##### Table of Contents

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



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FORM 10-Q



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



For the quarterly period ended June 30, 2005



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: 333-124855



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CENTENNIAL BANK HOLDINGS, INC.

(Exact name of registrant as specified in its charter)



|                                                              |  |                                        
|------------------------------------------------------------- |  | ---------------------------------------
|DELAWARE                                                      |  | 41-2150446                             
|(State or other jurisdictionof incorporation or organization) |  | (I.R.S. Employer Identification Number)
|                                                              | 
|1331 Seventeenth St., Suite 300 Denver, CO                    |  | 80202                                  
|(Address of principal executive offices)                      |  | (Zip Code)                             



303-296-9600

(Registrants telephone number, including area code)



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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, as amended 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 ̈No x



Indicate by check mark whether
the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes ̈No x



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



As of August 31, 2005 there were 53,081,750 shares of the registrants
common stock outstanding, including 1,178,816 shares of unvested restricted stock.



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##### Table of Contents

TABLE OF CONTENTS



|                             |  |                                                                                       |  |     
|---------------------------- |  | ------------------------------------------------------------------------------------- |  | ----
|                             |  |                                                                                      
|                             |  |                                                                                       |  | Page
|                             | 
|PART IFINANCIAL INFORMATION |  | 3                                                                                    
|                             |  |                                                                                      
|ITEM 1.                      |  | Unaudited Consolidated Financial Statements                                           |  | 3   
|                             |  |                                                                                      
|                             |  | Unaudited Condensed Consolidated Balance Sheets                                       |  | 3   
|                             |  |                                                                                      
|                             |  | Unaudited Condensed Consolidated Statements of Income                                 |  | 5   
|                             |  |                                                                                      
|                             |  | Unaudited Condensed Consolidated Statements of Comprehensive Income                   |  | 6   
|                             |  |                                                                                      
|                             |  | Unaudited Condensed Consolidated Statements of Cash Flows                             |  | 7   
|                             |  |                                                                                      
|                             |  | Notes to Unaudited Condensed Consolidated Financial Statements                        |  | 8   
|                             |  |                                                                                      
|ITEM 2.                      |  | Managements Discussion and Analysis of Financial Condition and Results of Operations |  | 16  
|                             |  |                                                                                      
|ITEM 3.                      |  | Quantitative and Qualitative Disclosures About Market Risk                            |  | 32  
|                             |  |                                                                                      
|ITEM 4.                      |  | Controls and Procedures                                                               |  | 33  
|                             | 
|PART IIOTHER INFORMATION    |  | 34                                                                                   
|                             |  |                                                                                      
|ITEM 1.                      |  | Legal Proceedings                                                                     |  | 34  
|                             |  |                                                                                      
|ITEM 2.                      |  | Unregistered Sale of Equity Securities and Use of Proceeds                            |  | 34  
|                             |  |                                                                                      
|ITEM 3.                      |  | Defaults Upon Senior Securities                                                       |  | 34  
|                             |  |                                                                                      
|ITEM 4.                      |  | Submission of Matters to a Vote of Security Holders                                   |  | 35  
|                             |  |                                                                                      
|ITEM 5.                      |  | Other Information                                                                     |  | 35  
|                             |  |                                                                                      
|ITEM 6.                      |  | Exhibits                                                                              |  | 36  
|                             | 
|SIGNATURES                   |  | 37                                                                                   



2



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##### Table of Contents



PART IFINANCIAL INFORMATION



|ITEM 1. | Unaudited Consolidated Financial Statements
|------- | -------------------------------------------



CENTENNIAL BANK HOLDINGS, INC. AND SUBSIDIARIES

Consolidated Balance Sheets

Unaudited



|                                                                                                 |  |                |           |   |                  |           |  
|------------------------------------------------------------------------------------------------ |  | -------------- | --------- | - | ---------------- | --------- | -
|                                                                                                 |  | June 30,2005   |           |   | December 31,2004 |          
|                                                                                                 |  | (In thousands) |          
|Assets                                                                                           |  |                |           |   |                  |           |  
|Cash and due from banks                                                                          |  | $              | 67,177    |   |                  | 67,927    |  
|Federal funds sold                                                                               |  |                | 1,200     |   |                  | 23,000    |  
|                                                                                                 |  |                |           |   |                  |           |  
|Cash and cash equivalents                                                                        |  |                | 68,377    |   |                  | 90,927    |  
|                                                                                                 |  |                |           |   |                  |           |  
|Time deposits with banks                                                                         |  |                | 5,000     |   |                  | 5,000     |  
|Securities available for sale, at fair value                                                     |  |                | 132,018   |   |                  | 125,687   |  
|Securities held to maturity (fair value of $502 and $645 at June 30, 2005 and December 31, 2004) |  |                | 506       |   |                  | 640       |  
|Bank stocks, at cost                                                                             |  |                | 14,835    |   |                  | 12,770    |  
|Other investments                                                                                |  |                |          |   |                  | 1,405     |  
|                                                                                                 |  |                |           |   |                  |           |  
|Total investments                                                                                |  |                | 152,359   |   |                  | 145,502   |  
|                                                                                                 |  |                |           |   |                  |           |  
|Loans held for sale                                                                              |  |                | 6,030     |   |                  | 7,301     |  
|Loans, net of unearned discount                                                                  |  |                | 1,718,213 |   |                  | 1,641,821 |  
|Less allowance for loan losses                                                                   |  |                | (25,535   | ) |                  | (25,022   | )
|                                                                                                 |  |                |           |   |                  |           |  
|Net loans                                                                                        |  |                | 1,698,708 |   |                  | 1,624,100 |  
|                                                                                                 |  |                |           |   |                  |           |  
|Premises and equipment, net                                                                      |  |                | 47,416    |   |                  | 44,921    |  
|Foreclosed assets                                                                                |  |                | 4,438     |   |                  | 5,707     |  
|Accrued interest receivable                                                                      |  |                | 9,957     |   |                  | 9,062     |  
|Goodwill                                                                                         |  |                | 331,626   |   |                  | 328,185   |  
|Other intangible assets, net                                                                     |  |                | 47,056    |   |                  | 53,360    |  
|Other assets                                                                                     |  |                | 8,272     |   |                  | 7,795     |  
|Assets held for sale                                                                             |  |                | 93,633    |   |                  | 89,642    |  
|                                                                                                 |  |                |           |   |                  |           |  
|Total assets                                                                                     |  | $              | 2,461,842 |   |                  | 2,399,201 |  
|                                                                                                 |  |                |           |   |                  |           |  



See Notes to Unaudited Condensed Consolidated Financial Statements.



