##### 



SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D.C. 20549
 FORM 10-Q
 Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934  For the Quarterly period ended September 30, 2005.
 Commission file number 000-24478.
 DEARBORN BANCORP, INC.
  Michigan
(State or other jurisdiction of
incorporation or organization)
    
    
    
    38-3073622
(I.R.S. Employer Identification No.)1360 Porter Street, Dearborn, MI
    
    
    
    48124(Address of principal executive office)
    
    
    
    (Zip Code)
 (313) 565-5700
 N/A
  þ o
  Class
    
    Shares OutstandingCommon Stock
    
    5,147,550
 o þ
  o þ




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##### 



PagePart I.
    
    
    
    Financial Information:Item 1.
    
    
    
    Financial StatementsThe following consolidated financial statements of DearbornBancorp, Inc. and its subsidiary included in this report are:Independent Accountants Report
    
    3Consolidated Balance Sheets  September 30, 2005,December 31, 2004 and September 30, 2004
    
    4Consolidated Statements of Income
 For the Three and NineMonths Ended September 30, 2005 and 2004
    
    5Consolidated Statements of
Comprehensive Income  Forthe Three and Nine Months Ended September 30, 2005 and 2004
    
    6Consolidated Statements of Cash
Flows  For theNine Months Ended September 30, 2005 and 2004
    
    7Notes to Consolidated Financial Statements
    
    8-13Item 2.
    
    
    
    Managements Discussion and Analysis of FinancialCondition and Results of Operations, Liquidity and Capital
    
    14-29Item 3.
    
    
    
    Quantitative and Qualitative Disclosures about Market Risk
    
    30-32Item 4.
    
    
    
    Controls and Procedures
    
    33Part II.
    
    
    
    Other Information:Pursuant to SEC rules and regulations, the following item(s) areincluded with the Form 10-Q Report:Item 6. Exhibits and Reports on Form 8-K
    
    34Pursuant to SEC rules and regulations, the following items are omittedfrom this Form 10-Q as inapplicable or to which the answer is negative:Item 1. Legal ProceedingsItem 2. Changes in Securities and Use of ProceedsItem 3. Defaults upon Senior SecuritiesItem 4. Submission of Matters to a Vote of Security HoldersItem 5  Other InformationSIGNATURES
    
    
    
    
    
    35
 2




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##### 



/s/ Crowe Chizek and Company LLC 
 3




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##### 



DEARBORN BANCORP, INC. AND SUBSIDIARY
 CONSOLIDATED BALANCE SHEETS (unaudited)
 (Dollars, in thousands)
    
    09/30/05
    
    
    12/31/04
    
    
    09/30/04ASSETSCash and cash equivalentsCash and due from banks
    
    $
    8,714
    
    
    $
    5,946
    
    
    $
    6,343Federal funds sold
    
    
    7,893
    
    
    
    12,640
    
    
    
    11,636Interest bearing deposits with banks
    
    
    74
    
    
    
    2,283
    
    
    
    29,600Total cash and cash equivalents
    
    
    16,681
    
    
    
    20,869
    
    
    
    47,579Mortgage loans held for sale
    
    
    2,697
    
    
    
    1,692
    
    
    
    1,533Securities, available for sale
    
    
    14,137
    
    
    
    21,075
    
    
    
    39,516Federal Home Loan Bank stock
    
    
    1,293
    
    
    
    1,122
    
    
    
    1,111LoansLoans
    
    
    645,003
    
    
    
    587,562
    
    
    
    474,111Allowance for loan loss
    
    
    (6,757
    )
    
    
    (5,884
    )
    
    
    (5,188
    )Net loans
    
    
    638,246
    
    
    
    581,678
    
    
    
    468,923Premises and equipment, net
    
    
    14,101
    
    
    
    13,124
    
    
    
    10,987Real estate owned
    
    
    661
    
    
    
    138
    
    
    
    357Goodwill
    
    
    5,473
    
    
    
    7,080
    
    
    
    Other intangible assets
    
    
    2,368
    
    
    
    902
    
    
    
    Accrued interest receivable
    
    
    2,014
    
    
    
    1,889
    
    
    
    1,648Other assets
    
    
    2,726
    
    
    
    3,093
    
    
    
    2,439Total assets
    
    $
    700,397
    
    
    $
    652,662
    
    
    $
    574,093LIABILITIESDepositsNon-interest bearing deposits
    
    $
    60,222
    
    
    $
    63,065
    
    
    $
    45,136Interest bearing deposits
    
    
    513,732
    
    
    
    477,815
    
    
    
    423,878Total deposits
    
    
    573,954
    
    
    
    540,880
    
    
    
    469,014Other liabilitiesFederal funds purchased
    
    
    4,500
    
    
    
    
    
    
    
    Securities sold under agreements to repurchase
    
    
    2,361
    
    
    
    4,115
    
    
    
    Federal Home Loan Bank advances
    
    
    25,588
    
    
    
    20,614
    
    
    
    20,614Accrued interest payable
    
    
    1,507
    
    
    
    1,107
    
    
    
    928Other liabilities
    
    
    998
    
    
    
    1,342
    
    
    
    1,140Subordinated debentures
    
    
    10,000
    
    
    
    10,000
    
    
    
    10,000Total liabilities
    
    
    618,908
    
    
    
    578,058
    
    
    
    501,696STOCKHOLDERS EQUITYCommon stock
 10,000,000 shares authorized,
5,136,456 shares at 09/30/05, 5,033,576 shares at
12/31/04; and 5,003,870 shares at 09/30/04
    
    
    79,240
    
    
    
    74,918
    
    
    
    71,370Retained earnings
    
    
    2,293
    
    
    
    344
    
    
    
    1,590Accumulated other comprehensive loss
    
    
    (44
    )
    
    
    (658
    )
    
    
    (563
    )Total stockholders equity
    
    
    81,489
    
    
    
    74,604
    
    
    
    72,397Total liabilities and stockholders equity
    
    $
    700,397
    
    
    $
    652,662
    
    
    $
    574,093
  4




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##### 



DEARBORN BANCORP, INC. AND SUBSIDIARY
 CONSOLIDATED STATEMENTS OF INCOME (unaudited)
 Three Months Ended
    
    
    Nine Months Ended(In thousands, except share and per share data)
    
    09/30/05
    
    
    09/30/04
    
    
    09/30/05
    
    
    09/30/04Interest incomeInterest on loans, including fees
    
    $
    11,133
    
    
    $
    7,142
    
    
    $
    31,153
    
    
    $
    20,296Interest on securities, available for sale
    
    
    125
    
    
    
