ) |                                        |   | (5,541 | )                                            |  |   | (3,549                                       | ) |  |   | (1,762 | )
|Recoveries on loans previously charged-off |  |                                        | 1,754  |   |                                        |   | 1,457  |                                              |  |   | 346                                          |   |  |   | 330    |  
|Allowance from acquisitions (note 3)       |  |                                        |       |   |                                        |   | 3,855  |                                              |  |   | 28,225                                       |   |  |   |       |  
|Unfunded commitment allowance (2)          |  |                                        |       |   |                                        |   | (718   | )                                            |  |   |                                             |   |  |   |       |  
|                                           |  |                                        |        |   |                                        |   |        |                                              |  |   |                                              |   |  |   |        |  
|Balance, end of period                     |  | $                                      | 27,899 |   |                                        | $ | 27,475 |                                              |  | $ | 25,022                                       |   |  | $ | 10,921 |  
|                                           |  |                                        |        |   |                                        |   |        |                                              |  |   |                                              |   |  |   |        |  

---

|(1) | The provision for credit losses noted in the consolidated financial statements includes provision for loan losses of $4,597,000 and a recovery on the reserve for unfunded
commitments of $307,000 for the year ended December 31, 2006.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | The reserve for unfunded loan commitments was reclassified from the allowance for loan losses to interest payable and other accrued liabilities at December 31, 2005.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------

The following is a summary of information pertaining to impaired loans at December 31:



|                                              |  |                |        |      |   |       
|--------------------------------------------- |  | -------------- | ------ | ---- | - | ------
|                                              |  | 2006           |        | 2005
|                                              |  | (In thousands)
|Impaired loans with a valuations allowance    |  | $              | 23,616 |      | $ | 44,267
|Impaired loans without a valuations allowance |  |                | 15,217 |      |   | 6,023 
|                                              |  |                |        |      |   |       
|Total impaired loans                          |  | $              | 38,833 |      | $ | 50,290
|                                              |  |                |        |      |   |       
|Valuation allowance related to impaired loans |  | $              | 8,028  |      | $ | 10,360
|                                              |  |                |        |      |   |       
|Average investment in impaired loans          |  | $              | 42,660 |      | $ | 38,425
|                                              |  |                |        |      |   |       

Interest income of $712,000 was recognized on nonaccrual loans during the year ended
December 31, 2006. The gross interest income that would have been recorded in the period that ended if the loans had been current in accordance with their original terms and had been outstanding throughout the period or since origination, if
held for part of the period for December 31, 2006 was $3,284,000. At December 31, 2006, no additional funds are committed to be advanced in connection with impaired loans. At December 31, 2006 and 2005, the total investment in loans
on nonaccrual was approximately $32,852,000 and $29,608,000, respectively. At December 31, 2006, $3,000 in loans past due ninety days or more were still accruing interest.



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CENTENNIAL BANK HOLDINGS, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements(Continued)



(7) Premises and Equipment

A summary of the cost and accumulated depreciation and amortization of premises and equipment at December 31 is as follows:



|                                          |  |                |         |   |      |   |        |  
|----------------------------------------- |  | -------------- | ------- | - | ---- | - | ------ | -
|                                          |  | 2006           |         |   | 2005 |  
|                                          |  | (In thousands) |        
|Land                                      |  | $              | 14,154  |   |      | $ | 15,509 |  
|Buildings                                 |  |                | 48,160  |   |      |   | 41,121 |  
|Leasehold improvements                    |  |                | 6,952   |   |      |   | 6,334  |  
|Equipment                                 |  |                | 16,426  |   |      |   | 15,632 |  
|Software                                  |  |                | 450     |   |      |   | 435    |  
|Leasehold interest in land                |  |                | 684     |   |      |   | 684    |  
|Construction in progress                  |  |                | 6       |   |      |   | 3,134  |  
|                                          |  |                |         |   |      |   |        |  
|                                          |  |                | 86,832  |   |      |   | 82,849 |  
|Accumulated depreciation and amortization |  |                | (12,666 | ) |      |   | (9,420 | )
|                                          |  |                |         |   |      |   |        |  
|                                          |  | $              | 74,166  |   |      | $ | 73,429 |  
|                                          |  |                |         |   |      |   |        |  

Depreciation expense for the year ended December 31, 2006, the year ended December 31,
2005, and the period July 17, 2004 to December 31, 2004 (Successor), and the period January 1, 2004 to July 16, 2004 (Predecessor) was $4,545,000, $3,579,000, $600,000 and $422,000 respectively. Such amounts are classified in
occupancy and furniture and equipment expense.

Pursuant to the terms of non-cancelable lease agreements in effect at December 31,
2006 pertaining to banking premises, future minimum rent commitments under various operating leases are as follows (amounts in thousands):



|                                      |  |   |       
|------------------------------------- |  | - | ------
|2007                                  |  | $ | 3,226 
|2008                                  |  |   | 3,099 
|2009                                  |  |   | 2,718 
|2010                                  |  |   | 2,776 
|2011                                  |  |   | 2,700 
|Thereafter                            |  |   | 8,944 
|                                      |  |   |       
|Total future minimum rent commitments |  | $ | 23,463
|                                      |  |   |       

Certain leases contain options to extend the lease terms for five to fifteen years. The cost of
such rental is not included in the above rental commitments. Rent expense for the year ended December 31, 2006, the year ended December 31, 2005, and the period July 17, 2004 to December 31, 2004 (Successor), and the period
January 1, 2004 to July 16, 2004 (Predecessor) was $3,280,000, $3,192,000, $542,000 and $639,000, respectively.



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CENTENNIAL BANK HOLDINGS, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements(Continued)



(8) Goodwill

Changes in the carrying amount of the Companys goodwill for the years ended December 31, 2006 and 2005 and the period July 17, 2004 to December 31, 2004 (Successor) and the period from
January 1, 2004 to July 16, 2004 (Predecessor) were as follows (amounts in thousands):



|                                      |  |   |         |  
|------------------------------------- |  | - | ------- | -
|Balance as of December 31, 2004       |  | $ | 328,185 |  
|Goodwill acquired on October 1, 2005  |  |   | 46,258  |  
|Goodwill acquired on November 1, 2005 |  |   | 14,623  |  
|Adjustment to goodwill                |  |   | 3,441   |  
|                                      |  |   |         |  
|Balance as of December 31, 2005       |  |   | 392,507 |  
|Adjustment to goodwill                |  |   | 1,089   |  
|Sale of First MainStreet Insurance    |  |   | (638    | )
|                                      |  |   |         |  
|Balance as of December 31, 2006       |  | $ | 392,958 |  
|                                      |  |   |         |  

The Company revised the estimated value for discontinued operations in the second quarter of 2005
based on additional information available related to the sale of its Collegiate Peaks subsidiary. The Company determined that it would have an estimated tax liability associated with the sale of Collegiate Peaks, resulting in additional goodwill of
$3,441,000 in 2005. In 2006, the Company increased its deferred income tax liabilities related to acquisitions, resulting in additional goodwill of $1,089,000.

(9) Other Intangible Assets

Intangible assets with definite lives are amortized over their respective estimated useful
lives to their estimated residual values. In 2005, the Company acquired definite lived intangible assets of $14,135,000 and none in 2006. The amortization expense represents the estimated decline in the value of the underlying intangible assets. The
Company had the following definite-lived intangible assets:



|                                         |  |              |  |                  |         |   |                  |   |         |  
|---------------------------------------- |  | ------------ |  | ---------------- | ------- | - | ---------------- | - | ------- | -
|                                         |  | Useful life  |  | December 31,2006 |         |   | December 31,2005 |  
|                                         |  |              |  | (In thousands)   |        
|Non-compete employment agreements        |  | 1 - 4 years  |  | $                | 3,606   |   |                  | $ | 3,706   |  
|Core deposit intangible assets           |  | 7 - 15 years |  |                  | 62,975  |   |                  |   | 62,975  |  
|Expirations - First MainStreet Insurance |  | 7 years      |  |                  |        |   |                  |   | 1,477   |  
|                                         |  |              |  |                  |         |   |                  |   |         |  
|                                         |  |              |  |                  | 66,581  |   |                  |   | 68,158  |  
|Accumulated amortization                 |  |              |  |                  | (24,982 | ) |                  |   | (13,236 | )
|                                         |  |              |  |                  |         |   |                  |   |         |  
|                                         |  |              |  | $                | 41,599  |   |                  | $ | 54,922  |  
|                                         |  |              |  |                  |         |   |                  |   |         |  



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CENTENNIAL BANK HOLDINGS, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements(Continued)



Amortization expense for the years ended December 31, 2006 and 2005 and the period from July 17,
2004 to December 31, 2004 was $ 11,815,000, $12,389,000, and $777,000, respectively. Estimated amortization expense for the next five years, and thereafter, is as follows (amounts in thousands):



|                    |  |       |       
|------------------- |  | ----- | ------
|                    |  | Total
|Fiscal year ending: |  |       |       
|2007                |  | $     | 8,665 
|2008                |  |       | 7,434 
|2009                |  |       | 6,277 
|2010                |  |       | 5,169 
|2011                |  |       | 4,091 
|Thereafter          |  |       | 9,963 
|                    |  |       |       
|                    |  | $     | 41,599
|                    |  |       |       

(10) Deposits

The aggregate amount of time deposits in denominations of $100,000 or more at December 31, 2006 and 2005 was $362,354,000 and $370,798,000, respectively. At December 31, 2006, the scheduled maturities of
interest-bearing time deposits are as follows (in thousands):



|                    |  |   |        
|------------------- |  | - | -------
|Fiscal year ending: |  |   |        
|2007                |  | $ | 489,145
|2008                |  |   | 59,699 
|2009                |  |   | 24,572 
|2010                |  |   | 2,485  
|2011                |  |   | 1,733  
|Thereafter          |  |   | 15     
|                    |  |   |        
|                    |  | $ | 577,649
|                    |  |   |        

(11) Securities Sold Under Agreements to Repurchase

Securities sold under agreements to repurchase, which are classified as secured borrowings, generally mature within one to four days from the transaction
date. Securities sold under agreements to repurchase are reflected at the amount of cash received in connection with the transaction. The Company may be required to provide additional collateral based on the fair value of the underlying security.
The securities sold under agreements to repurchase are collateralized by government agency and mortgage-backed securities held by the Company. At December 31, 2006, the Companys commitment on securities to be sold under agreements to
repurchase was $23,300,000. Total securities sold under agreements to repurchase outstanding at December 31, 2006 and 2005 were $25,469,000 and $29,076,000, respectively.



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CENTENNIAL BANK HOLDINGS, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements(Continued)



(12) Borrowings

A summary of borrowings is as follows:



|                             |  |                |         |               |                         |              |             |                |   |          
|---------------------------- |  | -------------- | ------- | ------------- | ----------------------- | ------------ | ----------- | -------------- | - | ---------
|                             |  | Principal      |         | Interest rate |                         | Maturitydate |             | Totalcommitted
|                             |  | (In thousands)
|December 31, 2006            |  |                |         |               |                         |              |             |                |   |          
|Short-term borrowings:       |  |                |         |               |                         |              |             |                |   |          
|Treasury Tax and Loans       |  | $              | 867     |               | Variable                |              | Revolving   |                | $ | 1,000    
|FHLB line of credit          |  |                | 55,200  |               | 5.40 & 5.59% (variable) |              | Apr-07      |                |   | 300,968  
|U.S. Bank line of credit     |  |                | 2,450   |               | 6.67% (variable)        |              | Nov-07      |                |   | 70,000   
|                             |  |                |         |               |                         |              |             |                |   |          
|Total short-term borrowings  |  |                | 58,517  |               |                         |              |             |                |   |          
|                             |  |                |         |               |                         |              |             |                |   |          
|Long-term borrowings:        |  |                |         |               |                         |              |             |                |   |          
|FHLB term notes (fixed rate) |  |                | 9,115   |               | Range: 2.52 6.22%      |              | 2007 2014  |                |   | See below
|                             |  |                |         |               |                         |              |             |                |   |          
|Total borrowings             |  | $              | 67,632  |               |                         |              |             |                |   |          
|                             |  |                |         |               |                         |              |             |                |   |          
|December 31, 2005            |  |                |         |               |                         |              |             |                |   |          
|Short-term borrowings:       |  |                |         |               |                         |              |             |                |   |          
|Treasury Tax and Loans       |  | $              | 1,275   |               | Variable                |              | Revolving   |                | $ | 1,000    
|FHLB line of credit          |  |                | 106,100 |               | 3.90 & 4.22% (variable) |              | Apr-06      |                |   | 324,336  
|FHLB term note               |  |                | 5,347   |               | Range: 3.91 5.15%      |              | NovDec2006 |                |   | See below
|U.S. Bank line of credit     |  |                | 7,808   |               | 5.68% (variable)        |              | 11/17/2006  |                |   | 70,000   
|                             |  |                |         |               |                         |              |             |                |   |          
|Total short-term borrowings  |  |                | 120,530 |               |                         |              |             |                |   |          
|                             |  |                |         |               |                         |              |             |                |   |          
|Long-term borrowings:        |  |                |         |               |                         |              |             |                |   |          
|FHLB term notes (fixed rate) |  |                | 9,668   |               | Range: 2.52 6.22%      |              | 2007-2014   |                |   | See below
|                             |  |                |         |               |                         |              |             |                |   |          
|Total borrowings             |  | $              | 130,198 |               |                         |              |             |                |   |          
|                             |  |                |         |               |                         |              |             |                |   |          

The Company has executed a blanket pledge and security agreement with the Federal Home Loan Bank,
which encompasses certain loans and securities as collateral for these borrowings. The maximum credit allowance for future borrowings, including term notes and the line of credit, was $300,968,000 and $324,336,000 at December 31, 2006 and 2005,
respectively. All lines of credit are expected to be renewed.

The Companys revolving credit agreement, as amended, with U.S. Bank
National Association contains financial covenants, including maintaining a minimum return on average assets, a maximum nonperforming assets to total loans ratio and regulatory capital ratios that qualify the Company as well-capitalized. As of
December 31, 2006, the Company was in compliance with all debt covenants, as amended. The line of credit is secured by the stock of Guaranty Bank.