3



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##### Table of Contents



CENTENNIAL BANK HOLDINGS, INC. AND SUBSIDIARIES

Consolidated Balance Sheets

Unaudited



|                                                                                                                                                                                                           |  |                |           |   |                  |           |  
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | -------------- | --------- | - | ---------------- | --------- | -
|                                                                                                                                                                                                           |  | June 30,2005   |           |   | December 31,2004 |          
|                                                                                                                                                                                                           |  | (In thousands) |          
|Liabilities and Stockholders Equity                                                                                                                                                                       |  |                |           |   |                  |           |  
|Liabilities:                                                                                                                                                                                               |  |                |           |   |                  |           |  
|Deposits:                                                                                                                                                                                                  |  |                |           |   |                  |           |  
|Noninterest-bearing demand                                                                                                                                                                                 |  | $              | 483,921   |   |                  | 477,999   |  
|Interest-bearing demand                                                                                                                                                                                    |  |                | 519,098   |   |                  | 581,580   |  
|Savings                                                                                                                                                                                                    |  |                | 79,514    |   |                  | 81,725    |  
|Time                                                                                                                                                                                                       |  |                | 506,647   |   |                  | 537,195   |  
|                                                                                                                                                                                                           |  |                |           |   |                  |           |  
|Total deposits                                                                                                                                                                                             |  |                | 1,589,180 |   |                  | 1,678,499 |  
|                                                                                                                                                                                                           |  |               
|Securities sold under agreements to repurchase and federal fund purchases                                                                                                                                  |  |                | 53,797    |   |                  | 27,492    |  
|Accrued interest payable                                                                                                                                                                                   |  |                | 2,886     |   |                  | 2,313     |  
|Borrowings                                                                                                                                                                                                 |  |                | 159,441   |   |                  | 39,770    |  
|Subordinated debentures                                                                                                                                                                                    |  |                | 41,677    |   |                  | 42,079    |  
|Deferred tax liability, net                                                                                                                                                                                |  |                | 13,825    |   |                  | 12,076    |  
|Other liabilities                                                                                                                                                                                          |  |                | 8,778     |   |                  | 10,350    |  
|Liabilities associated with assets held for sale                                                                                                                                                           |  |                | 75,711    |   |                  | 71,208    |  
|                                                                                                                                                                                                           |  |                |           |   |                  |           |  
|Total liabilities                                                                                                                                                                                          |  |                | 1,945,295 |   |                  | 1,883,787 |  
|                                                                                                                                                                                                           |  |               
|Commitments and contingencies                                                                                                                                                                              |  |                |           |   |                  |           |  
|                                                                                                                                                                                                           |  |               
|Stockholders equity:                                                                                                                                                                                      |  |                |           |   |                  |           |  
|Common stock$.001 par value; 100,000,000 shares authorized, 52,333,334 shares issued at June 30, 2005 and December 31, 2004; 51,902,934
and 52,333,334 outstanding at June 30, 2005 and December 31, 2004 |  |                | 52        |   |                  | 52        |  
|Additional paid-in capital                                                                                                                                                                                 |  |                | 511,868   |   |                  | 511,588   |  
|Retained earnings                                                                                                                                                                                          |  |                | 8,483     |   |                  | 3,796     |  
|Accumulated other comprehensive income (loss)                                                                                                                                                              |  |                | 803       |   |                  | (22       | )
|                                                                                                                                                                                                           |  |                |           |   |                  |           |  
|                                                                                                                                                                                                           |  |                | 521,206   |   |                  | 515,414   |  
|Less cost of shares in treasury, 430,400 shares at June 30, 2005                                                                                                                                           |  |                | (4,659    | ) |                  |          |  
|                                                                                                                                                                                                           |  |                |           |   |                  |           |  
|Total stockholders equity                                                                                                                                                                                 |  |                | 516,547   |   |                  | 515,414   |  
|                                                                                                                                                                                                           |  |                |           |   |                  |           |  
|Total liabilities and stockholders equity                                                                                                                                                                 |  | $              | 2,461,842 |   |                  | 2,399,201 |  
|                                                                                                                                                                                                           |  |                |           |   |                  |           |  



See Notes to Unaudited Condensed Consolidated Financial Statements.



4



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##### Table of Contents

CENTENNIAL BANK HOLDINGS, INC.

AND SUBSIDIARIES



Consolidated Statements of Income

Unaudited



|                                                                     |  |                                       |            |   |                           |           |   |                  |   |            |                    |  |           |  
|-------------------------------------------------------------------- |  | ------------------------------------- | ---------- | - | ------------------------- | --------- | - | ---------------- | - | ---------- | ------------------ |  | --------- | -
|                                                                     |  | Three Months Ended June 30,           |            |   | Six Months Ended June 30, |          
|                                                                     |  | 2005 (Successor)                      |            |   | 2004 (Predecessor)        |           |   | 2005 (Successor) |   |            | 2004 (Predecessor) | 
|                                                                     |  | (In thousands, except per share data) |           
|Interest income:                                                     |  |                                       |            |   |                           |           |   |                  |   |            |                    |  |           |  
|Loans, including fees                                                |  | $                                     | 30,583     |   |                           | 10,326    |   |                  | $ | 59,080     |                    |  | 20,528    |  
|Investment securities:                                               |  |                                       |            |   |                           |           |   |                  |   |            |                    |  |           |  
|Taxable                                                              |  |                                       | 348        |   |                           | 223       |   |                  |   | 648        |                    |  | 443       |  
|Tax-exempt                                                           |  |                                       | 591        |   |                           | 5         |   |                  |   | 1,083      |                    |  | 10        |  
|Dividends                                                            |  |                                       | 199        |   |                           | 64        |   |                  |   | 369        |                    |  | 119       |  
|Federal funds sold and other                                         |  |                                       | 647        |   |                           | 11        |   |                  |   | 1,231      |                    |  | 22        |  
|                                                                     |  |                                       |            |   |                           |           |   |                  |   |            |                    |  |           |  
|Total interest income                                                |  |                                       | 32,368     |   |                           | 10,629    |   |                  |   | 62,411     |                    |  | 21,122    |  
|                                                                     |  |                                       |            |   |                           |           |   |                  |   |            |                    |  |           |  
|Interest expense:                                                    |  |                                       |            |   |                           |           |   |                  |   |            |                    |  |           |  
|Deposits                                                             |  |                                       | 4,765      |   |                           | 2,259     |   |                  |   | 8,393      |                    |  | 4,947     |  
|Federal funds purchased and repurchase agreements                    |  |                                       | 267        |   |                           | 22        |   |                  |   | 444        |                    |  | 46        |  
|Subordinated debentures                                              |  |                                       | 596        |   |                           | 174       |   |                  |   | 1,170      |                    |  | 318       |  
|Borrowings                                                           |  |                                       | 870        |   |                           | 546       |   |                  |   | 1,206      |                    |  | 961       |  
|                                                                     |  |                                       |            |   |                           |           |   |                  |   |            |                    |  |           |  
|Total interest expense                                               |  |                                       | 6,498      |   |                           | 3,001     |   |                  |   | 11,213     |                    |  | 6,272     |  
|                                                                     |  |                                       |            |   |                           |           |   |                  |   |            |                    |  |           |  
|Net interest income                                                  |  |                                       | 25,870     |   |                           | 7,628     |   |                  |   | 51,198     |                    |  | 14,850    |  
|Provision for loan losses                                            |  |                                       |           |   |                           | 600       |   |                  |   | 1,700      |                    |  | 1,000     |  
|                                                                     |  |                                       |            |   |                           |           |   |                  |   |            |                    |  |           |  
|Net interest income, after provision for loan losses                 |  |                                       | 25,870     |   |                           | 7,028     |   |                  |   | 49,498     |                    |  | 13,850    |  
|Noninterest income:                                                  |  |                                       |            |   |                           |           |   |                  |   |            |                    |  |           |  
|Customer service and other fees                                      |  |                                       | 1,993      |   |                           | 1,021     |   |                  |   | 3,922      |                    |  | 2,036     |  
|Gain (loss) on sale of securities                                    |  |                                       | (14        | ) |                           |          |   |                  |   | 9          |                    |  | (66       | )
|Gain on sale of loans                                                |  |                                       | 257        |   |                           |          |   |                  |   | 627        |                    |  |          |  
|Gain (loss) on sale of assets                                        |  |                                       | 95         |   |                           | (39       | ) |                  |   | 341        |                    |  | 26        |  
|Other                                                                |  |                                       | 8          |   |                           | 5         |   |                  |   | 18         |                    |  | 20        |  
|                                                                     |  |                                       |            |   |                           |           |   |                  |   |            |                    |  |           |  
|Total noninterest income                                             |  |                                       | 2,339      |   |                           | 987       |   |                  |   | 4,917      |                    |  | 2,016     |  
|Noninterest expense:                                                 |  |                                       |            |   |                           |           |   |                  |   |            |                    |  |           |  
|Salaries and employee benefits                                       |  |                                       | 5,609      |   |                           | 2,633     |   |                  |   | 20,396     |                    |  | 5,633     |  
|Occupancy expense                                                    |  |                                       | 1,660      |   |                           | 527       |   |                  |   | 3,288      |                    |  | 1,098     |  
|Furniture and equipment                                              |  |                                       | 881        |   |                           | 307       |   |                  |   | 1,666      |                    |  | 613       |  
|Amortization of intangible assets                                    |  |                                       | 3,095      |   |                           |          |   |                  |   | 6,189      |                    |  |          |  
|Merger, acquisition and transition expenses                          |  |                                       | 5,005      |   |                           |          |   |                  |   | 5,448      |                    |  |          |  
|Other general and administrative                                     |  |                                       | 4,967      |   |                           | 1,738     |   |                  |   | 9,213      |                    |  | 3,744     |  
|                                                                     |  |                                       |            |   |                           |           |   |                  |   |            |                    |  |           |  
|Total noninterest expense                                            |  |                                       | 21,217     |   |                           | 5,205     |   |                  |   | 46,200     |                    |  | 11,088    |  
|                                                                     |  |                                       |            |   |                           |           |   |                  |   |            |                    |  |           |  
|Income before income taxes                                           |  |                                       | 6,992      |   |                           | 2,810     |   |                  |   | 8,215      |                    |  | 4,778     |  
|Income tax expense                                                   |  |                                       | 2,431      |   |                           | 1,071     |   |                  |   | 2,734      |                    |  | 1,699     |  
|                                                                     |  |                                       |            |   |                           |           |   |                  |   |            |                    |  |           |  
|Income from continuing operations                                    |  |                                       | 4,561      |   |                           | 1,739     |   |                  |   | 5,481      |                    |  | 3,079     |  
|Loss on disposition of discontinued operations, net of tax (Note 10) |  |                                       | (1,244     | ) |                           |          |   |                  |   | (1,244     | )                  |  |          |  
|Income from discontinued operations, net of tax                      |  |                                       | 273        |   |                           |          |   |                  |   | 450        |                    |  |          |  
|                                                                     |  |                                       |            |   |                           |           |   |                  |   |            |                    |  |           |  
|Net income                                                           |  | $                                     | 3,590      |   |                           | 1,739     |   |                  | $ | 4,687      |                    |  | 3,079     |  
|                                                                     |  |                                       |            |   |                           |           |   |                  |   |            |                    |  |           |  
|Earnings per sharebasic:                                            |  |                                       |            |   |                           |           |   |                  |   |            |                    |  |           |  
|Income from continuing operations                                    |  | $                                     | 0.09       |   |                           | 1.12      |   |                  | $ | 0.10       |                    |  | 1.98      |  
|Income from discontinued operations, net of tax                      |  |                                       | (0.02      | ) |                           |          |   |                  |   | (0.01      | )                  |  |          |  
|Net income                                                           |  |                                       | 0.07       |   |                           | 1.12      |   |                  |   | 0.09       |                    |  | 1.98      |  
|Earnings per sharediluted:                                          |  |                                       |            |   |                           |           |   |                  |   |            |                    |  |           |  
|Income from continuing operations                                    |  | $                                     | 0.09       |   |                           | 1.10      |   |                  | $ | 0.10       |                    |  | 1.95      |  
|Income from discontinued operations, net of tax                      |  |                                       | (0.02      | ) |                           |          |   |                  |   | (0.01      | )                  |  |          |  
|Net income                                                           |  |                                       | 0.07       |   |                           | 1.10      |   |                  |   | 0.09       |                    |  | 1.95      |  
|Weighted average shares outstanding                                  |  |                                       | 52,179,857 |   |                           | 1,557,293 |   |                  |   | 52,256,172 |                    |  | 1,554,660 |  
|Fully diluted average shares outstanding                             |  |                                       | 52,179,857 |   |                           | 1,584,068 |   |                  |   | 52,256,172 |                    |  | 1,581,483 |  