    155
    
    
    
    425
    
    
    
    293Interest on federal funds
    
    
    60
    
    
    
    49
    
    
    
    187
    
    
    
    87Interest on deposits with banks
    
    
    16
    
    
    
    80
    
    
    
    99
    
    
    
    97Total interest income
    
    
    11,334
    
    
    
    7,426
    
    
    
    31,864
    
    
    
    20,773Interest expenseInterest on deposits
    
    
    3,730
    
    
    
    2,080
    
    
    
    10,107
    
    
    
    5,443Interest on other borrowings
    
    
    361
    
    
    
    234
    
    
    
    949
    
    
    
    696Interest on subordinated debentures
    
    
    190
    
    
    
    109
    
    
    
    510
    
    
    
    332Total interest expense
    
    
    4,281
    
    
    
    2,423
    
    
    
    11,566
    
    
    
    6,471Net interest income
    
    
    7,053
    
    
    
    5,003
    
    
    
    20,298
    
    
    
    14,302Provision for loan losses
    
    
    248
    
    
    
    369
    
    
    
    991
    
    
    
    874Net interest income after provision for loan losses
    
    
    6,805
    
    
    
    4,634
    
    
    
    19,307
    
    
    
    13,428Non-interest incomeService charges on deposit accounts
    
    
    164
    
    
    
    141
    
    
    
    480
    
    
    
    409Fees for other services to customers
    
    
    16
    
    
    
    (10
    )
    
    
    65
    
    
    
    24Gain on the sale of loans
    
    
    125
    
    
    
    119
    
    
    
    459
    
    
    
    493Gain/(loss) on the sale of real estate
    
    
    4
    
    
    
    
    
    
    
    92
    
    
    
    (3
    )Other than temporary impairment of securities
    
    
    
    
    
    
    
    
    
    
    (696
    )
    
    
    Loss on the sale of securities, available for sale
    
    
    (44
    )
    
    
    
    
    
    
    (44
    )
    
    
    Other income
    
    
    40
    
    
    
    (4
    )
    
    
    56
    
    
    
    48Total non-interest income
    
    
    305
    
    
    
    246
    
    
    
    412
    
    
    
    971Non-interest expensesSalaries and employee benefits
    
    
    2,357
    
    
    
    1,868
    
    
    
    7,003
    
    
    
    5,537Commissions on the origination of loans
    
    
    48
    
    
    
    52
    
    
    
    179
    
    
    
    202Occupancy and equipment expense
    
    
    628
    
    
    
    322
    
    
    
    1,875
    
    
    
    1,046Intangible expense
    
    
    76
    
    
    
    
    
    
    
    153
    
    
    
    Advertising and marketing
    
    
    74
    
    
    
    66
    
    
    
    297
    
    
    
    223Stationery and supplies
    
    
    96
    
    
    
    81
    
    
    
    281
    
    
    
    225Professional services
    
    
    265
    
    
    
    67
    
    
    
    644
    
    
    
    281Data processing
    
    
    95
    
    
    
    82
    
    
    
    324
    
    
    
    229Other operating expenses
    
    
    322
    
    
    
    217
    
    
    
    1,002
    
    
    
    651Total non-interest expenses
    
    
    3,961
    
    
    
    2,755
    
    
    
    11,758
    
    
    
    8,394Income before income tax provision
    
    
    3,149
    
    
    
    2,125
    
    
    
    7,961
    
    
    
    6,005Income tax provision
    
    
    1,070
    
    
    
    723
    
    
    
    2,705
    
    
    
    2,039Net income
    
    $
    2,079
    
    
    $
    1,402
    
    
    $
    5,256
    
    
    $
    3,966Per share data:Net income  basic
    
    $
    0.41
    
    
    $
    0.31
    
    
    $
    1.03
    
    
    $
    1.04Net income  diluted
    
    $
    0.38
    
    
    $
    0.28
    
    
    $
    0.97
    
    
    $
    0.95Weighted average number of shares outstanding  basic
    
    
    5,109,849
    
    
    
    4,584,016
    
    
    
    5,079,869
    
    
    
    3,818,406Weighted average number of shares outstanding  diluted
    
    
    5,432,016
    
    
    
    4,963,943
    
    
    
    5,424,350
    
    
    
    4,191,238
  5




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##### 



DEARBORN BANCORP, INC. AND SUBSIDIARY
 CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (unaudited)
 Three Months Ended
    
    
    Nine Months Ended(In thousands)
    
    09/30/05
    
    
    09/30/04
    
    
    09/30/05
    
    
    09/30/04Net income
    
    $
    2,079
    
    
    $
    1,402
    
    
    $
    5,256
    
    
    $
    3,966Other comprehensive income (loss), net of taxUnrealized gains (losses) on securitiesUnrealized holding gains (losses) arising
during period
    
    
    (42
    )
    
    
    (552
    )
    
    
    191
    
    
    
    (886
    )Less: reclassification adjustment for losses
included in net income
    
    
    44
    
    
    
    
    
    
    
    740
    
    
    
    Tax effects
    
    
    (2
    )
    
    
    187
    
    
    
    (317
    )
    
    
    301Other comprehensive income (loss)
    
    
    
    
    
    
    (365
    )
    
    
    614
    
    
    
    (585
    )Comprehensive income
    
    $
    2,079
    
    
    $
    1,037
    
    
    $
    5,870
    
    
    $
    3,381
  6




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##### 



DEARBORN BANCORP, INC. AND SUBSIDIARY
 CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)
 Nine Months Ended(In thousands)
    
    9/30/05
    
    
    9/30/04Cash flows from operating activitiesInterest and fees received
    
    $
    31,437
    
    
    $
    20,447Interest paid
    
    
    (9,707
    )
    
    
    (5,965
    )Taxes paid
    
    
    (2,380
    )
    
    
    (1,500
    )Proceeds from sale of mortgages held for sale
    
    
    26,390
    
    
    
    32,667Origination of mortgages held for sale
    
    
    (26,936
    )
    
    
    (32,343
    )Cash paid to suppliers and employees
    
    
    (13,003
    )
    
    
    (8,243
    )Net cash provided by operating activities
    
    
    5,801
    
    
    
    5,063Cash flows from investing activitiesProceeds from maturities of securities available for sale
    
    
    7,200
    
    
    
    11,000Proceeds from call of securities available for sale
    
    
    