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CENTENNIAL BANK HOLDINGS, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements(Continued)



At December 31, 2006, the scheduled maturities of borrowings are as follows (in thousands):



|                 |  |   |       
|---------------- |  | - | ------
|2007             |  | $ | 58,954
|2008             |  |   | 697   
|2009             |  |   | 2,225 
|2010             |  |   | 1,430 
|2011             |  |   | 3,055 
|Thereafter       |  |   | 1,271 
|                 |  |   |       
|Total borrowings |  | $ | 67,632
|                 |  |   |       

(13) Income Taxes

The components of the income tax provision (benefit) are as follows (in thousands):



|                                  |  |                        |        |   |                                                         |   |                                                       |   |  |   |       |  |   |        |  
|--------------------------------- |  | ---------------------- | ------ | - | ------------------------------------------------------- | - | ----------------------------------------------------- | - |  | - | ----- |  | - | ------ | -
|                                  |  | Year endedDecember 31, |        |   | Period from July 17, 2004
toDecember 31, 2004 Successor |   | Period fromJanuary 1,2004 toJuly 16, 2004 Predecessor |  
|                                  |  | 2006 Successor         |        |   | 2005 Successor                                          |   |                                                       |  
|Current tax provision:            |  |                        |        |   |                                                         |   |                                                       |   |  |   |       |  |   |        |  
|Federal                           |  | $                      | 16,950 |   |                                                         | $ | 10,078                                                |   |  | $ | 639   |  | $ | 1,779  |  
|State                             |  |                        | 2,246  |   |                                                         |   | 1,307                                                 |   |  |   | 86    |  |   | 248    |  
|                                  |  |                        |        |   |                                                         |   |                                                       |   |  |   |       |  |   |        |  
|                                  |  |                        | 19,196 |   |                                                         |   | 11,385                                                |   |  |   | 725   |  |   | 2,027  |  
|                                  |  |                        |        |   |                                                         |   |                                                       |   |  |   |       |  |   |        |  
|Deferred tax provision (benefit): |  |                        |        |   |                                                         |   |                                                       |   |  |   |       |  |   |        |  
|Federal                           |  |                        | (6,946 | ) |                                                         |   | (3,430                                                | ) |  |   | 1,413 |  |   | (1,422 | )
|State                             |  |                        | (964   | ) |                                                         |   | (316                                                  | ) |  |   | 193   |  |   | (194   | )
|                                  |  |                        |        |   |                                                         |   |                                                       |   |  |   |       |  |   |        |  
|                                  |  |                        | (7,910 | ) |                                                         |   | (3,746                                                | ) |  |   | 1,606 |  |   | (1,616 | )
|                                  |  |                        |        |   |                                                         |   |                                                       |   |  |   |       |  |   |        |  
|                                  |  | $                      | 11,286 |   |                                                         | $ | 7,639                                                 |   |  | $ | 2,331 |  | $ | 411    |  
|                                  |  |                        |        |   |                                                         |   |                                                       |   |  |   |       |  |   |        |  

The total current and deferred tax provision associated with the Companys discontinued
operations was $327,000 for the year ended December 31, 2006 and a $3,000 benefit for the year ended December 31, 2005.

Income tax expense
attributable to income (loss) from continuing operations differed from the amounts computed by applying the U.S. federal statutory tax rate to pretax income (loss) from operations as a result of the following:



|                                  |  |                         |    |  |                                                        |    |  |                                                       |    |  |        |   
|--------------------------------- |  | ----------------------- | -- |  | ------------------------------------------------------ | -- |  | ----------------------------------------------------- | -- |  | ------ | --
|                                  |  | Year ended December 31, |    |  | Period fromJuly 17, 2004 toDecember 31, 2004 Successor |    |  | Period fromJanuary 1,2004
toJuly 16, 2004 Predecessor |   
|                                  |  | 2006 Successor          |    |  | 2005 Successor                                         |    |  |                                                      
|Tax at statutory federal rate     |  | 35.0                    | %  |  | 35.0                                                   | %  |  | 34.0                                                  | %  |  | 34.0   | % 
|State tax, net of federal benefit |  | 2.5                     | %  |  | 3.0                                                    | %  |  | 3.0                                                   | %  |  | 3.0    | % 
|Tax exempt income                 |  | (4.6                    | )% |  | (4.3                                                   | )% |  | (0.2                                                  | )% |  | (2.6   | )%
|Nondeductible merger expense      |  | 0.0                     | %  |  | 1.4                                                    | %  |  | 0.0                                                   | %  |  | (106.2 | )%
|Other                             |  | 0.6                     | %  |  | (1.6                                                   | )% |  | 1.2                                                   | %  |  | 5.5    | % 
|                                  |  |                         |    |  |                                                        |    |  |                                                       |    |  |        |   
|                                  |  | 33.5                    | %  |  | 33.5                                                   | %  |  | 38.0                                                  | %  |  | (61.1  | )%
|                                  |  |                         |    |  |                                                        |    |  |                                                       |    |  |        |   



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CENTENNIAL BANK HOLDINGS, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements(Continued)



At December 31, 2006, current taxes payable included in interest payable and other liabilities
totaled approximately $1,173,000. At December 31, 2005, current taxes receivable included in other assets totaled approximately $131,000. The Companys net deferred tax liability is included in interest payable and other liabilities.
Deferred tax assets and liabilities result from the tax effects of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes at December 31 are as
follows (in thousands):



|                                                                                   |  |      |        |   |      |   |         |  
|---------------------------------------------------------------------------------- |  | ---- | ------ | - | ---- | - | ------- | -
|                                                                                   |  | 2006 |        |   | 2005 |  
|Deferred tax assets:                                                               |  |      |        |   |      |   |         |  
|Allowance for loan losses                                                          |  | $    | 10,604 |   |      | $ | 10,537  |  
|Fair value adjustments on securities, loans, deposits, and subordinated debentures |  |      | 898    |   |      |   | 1,650   |  
|Other assets, accruals and other real estate owned                                 |  |      | 641    |   |      |   | 1,357   |  
|Unrealized loss on securities                                                      |  |      |       |   |      |   | 762     |  
|Intangible assets                                                                  |  |      | 865    |   |      |   | 752     |  
|Stock compensation and other                                                       |  |      | 1,275  |   |      |   | 301     |  
|                                                                                   |  |      |        |   |      |   |         |  
|                                                                                   |  |      | 14,283 |   |      |   | 15,359  |  
|                                                                                   |  |      |        |   |      |   |         |  
|Deferred tax liabilities:                                                          |  |      |        |   |      |   |         |  
|Premises and equipment                                                             |  |      | 6,275  |   |      |   | 4,786   |  
|Fair value adjustments on core deposit intangibles and fixed rate loans            |  |      | 15,812 |   |      |   | 19,925  |  
|FHLB stock, prepaid assets, equity investments and other liabilities               |  |      | 1,208  |   |      |   | 1,827   |  
|Deferred gain on investment in subsidiary                                          |  |      |       |   |      |   | 3,321   |  
|Unrealized gain on securities                                                      |  |      | 380    |   |      |   |        |  
|                                                                                   |  |      |        |   |      |   |         |  
|                                                                                   |  |      | 23,675 |   |      |   | 29,859  |  
|                                                                                   |  |      |        |   |      |   |         |  
|                                                                                   |  | $    | (9,392 | ) |      | $ | (14,500 | )
|                                                                                   |  |      |        |   |      |   |         |  

At December 31, 2006, the Company had no net operating loss or tax credit carryforwards for
federal or state income tax purposes. The Company recognized a tax benefit of $2,000 and $280,000 in 2006 and 2005, respectively, associated with the vesting of stock awards and the exercise of options granted by Guaranty.

Realization of the Companys deferred tax assets is dependent upon the Company generating sufficient taxable income to obtain benefit from the
reversal of net deductible temporary differences. The amount of deferred tax assets considered realizable is subject to adjustment in future periods based on estimates of future taxable income. In assessing the reliability of deferred tax assets,
the Company considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the
periods in which those temporary differences become deductible. Based upon the level of historical taxable income and projections for future taxable income over the periods in which the deferred tax assets are deductible, the Company believes it is
more likely than not that the Company will realize the benefits of these deductible differences at December 31, 2006, 2005 and 2004, and therefore, no valuation allowance for deferred tax assets was recorded at December 31, 2006, 2005 and
2004.



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CENTENNIAL BANK HOLDINGS, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements(Continued)



(14) Subordinated Debentures and Trust Preferred Securities

The Company had, net of unamortized premium of $46,000 at December 31, 2005 and zero at December 31, 2006, a $41,239,000 aggregate balance of
subordinated debentures outstanding with a weighted average cost of 9.05% and 8.30% at December 31, 2006 and 2005, respectively. The subordinated debentures were issued in four separate series. Each issuance has a maturity of thirty years from
its date of issue. The subordinated debentures were issued to trusts established by us, which in turn issued $40,000,000 of trust preferred securities. Generally and with certain limitations, the Company is permitted to call the debentures
subsequent to the first five or ten years, as applicable, after issue if certain conditions are met, or at any time upon the occurrence and continuation of certain changes in either the tax treatment or the capital treatment of the trusts, the
debentures or the preferred securities.

In September 2000, the Predecessor formed CenBank Statutory Trust I and completed an offering of
$10.0 million, 10.6% Cumulative Trust Preferred Securities (Preferred Securities), which are guaranteed by the Company. The Trust also issued common securities to the Predecessor and used the net proceeds from the offering to purchase $10.3 million
in principal amount of 10.6% Junior Subordinated Debentures (Debentures) issued by the Predecessor. Interest paid on the Debentures is distributed to the holders of the Preferred Securities. Distributions payable on the Preferred Securities are
recorded as interest expense in the consolidated statements of income. These Debentures are unsecured and rank junior and are subordinate in right of payment to all senior debt of the Company. The Preferred Securities are subject to mandatory
redemption upon repayment of the Debentures. The Company has the right, subject to events of default, to defer payments of interest on the Debentures at any time by extending the interest payment period for a period not exceeding 10 consecutive
semi-annual periods with respect to each deferral period, provided that no extension period may extend beyond the redemption or maturity date of the Debentures. The Debentures mature on September 7, 2030, which may be shortened by us to not
earlier than September 7, 2010, if certain conditions are met, or at any time upon the occurrence and continuation of certain changes in either the tax treatment or the capital treatment of the Trust, the Debentures or the Preferred Securities.

In February 2001, the Predecessor formed CenBank Statutory Trust II and completed an offering of $5.0 million 10.2% Cumulative Trust
Preferred Securities (Preferred Securities), which are guaranteed by the Company. The Trust also issued common securities to the Predecessor and used the net proceeds from the offering to purchase $5.2 million in principal amount of 10.2% Junior
Subordinated Debentures (Debentures) issued by the Predecessor. Interest paid on the Debentures is distributed to the holders of the Preferred Securities. Terms and conditions of these Debentures are substantially similar to those as described under
the CenBank Statutory Trust I. The Debentures mature on February 22, 2031, which may be shortened by us to not earlier than February 22, 2011, if certain conditions are met, or at any time upon the occurrence and continuation of certain
changes in either the tax treatment or the capital treatment of the Trust, the Debentures or the Preferred Securities.

In April 2004, the
Predecessor formed CenBank Statutory Trust III and completed an offering of $15.0 million LIBOR plus 2.65% Cumulative Trust Preferred Securities (Preferred Securities), which are guaranteed by the Company. The Trust also issued common securities to
the Predecessor and used the net proceeds from the offering to purchase $15.5 million in principal amount of floating rate Junior Subordinated Debentures (Debentures) issued by the Predecessor. Interest paid on the Debentures is distributed to the
holders of the Preferred Securities. Terms and conditions of these Debentures are substantially similar to those as described under the CenBank Statutory Trust I. The Debentures mature on April 15, 2034, which may be shortened by us to not
earlier than April 15, 2009, if certain conditions are met, or at any time upon the occurrence and continuation of certain changes in either the tax treatment or the capital treatment of the Trust, the Debentures or the Preferred Securities.



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In June 2003, Guaranty Corporation formed Guaranty Capital Trust III and completed an offering of
$10.0 million LIBOR plus 3.10% Cumulative Trust Preferred Securities (Preferred Securities), which are guaranteed by the Company. The Trust also issued common securities to Guaranty Corporation and used the net proceeds from the offering to purchase
$10.3 million in principal amount of Junior Subordinated Debt Securities issued by Guaranty. The Company assumed Guaranty Corporations obligations relating to such securities upon its acquisition of Guaranty. Interest is paid quarterly and is
distributed to the holders of the Preferred Securities. The Company has the right, subject to events of default, to defer payments of interest on the Debentures at any time by extending the interest payment period for a period not exceeding 20
consecutive quarterly periods with respect to each deferral period, provided that no extension period may extend beyond the redemption or maturity date of the Debentures. The Debentures mature on July 7, 2033, which may be shortened by us to
not earlier than July 7, 2008, if certain conditions are met, or at any time upon the occurrence and continuation of certain changes in either the tax treatment or the capital treatment of the Trust, the Debentures or the Preferred Securities.

For financial reporting purposes, the Trusts are treated as investments of the Company and not consolidated in the consolidated financial
statements. Although the securities issued by each of the Trusts are not included as a component of stockholders equity in the consolidated balance sheets, the securities are treated as capital for regulatory purposes. Specifically, under
applicable regulatory guidelines, the securities issued by the Trusts qualify as Tier 1 capital up to a maximum of 25% of Tier 1 capital on an aggregate basis. Any amount that exceeds 25% qualifies as Tier 2 capital. At December 31, 2006 and
2005, all of such securities outstanding qualified as Tier 1 capital.

(15) Off-Balance Sheet Activities

The Company is a party to credit related financial instruments with off-balance sheet risk in the normal course of business to meet the financing needs of
its customers. These financial instruments include commitments to extend credit, stand-by letters of credit and commercial letters of credit. Such commitments involve, to varying degrees, elements of credit and interest rate risk in excess of the
amount recognized in the consolidated balance sheets.

The Companys exposure to credit loss is represented by the contractual amount
of these commitments. The Company follows the same credit policies in making commitments as it does for on-balance sheet instruments.