See Notes to
Unaudited Condensed Consolidated Financial Statements.



5



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##### Table of Contents



CENTENNIAL BANK HOLDINGS, INC.

AND SUBSIDIARIES



Consolidated Statements of Comprehensive Income

Unaudited



|                                                               |  |                             |       |                    |                           |   |                  |       |                    |       |  
|-------------------------------------------------------------- |  | --------------------------- | ----- | ------------------ | ------------------------- | - | ---------------- | ----- | ------------------ | ----- | -
|                                                               |  | Three Months Ended June 30, |       |                    | Six Months Ended June 30, |  
|                                                               |  | 2005 (Successor)            |       | 2004 (Predecessor) |                           |   | 2005 (Successor) |       | 2004 (Predecessor) |      
|Net income                                                     |  | $                           | 3,590 |                    | 1,739                     |   |                  | 4,687 |                    | 3,079 |  
|Other comprehensive income (loss), net of tax                  |  |                             |       |                    |                           |   |                  |       |                    |       |  
|Change in net unrealized loss on securities available for sale |  |                             | 538   |                    | (305                      | ) |                  | 825   |                    | (224  | )
|                                                               |  |                             |       |                    |                           |   |                  |       |                    |       |  
|                                                               |  |                             |       |                   
|Comprehensive income                                           |  | $                           | 4,128 |                    | 1,434                     |   |                  | 5,512 |                    | 2,855 |  
|                                                               |  |                             |       |                    |                           |   |                  |       |                    |       |  



See Notes to Unaudited Condensed Consolidated Financial Statements.



6



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##### Table of Contents

CENTENNIAL BANK HOLDINGS, INC.