    
    
    
    325Proceeds from sales of securities available for sale
    
    
    4,000
    
    
    
    5,884Proceeds from repayments of securities available for sale
    
    
    209
    
    
    
    326Purchases of securities available for sale
    
    
    (3,535
    )
    
    
    (40,949
    )Purchases of Federal Home Loan Bank stock
    
    
    (171
    )
    
    
    (38
    )Increase in loans, net of payments received
    
    
    (57,559
    )
    
    
    (73,153
    )Purchases of property and equipment
    
    
    (1,691
    )
    
    
    (5,812
    )Net cash used in investing activities
    
    
    (51,547
    )
    
    
    (102,417
    )Cash flows from financing activitiesNet increase in non-interest bearing deposits
    
    
    (2,843
    )
    
    
    6,055Net increase in interest bearing deposits
    
    
    35,917
    
    
    
    83,340Increase (decrease) in federal funds purchased
    
    
    4,500
    
    
    
    Net increase of Federal Home Loan Bank advances
    
    
    4,974
    
    
    
    (24
    )Net decrease in other borrowings
    
    
    (1,754
    )
    
    
    Issuance of common stock
    
    
    28
    
    
    
    34,038Stock option exercise
    
    
    736
    
    
    
    376Net cash provided by financing activities
    
    
    41,558
    
    
    
    123,785Decrease in cash and cash equivalents
    
    
    (4,188
    )
    
    
    26,431Cash and cash equivalents at the beginning of the period
    
    
    20,869
    
    
    
    21,148Cash and cash equivalents at the end of the period
    
    $
    16,681
    
    
    $
    47,579Reconciliation of net income to net cash provided by operating activitiesNet income
    
    $
    5,256
    
    
    $
    3,966Adjustments to reconcile net income to net cash provided by
operating activitiesProvision for loan losses
    
    
    991
    
    
    
    874Depreciation and amortization expense
    
    
    714
    
    
    
    379Accretion of discount on investment securities
    
    
    (30
    )
    
    
    (53
    )Amortization of premium on investment securities
    
    
    25
    
    
    
    12Increase in mortgages held for sale
    
    
    (1,005
    )
    
    
    (28
    )Increase in interest receivable
    
    
    (125
    )
    
    
    (187
    )Increase in interest payable
    
    
    400
    
    
    
    174Increase in other assets
    
    
    (331
    )
    
    
    (751
    )Net change in other liabilities
    
    
    (94
    )
    
    
    677Net cash provided by operating activities
    
    $
    5,801
    
    
    $
    5,063
  7




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##### 



A.
    
    Accounting and Reporting PoliciesThe consolidated financial statements of Dearborn Bancorp, Inc. (the Corporation) include
the consolidation of its only subsidiary, Community Bank of Dearborn (the Bank). The
accounting and reporting policies of the Corporation are in accordance with accounting
principles generally accepted in the United States of America and conform to practice
within the banking industry.The consolidated financial statements of the Corporation as of September 30, 2005 and 2004,
and December 31, 2004 and for the three and nine month periods ended September 30, 2005 and
2004 reflect all adjustments, consisting of normal recurring items which are in the opinion
of management, necessary for a fair presentation of the results for the interim period.
The operating results for the quarter are not necessarily indicative of results of
operations for the entire year.The consolidated financial statements as of September 30, 2005 and 2004, and for the three
and nine months ended September 30, 2005 and 2004 included herein have been prepared by the
Corporation, without an audit, pursuant to the rules and regulations of the Securities and
Exchange Commission. Certain information and footnote disclosures normally included in
interim financial statements prepared in accordance with accounting principles generally
accepted in the United States of America have been condensed or omitted pursuant to such
rules and regulations. These financial statements should be read in conjunction with the
financial statements and notes thereon included in the Corporations 2004 Annual Report to
Stockholders on Form 10-K.Certain of the Corporations accounting policies are important to the portrayal of the
Corporations financial condition, since they require management to make difficult, complex
or subjective judgments, some of which may relate to matters that are inherently uncertain.
Estimates associated with these policies are susceptible to material changes as a result
of changes in facts and circumstances. Facts and circumstances which could affect these
material judgments include, but without limitation, changes in interest rates, in the
performance of the economy or in the financial condition of borrowers. Management believes
that its critical accounting policies include determining the allowance for loan losses,
determining the fair value of securities and other financial instruments and assessing
other than temporary impairments of securities.Basic income per share is based on weighted average common shares outstanding during the
period. Diluted income per share includes the dilutive effect of additional potential
common shares issuable under stock options.
 8




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##### 



A.
    
    Accounting and Reporting Policies (continued)Employee compensation expense under stock option plans is reported using the intrinsic
value method. No stock-based compensation cost is reflected in net income, as all options
granted had an exercise price equal to or greater than the market price of the underlying
common stock at date of grant. The following table illustrates the effect on net income
and earnings per share if expense was measured using the fair value recognition provisions
of FASB Statement No. 123, Accounting for Stock-based Compensation (in thousands, except
share and per share data).
 Three Months Ended
    
    
    Nine Months Ended09/30/05
    
    
    09/30/04
    
    
    09/30/05
    
    
    09/30/04Net incomeAs reported
    
    $
    2,079
    
    
    $
    1,402
    
    
    $
    5,256
    
    
    $
    3,966Less: stock-based compensation expense
determined under fair value based
method
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    9Pro forma
    
    $
    2,079
    
    
    $
    1,402
    
    
    $
    5,256
    
    
    $
    3,957Basic income per shareAs reported
    
    $
    0.41
    
    
    $
    0.31
    
    
    $
    1.03
    
    
    $
    1.04Pro forma
    
    $
    0.41
    
    
    $
    0.31
    
    
    $
    1.03
    
    
    $
    1.04Diluted income per shareAs reported
    
    $
    0.38
    
    
    $
    0.28
    
    
    $
    0.97
    
    
    $
    0.95Pro forma
    
    $
    0.38
    
    
    $
    0.28
    
    
    $
    0.97
    
    
    $
    0.94
 No options were granted during the nine months ended
September 30, 2004 or 2005.
 9




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##### 



B.
    
    New Accounting PronouncementsFAS 123, Revised, requires companies to record compensation cost for stock options provided
to employees in return for employment service. The cost is measured at fair value of the
options when granted, and this cost is expensed over the employment service period, which is
normally the vesting period of the options. This will apply to awards granted or modified
in 2006. Compensation cost will also be recorded for prior option grants that vest after
the date of adoption. The effect on results of operations will depend on the level of
future option grants and the calculation of the fair value of the options granted at such
future date, as well as the vesting periods provided, and so cannot currently be predicted.
As of September 30, 2005, there have been no options granted in 2005. There will be no
significant effect on financial position as total equity will not change.C.
    