At
December 31, the following financial instruments were outstanding whose contract amounts represented credit risk:



|                             |  |                |         |      |   |        
|---------------------------- |  | -------------- | ------- | ---- | - | -------
|                             |  | 2006           |         | 2005
|                             |  | (In thousands)
|Commitments to extend credit |  | $              | 555,757 |      | $ | 634,737
|Standby letters of credit    |  |                | 32,382  |      |   | 37,952 
|Commercial letters of credit |  |                | 274     |      |   | 472    

Commitments to extend credit are agreements to lend to a customer as long as there is no violation
of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Several of the commitments may expire without being drawn upon. Therefore, the total
commitment amounts do not necessarily represent future cash requirements. The amount of collateral obtained, if it is deemed necessary by the Company, is based on managements credit evaluation of the customer.

Commitments to extend credit under overdraft protection agreements are commitments for possible future extensions of credit to existing deposit
customers. These lines of credit are uncollateralized and usually do not



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Notes to Consolidated Financial Statements(Continued)



contain a specified maturity date and may not be drawn upon to the total extent to which the Company is committed.

Stand-by letters of credit are conditional commitments issued by the Company to guarantee the performance of a customer to a third party. Those letters
of credit are primarily issued to support public and private borrowing arrangements. Essentially all letters of credit issued have expiration dates within one year. The credit risk involved in issuing letters of credit is essentially the same as
that involved in extending loan facilities to customers. The Company generally holds collateral supporting those commitments if deemed necessary.

The Company enters into commercial letters of credit on behalf of its customers which authorize a third party to draw drafts on the Company up to a stipulated amount and with specific terms and conditions. A commercial letter of credit is a
conditional commitment on the part of the Company to provide payment on drafts drawn in accordance with the terms of the commercial letter of credit.

The Company has certain vendor contracts that are noncancelable without significant termination penalties. Future contract payments relating to these contracts are as follows (in thousands):



|     |  |   |      
|---- |  | - | -----
|2007 |  | $ | 2,333
|2008 |  |   | 2,033
|2009 |  |   | 1,514
|2010 |  |   | 456  
|     |  |   |      
|     |  | $ | 6,336
|     |  |   |      

(16) Contingencies

On December 31, 2004, an adversary proceeding was filed against Guaranty Bank and Trust Company in the United States Bankruptcy Court for the District of Colorado, by the trustees of the Will Hoover Company, or
the Hoover Company, and William Gordon Hoover, Jr., or Hoover, seeking to avoid certain transfers that occurred over a four-year period commencing in 1999 under the United States Bankruptcy Code (i.e., the Trustee action). The trustees allege
that certain transfers were made by the Hoover Company and Hoover with actual fraudulent intent, that the transfers were made for less than reasonably equivalent value and occurred at a time when the Hoover Company and Hoover were insolvent, or were
rendered insolvent by the transfers, and that certain other transfers were preferential as to other creditors, were made for less than reasonably equivalent value or were made by the Hoover Company or Hoover with actual fraudulent intent. On
September 7, 2005, the Bankruptcy Court granted, in part, Guaranty Banks initial response and dismissed $8.5 million of the claims relating to alleged transfers for payment of items credited in the check collection process. On
November 10, 2005, the trustees filed a motion in District Court requesting reconsideration of the Bankruptcy Courts order dismissing those claims. The District Court summarily denied the trustees motion on November 21, 2005.
The Trustees filed another motion for reconsideration with the Bankruptcy Court on November 9, 2006, which the court denied. On August 29, 2006, Guaranty Bank filed a motion for partial summary judgment on the trustees claims to
recover payments on alleged overdrafts in the amount of approximately $1.7 million, which the court denied. On September 1, 2006, the trustees amended the complaint to include a claim, based on similar arguments, to recover interest payments on
loans to Hoover and the Hoover Company in the amount of $0.1 million. We continue to vigorously contest the remaining claims, which amount to approximately $2.9 million. We have established a reserve that, after consultation with our counsel, we
have determined is appropriate for this litigation.



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Notes to Consolidated Financial Statements(Continued)



On July 22, 2005 and August 18, 2005, two separate but similar actions (i.e., the
Barnes action and Teper action, respectively) were filed against Guaranty Bank and a former officer in the Denver District Court, Denver, Colorado by investors who provided funds to Hoover, the Hoover Company or related entities. The investors
allege that certain activities of Guaranty Bank and its former officer with respect to the customer relationship with Hoover, the Hoover Company and related entities aided and abetted Hoover and the Hoover Company in securities violations and
violations of the Colorado Organized Crime Control Act and amounted to a civil conspiracy, causing the investors to incur damages. The court has subsequently dismissed the entire Teper action. The investors in the Barnes action are seeking actual
and statutory treble damages, as well as interest and attorneys fees, against Guaranty Bank and its former officer. The alleged actual losses claimed in connection with the Barnes action are approximately $12.2 million. In a series of
preliminary rulings in April 2006, the District Court dismissed a number of the claims representing alleged damages in excess of $1.0 million. The Company will continue to vigorously defend the Barnes action.

Although the Company has established a reserve for the Trustee action, we cannot determine whether the outcome of each of the above matters will have a
material adverse impact on our consolidated financial position or results of operations. To the extent these suits are not settled or dismissed, the Company will incur ongoing legal costs. If such legal costs will not be covered by insurance, the
legal costs incurred could have an adverse impact on our results of operations.

In the ordinary course of our business, we are party to
various other legal actions, which we believe are incidental to the operation of our business. Although the ultimate outcome and amount of liability, if any, with respect to these other legal actions to which we are currently a party cannot
presently be ascertained with certainty, in the opinion of management, based upon information currently available to us, any resulting liability is not likely to have a material adverse effect on the Companys consolidated financial position,
results of operations or cash flows.

(17) Employee Benefit Plans

During 2005, the Company had two 401(k) Plans that were merged into one 401(k) Plan. Substantially all employees are eligible to participate in the Plan. Employees may contribute up to 100 percent of their
compensation subject to certain limits based on federal tax laws. The Company makes matching contributions equal to a specified percentage of the employees compensation as defined by the Plan. For years ended December 31, 2006 and 2005,
the period July 17, 2004 to December 31, 2004 (Successor) and the period January 1, 2004 to July 16, 2004 (Predecessor), expensed contributions to the Plan were $781,000, $731,000, $113,000, and $146,000, respectively.

The Companys Predecessor offered an Employee Stock Ownership Plan (ESOP) that covered all active employees who had completed one
quarter of service. Subsequent to the purchase of the Predecessor, participation in the ESOP was terminated. The Predecessor allocated contributions to the plan, as determined by the board of directors. The Predecessors ESOP was terminated in
2005.

Stock-Based Compensation

In 2005, the Companys directors and stockholders approved the 2005 Stock Incentive Plan (the Incentive Plan). The Companys Board of Directors may grant stock-based compensation awards to officers, directors, key
employees and consultants under the terms described in the Incentive Plan. The allowable stock-based compensation awards include the grant of Options, Restricted Stock Awards, Restricted Stock Unit Awards, Performance Stock Awards, Stock
Appreciation Rights and other Equity-Based Awards. The Incentive Plan



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provides that eligible participants may be granted shares of Company common stock that are subject to forfeiture until the grantee vests in the stock award
based on the established conditions, which include service conditions and established performance measures.

Prior to vesting of the stock
awards with a service vesting condition, each grantee shall have the rights of a stockholder with respect to voting of the granted stock. The recipient is not entitled to dividend rights with respect to the shares of granted stock until vesting
occurs. Prior to vesting of the stock awards with performance vesting conditions, each grantee shall have the rights of a stockholder with respect to voting of the granted stock. The recipient is not entitled to dividend rights with respect to the
shares of granted stock until initial vesting occurs, at which time, the dividend rights will exist on vested and unvested shares of granted stock, subject to termination of such rights under the terms of the Incentive Plan.

Other than the stock awards with service and performance-based vesting conditions, no grants have been made under the Incentive Plan.

The Incentive Plan authorizes grants of stock-based compensation awards of up to 2,500,000 shares of Company common stock, subject to adjustments
provided by the Incentive Plan. As of December 31, 2006 and 2005, there were 1,725,825 and 1,278,631 shares of unvested stock granted (net of forfeitures), with 741,377 and 1,221,369 shares available for grant under the Incentive Plan,
respectively.

A summary of the status of our outstanding stock awards and the change during the year is presented in the table below:



|                                 |  |           |   |  |                                        |      
|-------------------------------- |  | --------- | - |  | -------------------------------------- | -----
|                                 |  | Shares    |   |  | WeightedAverage FairValue onAward Date
|Outstanding at December 31, 2005 |  | 1,278,631 |   |  | $                                      | 10.88
|Awarded                          |  | 995,268   |   |  |                                        | 10.55
|Forfeited                        |  | (515,276  | ) |  |                                        | 10.94
|Vested                           |  | (32,798   | ) |  |                                        | 10.50
|                                 |  |           |   |  |                                        |      
|Outstanding at December 31, 2006 |  | 1,725,825 |   |  |                                        | 10.67
|                                 |  |           |   |  |                                        |      

The Company recognized $2,899,000 and $800,000 in compensation expense for services rendered for
the years ended December 31, 2006 and 2005, respectively. The total income tax benefit recognized in the consolidated income statement for share-based compensation arrangements was $1,102,000 and $304,000 for the years ended December 31,
2006 and 2005, respectively. At December 31, 2006, compensation cost of $11,098,000 related to nonvested awards not yet recognized is expected to be recognized over a weighted-average period of 3.2 years.

A summary of the Companys awards and forfeitures for the years ended December 31, 2006 and 2005 is presented in the table below:



|                                       |  |                         |         |      |   |          
|-------------------------------------- |  | ----------------------- | ------- | ---- | - | ---------
|                                       |  | Year Ended December 31,
|                                       |  | 2006                    |         | 2005
|Number of shares granted               |  |                         | 995,268 |      |   | 1,308,631
|Weighted-average grant-date fair value |  | $                       | 10.55   |      | $ | 10.88    
|Number of shares that vested           |  |                         | 32,798  |      |   |         
|Fair value of shares vested            |  | $                       | 344,432 |      | $ |         
|Tax benefit realized                   |  | $                       | 130,919 |      | $ |         



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Deferred Compensation Plans

The Company maintains a Deferred Compensation Plan, effective as of June 30, 2005, for a select group of management or highly compensated employees
and non-employee members of the Board. The plan, which is meant to be an unfunded deferred compensation plan, is intended to be exempt from certain requirements of the Employee Retirement Income Security Act of 1974. The plan allows the participants
to defer up to 80% of their salary and up to 100% of their bonus or incentive compensation, and up to 100% of cash fees in the case of directors, until termination or upon the occurrence of other specified events (e.g., disability, previously
specified dates, and unforeseeable emergencies). The plan permits participants to elect to have deferred amounts deemed to be invested in various investment funds or Company common stock. The plan does not guarantee any minimum rate of return.
Participation in the plan is voluntary and participants may change their elections annually, or otherwise as permitted by the plan and applicable regulations governing the deferred tax treatment of the plan and may, in its sole discretion, make
additional contributions to participants accounts.

(18) Stockholders Equity

The Predecessor applied the intrinsic-value-based method of accounting prescribed by APB No. 25, Accounting for Stock Issued to Employees,
including FASB Interpretation No. 44, Accounting for Certain Transactions involving Stock Compensation, an interpretation of APB Opinion No. 25, to account for its fixed-plan stock options. Under this method, compensation
expense is recorded on the date of grant only if the current market price of the underlying stock exceeded the exercise price. SFAS No. 123 and SFAS No. 148 established accounting and disclosure requirements using a fair-value-based method
of accounting for stock-based employee compensation plans. As permitted by existing accounting standards, the Predecessor elected to continue to apply the intrinsic-value-based method of accounting described above.

The Predecessor had a non-qualified stock option plan for certain officers under which options to purchase shares of Centennial Bank Holdings, Inc.
(Predecessor) common stock were granted. Option prices varied from $20.20 to $67.00. The options were exercisable for a period of five years expiring on various dates from 2005 through 2009. At July 16, 2004, 27,325 stock options were exercised
when Centennial Bank Holdings, Inc. (Predecessor) was sold. The following is a summary of changes and share activity under the stock option plan.



|                                       |  |                                              |   |  |                               |      
|-------------------------------------- |  | -------------------------------------------- | - |  | ----------------------------- | -----
|                                       |  | January 1, 2004to July 16, 2004(Predecessor)
|                                       |  | Shares                                       |   |  | Weightedaverageexercise price
|Outstanding at the beginning of period |  | 27,325                                       |   |  | $                             | 50.16
|Granted                                |  |                                             |   |  |                               |     
|Exercised                              |  | (27,325                                      | ) |  |                               | 50.16
|Forfeited                              |  |                                             |   |  |                               |     
|                                       |  |                                              |   |  |                               |      
|Outstanding at the end of period       |  |                                             |   |  |                               |     
|                                       |  |                                              |   |  |                               |      

(19) Related-Party Transactions

In the ordinary course of business, the Company has granted loans to principal officers and directors and their affiliates amounting to $10,870,000 and
$32,765,000 at December 31, 2006 and 2005, respectively. There were no related party loans on past due or non-accrual status.



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Notes to Consolidated Financial Statements(Continued)



Activity during 2006 regarding outstanding loans to certain related-party loan customers (executive
officers, directors, and principal shareholders of the Company, including companies in which they are principal owners) was as follows (in thousands):



|                                    |  |   |         |  
|----------------------------------- |  | - | ------- | -
|Balance, December 31, 2005          |  | $ | 32,765  |  
|Advances                            |  |   | 22,772  |  
|Repayments                          |  |   | (35,221 | )
|Changes due to related party status |  |   | (9,446  | )
|                                    |  |   |         |  
|Balance, December 31, 2006          |  | $ | 10,870  |  
|                                    |  |   |         |  

Deposits from related parties held by the Company at December 31, 2006 and 2005 amounted to
$13,682,000 and $5,337,000, respectively.