AND SUBSIDIARIES



Consolidated Statements of Cash Flows

Unaudited

|                                                                                               |  |                           |          |   |                    |         |  
|---------------------------------------------------------------------------------------------- |  | ------------------------- | -------- | - | ------------------ | ------- | -
|                                                                                               |  | Six months Ended June 30, |         
|                                                                                               |  | 2005 (Successor)          |          |   | 2004 (Predecessor) |        
|                                                                                               |  | (In thousands)            |         
|Cash flows from operating activities:                                                          |  |                           |          |   |                    |         |  
|Net income                                                                                     |  | $                         | 4,687    |   |                    | 3,079   |  
|Adjustments to reconcile net income to net cash provided by operating activities:              |  |                           |          |   |                    |         |  
|Depreciation and amortization of premises and equipment                                        |  |                           | 1,882    |   |                    | 558     |  
|Loss on disposition of discontinued operations                                                 |  |                           | 1.244    |   |                    |        |  
|Gain on sale of foreclosed assets                                                              |  |                           | (250     | ) |                    | (26     | )
|Loss on disposal of premises and equipment                                                     |  |                           | (98      | ) |                    | 3       |  
|Gain on sale of securities                                                                     |  |                           | (635     | ) |                    | 56      |  
|Stock dividends                                                                                |  |                           | (117     | ) |                    | (40     | )
|Net accretion and amortization on securities and debt obligations                              |  |                           | (63      | ) |                    | 36      |  
|Provision for loan losses                                                                      |  |                           | 1,700    |   |                    | 1,000   |  
|Deferred income tax benefit                                                                    |  |                           | (2,423   | ) |                    | (42     | )
|Amortization of intangibles                                                                    |  |                           | 6,190    |   |                    |        |  
|Proceeds from sales of loans held for sale                                                     |  |                           | 47,185   |   |                    |        |  
|Originations of loans held for sale                                                            |  |                           | (45,287  | ) |                    |        |  
|Net change in:                                                                                 |  |                           |          |   |                    |         |  
|Accrued interest receivable and other assets                                                   |  |                           | (9,521   | ) |                    | (573    | )
|Accrued interest payable and other liabilities                                                 |  |                           | 7,518    |   |                    | 698     |  
|                                                                                               |  |                           |          |   |                    |         |  
|Net cash provided by operating activities                                                      |  |                           | 12,012   |   |                    | 4,749   |  
|                                                                                               |  |                           |          |   |                    |         |  
|Cash flows from investing activities (net of assets and liabilities acquired in acquisitions): |  |                           |          |   |                    |         |  
|Activity in available-for-sale securities:                                                     |  |                           |          |   |                    |         |  
|Sales, maturities, prepayments, and calls                                                      |  |                           | 100,252  |   |                    | 51,393  |  
|Purchases                                                                                      |  |                           | (108,064 | ) |                    | (50,124 | )
|Activity in held-to-maturity securities:                                                       |  |                           |          |   |                    |         |  
|Maturities, prepayments, and calls                                                             |  |                           | 130      |   |                    | 174     |  
|Purchases                                                                                      |  |                           |         |   |                    | (611    | )
|Loan originations and principal collections, net                                               |  |                           | (79,629  | ) |                    | 9,804   |  
|Proceeds from sales of foreclosed assets                                                       |  |                           | 3,290    |   |                    | 4,304   |  
|Proceeds from sale of other investments                                                        |  |                           | 1,516    |   |                    |        |  
|Proceeds from sale of premises and equipment                                                   |  |                           | 373      |   |                    | 138     |  
|Payments on discontinued operations                                                            |  |                           | (43      | ) |                    |        |  
|Additions to premises and equipment                                                            |  |                           | (4,763   | ) |                    | (180    | )
|                                                                                               |  |                           |          |   |                    |         |  
|Net cash provided (used) by investing activities                                               |  |                           | (86,938  | ) |                    | 14,898  |  
|                                                                                               |  |                           |          |   |                    |         |  
|Cash flows from financing activities (net of assets and liabilities acquired in acquisitions): |  |                           |          |   |                    |         |  
|Net change in deposits                                                                         |  |                           | (88,945  | ) |                    | (37,560 | )
|Net change in short-term borrowings                                                            |  |                           | 90,907   |   |                    | 8,280   |  
|Proceeds from issuance of long-term debt                                                       |  |                           | 31,267   |   |                    | 10,231  |  
|Net change in federal funds purchased and repurchase agreements                                |  |                           | 23,806   |   |                    | 29      |  
|Net proceeds from sale of common stock                                                         |  |                           |         |   |                    | 766     |  
|Repurchase of common stock                                                                     |  |                           | (4,659   | ) |                    |        |  
|                                                                                               |  |                           |          |   |                    |         |  
|Net cash provided (used) by financing activities                                               |  |                           | 52,376   |   |                    | (18,254 | )
|                                                                                               |  |                           |          |   |                    |         |  
|Net change in cash and cash equivalents                                                        |  |                           | (22,550  | ) |                    | 1,393   |  
|Cash and cash equivalents, beginning of period                                                 |  |                           | 90,927   |   |                    | 23,731  |  
|                                                                                               |  |                           |          |   |                    |         |  
|Cash and cash equivalents, end of period                                                       |  | $                         | 68,377   |   |                    | 25,124  |  
|                                                                                               |  |                           |          |   |                    |         |  
|Supplemental disclosure of cash flow activity:                                                 |  |                           |          |   |                    |         |  
|Interest paid on deposits and borrowed funds                                                   |  | $                         | 11,369   |   |                    | 6,313   |  
|                                                                                               |  |                           |          |   |                    |         |  
|Income taxes paid                                                                              |  | $                         | 1,044    |   |                    | 664     |  
|                                                                                               |  |                           |          |   |                    |         |  
|Supplemental disclosure of noncash activities:                                                 |  |                           |          |   |                    |         |  
|Loans transferred to other real estate owned                                                   |  | $                         | 1,770    |   |                    | 1,717   |  
|                                                                                               |  |                           |          |   |                    |         |  

See Notes to Unaudited Condensed Consolidated Financial Statements.



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CENTENNIAL BANK HOLDINGS, INC.

AND SUBSIDIARIES



Notes to Unaudited Condensed Consolidated Financial Statements



|(1) | Organization, Operations and Basis of Presentation
|--- | --------------------------------------------------



Centennial Bank Holdings, Inc. and Subsidiaries (the Company), is primarily engaged in the business of banking, providing services to individual and
corporate customers principally in Colorado.



On July 16, 2004,
Centennial Bank Holdings, Inc. and its wholly owned subsidiary, Centennial Bank of the West (Predecessor) was 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 changed its name to Centennial Bank Holdings, Inc. (Successor). For presentation purposes, consolidated statements of income, comprehensive income, and cash flows are presented
for the six months ended June 30, 2005 (Successor) and the six months ended June 30, 2004 (Predecessor). On December 31, 2004, Centennial Bank Holdings, Inc. purchased all of the outstanding stock of Guaranty Corporation. Guaranty Corporations
subsidiaries include Guaranty Bank and Trust Company, First National Bank of Strasburg, and Collegiate Peaks Bank. Accordingly, the consolidated balance sheets as of June 30, 2005 and December 31, 2004 (Successor) include the accounts of Guaranty
Corporation and subsidiaries. These acquisitions were accounted for under the purchase method of accounting through which the purchase price was allocated to the tangible and intangible assets and liabilities acquired. The accompanying Predecessor
statements of income, comprehensive income and cash flows for the six months ended June 30, 2004 do not reflect the effects of purchase accounting and, therefore are not comparable to the Successor financial statements for the periods subsequent to
the acquisitions.



| | (a) | Basis of Presentation
| | --- | ---------------------



The accounting and reporting policies of the Company conform to accounting principles generally accepted in the United States of America.
All significant intercompany balances and transactions have been eliminated. Our financial statements reflect all adjustments that are, in the opinion of management, necessary for a fair presentation of the financial position and results of
operations for the periods presented. Certain information and note disclosures normally included in consolidated financial statements prepared in accordance with U.S. generally accepted accounting principles have been condensed or omitted pursuant
to the rules and regulations of the Securities and Exchange Commission. The interim operating results are not necessarily indicative of operating results for the full year.



| | (b) | Use of Estimates
| | --- | ----------------



The preparation of the consolidated financial statements in conformity with accounting principles generally accepted in the United States
of America 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. Actual results could differ
significantly from those estimates. Material estimates that are particularly susceptible to significant changes include the allowance for loan losses, the valuation of foreclosed real estate, deferred tax assets and liabilities, goodwill and other
intangible assets.



| | (c) | Impairment of Long-Lived Assets
| | --- | -------------------------------



In accordance with SFAS No. 144, long-lived assets, such as property, fixtures and equipment, and purchased intangibles 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



8



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##### Table of Contents

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
consolidated 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.



| | (d) | Segments of an Enterprise and Related Information
| | --- | -------------------------------------------------



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. The Company has three active operating subsidiaries, namely, the bank subsidiaries, otherwise known as Centennial Bank of the West, Guaranty Bank and
Trust Company and Collegiate Peaks Bank. On April 14, 2005, the Company merged First National Bank of Strasburg into Guaranty Bank and Trust Company. 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. None of the Companys other subsidiaries meets the 10% threshold for disclosure under SFAS No. 131.



| | (e) | Stock Incentive Plan
| | --- | --------------------



On April 5, 2005, the Companys board of directors adopted the 2005 Stock Incentive Plan, or the Plan, subject to Stockholder
approval. The Plan provides for grants of stock options, restricted stock awards, restricted stock units awards, performance stock awards, stock appreciation rights, and other equity-based awards to key employees, nonemployee directors, consultants
and prospective employees. At the Companys annual meeting on June 2, 2005, the Companys stockholders approved the Plan. No grants had been made under this Plan as of June 30, 2005.