    Securities Available For SaleThe amortized cost and estimated market value of securities available for
sale are as follows (in thousands):
 September 30, 2005Gross
    
    
    Gross
    
    
    EstimatedAmortized
    
    
    Unrealized
    
    
    Unrealized
    
    
    FairCost
    
    
    Gains
    
    
    Losses
    
    
    ValueUS Treasury securities
    
    $
    11,700
    
    
    $
    
    
    
    ($
    75
    )
    
    $
    11,625Mortgage backed securities
    
    
    618
    
    
    
    9
    
    
    
    
    
    
    
    627Corporate debt securities
    
    
    1,885
    
    
    
    
    
    
    
    
    
    
    
    1,885Totals
    
    $
    14,203
    
    
    $
    9
    
    
    ($
    75
    )
    
    $
    14,137December 31, 2004Gross
    
    
    Gross
    
    
    EstimatedAmortized
    
    
    Unrealized
    
    
    Unrealized
    
    
    FairCost
    
    
    Gains
    
    
    Losses
    
    
    ValueUS Treasury securities
    
    $
    15,696
    
    
    $
    
    
    
    ($
    62
    )
    
    $
    15,634Mortgage backed securities
    
    
    826
    
    
    
    25
    
    
    
    
    
    
    
    851Corporate debt securities
    
    
    1,550
    
    
    
    
    
    
    
    
    
    
    
    1,550FHLMC preferred stock
    
    
    4,000
    
    
    
    
    
    
    
    (960
    )
    
    
    3,040Totals
    
    $
    22,072
    
    
    $
    25
    
    
    ($
    1,022
    )
    
    $
    21,075
 10




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##### 



The amortized cost and estimated market value of securities available for sale at
September 30, 2005 by contractual maturity are shown below (in thousands):
 EstimatedAmortized
    
    
    FairCost
    
    
    ValueDue in three months or less
    
    $
    3,001
    
    
    $
    2,993Due in three months through one year
    
    
    7,696
    
    
    
    7,645Due in over one year through five years
    
    
    1,003
    
    
    
    987Due in over five years
    
    
    1,885
    
    
    
    1,885Mortgage backed securities
    
    
    618
    
    
    
    627Totals
    
    $
    14,203
    
    
    $
    14,137
 The entire portfolio has a net unrealized loss of $66,000 at September 30, 2005. The
Corporation had US treasury securities with unrealized losses of $75,000 at September 30,
2005. As of September 30, 2005, these securities have a fair value of $12,775,000 and have
been in a continuous loss position for less than 12 months.Unrealized losses on these securities have not been recognized into income because these
securities are of high credit quality, management has the intent and ability to hold these
securities for the foreseeable future, and the decline in fair value is largely due to
changes in interest rates. The fair value is expected to recover as the securities approach
their maturity date or reset date.The Corporation does not hold any securities in the Held to Maturity category nor does the
Corporation hold or utilize derivatives.The Corporation recorded an Other Than Temporary Impairment Loss on an investment in FHLMC
Preferred Stock in the amount of $696,000 during the second quarter of 2005. This security
was sold on July 22, 2005. As a result of the sale of this security, the Corporation
recognized a loss on the sale of securities, available for sale of $44,000 during the third
quarter of 2005. Please refer to the discussion of Other Than Temporary Impairment Loss
in Managements Discussion and Analysis of Financial Condition and Statement of Operations
for additional information.
 11




---



##### 



D.
    
    Stock Incentive PlansStock Option PlanOptions to buy common stock are granted to officers and employees under a Stock Option Plan
which provided for the issue of up to 775,674 shares. There are no shares available for
additional grant under this plan. Exercise price is the market price at date of grant. The
maximum option term is ten years, and options vest fully after six months from the date of
grant.A summary of the option activity for the nine months ended September 30, 2005 is as follows:
 WeightedAvailable
    
    
    
    
    
    
    Averagefor
    
    
    Options
    
    
    ExerciseGrant
    
    
    Outstanding
    
    
    PriceOutstanding at January 1, 2005
    
    
    
    
    
    
    567,502
    
    
    $
    8.75Exercised
    
    
    
    
    
    
    (102,880
    )
    
    
    8.14Outstanding at September 30, 2005
    
    
    
    
    
    
    464,622
    
    
    $
    8.88
 For the options outstanding at September 30, 2005, the range of exercise prices was
$4.39 to $16.96 per share with a weighted-average remaining contractual term of 5.6 years.
At September 30, 2005, 464,622 options were exercisable at weighted average exercise price
of $8.88 per share. Since all shares authorized for issuance under the Stock Option Plan
have been granted, all future awards will be made under the Long-Term Incentive Plan.Long-Term Incentive PlanThe Corporations 2005 Long-Term Incentive Plan (2005 Plan) was approved by the Board
of Directors on April 12, 2005 and subsequently by the shareholders of the Corporation at
the annual meeting on May 17, 2005. The 2005 Plan will be administered by the Compensation
Committee of the Board of Directors and may grant awards in the form of incentive stock
options, non-qualified stock options, restricted shares, restricted share units, performance
 shares and/or performance share units. The maximum number of shares available under the
2005 Plan is 300,000.As of September 30, 2005, there have been no grants under the 2005 Plan.
 12




---



##### 



E.
    