Castle Creek Financial LLC (Castle Creek Financial) serves as the exclusive
financial advisor for the Company. Castle Creek Financial is an affiliate of Castle Creek Capital LLC, which is controlled by the Companys Chairman of the Board (who also served as the Companys Chief Executive Officer through May 2006).
During 2005, the Company paid Castle Creek Financial fees of $1,094,000 million for services related to acquisitions. Castle Creek Financial was also entitled to reimbursement of expenses and, until August 2005, a quarterly retainer. These amounts
totaled $68,000 in 2005. No payments to Castle Creek Financial were made in 2006.

The Company has incurred costs for facility rental and
related services from companies that were affiliated with certain members of executive management or the Board of Directors during 2006 and 2005. In 2006, we paid $2,122,000 to companies with such relationships. During 2005, the company paid
$1,068,000 to related companies for facility rental and related services. In 2006 and 2005, Guaranty paid $232,000 and $2,145,000, respectively, for construction services to a company that was affiliated with a member of the Guaranty Bank board of
directors.

(20) Fair Value of Financial Instruments

The fair value of a financial instrument is the current amount that would be exchanged between willing parties, other than in a forced liquidation. Fair value is best determined based upon quoted market prices.
However, in many instances, there are no quoted market prices for the Companys various financial instruments. In cases where quoted market prices are not available, fair values are based on estimates using present value or other valuation
techniques. Those techniques are significantly affected by the assumptions used, including the discount rate and estimates of future cash flows. Accordingly, the fair value estimates may not be realized in an immediate settlement of the instrument.
Statement of Financial Accounting Standards No. 107 excludes certain financial instruments and all nonfinancial instruments from its disclosure requirements. Accordingly, the aggregate fair value amounts presented may not necessarily represent
the underlying fair value of the Company.

The following methods and assumptions were used by the Company in estimating fair value
disclosures for financial instruments:

(a) Cash and Cash Equivalents

The carrying amounts of cash and short-term instruments approximate fair values.



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Notes to Consolidated Financial Statements(Continued)



(b) Securities, Bank Stocks and Other Investments

Fair values for securities are based on quoted market prices. The carrying amount of bank stocks equals fair value based on the redemption provisions. The
carrying value of other investments approximates their fair value.

(c) Loans Receivable

For variable-rate loans that reprice frequently and with no significant change in credit risk, fair values are based on carrying values. Fair values for
certain mortgage loans (e.g., one-to-four family residential) and other consumer loans are based on quoted market prices of similar loans. Fair values for other loans (e.g., commercial real estate and investment property mortgage loans, commercial
and industrial loans) are estimated using discounted cash flow analyses, using interest rates currently being offered for loans with similar terms to borrowers of similar credit quality. Fair values for non-performing loans are estimated using
discounted cash flow analyses or underlying collateral values, where applicable.

(d) Deposit Liabilities

The fair values disclosed for demand deposits (e.g., interest and non-interest checking, passbook savings, and certain types of money market accounts)
are, by definition, equal to the amount payable on demand at the reporting date (i.e., their carrying amount). The carrying amounts of variable-rate, fixed-term money market accounts and certificates of deposit approximate their fair values at the
reporting date. Fair values for fixed-rate certificates of deposit are estimated using a discounted cash flows calculation that applies interest rates currently being offered on certificates to a schedule of aggregated expected monthly maturities on
time deposits.

(e) Short-term Borrowings

The carrying amounts of federal funds purchased, borrowings under repurchase agreements, and other short-term borrowings maturing within ninety days approximate their fair values. Fair values of other short-term
borrowings are estimated using discounted cash flow analyses based on the Companys current incremental borrowing rates for similar types of borrowing arrangements.

(f) Long-term Borrowings

The fair values of the Companys long-term borrowings are
estimated using discounted cash flow analyses based on the Companys current incremental borrowing rates for similar types of borrowing arrangements.

(g) Subordinated Debentures

The fair values of the Companys Subordinated Debentures are
estimated using discounted cash flow analyses based on the Companys current incremental borrowing rates for similar types of borrowing arrangements.

(h) Accrued Interest

The carrying amounts of accrued interest approximate fair value.

(i) Off-balance Sheet Instruments

Fair values for off-balance sheet, credit-related financial instruments are based on fees currently charged to enter into similar agreements, taking into account the remaining terms of the agreements and the
counterparties credit standing. The fair value of commitments is not material.



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Notes to Consolidated Financial Statements(Continued)



The estimated fair values, and related carrying or notational amounts, of the Companys
financial instruments as of December 31, are as follows:



|                                                                           |  |                |           |            |   |                |  |            |           |  |   |          
|-------------------------------------------------------------------------- |  | -------------- | --------- | ---------- | - | -------------- |  | ---------- | --------- |  | - | ---------
|                                                                           |  | 2006           |           | 2005      
|                                                                           |  | Carryingamount |           | Fair value |   | Carryingamount |  | Fair value
|                                                                           |  | (In thousands)
|Financial assets:                                                          |  |                |           |            |   |                |  |            |           |  |   |          
|Cash and cash equivalents                                                  |  | $              | 49,620    |            | $ | 49,620         |  | $          | 98,942    |  | $ | 98,942   
|Securities available for sale                                              |  |                | 157,260   |            |   | 157,260        |  |            | 143,081   |  |   | 143,081  
|Securities held to maturity                                                |  |                | 11,217    |            |   | 11,157         |  |            | 5,798     |  |   | 5,686    
|Bank stocks                                                                |  |                | 31,845    |            |   | 31,845         |  |            | 26,874    |  |   | 26,874   
|Loans held for sale                                                        |  |                |          |            |   |               |  |            | 6,820     |  |   | 6,820    
|Loans, net                                                                 |  |                | 1,919,588 |            |   | 1,893,775      |  |            | 2,040,118 |  |   | 2,019,790
|Accrued interest receivable                                                |  |                | 13,880    |            |   | 13,880         |  |            | 13,061    |  |   | 13,061   
|                                                                           |  |                |           |           
|Financial liabilities:                                                     |  |                |           |            |   |                |  |            |           |  |   |          
|Deposits                                                                   |  |                | 1,960,105 |            |   | 1,957,740      |  |            | 2,048,352 |  |   | 2,043,667
|Securities sold under agreements to repurchase and federal funds purchased |  |                | 25,469    |            |   | 25,469         |  |            | 44,399    |  |   | 44,399   
|Short-term borrowings                                                      |  |                | 58,517    |            |   | 58,517         |  |            | 120,530   |  |   | 120,530  
|Subordinated debentures                                                    |  |                | 41,239    |            |   | 46,087         |  |            | 41,275    |  |   | 43,910   
|Long-term borrowings                                                       |  |                | 9,115     |            |   | 8,830          |  |            | 9,668     |  |   | 9,309    
|Accrued interest payable                                                   |  |                | 5,098     |            |   | 5,098          |  |            | 4,821     |  |   | 4,821    

(21) Regulatory Requirements

The Company and the bank subsidiaries are subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory
and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the Companys consolidated financial statements. Under capital adequacy guidelines and the regulatory framework for prompt
corrective action, the Company must meet specific capital guidelines that involve quantitative measures of their assets, liabilities, and certain off-balance sheet items as calculated under regulatory accounting practices. The Companys capital
amounts and classification are also subject to qualitative judgments by the regulators about components, risk weighting, and other factors. Prompt corrective action provisions are not applicable to bank holding companies.

Quantitative measures established by regulation to ensure capital adequacy require the Company and the banks to maintain minimum amounts and ratios (set
forth in the following table) of Total and Tier 1 capital to risk-weighted assets, and of Tier 1 capital to average assets. Management believes, as of December 31, 2006, that the Company and all bank subsidiaries met all capital adequacy
requirements to which they are subject.



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As of December 31, 2006, the most recent notifications from the Companys bank regulatory
agencies categorized all the bank subsidiaries as well capitalized under the regulatory framework for prompt corrective action. To be categorized as well capitalized, an institution must maintain minimum Total risk-based, Tier 1 risk-based, and Tier
1 leverage ratios, as set forth in the following table. There are no conditions or events since that notification that management believes have changed the categorization of the Company or any of the bank subsidiaries as well capitalized. The
Companys and the bank subsidiaries actual capital amounts and ratios for 2006 and 2005 are presented in the table below.



|                                        |  |                        |         |       |                            |   |        |                                                                      |         |  |      |        |  |       |         |  |       |  
|--------------------------------------- |  | ---------------------- | ------- | ----- | -------------------------- | - | ------ | -------------------------------------------------------------------- | ------- |  | ---- | ------ |  | ----- | ------- |  | ----- | -
|                                        |  | Actual                 |         |       | Minimum CapitalRequirement |   |        | Minimum to beWell CapitalizedUnder PromptCorrective ActionProvisions |        
|                                        |  | Amount                 |         | Ratio |                            |   | Amount |                                                                      | Ratio   |  |      | Amount |  | Ratio |        
|                                        |  | (Dollars in thousands) |        
|As of December 31, 2006:                |  |                        |         |       |                            |   |        |                                                                      |         |  |      |        |  |       |         |  |       |  
|Total capital to risk weighted assets:  |  |                        |         |       |                            |   |        |                                                                      |         |  |      |        |  |       |         |  |       |  
|Consolidated                            |  | $                      | 237,768 |       | 11.17                      | % |        | $                                                                    | 170,260 |  | 8.00 | %      |  | $     | 212,821 |  | 10.00 | %
|CBW                                     |  |                        | 94,065  |       | 11.36                      |   |        |                                                                      | 66,255  |  | 8.00 |        |  |       | 82,819  |  | 10.00 |  
|Guaranty Bank                           |  |                        | 140,614 |       | 10.93                      |   |        |                                                                      | 102,965 |  | 8.00 |        |  |       | 128,707 |  | 10.00 |  
|Tier 1 capital to risk weighted assets: |  |                        |         |       |                            |   |        |                                                                      |         |  |      |        |  |       |         |  |       |  
|Consolidated                            |  |                        | 211,144 |       | 9.92                       |   |        |                                                                      | 85,128  |  | 4.00 |        |  |       | 127,692 |  | 6.00  |  
|CBW                                     |  |                        | 83,666  |       | 10.10                      |   |        |                                                                      | 33,128  |  | 4.00 |        |  |       | 49,691  |  | 6.00  |  
|Guaranty Bank                           |  |                        | 126,407 |       | 9.82                       |   |        |                                                                      | 51,483  |  | 4.00 |        |  |       | 77,224  |  | 6.00  |  
|Tier 1 capital to average assets:       |  |                        |         |       |                            |   |        |                                                                      |         |  |      |        |  |       |         |  |       |  
|Consolidated                            |  |                        | 211,144 |       | 8.93                       |   |        |                                                                      | 94,585  |  | 4.00 |        |  |       | 118,232 |  | 5.00  |  
|CBW                                     |  |                        | 83,666  |       | 8.90                       |   |        |                                                                      | 37,584  |  | 4.00 |        |  |       | 46,980  |  | 5.00  |  
|Guaranty Bank                           |  |                        | 126,407 |       | 9.14                       |   |        |                                                                      | 55,298  |  | 4.00 |        |  |       | 69,122  |  | 5.00  |  
|As of December 31, 2005:                |  |                        |         |       |                            |   |        |                                                                      |         |  |      |        |  |       |         |  |       |  
|Total capital to risk weighted assets:  |  |                        |         |       |                            |   |        |                                                                      |         |  |      |        |  |       |         |  |       |  
|Consolidated                            |  | $                      | 230,834 |       | 10.08                      | % |        | $                                                                    | 183,120 |  | 8.00 | %      |  | $     | 228,900 |  | 10.00 | %
|CBW                                     |  |                        | 95,871  |       | 10.44                      |   |        |                                                                      | 73,437  |  | 8.00 |        |  |       | 91,796  |  | 10.00 |  
|Guaranty Bank                           |  |                        | 131,670 |       | 10.06                      |   |        |                                                                      | 104,713 |  | 8.00 |        |  |       | 130,891 |  | 10.00 |  
|Collegiate Peaks                        |  |                        | 9,159   |       | 15.07                      |   |        |                                                                      | 4,862   |  | 8.00 |        |  |       | 6,077   |  | 10.00 |  
|Tier 1 capital to risk weighted assets: |  |                        |         |       |                            |   |        |                                                                      |         |  |      |        |  |       |         |  |       |  
|Consolidated                            |  |                        | 202,232 |       | 8.83                       |   |        |                                                                      | 91,559  |  | 4.00 |        |  |       | 137,338 |  | 6.00  |  
|CBW                                     |  |                        | 84,395  |       | 9.19                       |   |        |                                                                      | 36,719  |  | 4.00 |        |  |       | 55,078  |  | 6.00  |  
|Guaranty Bank                           |  |                        | 115,309 |       | 8.81                       |   |        |                                                                      | 52,356  |  | 4.00 |        |  |       | 78,533  |  | 6.00  |  
|Collegiate Peaks                        |  |                        | 8,430   |       | 13.87                      |   |        |                                                                      | 2,431   |  | 4.00 |        |  |       | 3,646   |  | 6.00  |  
|Tier 1 capital to average assets:       |  |                        |         |       |                            |   |        |                                                                      |         |  |      |        |  |       |         |  |       |  
|Consolidated                            |  |                        | 202,232 |       | 7.97                       |   |        |                                                                      | 101,461 |  | 4.00 |        |  |       | N/A     |  | N/A   |  
|CBW                                     |  |                        | 84,395  |       | 8.24                       |   |        |                                                                      | 40,948  |  | 4.00 |        |  |       | 51,185  |  | 5.00  |  
|Guaranty Bank                           |  |                        | 115,309 |       | 8.15                       |   |        |                                                                      | 56,608  |  | 4.00 |        |  |       | 70,760  |  | 5.00  |  
|Collegiate Peaks                        |  |                        | 8,430   |       | 9.72                       |   |        |                                                                      | 3,470   |  | 4.00 |        |  |       | 4,338   |  | 5.00  |  

The Company may be required to maintain average balances on hand or with the Federal Reserve Bank.
At December 31, 2005, the reserve balance was $19,196,000, with no requirement at December 31, 2006.