| | (f) | Reclassifications
| | --- | -----------------



Certain amounts in prior year financial statements have been reclassified to conform to the current year presentation.



|(2) | Securities
|--- | ----------



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



|                               |  |                           |         |                        |       |                         |      |   |           |        
|------------------------------ |  | ------------------------- | ------- | ---------------------- | ----- | ----------------------- | ---- | - | --------- | -------
|                               |  | June 30, 2005 (Successor)
|                               |  | Amortized Cost            |         | Gross Unrealized Gains |       | Gross Unrealized Losses |      |   | FairValue
|                               |  | (In thousands)           
|Securities available for sale: |  |                           |         |                        |       |                         |      |   |           |        
|U.S. treasuries                |  | $                         | 19,891  |                        | 3     |                         | (71  | ) |           | 19,823 
|U.S. government agencies       |  |                           | 11,492  |                        |      |                         | (9   | ) |           | 11,483 
|State and municipal            |  |                           | 53,768  |                        | 1,241 |                         | (33  | ) |           | 54,976 
|Mortgage-backed                |  |                           | 44,950  |                        | 67    |                         | (287 | ) |           | 44,730 
|Marketable equity securities   |  |                           | 1,003   |                        | 3     |                         |     |   |           | 1,006  
|                               |  |                           |         |                        |       |                         |      |   |           |        
|Securities available for sale  |  | $                         | 131,104 |                        | 1,314 |                         | (400 | ) |           | 132,018
|                               |  |                           |         |                        |       |                         |      |   |           |        
|Securities held to maturity:   |  |                           |         |                        |       |                         |      |   |           |        
|Mortgage-backed                |  | $                         | 506     |                        |      |                         | (4   | ) |           | 502    
|                               |  |                           |         |                        |       |                         |      |   |           |        



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##### Table of Contents

|                               |  |                               |         |                        |     |                         |      |   |           |        
|------------------------------ |  | ----------------------------- | ------- | ---------------------- | --- | ----------------------- | ---- | - | --------- | -------
|                               |  | December 31, 2004 (Successor)
|                               |  | Amortized Cost                |         | Gross Unrealized Gains |     | Gross Unrealized Losses |      |   | FairValue
|                               |  | (In thousands)               
|Securities available for sale: |  |                               |         |                        |     |                         |      |   |           |        
|U.S. treasuries                |  | $                             | 38,170  |                        |    |                         |     |   |           | 38,170 
|U.S. government agencies       |  |                               | 8,482   |                        |    |                         | (3   | ) |           | 8,479  
|State and municipal            |  |                               | 34,320  |                        | 1   |                         |      |   |           | 34,321 
|Mortgage-backed                |  |                               | 43,748  |                        | 124 |                         | (159 | ) |           | 43,713 
|Marketable equity securities   |  |                               | 1,004   |                        |    |                         |     |   |           | 1,004  
|                               |  |                               |         |                        |     |                         |      |   |           |        
|Securities available for sale  |  | $                             | 125,724 |                        | 125 |                         | (162 | ) |           | 125,687
|                               |  |                               |         |                        |     |                         |      |   |           |        
|Securities held to maturity:   |  |                               |         |                        |     |                         |      |   |           |        
|Mortgage-backed                |  | $                             | 640     |                        | 5   |                         |     |   |           | 645    
|                               |  |                               |         |                        |     |                         |      |   |           |        



|(3) | Loans
|--- | -----



A summary of net loans by loan type at the dates indicated is as follows:



|                                    |  |                          |           |   |                              |           |  
|----------------------------------- |  | ------------------------ | --------- | - | ---------------------------- | --------- | -
|                                    |  | June 30,2005 (Successor) |           |   | December 31,2004 (Successor) |          
|                                    |  | (In thousands)           |          
|Loans on real estate:               |  |                          |           |   |                              |           |  
|Residential and commercial mortgage |  | $                        | 712,002   |   |                              | 638,007   |  
|Construction                        |  |                          | 341,885   |   |                              | 308,545   |  
|Equity lines of credit              |  |                          | 73,936    |   |                              | 81,936    |  
|Commercial loans                    |  |                          | 449,028   |   |                              | 458,171   |  
|Agricultural loans                  |  |                          | 64,485    |   |                              | 62,199    |  
|Lease financing                     |  |                          | 860       |   |                              | 912       |  
|Installment loans to individuals    |  |                          | 54,421    |   |                              | 64,625    |  
|Overdrafts                          |  |                          | 547       |   |                              | 5,589     |  
|SBA and other                       |  |                          | 22,201    |   |                              | 22,004    |  
|                                    |  |                          |           |   |                              |           |  
|                                    |  |                          | 1,719,365 |   |                              | 1,641,988 |  
|Less:                               |  |                          |           |   |                              |           |  
|Allowance for loan losses           |  |                          | (25,535   | ) |                              | (25,022   | )
|Net of unearned discount            |  |                          | (1,152    | ) |                              | (167      | )
|                                    |  |                          |           |   |                              |           |  
|                                    |  |                          | 1,692,678 |   |                              | 1,616,799 |  
|Loans available for sale            |  |                          | 6,030     |   |                              | 7,301     |  
|                                    |  |                          |           |   |                              |           |  
|                                    |  | $                        | 1,698,708 |   |                              | 1,624,100 |  
|                                    |  |                          |           |   |                              |           |  



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A summary of transactions in the allowance for loan losses for the periods indicated is as follows:



|                                           |  |                           |        |   |                             |       |   |                           |   |        |                             |  |        |  
|------------------------------------------ |  | ------------------------- | ------ | - | --------------------------- | ----- | - | ------------------------- | - | ------ | --------------------------- |  | ------ | -
|                                           |  | Three Months Ended        |        |   | Six Months Ended            |      
|                                           |  | June 30, 2005 (Successor) |        |   | June 30, 2004 (Predecessor) |       |   | June 30, 2005 (Successor) |   |        | June 30, 2004 (Predecessor) | 
|                                           |  | (In thousands)            |       
|Balance, beginning of period               |  | $                         | 26,561 |   |                             | 7,261 |   |                           | $ | 25,022 |                             |  | 7,653  |  
|Provision for loan losses                  |  |                           |       |   |                             | 600   |   |                           |   | 1,700  |                             |  | 1,000  |  
|Loans charged off                          |  |                           | (1,206 | ) |                             | (783  | ) |                           |   | (1,711 | )                           |  | (1,736 | )
|Recoveries on loans previously charged-off |  |                           | 180    |   |                             | 164   |   |                           |   | 524    |                             |  | 325    |  
|                                           |  |                           |        |   |                             |       |   |                           |   |        |                             |  |        |  
|Balance, end of period                     |  | $                         | 25,535 |   |                             | 7,242 |   |                           | $ | 25,535 |                             |  | 7,242  |  
|                                           |  |                           |        |   |                             |       |   |                           |   |        |                             |  |        |  



The following table
details key information regarding the Companys impaired loans at the dates indicated:



|                                                      |  |                           |        |                               |       
|----------------------------------------------------- |  | ------------------------- | ------ | ----------------------------- | ------
|                                                      |  | June 30, 2005 (Successor) |        | December 31, 2004 (Successor)
|                                                      |  | (In thousands)           
|Impaired loans with a specific valuation allowance    |  | $                         | 28,390 |                               | 27,970
|Impaired loans without a specific valuation allowance |  |                           | 4,287  |                               | 7,632 
|                                                      |  |                           |        |                               |       
|Total impaired loans                                  |  | $                         | 32,677 |                               | 35,602
|                                                      |  |                           |        |                               |       
|Valuation allowance related to impaired loans         |  | $                         | 17,556 |                               | 9,290 
|                                                      |  |                           |        |                               |       
|Average investment in impaired loans                  |  | $                         | 38,027 |                               | 11,422
|                                                      |  |                           |        |                               |       



No interest income was
recognized on impaired loans during the six months ended June 30, 2005 and 2004. At June 30, 2005, no additional funds were committed to be advanced in connection with impaired loans. At June 30, 2005 and December 31, 2004, the total investment in
loans on nonaccrual was approximately $9,975,000 and $11,905,000, respectively.



|(4) | Goodwill and Other Intangible Assets
|--- | ------------------------------------



Goodwill and other intangible assets arise from purchase business combinations. Goodwill and other intangible assets deemed to have indefinite lives
generated from purchase combinations are tested for impairment no less than annually.