    AcquisitionOn October 29, 2004, the Corporation acquired the Bank of Washtenaw (Washtenaw), a wholly
owned subsidiary of Pavillion Bancorp, Inc. for $15,100,000 in cash. The assets and
liabilities of the Bank of Washtenaw at acquisition and net income derived from those
assets and liabilities since the acquisition have been consolidated into the Bank.
Washtenaw, which was founded in January 2001, has an office in Saline, Michigan and two
offices in Ann Arbor, Michigan. As of October 29, 2004, Washtenaw had total assets of
$85,500,000, gross loans of $67,100,000 and total deposits of $66,100,000.The acquisition has been accounted for using the purchase method of accounting, and
accordingly, the purchase price has been allocated to the tangible and identified
intangible assets purchased and the liabilities assumed based upon the estimated fair
values at the date of acquisition. Identified intangible assets and purchase accounting
fair value adjustments are being amortized under various methods over the expected lives of
the corresponding assets and liabilities. Goodwill will not be amortized, but will be
reviewed for impairment on an annual basis. Goodwill and other intangible assets are tax
deductible over 15 years. During the third quarter of 2005, we completed our analysis of
intangible assets. A business relationship intangible of $1,620,000 was identified and
separated from goodwill. This intangible asset is being amortized over its estimated life
of 17 years. Currently, identified intangible assets subject to amortization are
$2,368,000. Goodwill aggregates to $5,473,000.The consolidated statements of income reflect the operating results of Washtenaw since the
effective date of the acquisition. The following table presents pro forma information for
the Corporation including the acquisition of Bank of Washtenaw for the nine months ended
September 30, 2004, as if the acquisition had occurred at the beginning of 2004.
 Nine Months Ended(In thousands, except share and per share data)
    
    9/30/2004Interest income
    
    $
    24,051Interest expense
    
    
    7,419Net interest income
    
    
    16,632Provision for loan loss
    
    
    889Net interest income after provision for loan losses
    
    
    15,743Non-interest income
    
    
    1,172Non-interest expense
    
    
    10,343Income before income tax provision
    
    
    6,572Income tax provision
    
    
    2,216Net income
    
    $
    4,356Basic earnings per share
    
    $
    1.14Diluted earnings per share
    
    $
    1.04
 13




---



##### 



PART I    FINANCIAL INFORMATION
 ITEM 2.  
    
    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
    14




---



##### 



General
  Date Opened
    
    Location
    
    Type of officeFebruary 1994
    
    22290 Michigan Avenue
    
    Full service retail branch with ATMDearborn, Michigan 48124December 1995
    
    24935 West Warren Avenue
    
    Full service retail branchDearborn Heights, Michigan 48127August 1997
    
    44623 Five Mile Road
    
    Full service retail branch with ATMPlymouth, Michigan 48170May 2001
    
    1325 North Canton Center Road
    
    Full service retail branch with ATMCanton, Michigan 48187December 2001
    
    45000 River Ridge Drive
    
    Regional lending centerClinton Township, Michigan 48038November 2002
    
    19100 Hall Road
    
    Full service retail branch with ATMClinton Township, Michigan 48038February 2003
    
    12820 Fort Street
    
    Full service retail branch with ATMSouthgate, Michigan 48195May 2003
    
    3201 University Drive, Suite 180
    
    Full service retail branchAuburn Hills, Michigan 48326October 2004
    
    450 East Michigan Avenue
    
    Full service retail branch with ATMSaline, MI 48176October 2004
    
    250 West Eisenhower Parkway
    
    Full service retail branch with ATMAnn Arbor, MI 48103
    
    Regional lending centerOctober 2004
    
    2180 West Stadium Blvd.
    
    Full service retail branch with ATMAnn Arbor, MI 48103December 2004
    
    1360 Porter Street
    
    Loan production officeDearborn, MI 48124
    
    Regional lending center
  Date Formed
    
    Name
    
    Services OfferedAugust 1997
    
    Community Bank Insurance Agency, Inc.
    
    Limited insurance related activitiesMay 2001
    
    Community Bank Mortgage, Inc.
    
    Origination of commercial andresidential mortgage loansMarch 2002
    
    Community Bank Audit Services, Inc.
    
    Internal auditing and complianceservices for financial institutions
 15




---



##### 



Results of Operations
  Net Interest Income
 2005 Compared to 2004.
 Average Balances, Interest Rates and Yields.
 16




---



##### 



Three months ended September 30,
    
    
    Three months ended September 30,2005
    
    
    2004Average
    
    
    
    
    
    
    Average
    
    
    Average
    
    
    
    
    
    
    Average(In thousands)
    
    Balance
    
    
    Interest
    
    
    Rate
    
    
    Balance
    
    
    Interest
    
    
    RateAssetsInterest-bearing deposits with banks
    
    $
    2,036
    
    
    $
    16
    
    
    
    3.12
    %
    
    $
    21,945
    
    
    $
    80
    
    
    
    1.45
    %Federal funds sold
    
    
    7,013
    
    
    
    60
    
    
    
    3.39
    %
    
    
    12,160
    
    
    
    49
    
    
    
    1.60
    %Securities, available for sale
    
    
    17,838
    
    
    
    125
    
    
    
    2.78
    %
    
    
    32,214
    
    
    
    155
    
    
    
    1.91
    %Loans
    
    
    638,699
    
    
    
    11,133
    
    
    
    6.92
    %
    
    
    454,652
    
    
    
    7,142
    
    
    
    6.25
    %Sub-total earning assets
    
    
    665,586
    
    
    
    11,334
    
    
    
    6.76
    %
    
    
    520,971
    
    
    
    7,426
    
    
    
    5.67
    %Other assets
    
    
    31,312
    
    
    
    
    
    
    
    
    
    
    
    18,235Total assets
    
    $
    696,898
    
    
    
    
    
    
    
    
    
    
    $
    539,206Liabilities and stockholders equityInterest bearing deposits
    
    $
    507,529
    
    
    $
    3,730
    
    
    
    2.92
    %
    
    $
    400,265
    
    
    $
    2,080
    
    
    
    2.07
    %Other borrowings
    
    
    38,145
    
    
    
    551
    
    
    
    5.73
    %
    
    
    30,634
    
    
    
    343
    
    
    
    4.45
    %Sub-total interest bearing liabilities
    
    
    545,674
    
    
    
    4,281
    
    
    
    3.11
    %
    
    
    430,899
    
    
    
    2,423
    
    
    
    2.24
    %Non-interest bearing deposits
    
    
    62,494
    
    
    
    
    
    
    
    
    
    
    
    43,553Other liabilities
    
    
    2,413
    
    
    
    
    
    
    
    
    
    
    
    1,711Stockholders equity
    
    
    80,712
    
    
    
    
    
    
    
    
    
    
    
    63,043Total liabilities and stockholders equity
    
    $
    696,898
    
    
    
    
    
    
    
    
    
    
    $
    539,206Net interest income
    
    
    
    
    
    $
    7,053
    
    
    
    
    
    
    
    
    
    
    $
    5,003Net interest rate spread
    
    
    
    
    
    
    
    
    
    
    3.65
    %
    
    
    
    
    
    
    
    
    
    
    3.43
    %Net interest margin on earning assets
    
    
    
    
    
    
    
    
    
    
    4.20
    %
    
    
    
    
    
    
    
    
    