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CENTENNIAL BANK HOLDINGS, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements(Continued)



(22) Assets Held for Sale and Discontinued Operations

On March 1, 2006, the Company sold certain assets of its First MainStreet Insurance subsidiary. First MainStreet Insurance was acquired by the
Company on October 1, 2005 as part of the First MainStreet Financial, Ltd. acquisition. The following table presents the results of operations that were reported as discontinued operations for the years ended December 31, 2006 and 2005.



|                                                       |  |                         |     |          |   |     |  
|------------------------------------------------------ |  | ----------------------- | --- | -------- | - | --- | -
|                                                       |  | Year Ended December 31, |    
|                                                       |  | 2006                    |     | 2005 (a) |  
|                                                       |  | (In thousands)          |    
|Results of operations:                                 |  |                         |     |          |   |     |  
|Interest expense                                       |  | $                       | 1   |          | $ | 1   |  
|                                                       |  |                         |     |          |   |     |  
|Noninterest income                                     |  |                         | 507 |          |   | 801 |  
|                                                       |  |                         |     |          |   |     |  
|Noninterest expense:                                   |  |                         |     |          |   |     |  
|Salaries and employee benefits                         |  |                         | 253 |          |   | 502 |  
|Occupancy expense                                      |  |                         | 21  |          |   | 31  |  
|Furniture and equipment                                |  |                         | 17  |          |   | 14  |  
|Amortization                                           |  |                         | 46  |          |   | 69  |  
|Merger, acquisition and transition                     |  |                         |    |          |   | 60  |  
|Other general and administrative                       |  |                         | 143 |          |   | 190 |  
|                                                       |  |                         |     |          |   |     |  
|Total noninterest expense                              |  |                         | 480 |          |   | 866 |  
|                                                       |  |                         |     |          |   |     |  
|Income (loss) before income taxes                      |  |                         | 26  |          |   | (66 | )
|Income taxes provision (benefit)                       |  |                         | 9   |          |   | (21 | )
|                                                       |  |                         |     |          |   |     |  
|Income (loss) from discontinued operations, net of tax |  | $                       | 17  |          | $ | (45 | )
|                                                       |  |                         |     |          |   |     |  

---

|(a) | The 2005 results of operations were reclassified to income from discontinued operations.
|--- | ----------------------------------------------------------------------------------------



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CENTENNIAL BANK HOLDINGS, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements(Continued)



On June 19, 2006, the Company signed a definitive agreement to sell Collegiate Peaks to a new
group of investors. This agreement followed the August 25, 2005 definitive agreement for the sale of Collegiate Peaks that was terminated on April 25, 2006. The Company consummated the sale of Collegiate Peaks as of November 1, 2006.
Pursuant to the Companys 2005 decision to sell Collegiate Peaks, the Company classified Collegiate Peaks assets and liabilities as held for sale at the lower of cost or fair value at December 31, 2005. The following tables present
the assets and liabilities of Collegiate Peaks that are presented as held for sale in the consolidated balance sheets at December 31, 2005 and the results of operations that are presented in discontinued operations for the years ended
December 31, 2006 and 2005:



|                                                       |  |                         |        |      |   |      
|------------------------------------------------------ |  | ----------------------- | ------ | ---- | - | -----
|                                                       |  | December 31, 2005       |        |     
|                                                       |  | (In thousands)          |        |     
|Assets held for sale:                                  |  |                         |        |      |   |      
|Cash and cash equivalents                              |  | $                       | 19,869 |      |   |      
|Investments                                            |  |                         | 16,647 |      |   |      
|Loans and leases, net                                  |  |                         | 48,150 |      |   |      
|Intangible assets                                      |  |                         | 3,528  |      |   |      
|Goodwill                                               |  |                         | 8,922  |      |   |      
|Other assets                                           |  |                         | 1,154  |      |   |      
|                                                       |  |                         |        |      |   |      
|Total assets held for sale                             |  | $                       | 98,270 |      |   |      
|                                                       |  |                         |        |      |   |      
|Liabilities associated with assets held for sale:      |  |                         |        |      |   |      
|Deposits                                               |  | $                       | 74,069 |      |   |      
|Securities sold under repurchase agreements            |  |                         | 4,682  |      |   |      
|Other liabilities                                      |  |                         | 1,666  |      |   |      
|                                                       |  |                         |        |      |   |      
|Total liabilities associated with assets held for sale |  | $                       | 80,417 |      |   |      
|                                                       |  |                         |        |      |   |      
|                                                       | 
|                                                       |  | Year Ended December 31,
|                                                       |  | 2006                    |        | 2005
|                                                       |  | (In thousands)         
|Selected Results of Operations:                        |  |                         |        |      |   |      
|Interest income                                        |  | $                       | 4,651  |      | $ | 3,969
|Noninterest income                                     |  |                         | 300    |      |   | 425  
|Income before income taxes                             |  |                         | 1,583  |      |   | 1,497
|Net income from discontinued operations, net of tax    |  |                         | 1,141  |      |   | 1,105



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CENTENNIAL BANK HOLDINGS, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements(Continued)



The accompanying consolidated financial statements for the periods January 1, 2004 to
July 16, 2004 and July 17, 2004 to December 31, 2004 do not include the results of operations or cash flows for Guaranty Corporation or any of its subsidiaries, including Collegiate Peaks. In the accompanying consolidated statement of
cash flows for the period July 17, 2004 to December 31, 2004, the caption cash and cash equivalents paid in acquisitions of approximately $380.1 million is net of approximately $6.3 million of Collegiate Peaks cash acquired on December 31,
2004.

The income from discontinued operations consisted of the following:



|                                                                                      |  |                       |       |   |      |   |        |  
|------------------------------------------------------------------------------------- |  | --------------------- | ----- | - | ---- | - | ------ | -
|                                                                                      |  | Year EndedDecember 31 |      
|                                                                                      |  | 2006                  |       |   | 2005 |  
|                                                                                      |  | (In thousands)        |      
|Collegiate Peaks income from operations                                               |  | $                     | 1,141 |   |      | $ | 1,105  |  
|Impairment of Collegiate Peaks assets                                                 |  |                       | (325  | ) |      |   | (1,937 | )
|Tax benefit from impaired Collegiate Peaks income                                     |  |                       | 124   |   |      |   | 395    |  
|Gain on sale of Collegiate Peaks                                                      |  |                       | 1,039 |   |      |   |       |  
|First MainStreet Insurance net income (loss)                                          |  |                       | 17    |   |      |   | (45    | )
|Elimination of intercompany income from Collegiate Peaks and First MainStreet Ins.    |  |                       | (8    | ) |      |   |       |  
|                                                                                      |  |                       |       |   |      |   |        |  
|Income (loss) from discontinued operations, net of tax of $327 and $(3), respectively |  | $                     | 1,988 |   |      | $ | (482   | )
|                                                                                      |  |                       |       |   |      |   |        |  

(23) Supplemental Cash Flow Disclosures

The following table presents the interest paid, income taxes paid, and noncash transactions of the Company, including activity associated with Collegiate
Peaks Bank, which was held for sale from its acquisition on December 31, 2004 to its sale on November 1, 2006, and reported as discontinued operations in the Companys statements of income for the years ended December 31, 2006 and 2005.



|                                               |  |                         |        |                                    |   |                                  |  |   |       |  |   |      
|---------------------------------------------- |  | ----------------------- | ------ | ---------------------------------- | - | -------------------------------- |  | - | ----- |  | - | -----
|                                               |  | (Successor)             |        | (Predecessor)                     
|                                               |  | Year Ended December 31, |        | July 17, 2004 to December 31, 2004 |   | January 1, 2004 to
July 16, 2004
|                                               |  | 2006                    |        | 2005    (Restated)                 |   |                                 
|                                               |  | (In thousands)         
|Supplemental disclosure of cash flow activity: |  |                         |        |                                    |   |                                  |  |   |       |  |   |      
|Interest paid on deposits and borrowed funds   |  | $                       | 58,232 |                                    | $ | 31,985                           |  | $ | 3,631 |  | $ | 7,034
|Income taxes paid                              |  |                         | 18,393 |                                    |   | 12,288                           |  |   | 1,436 |  |   | 664  
|Supplemental disclosure of noncash activities: |  |                         |        |                                    |   |                                  |  |   |       |  |   |      
|Stock issued for acquisitions                  |  |                         |       |                                    |   | 99,936                           |  |   |      |  |   |     
|Loans transferred to other real estate owned   |  |                         | 6,170  |                                    |   | 2,547                            |  |   | 2,007 |  |   | 1,859



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CENTENNIAL BANK HOLDINGS, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements(Continued)



The cash balances and activity associated with Collegiate Peaks Bank are included in assets held for
sale, and as such, did not effect cash and cash equivalents as classified in the accompanying consolidated balance sheets of the Company. The following table presents Collegiate Peaks Bank cash activity for the period from January 1, 2006 to
November 1, 2006, the date of sale, and the year ended December 31, 2005, which is included in the accompanying statements of cash flows for the years ended December 31, 2006 and 2005. The consolidated statements of cash flows include all
cash activity of the Company, including cash and cash equivalents classified within assets held for sale in the Companys consolidated balance sheets.



|                                                                                  |  |                                               |         |   |                             |   |         |  
|--------------------------------------------------------------------------------- |  | --------------------------------------------- | ------- | - | --------------------------- | - | ------- | -
|                                                                                  |  | Period fromJanuary 1, 2006 toNovember 1, 2006 |         |   | Year EndedDecember 31, 2005 |  
|                                                                                  |  | (In thousands)                                |        
|Cash flows from operating activities:                                             |  |                                               |         |   |                             |   |         |  
|Net income                                                                        |  | $                                             | 1,141   |   |                             | $ | 1,105   |  
|Adjustments to reconcile net income to net cash provided by operating activities: |  |                                               |         |   |                             |   |         |  
|Provision for credit losses                                                       |  |                                               | 100     |   |                             |   | 84      |  
|Depreciation and amortization                                                     |  |                                               | 77      |   |                             |   | 93      |  
|Loss on sale of real estate owned and assets                                      |  |                                               | 9       |   |                             |   |        |  
|Net change in:                                                                    |  |                                               |         |   |                             |   |         |  
|Other                                                                             |  |                                               | (228    | ) |                             |   | (128    | )
|Accrued interest receivable and other assets                                      |  |                                               | (245    | ) |                             |   | 15      |  
|Accrued interest payable and other liabilities                                    |  |                                               | 60      |   |                             |   | 25      |  
|                                                                                  |  |                                               |         |   |                             |   |         |  
|Net cash provided by operating activities                                         |  |                                               | 914     |   |                             |   | 1,194   |  
|                                                                                  |  |                                               |         |   |                             |   |         |  
|Cash flows from investing activities:                                             |  |                                               |         |   |                             |   |         |  
|Activity in available for sale securities:                                        |  |                                               |         |   |                             |   |         |  
|Maturities, prepayments, and calls                                                |  |                                               | 11,550  |   |                             |   | 15,854  |  
|Purchases                                                                         |  |                                               | (12,231 | ) |                             |   | (14,849 | )
|Activity in held to maturity securities and bank stocks:                          |  |                                               |         |   |                             |   |         |  
|Maturities, prepayments, and calls                                                |  |                                               | 231     |   |                             |   |        |  
|Loan originations and principal collections, net                                  |  |                                               | (1,594  | ) |                             |   | 2,499   |  
|Proceeds from sales of premises and equipment                                     |  |                                               | 8       |   |                             |   |        |  
|Additions to premises and equipment                                               |  |                                               | (40     | ) |                             |   | (63     | )
|                                                                                  |  |                                               |         |   |                             |   |         |  
|Net cash provided (used) by investing activities                                  |  |                                               | (2,076  | ) |                             |   | 3,441   |  
|                                                                                  |  |                                               |         |   |                             |   |         |  
|Cash flows from financing activities:                                             |  |                                               |         |   |                             |   |         |  
|Net increase in deposits                                                          |  |                                               | 15,687  |   |                             |   | 8,400   |  
|Net change in federal funds purchased and repurchase agreements                   |  |                                               | 6,582   |   |                             |   | 508     |  
|Dividends paid on common stock                                                    |  |                                               | (1,750  | ) |                             |   |        |  
|                                                                                  |  |                                               |         |   |                             |   |         |  
|Net cash provided by financing activities                                         |  |                                               | 20,519  |   |                             |   | 8,908   |  
|                                                                                  |  |                                               |         |   |                             |   |         |  
|Net change in cash and cash equivalents                                           |  |                                               | 19,357  |   |                             |   | 13,543  |  
|Cash and cash equivalents, beginning of period                                    |  |                                               | 19,869  |   |                             |   | 6,326   |  
|                                                                                  |  |                                               |         |   |                             |   |         |  
|Cash and cash equivalents, end of period                                          |  | $                                             | 39,226  |   |                             | $ | 19,869  |  
|                                                                                  |  |                                               |         |   |                             |   |         |  
|Supplemental disclosure of cash flow activity:                                    |  |                                               |         |   |                             |   |         |  
|Interest paid on deposits and borrowed funds                                      |  | $                                             | 926     |   |                             | $ | 745     |  



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CENTENNIAL BANK HOLDINGS, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements(Continued)



(24) Parent Company Only Condensed Financial Information

The following is condensed financial information of Centennial Bank Holdings, Inc. (parent company only).