Intangible assets with definite lives are amortized over their respective estimated useful lives of two to 14 years to their estimated residual values and reviewed for impairment annually. The amortization expense
represents the estimated decline in the value of the underlying deposits or loan customers acquired.



11



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The changes in the carrying amount of goodwill for the periods ended June 30, 2005 and December 31, 2004
are as follows:



|                                       |  |                               |         |                             |         |  
|-------------------------------------- |  | ----------------------------- | ------- | --------------------------- | ------- | -
|                                       |  | Six Months EndedJune 30, 2005 |         | Year EndedDecember 31, 2004 |        
|                                       |  | (In thousands)                |        
|Balance, beginning of period           |  | $                             | 328,185 |                             | 9,226   |  
|Elimination of preacquisition goodwill |  |                               |        |                             | (9,226  | )
|Goodwill acquired on July 17, 2004     |  |                               |        |                             | 104,684 |  
|Goodwill acquired on December 31, 2004 |  |                               |        |                             | 223,501 |  
|Adjustment to goodwill                 |  |                               |         |                             |         |  
|Increase related to income taxes       |  |                               | 3,441   |                             |        |  
|                                       |  |                               |         |                             |         |  
|Balance, end of period                 |  | $                             | 331,626 |                             | 328,185 |  
|                                       |  |                               |         |                             |         |  



The Company revised
its estimated value for its discontinued operations in the second quarter of 2005 based on additional information available related to the sale of the Collegiate Peaks Bank subsidiary. This revision resulted in a $794,000 reallocation of goodwill
between the holding company and Collegiate Peaks Bank. The Company determined that it would have an estimated tax liability associated with the sale of Collegiate Peaks Bank, resulting in additional goodwill of $3,441,000.



The following table presents the gross amounts of core deposits and customer
relationships intangibles and the related accumulated amortization at the dates indicated:



|                                            |  |                 |  |                          |        |   |                              |        |  
|------------------------------------------- |  | --------------- |  | ------------------------ | ------ | - | ---------------------------- | ------ | -
|                                            |  | Useful life     |  | June 30,2005 (Successor) |        |   | December 31,2004 (Successor) |       
|                                            |  |                 |  | (In thousands)           |       
|Non-compete employment agreement            |  | 2 years         |  | $                        | 3,606  |   |                              | 3,720  |  
|Core deposit intangible Centennial Bank     |  | 10 years        |  |                          | 4,715  |   |                              | 4,715  |  
|Core deposit intangible First National Bank |  | 13.6 years      |  |                          |       |   |                              | 8,941  |  
|Core deposit intangible Guaranty Bank       |  | 9 to 13.6 years |  |                          | 45,702 |   |                              | 36,761 |  
|                                            |  |                 |  |                          |        |   |                              |        |  
|                                            |  |                 |  |                          | 54,023 |   |                              | 54,137 |  
|Accumulated amortization                    |  |                 |  |                          | (6,967 | ) |                              | (777   | )
|                                            |  |                 |  |                          |        |   |                              |        |  
|                                            |  |                 |  | $                        | 47,056 |   |                              | 53,360 |  
|                                            |  |                 |  |                          |        |   |                              |        |  



Amortization expense
for intangible assets for the six months ended June 30, 2005 and 2004 was $6,190,000 and none, respectively.



|(5) | Borrowings
|--- | ----------



Borrowed funds include Treasury Tax and Loan notes, Federal Home Loan Bank (FHLB) borrowings, and a line of credit with First Tennessee. The
FHLB borrowings are collateralized by a blanket pledge and security agreement. The Company had $159,441,000 and $39,770,000 outstanding under these borrowings at June 30, 2005 and December 31, 2004, with a total commitment of $243,027,000
at June 30, 2005.



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##### Table of Contents

|(6) | Subordinated Debentures and Trust Preferred Securities
|--- | ------------------------------------------------------



Excluding unamortized premium of $448,000, the Company had a $41,229,000 aggregate balance of subordinated debentures outstanding with a weighted average
cost of 7.9% at June 30, 2005. 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 million of trust preferred securities. Generally and with certain limitations, the Company is permitted to call the debentures subsequent to the first five years 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.



The following table summarizes the terms of each subordinated debenture issuance at June 30, 2005 (dollars in thousands):



|                           |  |            |  |        |        |              |           |           |           |                       |          |               |              |   |             |      |   |                     |           
|-------------------------- |  | ---------- |  | ------ | ------ | ------------ | --------- | --------- | --------- | --------------------- | -------- | ------------- | ------------ | - | ----------- | ---- | - | ------------------- | ----------
|Series                     |  | DateIssued |  | Amount |        | MaturityDate |           | CallDate* |           | Fixed orVariable Rate |          | Rate Adjuster |              |   | CurrentRate |      |   | Next RateReset Date
|CenBank Trust I            |  | 9/7/2000   |  | $      | 10,310 |              | 9/7/2030  |           | 9/7/2010  |                       | Fixed    |               | N/A          |   |             | 10.6 | % |                     | N/A       
|CenBank Trust II           |  | 2/22/2001  |  |        | 5,155  |              | 2/22/2031 |           | 2/22/2011 |                       | Fixed    |               | N/A          |   |             | 10.2 | % |                     | N/A       
|CenBank Trust III          |  | 4/15/2004  |  |        | 15,454 |              | 4/15/2034 |           | 4/15/2009 |                       | Variable |               | LIBOR + 2.65 | % |             | 6.2  | % |                     | 10/15/2005
|Guaranty Capital Trust III |  | 7/7/2003   |  |        | 10,310 |              | 7/7/2033  |           | 7/7/2008  |                       | Variable |               | LIBOR + 3.10 | % |             | 6.6  | % |                     | 10/15/2005

---

|* | Call date represents the earliest call date by the Company without penalty.
|- | ---------------------------------------------------------------------------



These securities are currently included in our Tier I capital for purposes of determining the Companys Tier I and total risk-based capital
ratios. The Board of Governors of the Federal Reserve System, which is the Companys banking regulator, has promulgated the capital regulations affecting trust preferred securities with a five-year transition period ending March 31, 2009.
The regulations currently in effect limit the amount of trust preferred securities that can be included in Tier I capital to 25% of the sum of core capital elements without a deduction for goodwill. We have determined that our Tier I
capital ratios would remain above the well-capitalized level had the modification of the capital regulations been in effect at June 30, 2005.



|(7) | Commitments
|--- | -----------



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.