    
    3.82
    %
 17




---



##### 



Nine months ended September 30,
    
    
    Nine months ended September 30,2005
    
    
    2004Average
    
    
    
    
    
    
    Average
    
    
    Average
    
    
    
    
    
    
    Average(In thousands)
    
    Balance
    
    
    Interest
    
    
    Rate
    
    
    Balance
    
    
    Interest
    
    
    RateAssetsInterest-bearing deposits with banks
    
    $
    4,506
    
    
    $
    99
    
    
    
    2.94
    %
    
    $
    9,842
    
    
    $
    97
    
    
    
    1.32
    %Federal funds sold
    
    
    8,516
    
    
    
    187
    
    
    
    2.94
    %
    
    
    9,511
    
    
    
    87
    
    
    
    1.22
    %Investment securities, available for sale
    
    
    20,123
    
    
    
    425
    
    
    
    2.82
    %
    
    
    20,978
    
    
    
    293
    
    
    
    1.87
    %Loans
    
    
    621,286
    
    
    
    31,153
    
    
    
    6.70
    %
    
    
    431,617
    
    
    
    20,296
    
    
    
    6.28
    %Sub-total earning assets
    
    
    654,431
    
    
    
    31,864
    
    
    
    6.51
    %
    
    
    471,948
    
    
    
    20,773
    
    
    
    5.88
    %Other assets
    
    
    32,759
    
    
    
    
    
    
    
    
    
    
    
    16,929Total assets
    
    $
    687,190
    
    
    
    
    
    
    
    
    
    
    $
    488,877Liabilities and stockholders equityInterest bearing deposits
    
    $
    501,985
    
    
    $
    10,107
    
    
    
    2.69
    %
    
    $
    371,193
    
    
    $
    5,443
    
    
    
    1.96
    %Other borrowings
    
    
    41,643
    
    
    
    1,459
    
    
    
    4.68
    %
    
    
    30,636
    
    
    
    1,028
    
    
    
    4.48
    %Sub-total interest bearing liabilities
    
    
    543,628
    
    
    
    11,566
    
    
    
    2.84
    %
    
    
    401,829
    
    
    
    6,471
    
    
    
    2.15
    %Non-interest bearing deposits
    
    
    63,052
    
    
    
    
    
    
    
    
    
    
    
    40,559Other liabilities
    
    
    2,168
    
    
    
    
    
    
    
    
    
    
    
    1,229Stockholders equity
    
    
    78,342
    
    
    
    
    
    
    
    
    
    
    
    45,260Total liabilities and stockholders equity
    
    $
    687,190
    
    
    
    
    
    
    
    
    
    
    $
    488,877Net interest income
    
    
    
    
    
    $
    20,298
    
    
    
    
    
    
    
    
    
    
    $
    14,302Net interest rate spread
    
    
    
    
    
    
    
    
    
    
    3.67
    %
    
    
    
    
    
    
    
    
    
    
    3.73
    %Net interest margin on earning assets
    
    
    
    
    
    
    
    
    
    
    4.15
    %
    
    
    
    
    
    
    
    
    
    
    4.05
    %
 18




---



##### 



Rate/Volume Analysis.
 Three Months Ended
    
    
    
    
    
    
    
    
    
    
    Nine Months Ended2005/2004
    
    
    2005/2004Change in Interest Due to:
    
    
    Change in Interest Due to:Average
    
    
    Average
    
    
    Net
    
    
    Average
    
    
    Average
    
    
    Net(In thousands)
    
    Balance
    
    
    Rate
    
    
    Change
    
    
    Balance
    
    
    Rate
    
    
    ChangeAssetsInterest bearing deposits with banks
    
    ($
    155
    )
    
    $
    91
    
    
    ($
    64
    )
    
    ($
    78
    )
    
    $
    80
    
    
    $
    2Federal funds sold
    
    
    (43
    )
    
    
    54
    
    
    
    11
    
    
    
    18
    
    
    
    82
    
    
    
    100Securities, available for sale
    
    
    (100
    )
    
    
    70
    
    
    
    (30
    )
    
    
    29
    
    
    
    103
    
    
    
    132Loans
    
    
    3,234
    
    
    
    757
    
    
    
    3,991
    
    
    
    9,943
    
    
    
    914
    
    
    
    10,857Total earning assets
    
    $
    2,935
    
    
    $
    973
    
    
    $
    3,908
    
    
    $
    9,913
    
    
    $
    1,178
    
    
    $
    11,091LiabilitiesInterest bearing deposits
    
    $
    801
    
    
    $
    849
    
    
    $
    1,650
    
    
    $
    3,303
    
    
    $
    1,361
    
    
    $
    4,664Other borrowings
    
    
    
    
    
    
    98
    
    
    
    208
    
    
    
    
    
    
    
    31
    
    
    
    431Total interest bearing liabilities
    
    $
    801
    
    
    $
    947
    
    
    $
    1,858
    
    
    $
    3,303
    
    
    $
    1,392
    
    
    $
    5,095Net interest income
    
    
    
    
    
    
    
    
    
    $
    2,050
    
    
    
    
    
    
    
    
    
    
    $
    5,996Net interest rate spread
    
    
    
    
    
    
    
    
    
    
    0.21
    %
    
    
    
    
    
    
    
    
    
    
    (0.06
    %)Net interest margin on earning assets
    
    
    
    
    
    
    
    
    
    
    0.38
    %
    
    
    
    
    
    
    
    
    
    
    0.10
    %
 Provision for Loan Losses
 2005 Compared to 2004.
 19




---



##### 



Other Than Temporary Impairment of Securities
    Market ValueRate
    
    (per share)3/23/2001
    
    
    4.50
    %
    
    $
    50.004/1/2002
    
    
    2.82
    %
    
    $
    50.004/1/2003
    
    
    1.14
    %
    
    $
    50.004/1/2004
    
    
    1.14
    %
    
    $
    46.256/30/2004
    
    
    1.14
    %
    
    $
    46.059/30/2004
    
    
    1.14
    %
    
    $
    39.0012/31/2004
    
    
    1.14
    %
    
    $
    38.003/31/2005
    
    
    1.14
    %
    
    $
    42.756/30/2005
    
    
    3.64
    %
    
    $
    41.30
  20




---



##### 



Non-interest Income
 2005 Compared to 2004.
 21




---



##### 



Non-interest Expense
 2005 Compared to 2004.
  Income Tax Provision
 2005 Compared to 2004.
 22