Balance Sheets

(Parent Company
Only)

December 31, 2006 and 2005



|                                                          |  |                |         |   |      |   |         |  
|--------------------------------------------------------- |  | -------------- | ------- | - | ---- | - | ------- | -
|                                                          |  | 2006           |         |   | 2005 |  
|                                                          |  | (In thousands) |        
|ASSETS                                                    |  |                |         |   |      |   |         |  
|Cash                                                      |  | $              | 613     |   |      | $ | 27      |  
|Other loans                                               |  |                | 1,258   |   |      |   |        |  
|Goodwill                                                  |  |                | 4,756   |   |      |   | 5,016   |  
|Investment in subsidiaries                                |  |                | 624,871 |   |      |   | 642,666 |  
|Due from subsidiaries                                     |  |                | 247     |   |      |   | 7,319   |  
|Other assets                                              |  |                | 10,487  |   |      |   | 1,425   |  
|                                                          |  |                |         |   |      |   |         |  
|Total assets                                              |  | $              | 642,232 |   |      | $ | 656,453 |  
|                                                          |  |                |         |   |      |   |         |  
|LIABILITIES AND STOCKHOLDERS EQUITY                      |  |                |         |   |      |   |         |  
|Liabilities:                                              |  |                |         |   |      |   |         |  
|Borrowings                                                |  | $              | 2,450   |   |      | $ | 7,808   |  
|Subordinated debentures                                   |  |                | 41,239  |   |      |   | 41,275  |  
|Other liabilities                                         |  |                | 9,084   |   |      |   | 8,622   |  
|                                                          |  |                |         |   |      |   |         |  
|Total liabilities                                         |  |                | 52,773  |   |      |   | 57,705  |  
|                                                          |  |                |         |   |      |   |         |  
|Stockholders equity:                                     |  |                |         |   |      |   |         |  
|Common stock                                              |  |                | 64      |   |      |   | 63      |  
|Additional paid-in capital                                |  |                | 614,489 |   |      |   | 612,089 |  
|Shares to be issued for deferred compensation obligations |  |                | 775     |   |      |   |        |  
|Retained earnings                                         |  |                | 42,896  |   |      |   | 18,478  |  
|Accumulated other comprehensive income                    |  |                | 809     |   |      |   | 93      |  
|Treasury stock                                            |  |                | (69,574 | ) |      |   | (31,975 | )
|                                                          |  |                |         |   |      |   |         |  
|Total stockholders equity                                |  |                | 589,459 |   |      |   | 598,748 |  
|                                                          |  |                |         |   |      |   |         |  
|Total liabilities and stockholders equity                |  | $              | 642,232 |   |      | $ | 656,453 |  
|                                                          |  |                |         |   |      |   |         |  



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CENTENNIAL BANK HOLDINGS, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements(Continued)



Statements of Income

(Parent Company Only)

Years ended December 31, 2006 and 2005, the Period
July 17, 2004 to December 31, 2004 (Successor),

and the Period January 1, 2004 to July 16, 2004 (Predecessor)



|                                                                                        |  |                |         |   |               |   |         |                                        |  |   |                                        |   |  |   |        |  
|--------------------------------------------------------------------------------------- |  | -------------- | ------- | - | ------------- | - | ------- | -------------------------------------- |  | - | -------------------------------------- | - |  | - | ------ | -
|                                                                                        |  | (Successor)    |         |   | (Predecessor) |  
|                                                                                        |  | 2006           |         |   | 2005          |   |         | Period July 17,2004 toDecember 31,2004 |  |   | Period January 1,2004 to July 16, 2004 |  
|                                                                                        |  | (In thousands) |        
|Income:                                                                                 |  |                |         |   |               |   |         |                                        |  |   |                                        |   |  |   |        |  
|Interest income on other investments                                                    |  | $              | 111     |   |               | $ | 97      |                                        |  | $ | 211                                    |   |  | $ | 32     |  
|Charges for servicessubsidiary banks                                                   |  |                | 12,620  |   |               |   | 3,086   |                                        |  |   |                                       |   |  |   |       |  
|Other                                                                                   |  |                | 405     |   |               |   | 119     |                                        |  |   |                                       |   |  |   |       |  
|                                                                                        |  |                |         |   |               |   |         |                                        |  |   |                                        |   |  |   |        |  
|Total income                                                                            |  |                | 13,136  |   |               |   | 3,302   |                                        |  |   | 211                                    |   |  |   | 32     |  
|Expenses:                                                                               |  |                |         |   |               |   |         |                                        |  |   |                                        |   |  |   |        |  
|Interest expense                                                                        |  | $              | 4,420   |   |               | $ | 2,875   |                                        |  | $ | 714                                    |   |  | $ | 1,059  |  
|Salaries and benefits                                                                   |  |                | 11,489  |   |               |   | 4,343   |                                        |  |   |                                       |   |  |   | 500    |  
|Professional services                                                                   |  |                | 3,798   |   |               |   | 3,126   |                                        |  |   | 258                                    |   |  |   |       |  
|Merger, acquisitions and transition                                                     |  |                | 805     |   |               |   | 2,797   |                                        |  |   |                                       |   |  |   | 1,774  |  
|Other                                                                                   |  |                | 4,603   |   |               |   | 439     |                                        |  |   | 64                                     |   |  |   |       |  
|                                                                                        |  |                |         |   |               |   |         |                                        |  |   |                                        |   |  |   |        |  
|Total expenses                                                                          |  |                | 25,115  |   |               |   | 13,580  |                                        |  |   | 1,036                                  |   |  |   | 3,333  |  
|                                                                                        |  |                |         |   |               |   |         |                                        |  |   |                                        |   |  |   |        |  
|Loss before federal income taxes and equity in undistributed net income of subsidiaries |  |                | (11,979 | ) |               |   | (10,278 | )                                      |  |   | (825                                   | ) |  |   | (3,301 | )
|Income tax benefit                                                                      |  |                | (4,233  | ) |               |   | (3,941  | )                                      |  |   | (306                                   | ) |  |   | (414   | )
|                                                                                        |  |                |         |   |               |   |         |                                        |  |   |                                        |   |  |   |        |  
|Loss before equity in undistributed net income of subsidiaries                          |  |                | (7,746  | ) |               |   | (6,337  | )                                      |  |   | (519                                   | ) |  |   | (2,887 | )
|Equity in undistributed net income of subsidiaries                                      |  |                | 31,327  |   |               |   | 22,561  |                                        |  |   | 4,315                                  |   |  |   | 1,803  |  
|Income (loss) from discontinued operations, net of tax                                  |  |                | 837     |   |               |   | (1,542  | )                                      |  |   |                                       |   |  |   |       |  
|                                                                                        |  |                |         |   |               |   |         |                                        |  |   |                                        |   |  |   |        |  
|Net income (loss)                                                                       |  | $              | 24,418  |   |               | $ | 14,682  |                                        |  | $ | 3,796                                  |   |  | $ | (1,084 | )
|                                                                                        |  |                |         |   |               |   |         |                                        |  |   |                                        |   |  |   |        |  



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CENTENNIAL BANK HOLDINGS, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements(Continued)



Statements of Cash Flows

(Parent Company Only)

Years ended December 31, 2006 and 2005, the Period
July 17, 2004 to December 31, 2004 (Successor)

and the Period January 1, 2004 to July 16, 2004 (Predecessor)



|                                                                                     |  |                |         |   |               |   |         |                                          |  |   |                                         |   |  |   |        |  
|------------------------------------------------------------------------------------ |  | -------------- | ------- | - | ------------- | - | ------- | ---------------------------------------- |  | - | --------------------------------------- | - |  | - | ------ | -
|                                                                                     |  | (Successor)    |         |   | (Predecessor) |  
|                                                                                     |  | 2006           |         |   | 2005          |   |         | Period July 17, 2004 toDecember 31, 2004 |  |   | Period January 1, 2004 to July 16, 2004 |  
|                                                                                     |  | (In thousands) |        
|Cash flows from operating activities                                                 |  |                |         |   |               |   |         |                                          |  |   |                                         |   |  |   |        |  
|Net income (loss)                                                                    |  | $              | 24,418  |   |               | $ | 14,682  |                                          |  | $ | 3,796                                   |   |  | $ | (1,084 | )
|Adjustments to reconcile net income (loss) to net cash used by operating activities: |  |                |         |   |               |   |         |                                          |  |   |                                         |   |  |   |        |  
|Amortization                                                                         |  |                | 831     |   |               |   | (804    | )                                        |  |   | (367                                    | ) |  |   |       |  
|Compensation related to stock grants                                                 |  |                |        |   |               |   | 470     |                                          |  |   |                                        |   |  |   |       |  
|Gain (loss) on sale of assets                                                        |  |                | 3       |   |               |   | (111    | )                                        |  |   |                                        |   |  |   |       |  
|(Loss) gain on discontinued operation                                                |  |                | (442    | ) |               |   | 1,542   |                                          |  |   |                                        |   |  |   |       |  
|Equity based compensation                                                            |  |                | 1,673   |   |               |   |        |                                          |  |   |                                        |   |  |   |       |  
|Deferred compensationshares to be issued                                            |  |                | 275     |   |               |   |        |                                          |  |   |                                        |   |  |   |       |  
|Amortization of purchase adjustment                                                  |  |                | (36     | ) |               |   |        |                                          |  |   |                                        |   |  |   |       |  
|Change in accrued and deferred income taxes, net                                     |  |                |        |   |               |   | 227     |                                          |  |   | (306                                    | ) |  |   |       |  
|Net change in:                                                                       |  |                |         |   |               |   |         |                                          |  |   |                                         |   |  |   |        |  
|Accrued interest receivable and other assets                                         |  |                | 6,695   |   |               |   | (6,143  | )                                        |  |   | 689                                     |   |  |   | 4      |  
|Accrued interest payable and other liabilities                                       |  |                | (3,502  | ) |               |   | 353     |                                          |  |   | 311                                     |   |  |   | (631   | )
|Equity in earnings of consolidated subsidiaries                                      |  |                | (31,327 | ) |               |   | (22,561 | )                                        |  |   | (4,315                                  | ) |  |   | (1,803 | )
|                                                                                     |  |                |         |   |               |   |         |                                          |  |   |                                         |   |  |   |        |  
|Net cash used by operating activities                                                |  |                | (1,412  | ) |               |   | (12,345 | )                                        |  |   | (192                                    | ) |  |   | (3,514 | )
|                                                                                     |  |                |         |   |               |   |         |                                          |  |   |                                         |   |  |   |        |  
|Cash flow from investing activities:                                                 |  |                |         |   |               |   |         |                                          |  |   |                                         |   |  |   |        |  
|Net cash and cash equivalents paid in acquisitions                                   |  |                | (4,122  | ) |               |   |        |                                          |  |   | (516,160                                | ) |  |   |       |  
|Proceeds from sale of assets                                                         |  |                | 31      |   |               |   | 1,515   |                                          |  |   |                                        |   |  |   |       |  
|Cash from sale of subsidiaries                                                       |  |                | 19,835  |   |               |   |        |                                          |  |   |                                        |   |  |   |       |  
|Cash invested in subsidiaries                                                        |  |                |        |   |               |   | (4,413  | )                                        |  |   |                                        |   |  |   |       |  
|Payments on discontinued operations                                                  |  |                | (189    | ) |               |   | (104    | )                                        |  |   |                                        |   |  |   |       |  
|Dividends received from subsidiaries                                                 |  |                | 29,653  |   |               |   | 41,500  |                                          |  |   | 3,000                                   |   |  |   | 2,350  |  
|                                                                                     |  |                |         |   |               |   |         |                                          |  |   |                                         |   |  |   |        |  
|Net cash provided (used) by investing activities                                     |  |                | 45,208  |   |               |   | 38,498  |                                          |  |   | (513,160                                | ) |  |   | 2,350  |  
|                                                                                     |  |                |         |   |               |   |         |                                          |  |   |                                         |   |  |   |        |  



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CENTENNIAL BANK HOLDINGS, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements(Continued)



Statements of Cash Flows(Continued)

(Parent Company Only)

Years ended
December 31, 2006 and 2005, the Period July 17, 2004 to December 31, 2004 (Successor)

and the Period January 1,
2004 to July 16, 2004 (Predecessor)



|                                                                       |  |                |         |               |      |   |         |                                          |  |                                         |         |  |   |        |  
|---------------------------------------------------------------------- |  | -------------- | ------- | ------------- | ---- | - | ------- | ---------------------------------------- |  | --------------------------------------- | ------- |  | - | ------ | -
|                                                                       |  | (Successor)    |         | (Predecessor) |     
|                                                                       |  | 2006           |         |               | 2005 |   |         | Period July 17, 2004 toDecember 31, 2004 |  | Period January 1, 2004 to July 16, 2004 |        
|                                                                       |  | (In thousands) |        
|Cash flows from financing activities:                                  |  |                |         |               |      |   |         |                                          |  |                                         |         |  |   |        |  
|Net changes in short-term borrowings                                   |  |                | (5,358  | )             |      |   | (4,470  | )                                        |  |                                         | 12,000  |  |   | (1,575 | )
|Proceeds from issuance of subordinated debentures                      |  |                |        |               |      |   |        |                                          |  |                                         |        |  |   | 14,925 |  
|Proceeds from sale of common stock                                     |  |                |        |               |      |   |        |                                          |  |                                         | 511,640 |  |   | 2,186  |  
|Costs associated with issuance of common stock                         |  |                |        |               |      |   | (504    | )                                        |  |                                         |        |  |   |       |  
|Repurchase of common stock                                             |  |                | (37,854 | )             |      |   | (31,720 | )                                        |  |                                         |        |  |   | (2,716 | )
|Tax benefits from vesting of stock compensation                        |  |                | 2       |               |      |   | 280     |                                          |  |                                         |        |  |   |       |  
|                                                                       |  |                |         |               |      |   |         |                                          |  |                                         |         |  |   |        |  
|Net cash provided (used) by financing activities                       |  |                | (43,210 | )             |      |   | (36,414 | )                                        |  |                                         | 523,640 |  |   | 12,820 |  
|                                                                       |  |                |         |               |      |   |         |                                          |  |                                         |         |  |   |        |  
|Net change in cash and cash equivalents                                |  |                | 586     |               |      |   | (10,261 | )                                        |  |                                         | 10,288  |  |   | 11,656 |  
|Cash and cash equivalents, beginning of period                         |  |                | 27      |               |      |   | 10,288  |                                          |  |                                         |        |  |   | 260    |  
|                                                                       |  |                |         |               |      |   |         |                                          |  |                                         |         |  |   |        |  
|Cash and cash equivalents, end of period                               |  | $              | 613     |               |      | $ | 27      |                                          |  | $                                       | 10,288  |  | $ | 11,916 |  
|                                                                       |  |                |         |               |      |   |         |                                          |  |                                         |         |  |   |        |  
|Supplemental disclosure of noncash investing and financing activities: |  |                |         |               |      |   |         |                                          |  |                                         |         |  |   |        |  
|Common stock issued for acquisitions                                   |  | $              |        |               |      | $ | 99,936  |                                          |  | $                                       |        |  | $ |       |  



105



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CENTENNIAL BANK HOLDINGS, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements(Continued)



(25) Quarterly Results of Operations (Unaudited)