13



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##### Table of Contents

At the dates indicated, the following financial instruments were outstanding whose contract amounts
represented credit risk:



|                             |  |                         |         |                             |        
|---------------------------- |  | ----------------------- | ------- | --------------------------- | -------
|                             |  | June 30,2005(Successor) |         | December 31,2004(Successor)
|                             |  | (In thousands)         
|Commitments to extend credit |  | $                       | 564,297 |                             | 468,059
|Standby letters of credit    |  |                         | 36,230  |                             | 71,266 
|Commercial letters of credit |  |                         | 479     |                             | 574    



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 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. Substantially 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.



|(8) | Capital Ratios
|--- | --------------



At June 30, 2005 and December 31, 2004, the Company had leverage ratios of 9.54% and 8.70%, Tier 1 risk-weighted capital ratios of 10.12% and 9.39%,
and total risk-weighted capital ratios of 11.37% and 10.64%, respectively. The Company actively monitors its regulatory capital ratios to ensure that the Company and its bank subsidiaries are well capitalized under the applicable regulatory
framework.



|(9) | Business Combination
|--- | --------------------



On December 21, 2004, the Company entered into a definitive agreement to acquire all of the outstanding stock of First MainStreet Financial, Ltd. in
exchange for approximately 10 million Company shares with an estimated value of $10.50 per share. Management anticipates this merger will close on October 1, 2005.



|(10) | Assets Held for Sale and Discontinued Operations
|---- | ------------------------------------------------



The Company has decided to sell its Collegiate Peaks Bank subsidiary and has classified its assets and liabilities as held for sale at the lower of cost
or fair value at June 30, 2005. As of June 30, 2005, the Company has recorded an impairment of fair value for Collegiate Peaks Bank of $1,201,000. The $1,201,000 consisted of 2005 net income of $450,000 that will not be reflected as an
adjustment to the sale price, a $794,000 reduction to the value of the Collegiate Peaks Bank from its estimated value at December 31, 2004 of $18,434,000, offset by the payment of $43,000 of disposition costs during the six months ended
June 30, 2005. Earnings from Collegiate Peaks between June 30, 2005 and its disposition date will be offset by an increased impairment as the purchase price will not be adjusted for the additional earnings. Completion of the sale of the
subsidiary is anticipated in the fourth quarter of 2005. The Company had no income from operations from the subsidiary in 2004, as the subsidiary was acquired in connection with the purchase of Guaranty Corporation on December 31, 2004. The
following table presents the assets and liabilities of the



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subsidiary which are held for sale at June 30, 2005 and the summary results of operations of the subsidiary for the six months ended June 30, 2005:



|                                                       |  |                               |        |  
|------------------------------------------------------ |  | ----------------------------- | ------ | -
|                                                       |  | June 30, 2005                 |       
|                                                       |  | (In thousands)                |       
|Assets held for sale:                                  |  |                               |        |  
|Cash and cash equivalents                              |  | $                             | 10,301 |  
|Investments                                            |  |                               | 16,395 |  
|Loans and leases, net                                  |  |                               | 52,768 |  
|Other intangible assets                                |  |                               | 3,574  |  
|Goodwill                                               |  |                               | 8,922  |  
|Other assets                                           |  |                               | 2,874  |  
|                                                       |  |                               |        |  
|Fair value adjustment                                  |  |                               | (1,201 | )
|                                                       |  |                               |        |  
|Total assets held for sale                             |  | $                             | 93,633 |  
|                                                       |  |                               |        |  
|Liabilities associated with assets held for sale:      |  |                               |        |  
|Deposits                                               |  | $                             | 68,769 |  
|Securities sold under repurchase agreements            |  |                               | 5,246  |  
|Other liabilities                                      |  |                               | 1,696  |  
|                                                       |  |                               |        |  
|Total liabilities associated with assets held for sale |  | $                             | 75,711 |  
|                                                       |  |                               |        |  
|                                                       | 
|                                                       |  | Six months EndedJune 30, 2005 |       
|                                                       |  | (In thousands)                |       
|Interest income                                        |  | $                             | 2,248  |  
|Noninterest income                                     |  |                               | 216    |  
|Net income                                             |  |                               | 450    |  



|(11) | Subsequent Event
|---- | ----------------



On June 24, 2005, the Company announced the signing of a definitive agreement to acquire all the outstanding stock and options of Foothills Bank for $27.5
million in cash. Foothills Bank is located in the Wheatridge, Colorado, and had $126 million in assets, $95 million in net loans and $115 million in deposits at June 30, 2005. This transaction, which is subject to regulatory approval and the
approval of Foothills Banks shareholders, is expected to close during the fourth quarter of 2005.



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##### Table of Contents

|ITEM 2. | Managements Discussion and Analysis of Financial Condition and Results of Operations
|------- | -------------------------------------------------------------------------------------



Forward-Looking Information



The following is managements discussion and analysis of the major factors that influenced our financial performance for the three months and six months ended June
30, 2005. This analysis should be read in conjunction with our 2004 consolidated financial statements as filed on our Form S-1 registration statement and with the unaudited financial statements and notes as set forth in this report.Unless the
context requires otherwise, the terms Company, us, we, and our refers to Centennial Bank Holdings, Inc. on a consolidated basis.



Certain statements contained in this Quarterly Report on Form 10-Q (Report), including, without limitation,
statements containing the words believes, anticipates, intends, expects, and words of similar import, constitute forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Such forward looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be
materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Such factors include, among others, the following: general economic and business conditions in those areas in which we
operate, demographic changes, competition, fluctuations in interest rates, changes in business strategy or development plans, changes in governmental regulation, credit quality, the availability of capital to fund the expansion of our business,
economic, political and global changes arising from the war on terrorism, the conflict with Iraq and its aftermath, and other Risk Factors referenced in our 2005 Form S-1 registration statement. When relying on forward-looking statements
to make decisions with respect to our Company, investors and others are cautioned to consider these and other risks and uncertainties. We assume no obligation to update such forward-looking statements. The forward-looking statements are made as of
the date of this Report, and we do not intend, and assume no obligation, to update the forward-looking statements or to update the reasons why actual results could differ from those projected in the forward-looking statements. All forward-looking
statements contained in this Report are expressly qualified by these cautionary statements.



Overview



We are 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, real estate loans, including construction loans 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, fees from 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.



Recent Developments



On March 3, 2004, we were incorporated in Delaware under the name Centennial
C Corp. 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, a bank holding company and a Colorado corporation, which operated 18 branches in Colorado through its three banking subsidiaries. The acquisitions were accounted for using the purchase method of accounting. Centennials financial
statements as of December 31, 2004 present the consolidated financial position of Centennial at December 31, 2004, which includes Guaranty. The results of operations for the three and six months ended June 30, 2004 reflect our predecessor only.



16



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##### Table of Contents

Critical Accounting Policies



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 and 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 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 monthly. 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 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 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 significant number of much smaller portfolio segments that comprise the consumer and commercial 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 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-maturityor available-for-salein 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.



Deferred Income Taxes



Deferred income taxes reflect the estimated future tax effects of temporary differences between the reported amount of assets and liabilities for
financial reporting purposes and such amounts as measured by tax laws and regulations. We use an estimate of future earnings to support our position that the benefit of our deferred tax assets will be realized. If future income should prove
non-existent or less than the amount of the deferred tax assets within the tax years to which they may be applied, the asset may not be realized and our net income will be reduced.



Impairment of Goodwill



Goodwill represents the excess of the purchase price over the fair value of net assets acquired. 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 first step in testing for impairment is to determine the fair value of each
reporting unit. If the carrying amount of any reporting unit exceeds its fair value, an impairment to goodwill is recorded. The evaluation of goodwill involves estimations of discount rates, the timing of projected future cash flows, and utilization
of market based valuation techniques. The assumptions used in the evaluation of goodwill are subject to change with changes in economic conditions and other factors. Changes in assumptions used to evaluate this intangible asset affect its value and
could have a material adverse impact on our results of operations.