---



##### 



Comparison of Financial Condition at September 30, 2005 and December 31, 2004
 Assets.
 Federal Funds Sold.
 Interest bearing deposits with banks.
 Mortgage Loans Held for Sale.
 Securities, Available for Sale.
  Federal Home Loan Bank Stock.
 23




---



##### 



Loans.
 9/30/05
    
    
    12/31/04
    
    
    9/30/04Consumer loans
    
    $
    38,146
    
    
    $
    42,149
    
    
    $
    27,199Commercial, financial, & other
    
    
    128,996
    
    
    
    129,103
    
    
    
    87,912Commercial real estate construction
    
    
    97,924
    
    
    
    72,286
    
    
    
    57,098Commercial real estate mortgages
    
    
    334,660
    
    
    
    296,934
    
    
    
    255,378Residential real estate mortgages
    
    
    45,277
    
    
    
    47,090
    
    
    
    46,524645,003
    
    
    
    587,562
    
    
    
    474,111Allowance for loan losses
    
    
    (6,757
    )
    
    
    (5,884
    )
    
    
    (5,188
    )$
    638,246
    
    
    $
    581,678
    
    
    $
    468,923
  9/30/05
    
    
    12/31/04
    
    
    9/30/04Over 90 days past due and still accruing
    
    $
    62
    
    
    $
    143
    
    
    $
    4Non-accrual loans
    
    
    944
    
    
    
    2,956
    
    
    
    1,542Real estate owned
    
    
    661
    
    
    
    136
    
    
    
    357Other repossessed assets
    
    
    
    
    
    
    2
    
    
    
    $
    1,667
    
    
    $
    3,237
    
    
    $
    1,903
  Number ofLoans
    
    BalanceConsumer loans
    
    
    1
    
    
    $
    25Commercial, financial, & other
    
    
    3
    
    
    
    449Commercial real estate construction
    
    
    
    
    
    
    Commercial real estate mortgages
    
    
    4
    
    
    
    234Residential real estate mortgages
    
    
    3
    
    
    
    236Total non-accrual loans
    
    
    11
    
    
    $
    944
 24




---



##### 



Allowance for Loan Losses.
  Nine Months Ended
    
    
    Year Ended
    
    
    Nine Months Ended9/30/05
    
    
    12/31/04
    
    
    9/30/04Balance, beginning of year
    
    $
    5,884
    
    
    $
    4,314
    
    
    $
    4,314Allowance on loans acquired
    
    
    
    
    
    
    184
    
    
    
    Charge-offs:Consumer loans
    
    
    105
    
    
    
    31
    
    
    
    19Commercial, financial & other
    
    
    122
    
    
    
    
    
    
    
    Commercial real estate construction
    
    
    
    
    
    
    
    
    
    
    Commercial real estate mortgages
    
    
    86
    
    
    
    100
    
    
    
    Residential real estate mortgages
    
    
    
    
    
    
    
    
    
    
    94Recoveries:Consumer loans
    
    
    27
    
    
    
    13
    
    
    
    12Commercial, financial & other
    
    
    127
    
    
    
    104
    
    
    
    41Commercial real estate construction
    
    
    
    
    
    
    
    
    
    
    Commercial real estate mortgages
    
    
    9
    
    
    
    
    
    
    
    61Residential real estate mortgages
    
    
    32
    
    
    
    
    
    
    
    Net charge-offs (recoveries)
    
    
    118
    
    
    
    14
    
    
    
    (1
    )Additions charged to operations
    
    
    991
    
    
    
    1,400
    
    
    
    873Balance, end of period
    
    $
    6,757
    
    
    $
    5,884
    
    
    $
    5,188Allowance to total loans
    
    
    1.05
    %
    
    
    1.00
    %
    
    
    1.09
    %Allowance to nonperforming assets
    
    
    409.02
    %
    
    
    181.77
    %
    
    
    272.62
    %Net charge-offs/(recoveries)
to average loans
    
    
    0.02
    %
    
    
    0.00
    %
    
    
    0.00
    %
 Premises and Equipment.
 25




---



##### 



Real estate owned.
 Goodwill and other intangible assets.
  Accrued Interest Receivable.
 Other Assets
 26




---



##### 



Deposits.
 9/30/05
    
    
    12/31/04
    
    
    9/30/04Non-interest bearing:Demand
    
    $
    60,222
    
    
    $
    63,065
    
    
    $
    45,136Interest bearing:Checking
    
    $
    15,286
    
    
    $
    15,400
    
    
    $
    14,988Money market
    
    
    38,118
    
    
    
    54,957
    
    
    
    34,336Savings
    
    
    74,687
    
    
    
    83,773
    
    
    
    91,611Time, under $100,000
    
    
    140,639
    
    
    
    124,448
    
    
    
    99,620Time, $100,000 and over
    
    
    245,002
    
    
    
    199,237
    
    
    
    183,323513,732
    
    
    
    477,815
    
    
    
    423,878Total deposits
    
    $
    573,954
    
    
    $
    540,880
    
    
    $
    469,014
   9/30/05
    
    
    12/31/04
    
    
    9/30/04Interest bearing checking
    
    $
    1,380
    
    
    $
    2,633
    
    
    $
    5,047Time, $100,000 and over
    
    
    81,264
    
    
    
    71,058
    
    
    
    77,044Total municipal deposits
    
    $
    82,644
    
    
    $
    73,691
    
    
    $
    82,091
 
 27




---



##### 



Federal Funds Purchased
 Securities Sold Under Agreement to Repurchase
 Federal Home Loan Bank Advances
 Accrued Interest Payable
 Other Liabilities
 Subordinated Debentures .
 28




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##### 



Capital
   MinimumTo Be Well CapitalizedMinimum for Capital
    
    
    Under Prompt CorrectiveActual
    
    
    Adequacy Purposes
    
    
    Action ProvisionsAmount
    
    
    Ratio
    
    
    Amount
    
    
    Ratio
    
    
    Amount
    
    
    RatioAs of September 30, 2005Total capital
(to risk weighted assets)Consolidated
    
    $
    90,430
    
    
    
    13.08
    %
    
    $
    55,294
    
    
    
    8.00
    %
    
    $
    69,117
    
    
    
    10.00
    %Bank
    
    
    73,337
    
    
    
    10.71
    %
    
    
    54,769
    
    
    
    8.00
    %
    
    
    68,462
    
    
    
    10.00
    %Tier 1 capital
(to risk weighted assets)Consolidated
    
    
    83,673
    
    
    