2006 Quarterly Results of Operations



|                                                       |  |                                       |        |                   |   |              |  |               |        |  |   |       
|------------------------------------------------------ |  | ------------------------------------- | ------ | ----------------- | - | ------------ |  | ------------- | ------ |  | - | ------
|                                                       |  | Quarter Ended                        
|                                                       |  | December 31,2006                      |        | September 30,2006 |   | June 30,2006 |  | March 31,2006
|                                                       |  | (In thousands, except per share data)
|Interest income                                        |  | $                                     | 43,881 |                   | $ | 44,224       |  | $             | 42,966 |  | $ | 42,710
|Interest expense                                       |  |                                       | 15,974 |                   |   | 15,229       |  |               | 13,578 |  |   | 12,803
|                                                       |  |                                       |        |                   |   |              |  |               |        |  |   |       
|Net interest income                                    |  |                                       | 27,907 |                   |   | 28,995       |  |               | 29,388 |  |   | 29,907
|Provision for credit losses                            |  |                                       | 2,724  |                   |   | 1,566        |  |               |       |  |   |      
|                                                       |  |                                       |        |                   |   |              |  |               |        |  |   |       
|Net interest income, after provision for credit losses |  |                                       | 25,183 |                   |   | 27,429       |  |               | 29,388 |  |   | 29,907
|Noninterest income                                     |  |                                       | 2,526  |                   |   | 3,474        |  |               | 3,605  |  |   | 3,112 
|Noninterest expense                                    |  |                                       | 21,222 |                   |   | 22,942       |  |               | 25,005 |  |   | 21,739
|                                                       |  |                                       |        |                   |   |              |  |               |        |  |   |       
|Income before income taxes                             |  |                                       | 6,487  |                   |   | 7,961        |  |               | 7,988  |  |   | 11,280
|Income tax expense                                     |  |                                       | 2,163  |                   |   | 2,521        |  |               | 2,611  |  |   | 3,991 
|                                                       |  |                                       |        |                   |   |              |  |               |        |  |   |       
|Income from continuing operations                      |  |                                       | 4,324  |                   |   | 5,440        |  |               | 5,377  |  |   | 7,289 
|Income from discontinued operations, net of tax        |  |                                       | 1,119  |                   |   | 380          |  |               | 349    |  |   | 140   
|                                                       |  |                                       |        |                   |   |              |  |               |        |  |   |       
|Net income                                             |  | $                                     | 5,443  |                   | $ | 5,820        |  | $             | 5,726  |  | $ | 7,429 
|                                                       |  |                                       |        |                   |   |              |  |               |        |  |   |       
|Earnings per sharebasic and diluted                   |  |                                       |        |                   |   |              |  |               |        |  |   |       
|Income from continuing operations                      |  | $                                     | 0.08   |                   | $ | 0.10         |  | $             | 0.09   |  | $ | 0.12  
|Income from discontinued operations, net of tax        |  |                                       | 0.02   |                   |   |             |  |               | 0.01   |  |   | 0.01  
|Net income                                             |  |                                       | 0.10   |                   |   | 0.10         |  |               | 0.10   |  |   | 0.13  

2005 Quarterly Results of Operations



|                                                       |  |                                       |        |                   |   |              |  |   |               |   |  |   |       
|------------------------------------------------------ |  | ------------------------------------- | ------ | ----------------- | - | ------------ |  | - | ------------- | - |  | - | ------
|                                                       |  | Quarters Ended                       
|                                                       |  | December 31,2005                      |        | September 30,2005 |   | June 30,2005 |  |   | March 31,2005
|                                                       |  | (In thousands, except per share data)
|Interest income                                        |  | $                                     | 42,638 |                   | $ | 34,514       |  | $ | 32,368        |   |  | $ | 30,043
|Interest expense                                       |  |                                       | 11,841 |                   |   | 8,641        |  |   | 6,498         |   |  |   | 4,715 
|                                                       |  |                                       |        |                   |   |              |  |   |               |   |  |   |       
|Net interest income                                    |  |                                       | 30,797 |                   |   | 25,873       |  |   | 25,870        |   |  |   | 25,328
|Provision for credit losses                            |  |                                       | 1,700  |                   |   |             |  |   |              |   |  |   | 1,700 
|                                                       |  |                                       |        |                   |   |              |  |   |               |   |  |   |       
|Net interest income, after provision for credit losses |  |                                       | 29,097 |                   |   | 25,873       |  |   | 25,870        |   |  |   | 23,628
|Noninterest income                                     |  |                                       | 3,469  |                   |   | 2,732        |  |   | 2,339         |   |  |   | 2,578 
|Noninterest expense                                    |  |                                       | 25,922 |                   |   | 20,727       |  |   | 21,217        |   |  |   | 24,983
|                                                       |  |                                       |        |                   |   |              |  |   |               |   |  |   |       
|Income before income taxes                             |  |                                       | 6,644  |                   |   | 7,878        |  |   | 6,992         |   |  |   | 1,223 
|Income tax expense                                     |  |                                       | 2,136  |                   |   | 2,748        |  |   | 2,431         |   |  |   | 303   
|                                                       |  |                                       |        |                   |   |              |  |   |               |   |  |   |       
|Income from continuing operations                      |  |                                       | 4,508  |                   |   | 5,130        |  |   | 4,561         |   |  |   | 920   
|Income (loss) from discontinued operations, net of tax |  |                                       | 357    |                   |   |             |  |   | (971          | ) |  |   | 177   
|                                                       |  |                                       |        |                   |   |              |  |   |               |   |  |   |       
|Net income                                             |  | $                                     | 4,865  |                   | $ | 5,130        |  | $ | 3,590         |   |  | $ | 1,097 
|                                                       |  |                                       |        |                   |   |              |  |   |               |   |  |   |       
|Earnings per sharebasic and diluted                   |  |                                       |        |                   |   |              |  |   |               |   |  |   |       
|Income from continuing operations                      |  |                                       | 0.07   |                   |   | 0.10         |  |   | 0.09          |   |  |   | 0.02  
|Income (loss) from discontinued operations, net of tax |  |                                       | 0.01   |                   |   |             |  |   | (0.02         | ) |  |   |      
|Net income                                             |  |                                       | 0.08   |                   |   | 0.10         |  |   | 0.07          |   |  |   | 0.02  



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|ITEM 9. | CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
|------- | ------------------------------------------------------------------------------------

None.



|ITEM 9A. | CONTROLS AND PROCEDURES
|-------- | -----------------------

As of the end of the
period covered by this report, an evaluation was carried out by the Companys management, with the participation of the Chief Executive Officer and the Chief Financial Officer, of the effectiveness of the Companys disclosure controls and
procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934). Based on that evaluation, which included consideration of the restatement described below, the Companys Chief Executive Officer and Chief Financial Officer
have concluded that the Companys disclosure controls and procedures were effective. The Companys disclosure controls and procedures were designed to provide reasonable assurance that information required to be disclosed in reports that
we file or submit under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission. It should be noted that the design of any
system of controls is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions, regardless of how
remote. Due to inherent limitations, such controls and procedures may not prevent or detect all misstatements and lapses or deficiencies in internal controls, which may lead to significant deficiencies or material weaknesses. These inherent
limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of a simple error or mistake. However, the controls have been designed to provide reasonable assurance of achieving the
controls stated goals.

As reported in the Current Report on Form 8-K filed by the Company on March 16, 2007 (as amended by the Form
8-K/A filed by the Company on March 20, 2007), the Company is restating its previously issued consolidated statements of cash flows for the year ended December 31, 2005 as set forth in the Companys Annual Report on Form 10-K for the year ended
December 31, 2005, the nine-month periods ended September 30, 2006 and 2005, the six-month periods ended June 30, 2006 and 2005, and the three-month periods ended March 31, 2006 and 2005 as set forth in the Companys Quarterly Reports on
Form 10-Q for the periods ended September 30, 2006, June 30, 2006, March 31, 2006, respectively. The restatements, which are disclosed in Note 2(a) to our consolidated financial statements included in Part II, Item 8 of this Annual Report on
Form 10-K, do not affect the Companys consolidated statements of income, consolidated balance sheets or consolidated statements of stockholders equity and comprehensive income (loss) for any of the effected periods. Accordingly, the
Companys historical revenues, net income, earnings per share, total assets and regulatory capital will remain unchanged.

The cash
flow restatements solely relate to the presentation of cash and cash equivalents held at Collegiate Peaks Bank, which the Company acquired in December 2004 and sold in November 2006. The consolidated statement of cash flows for the year ended
December 31, 2006 reflected the sale of Collegiate Peaks on November 1, 2006. As part of the Companys review of the consolidated statements of cash flows that were being prepared for filing in this Annual Report, the Companys internal
accounting staff reevaluated its presentation of Collegiate Peaks in its consolidated statements of cash flows and it was determined by the Company that the cash and cash equivalents presented in the consolidated statements of cash flows should have
included the cash and cash equivalents of Collegiate Peaks, which were classified as assets held for sale on the Companys consolidated balance sheet as of December 31, 2005. The restatements for the year ended December 31, 2005, and the year
to date periods ended March 31, 2006, June 30, 2006, and September 30, 2006 solely affect the presentation of cash flows from operating activities, the total change in cash and cash equivalents, and the total cash and cash equivalents presented in
the affected consolidated statements of cash flows of the Company. The restatements for the year to date periods ended March 31, 2005, June 30, 2005 and September 30, 2005, affect the amounts reflected in the operating activities, investing
activities, and financing activities section



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of the statements of cash flows, the total change in cash and cash equivalents, and the total cash and cash equivalents presented in the affected
consolidated statements of cash flows.

In addition, in connection with the restatements, the Companys management, with the
participation of the Chief Executive Officer and the Chief Financial Officer, reevaluated the effectiveness of the Companys disclosure controls and procedures as of December 31, 2005 and March 31, June 30 and September 30, 2006. Based on that
reevaluation and in light of the restatements, the Companys Chief Executive Officer and Chief Financial Officer have concluded that the Companys disclosure controls and procedures were ineffective at those dates, due to a material
weakness in internal control over financial reporting relating to the Companys review procedures over the consolidated statements of cash flows. No such material weakness existed as of December 31, 2006.

Throughout 2006, management continued its efforts to refine and improve its internal control over financial reporting, including its preparation to
become compliant with Section 404 of the Sarbanes-Oxley Act of 2002 by December 31, 2006. Our internal audit function reviewed and tested our internal control over financial reporting to ensure that it was designed appropriately and would operate as
designed.

During the fourth quarter ended December 31, 2006, we made the following change in internal control over financial reporting:

Enhanced the review process over the Companys consolidated financial statements. The statement of cash flows is now prepared by a
recently hired accountant with technical accounting and financial reporting experience. This allowed an additional level of review of the Companys consolidated statement of cash flows.

Otherwise, there have been no changes in the Companys internal control over financial reporting (as defined in Rule 13a-15(f) under the Securities
Exchange Act of 1934) during our most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, the Companys internal control over financial reporting. We strive to continually improve our internal
controls over financial reporting, and we have taken and will continue to take corrective action if and as we discover deficiencies in our internal controls over financial reporting.

Managements Report on Internal Control over Financial Reporting and the Report of Independent Registered Public Accounting Firm thereon are set
forth in Part II, Item 8 of this Annual Report on Form 10-K.



|ITEM 9B. | OTHER INFORMATION
|-------- | -----------------

None.



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PART III



|ITEM 10. | DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
|-------- | ------------------------------------------------------

Information required by this Item is incorporated herein by reference to our Proxy Statement (Schedule 14A) for our 2007 Annual Meeting of Stockholders to be filed with the SEC within 120 days of our fiscal year-end. Information relating to
our Code of Business Conduct and Ethics that applies to our employees, including its senior financial officers, is included in Part I of this Annual Report on Form 10 K under Item 1. BusinessAvailable Information.



|ITEM 11. | EXECUTIVE COMPENSATION
|-------- | ----------------------

The information required by
this Item is incorporated herein by reference to our Proxy Statement (Schedule 14A) for our 2007 Annual Meeting of Stockholders to be filed with the SEC within 120 days of our fiscal year-end.



|ITEM 12. | SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
|-------- | ----------------------------------------------------------------------------------------------

Certain information regarding securities authorized for issuance under our equity compensation plans is included under the section captioned
Securities Authorized for Issuance Under Equity Compensation Plans in Item 5 in this Annual Report on Form 10-K. Other information required by this Item is incorporated herein by reference to our Proxy Statement (Schedule 14A) for
our 2007 Annual Meeting of Stockholders to be filed with the SEC within 120 days of our fiscal year-end.



|ITEM 13. | CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
|-------- | -------------------------------------------------------------------------

The information required by this Item is incorporated herein by reference to our Proxy Statement (Schedule 14A) for our 2007 Annual Meeting of Stockholders to be filed with the SEC within 120 days of our fiscal
year-end.



|ITEM 14. | PRINCIPAL ACCOUNTANT FEES AND SERVICES
|-------- | --------------------------------------

The
information required by this Item is incorporated herein by reference to our Proxy Statement (Schedule 14A) for our 2007 Annual Meeting of Stockholders to be filed with the SEC within 120 days of our fiscal year-end.



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PART IV



|ITEM 15. | EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
|-------- | ------------------------------------------

(a) 1.
Financial Statements

The consolidated financial statements of Centennial Bank Holdings, Inc. and its subsidiaries and independent
auditors reports are included in Part II (Item 8) of this Form 10 K.

2. Financial Statement Schedules

All financial statement schedules have been omitted, as they are either inapplicable or included in the Notes to Consolidated Financial
Statements.