    12.11
    %
    
    
    27,647
    
    
    
    4.00
    %
    
    
    41,470
    
    
    
    6.00
    %Bank
    
    
    66,580
    
    
    
    9.73
    %
    
    
    27,385
    
    
    
    4.00
    %
    
    
    41,077
    
    
    
    6.00
    %Tier 1 capital
(to average assets)Consolidated
    
    
    83,673
    
    
    
    12.01
    %
    
    
    27,876
    
    
    
    4.00
    %
    
    
    34,845
    
    
    
    5.00
    %Bank
    
    
    66,580
    
    
    
    9.79
    %
    
    
    27,216
    
    
    
    4.00
    %
    
    
    34,020
    
    
    
    5.00
    %As of December 31, 2004Total capital
(to risk weighted assets)Consolidated
    
    $
    81,868
    
    
    
    13.27
    %
    
    $
    49,360
    
    
    
    8.00
    %
    
    $
    61,700
    
    
    
    10.00
    %Bank
    
    
    63,986
    
    
    
    10.47
    %
    
    
    48,913
    
    
    
    8.00
    %
    
    
    61,141
    
    
    
    10.00
    %Tier 1 capital
(to risk weighted assets)Consolidated
    
    
    75,984
    
    
    
    12.32
    %
    
    
    24,680
    
    
    
    4.00
    %
    
    
    37,020
    
    
    
    6.00
    %Bank
    
    
    58,102
    
    
    
    9.50
    %
    
    
    24,457
    
    
    
    4.00
    %
    
    
    36,685
    
    
    
    6.00
    %Tier 1 capital
(to average assets)Consolidated
    
    
    75,984
    
    
    
    12.12
    %
    
    
    25,079
    
    
    
    4.00
    %
    
    
    31,348
    
    
    
    5.00
    %Bank
    
    
    58,102
    
    
    
    9.78
    %
    
    
    23,765
    
    
    
    4.00
    %
    
    
    29,706
    
    
    
    5.00
    %
  29




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##### 



PART I    FINANCIAL INFORMATION
  Interest Rate Sensitivity Analysis.
   30




---



##### 



Interest Rate Sensitivity Period1-90
    
    
    91-365
    
    
    1-5
    
    
    Over(In thousands)
    
    Days
    
    
    Days
    
    
    Years
    
    
    5 Years
    
    
    TotalEarning assetsFederal funds sold
    
    $
    7,893
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    7,893Interest bearing deposits with Banks
    
    
    74
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    74Mortgage loans held for sale
    
    
    2,697
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,697Securities available for sale
    
    
    9,544
    
    
    
    3,001
    
    
    
    987
    
    
    
    605
    
    
    
    14,137Federal Home Loan Bank stock
    
    
    1,293
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,293Total loans, net of non-accrual
    
    
    294,890
    
    
    
    23,474
    
    
    
    300,846
    
    
    
    24,848
    
    
    
    644,058Total earning assets
    
    
    316,391
    
    
    
    26,475
    
    
    
    301,833
    
    
    
    25,453
    
    
    
    670,152Interest bearing liabilitiesTotal interest bearing deposits
    
    
    236,725
    
    
    
    160,698
    
    
    
    116,309
    
    
    
    
    
    
    
    513,732Federal funds purchased
    
    
    4,500
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,500Federal Home Loan Bank advances
    
    
    27
    
    
    
    20,561
    
    
    
    5,000
    
    
    
    
    
    
    
    25,588Other Borrowings
    
    
    2,361
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,361Trust preferred securities
    
    
    10,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    10,000Total interest bearing liabilities
    
    
    253,613
    
    
    
    181,259
    
    
    
    121,309
    
    
    
    
    
    
    
    556,181Net asset (liability) funding gap
    
    
    62,778
    
    
    
    (154,784
    )
    
    
    180,524
    
    
    
    25,453
    
    
    $
    113,971Cumulative net asset (liability) funding gap
    
    $
    62,778
    
    
    ($
    92,006
    )
    
    $
    88,518
    
    
    $
    113,971
 31




---



##### 



Liquidity.
   Payments Due By PeriodLess Than 1 Year
    
    
    1-3 Years
    
    
    3-5 Years
    
    
    Over 5 Years
    
    
    TotalSecurities sold under
agreements to repurchase
    
    $
    2,361
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    2,361Certificates of deposit
    
    
    269,332
    
    
    
    100,917
    
    
    
    15,392
    
    
    
    
    
    
    
    385,641Federal funds purchased
    
    
    4,500
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,500Long-term borrowings
    
    
    27
    
    
    
    20,561
    
    
    
    5,000
    
    
    
    
    
    
    
    25,588Lease commitments
    
    
    617
    
    
    
    970
    
    
    
    837
    
    
    
    324
    
    
    
    2,748Subordinated debentures
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    10,000
    
    
    
    10,000Totals
    
    $
    276,837
    
    
    $
    122,448
    
    
    $
    21,229
    
    
    $
    10,324
    
    
    $
    430,838
  Amount Of Commitment Expiration Per PeriodLess Than 1 Year
    
    
    1-3 Years
    
    
    3-5 Years
    
    
    Over 5 Years
    
    
    TotalUnused loan commitments
    
    $
    68,674
    
    
    $
    25,889
    
    
    $
    2,542
    
    
    $
    29,789
    
    
    $
    126,894Standby letters of credit
    
    
    1,032
    
    
    
    5,523
    
    
    
    992
    
    
    
    
    
    
    
    7,547Totals
    
    $
    69,706
    
    
    $
    31,412
    
    
    $
    3,534
    
    
    $
    29,789
    
    
    $
    134,441
 32




---



##### 



Item 4. Controls and Procedures
 Disclosure
Controls and Procedures 
 Internal
Controls Over Financial Reporting
 33




---



##### 



PART II    OTHER INFORMATION
  (a)
    
    Exhibits
 Exhibit 31.1
    
    
    CEO Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.Exhibit 31.2
    
    
    CFO Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.Exhibit 32.1
    
    
    CEO Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.Exhibit 32.2
    
    
    CFO Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
 (b)
    
    Two Form 8-K Reports, dated July 19, 2005 were filed during the quarter ended September 30,
2005.
 34




---



##### 



SIGNATURES
  
  
    
    
    35




---



##### 



Number
    
    DescriptionExhibit 31.1
    
    CEO Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.Exhibit 31.2
    
    CFO Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.Exhibit 32.1
    
    CEO Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.Exhibit 32.2
    
    CFO Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
 36