3. Exhibits

The following documents are included or incorporated by reference in this Annual Report on Form 10-K:



|               |  |                                                                                                                                                                                                                                                                                                                                          
|-------------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit Number |  | Description of Exhibit                                                                                                                                                                                                                                                                                                                   
|2.1            |  | Agreement and Plan of Merger, dated as of December 20, 2004, by and between the Registrant and First MainStreet Financial, Ltd. (incorporated herein by reference from Exhibit 2.1 to
Registrants Registration Statement on Form S-1 (File No. 333-124855), as amended)                                                                 
|               | 
|3.1            |  | Amended and Restated Certification of Incorporation of the Registrant (incorporated herein by reference from Exhibit 3.1 to Registrants Registration Statement on Form S-1 (File No.
333-124855), as amended)                                                                                                                           
|               | 
|3.2            |  | Amended and Restated Bylaws of the Registrant (incorporated herein by reference from Exhibit 3.2 to Registrants Registration Statement on Form S-1 (File No. 333-124855), as
amended)                                                                                                                                                   
|               | 
|4.1            |  | Specimen stock certificate representing shares of common stock of the Registrant (incorporated herein by reference from Exhibit 4.1 to Registrants Registration Statement on Form S-1 (File
No. 333-124855), as amended)                                                                                                                
|               | 
|4.2            |  | Indenture, dated September 7, 2000, between State Street Bank and Trust Company of Connecticut, National Association, and the Registrant (incorporated herein by reference from Exhibit 4.2 to
Registrants Registration Statement on Form S-1 (File No. 333-124855), as amended)                                                        
|               | 
|4.3            |  | Amended and Restated Declaration of Trust, dated September 7, 2000, by and among State Street Bank and Trust Company of Connecticut, National Association, the Administrators and the Registrant
(incorporated herein by reference from Exhibit 4.3 to Registrants Registration Statement on Form S-1 (File No. 333-124855), as amended)
|               | 
|4.4            |  | Guarantee Agreement, dated September 7, 2000, by and between State Street Bank and Trust Company of Connecticut, National Association, and the Registrant (incorporated herein by reference from
Exhibit 4.4 to Registrants Registration Statement on Form S-1 (File No. 333-124855), as amended)                                       
|               | 
|4.5            |  | Indenture, dated February 22, 2001, State Street Bank and Trust Company of Connecticut, National Association, and the Registrant (incorporated herein by reference from Exhibit 4.5 to
Registrants Registration Statement on Form S-1 (File No. 333-124855), as amended)                                                                
|               | 
|4.6            |  | Amended and Restated Declaration of Trust, dated February 22, 2001, by and among State Street Bank and Trust Company of Connecticut, National Association, the Administrators and the
Registrant (incorporated herein by reference from Exhibit 4.6 to Registrants Registration Statement on Form S-1 (File No. 333-124855), as amended)



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|               |  |                                                                                                                                                                                                                                                                                                                                     
|-------------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit Number |  | Description of Exhibit                                                                                                                                                                                                                                                                                                              
|4.7            |  | Guarantee Agreement, dated February 22, 2001, by and between State Street Bank and Trust Company of Connecticut, National Association, and the Registrant (incorporated herein by reference from
Exhibit 4.7 to Registrants Registration Statement on Form S-1 (File No. 333-124855), as amended)                                  
|               | 
|4.8            |  | Junior Subordinated Indenture, dated April 8, 2004, between Deutsche Bank Trust Company Americas and the Registrant (incorporated herein by reference from Exhibit 4.8 to Registrants
Registration Statement on Form S-1 (File No. 333-124855), as amended)                                                                        
|               | 
|4.9            |  | Amended and Restated Trust Agreement, dated April 8, 2004, among Deutsche Bank Trust Company Americas, Deutsche Bank Trust Company Delaware, the Administrative Trustees and the Registrant
(incorporated herein by reference from Exhibit 4.9 to Registrants Registration Statement on Form S-1 (File No. 333-124855), as amended)
|               | 
|4.10           |  | Guarantee Agreement, dated April 8, 2004, between Deutsche Bank Trust Company Americas and the Registrant (incorporated herein by reference from Exhibit 4.10 to Registrants Registration
Statement on Form S-1 (File No. 333-124855), as amended)                                                                                 
|               | 
|4.11           |  | Assumption Letter, dated December 31, 2004, to Wells Fargo Bank, National Association, and Wells Fargo Delaware Trust Company from the Registrant (incorporated herein by reference from Exhibit
4.11 to Registrants Registration Statement on Form S-1 (File No. 333-124855), as amended)                                         
|               | 
|4.12           |  | Indenture, dated June 30, 2003, between Wells Fargo Bank, National Association, and Guaranty Corporation (incorporated herein by reference from Exhibit 4.12 to Registrants Registration
Statement on Form S-1 (File No. 333-124855), as amended)                                                                                  
|               | 
|4.13           |  | First Supplemental Indenture, dated December 31, 2004, by and between Wells Fargo Bank, National Association, and the Registrant (incorporated herein by reference from Exhibit 4.13 to
Registrants Registration Statement on Form S-1 (File No. 333-124855), as amended)                                                          
|               | 
|4.14           |  | Amended and Restated Declaration of Trust, dated June 30, 2003, by the Trustees, the Administrators and Guaranty Corporation (incorporated herein by reference from Exhibit 4.14 to
Registrants Registration Statement on Form S-1 (File No. 333-124855), as amended)                                                              
|               | 
|4.15           |  | Guarantee Agreement, dated June 30, 2003, by Wells Fargo Bank, National Association, and Guaranty Corporation (incorporated herein by reference from Exhibit 4.15 to Registrants
Registration Statement on Form S-1 (File No. 333-124855), as amended)                                                                             
|               | 
|10.1          |  | Form of Indemnification Agreement for Executive Officers and Directors of the Registrant (incorporated herein by reference from Exhibit 10.2 to Registrants Registration Statement on Form
S-1 (File No. 333-124855), as amended)                                                                                                  
|               | 
|10.2          |  | Employment Agreement, dated as of October 27, 2004, between David C. Boyles and the Registrant (incorporated herein by reference from Exhibit 10.3 to Registrants Registration Statement on
Form S-1 (File No. 333-124855), as amended)                                                                                            
|               | 
|10.3          |  | Transition Agreement, dated May 16, 2006, between David C. Boyles and the Registrant (incorporated herein by reference from Exhibit 10.2 to Registrants Form 8-K filed on May 17,
2006)                                                                                                                                            
|               | 
|10.4          |  | Employment Agreement, dated as of October 27, 2004, between John Perkins and Guaranty Bank and Trust Company (incorporated herein by reference from Exhibit 10.9 to Registrants
Registration Statement on Form S-1 (File No. 333-124855), as amended)                                                                              
|               | 
|10.5          |  | Transition Agreement, dated May 16, 2006, between John Perkins and Guaranty Bank and Trust Company (incorporated herein by reference from Exhibit 10.3 to Registrants Form 8-K filed on May
17, 2006)                                                                                                                              



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|               |  |                                                                                                                                                                                                                                                         
|-------------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit Number |  | Description of Exhibit                                                                                                                                                                                                                                  
|10.6          |  | Centennial Bank Holdings, Inc. Change in Control Severance Plan, effective December 11, 2006 (incorporated herein by reference from Exhibit 10.1 to Registrants Form 8-K filed on December
15, 2006)                                                   
|               | 
|10.7          |  | Amended and Restated 2005 Stock Incentive Plan (incorporated herein by reference from Exhibit 10.1 to Registrants Form 10-Q filed on May 15, 2006)                                                                                                     
|               | 
|10.8          |  | Form of Option Award Agreement (incorporated herein by reference from Exhibit 10.16 to Registrants Registration Statement on Form S-1 (File No. 333-124855), as amended)                                                                               
|               | 
|10.9          |  | Amended Form of Restricted Stock Award Agreement (incorporated herein by reference from Exhibit 10.16 to Registrants Registration Statement on Form S-4 (File No. 333-126643), as
amended)                                                             
|               | 
|10.10         |  | Form of Restricted Stock Award Agreement for Directors (incorporated herein by reference from Exhibit 10.16.1 to Registrants Registration Statement on Form S-4 (File No. 333-126643), as
amended)                                                     
|               | 
|10.11         |  | Amended and Restated Centennial Bank Holdings, Inc. 2005 Deferred Compensation Plan (incorporated herein by reference from Exhibit 4.3 to Registrants Registration Statement on Form S-8
(File No. 333-134950), as amended)                            
|               | 
|10.12         |  | Form of Executive Cash Incentive Plan                                                                                                                                                                                                                   
|               | 
|10.13          |  | Services Agreement, dated as of November 8, 2006, by and between Castle Creek Financial LLC and the Registrant (incorporated herein by reference from Exhibit 10.2 to Registrants Form 10-Q
filed on November 13, 2006)                                
|               | 
|10.14          |  | Lease Agreement, dated June 30, 2002, between American Eagle Investments, LLC and Centennial Bank of the West (incorporated herein by reference from Exhibit 10.21 to Registrants
Registration Statement on Form S-4 (File No. 333-126643), as amended)
|               | 
|10.15          |  | Lease Agreement, dated December 17, 1996, between Stagecoach Stop, LLC and Centennial Bank of the West (incorporated herein by reference from Exhibit 10.22 to Registrants Registration
Statement on Form S-4 (File No. 333-126643), as amended)       
|               | 
|10.16          |  | Revolving Credit Agreement, dated November 8, 2005, between U.S. Bank National Association and the Registrant (incorporated herein by reference from Exhibit 10.1 to Registrants Form 10-Q
filed on November 14, 2005)                                 
|               | 
|10.17          |  | Amendment No. 1 to Revolving Credit Agreement, dated as of March 28, 2006, between U.S. Bank National Association and the Registrant (incorporated herein by reference from Exhibit 10.20 to
Registrants Form 10-K filed on March 31, 2006)            
|               | 
|10.18          |  | Amendment No. 2 to Revolving Credit Agreement, dated May 11, 2006, between U.S. Bank National Association and the Registrant (incorporated herein by reference from Exhibit 10.2 to
Registrants Form 10-Q filed on May 15, 2006)                       
|               | 
|10.19          |  | Amendment No. 3 to Revolving Credit Agreement, dated November 7, 2006, between U.S. Bank National Association and the Registrant (incorporated herein by reference from Exhibit 10.3 to
Registrants Form 10-Q filed on November 13, 2006)              
|               | 
|10.20          |  | Pledge Agreement, dated as of November 8, 2005, between U.S. Bank National Association and the Registrant (incorporated herein by reference from Exhibit 10.2 to Registrants Form 10-Q filed
on November 14, 2005)                                     



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|               |  |                                                                                                                                                                                                                                                                      
|-------------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit Number |  | Description of Exhibit                                                                                                                                                                                                                                               
|11.1           |  | Statement re: Computation of Per Share Earnings (Included in Item 6. Selected Financial Data and Note 2(o) of the Notes to Consolidated Financial Statements contained in Item
8. Financial Statements and Supplementary Data of this Annual Report on Form 10-K)
|               | 
|12.1           |  | Statement re: Computation of Ratios (Included in Item 6. Selected Financial Data of this Annual Report on Form 10-K)                                                                                                                                               
|               | 
|21.1           |  | Subsidiaries of the Registrant                                                                                                                                                                                                                                       
|               | 
|23.1           |  | Consent of KPMG LLP                                                                                                                                                                                                                                                  
|               | 
|24.1           |  | Power of Attorney (included on signature page)                                                                                                                                                                                                                       
|               | 
|31.1           |  | Section 302 Certifications                                                                                                                                                                                                                                           
|               | 
|32.1           |  | Section 906 Certifications                                                                                                                                                                                                                                           

---

| | Indicates a management contract or compensatory plan or arrangement
|- | -------------------------------------------------------------------

(b) Exhibits

The exhibits listed in Item 15(a)(3) are incorporated by reference or attached
hereto.

(c) Excluded Financial Statements

Not Applicable



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##### Table of Contents

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) 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.

Date: March 23, 2007



CENTENNIAL BANK HOLDINGS, INC./S/    PAUL W.
TAYLORName:

Paul W. TaylorTitle:

Executive Vice President and Chief Financial Officer


KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below
constitutes and appoints Daniel M. Quinn, Paul W. Taylor and Zsolt K. Besskó, and each of them severally, his or her true and lawful attorney-in-fact with power of substitution and resubstitution to sign in his or her name, place and stead,
in any and all capacities, to do any and all things and execute any and all instruments that such attorney-in-fact may deem necessary or advisable under the Securities Exchange Act of 1934 and any rules, regulations and requirements of the U.S.
Securities and Exchange Commission in connection with this Annual Report on Form 10-K and any and all amendments hereto, as fully for all intents and purposes as he or she might or could do in person, and hereby ratifies and confirms all said
attorneys-in-fact and agents, each acting alone, and his or her substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, this report has been signed by the following persons on behalf of the registrant and in the capacities and on the dates indicated.



|                                                 |  |                                                                                                      |  |               
|------------------------------------------------ |  | ---------------------------------------------------------------------------------------------------- |  | --------------
|Signature                                        |  | Title                                                                                                |  | Date          
|                                                 |  |                                                                                                     
|/S/    DANIEL M.
QUINN Daniel M. Quinn           |  | President and Chief Executive Officer (Principal Executive Officer)                                  |  | March 23, 2007
|                                                 |  |                                                                                                     
|/S/    PAUL W.
TAYLOR Paul W. Taylor             |  | Executive Vice President and    Chief Financial Officer (Principal Financial and Accounting Officer) |  | March 23, 2007
|                                                 |  |                                                                                                     
|/S/    JOHN M.
EGGEMEYER John M. Eggemeyer       |  | Chairman of the Board and Director                                                                   |  | March 23, 2007
|                                                 |  |                                                                                                     
|/S/    EDWARD B. CORDES Edward B. Cordes         |  | Director                                                                                             |  | March 23, 2007
|                                                 |  |                                                                                                     
|/S/    WILLIAM R.
FARR William R. Farr           |  | Director                                                                                             |  | March 23, 2007
|                                                 |  |                                                                                                     
|/S/    STEPHEN D.
JOYCE Stephen D. Joyce         |  | Director                                                                                             |  | March 23, 2007
|                                                 |  |                                                                                                     
|/S/    STEPHEN B.
SHRAIBERG Stephen B. Shraiberg |  | Director                                                                                             |  | March 23, 2007
|                                                 |  |                                                                                                     
|/S/    KATHLEEN SMYTHE Kathleen Smythe           |  | Director                                                                                             |  | March 23, 2007
|                                                 |  |                                                                                                     
|/S/    MATTHEW P.
WAGNER Matthew P. Wagner       |  | Director                                                                                             |  | March 23, 2007
|                                                 |  |                                                                                                     
|/S/    ALBERT C.
YATES Albert C. Yates           |  | Director                                                                                             |  | March 23, 2007



114