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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 2004 consolidated financial statements set forth in our Form S-1 to gain a better understanding of how our financial performance is measured and reported.



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Results of Operations



The following table summarizes certain key financial results for us for the
periods indicated:



|                                               |  |                             |            |   |                           |   |                                |  |   |                 |   |  |                   |            |                                |  |   |           |  |   |         |  
|---------------------------------------------- |  | --------------------------- | ---------- | - | ------------------------- | - | ------------------------------ |  | - | --------------- | - |  | ----------------- | ---------- | ------------------------------ |  | - | --------- |  | - | ------- | -
|                                               |  | Three Months Ended June 30, |            |   | Six Months Ended June 30, |  
|(In thousands, except share andratio data)     |  | 2005(Successor)             |            |   | 2004(Predecessor)         |   | Change -Favorable(Unfavorable) |  |   | 2005(Successor) |   |  | 2004(Predecessor) |            | Change -Favorable(Unfavorable) | 
|Results of Operations:                         |  |                             |            |   |                           |   |                                |  |   |                 |   |  |                   |            |                                |  |   |           |  |   |         |  
|Interest income                                |  | $                           | 32,368     |   |                           | $ | 10,629                         |  | $ | 21,739          |   |  | $                 | 62,411     |                                |  | $ | 21,122    |  | $ | 41,289  |  
|Interest expense                               |  |                             | 6,498      |   |                           |   | 3,001                          |  |   | (3,497          | ) |  |                   | 11,213     |                                |  |   | 6,272     |  |   | (4,941  | )
|                                               |  |                             |            |   |                           |   |                                |  |   |                 |   |  |                   |            |                                |  |   |           |  |   |         |  
|Net interest income                            |  |                             | 25,870     |   |                           |   | 7,628                          |  |   | 18,242          |   |  |                   | 51,198     |                                |  |   | 14,850    |  |   | 36,348  |  
|Provision for loan losses                      |  |                             |           |   |                           |   | 600                            |  |   | 600             |   |  |                   | 1,700      |                                |  |   | 1,000     |  |   | (700    | )
|                                               |  |                             |            |   |                           |   |                                |  |   |                 |   |  |                   |            |                                |  |   |           |  |   |         |  
|Net interest income after provision for losses |  |                             | 25,870     |   |                           |   | 7,028                          |  |   | 18,842          |   |  |                   | 49,498     |                                |  |   | 13,850    |  |   | 35,648  |  
|Noninterest income                             |  |                             | 2,339      |   |                           |   | 987                            |  |   | 1,352           |   |  |                   | 4,917      |                                |  |   | 2,016     |  |   | 2,901   |  
|Noninterest expense                            |  |                             | 21,217     |   |                           |   | 5,205                          |  |   | (16,012         | ) |  |                   | 46,200     |                                |  |   | 11,088    |  |   | (35,112 | )
|                                               |  |                             |            |   |                           |   |                                |  |   |                 |   |  |                   |            |                                |  |   |           |  |   |         |  
|Income before income taxes                     |  |                             | 6,992      |   |                           |   | 2,810                          |  |   | 4,182           |   |  |                   | 8,215      |                                |  |   | 4,778     |  |   | 3,437   |  
|Provision for income taxes                     |  |                             | 2,431      |   |                           |   | 1,071                          |  |   | (1,360          | ) |  |                   | 2,734      |                                |  |   | 1,699     |  |   | (1,035  | )
|                                               |  |                             |            |   |                           |   |                                |  |   |                 |   |  |                   |            |                                |  |   |           |  |   |         |  
|Income from continuing operations              |  |                             | 4,561      |   |                           |   | 1,739                          |  |   | 2,822           |   |  |                   | 5,481      |                                |  |   | 3,079     |  |   | 2,402   |  
|Income (loss) from discontinued operations     |  |                             | (971       | ) |                           |   |                               |  |   | (971            | ) |  |                   | (794       | )                              |  |   |          |  |   | (794    | )
|                                               |  |                             |            |   |                           |   |                                |  |   |                 |   |  |                   |            |                                |  |   |           |  |   |         |  
|Net income                                     |  | $                           | 3,590      |   |                           | $ | 1,739                          |  | $ | 1,851           |   |  | $                 | 4,687      |                                |  | $ | 3,079     |  | $ | 1,608   |  
|                                               |  |                             |            |   |                           |   |                                |  |   |                 |   |  |                   |            |                                |  |   |           |  |   |         |  
|Share Data:                                    |  |                             |            |   |                           |   |                                |  |   |                 |   |  |                   |            |                                |  |   |           |  |   |         |  
|Basic earnings per share                       |  | $                           | 0.07       |   |                           | $ | 1.12                           |  |   | nm              |   |  | $                 | 0.09       |                                |  | $ | 1.98      |  |   | nm      |  
|Diluted earnings per share                     |  | $                           | 0.07       |   |                           | $ | 1.10                           |  |   | nm              |   |  | $                 | 0.09       |                                |  | $ | 1.95      |  |   | nm      |  
|Average shares outstanding                     |  |                             | 52,179,857 |   |                           |   | 1,557,293                      |  |   | nm              |   |  |                   | 52,256,172 |                                |  |   | 1,554,660 |  |   | nm      |  
|Diluted average shares outstanding             |  |                             | 52,179,857 |   |                           |   | 1,584,068                      |  |   | nm              |   |  |                   | 52,256,172 |                                |  |   | 1,581,483 |  |   | nm      |  



nm - Change in earnings per share is
not meaningful due to the acquisition of the predecessor in July 2004.



Net income increased $1.6 million from $3.1 million for the six months ended June 30, 2004 to $4.7 million for the six months ended June 30, 2005. The change in net income consisted of $4.5 million of net income attributable to bank
operations of Guaranty, an increase in net income of $0.1 million over our predecessors banking operations, and an increased net loss of $2.2 million at the holding company over our predecessors net loss. During the six months ended June
30, 2005, we experienced a loss from discontinued operations of $.8 million, which represents the difference between the expected net proceeds from the sale of our Collegiate Peaks Bank subsidiary and the amount estimated as its value at December
31, 2004.



Net interest income increased $36.3 million from
$14.9 million for the six months ended June 30, 2004 to $51.2 million for the six months ended June 30, 2005. Excluding the net interest income of $34.7 million generated by the subsidiary banks we acquired from Guaranty, net interest income
increased to $16.5 million from $14.9 million and was offset by an increase of $0.7 million in provision for loan losses and an increase of $4.2 million in noninterest expense. Interest income increased $41.3 million from $21.1 million for the six
months ended June 30, 2004 to $62.4 million for the six months ended June 30, 2005. Interest expense increased $4.9 million from $6.3 million for the six months ended June 30, 2004 to $11.2 million for the six months ended June 30, 2005. Excluding
the interest income and interest expense of the subsidiary banks we acquired from



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Guaranty, we experienced an increase in interest income of $0.6 million to $21.8 million for the first six months of 2005 and a decrease in interest expense
of $1.0 million to $5.3 million for the first six months of 2005. The single largest cause of the increase in interest income is the result of an increased real estate loan portfolio balances during the first six months of 2005 compared to the first
six months of 2004. Our decrease in interest expense is primarily due to the accretion of $0.8 million during the first six months of 2005 of fair value adjustments on CDs that resulted from the acquisition of our predecessor. No such accretion took
place in the first six months of 2004. The net impact of the increase in our interest income and interest expense excluding the effect of the Guaranty acquisition is a $1.6 million increase from the first six months of 2004. The $0.7 million
increase in the provision for loan losses in 2005 over 2004 was the result of a provision for a large loan during the first six months of 2005. Additional information on the provision for loan losses is provided below under -Provision for Loan
Losses and -Allowance for Loan Losses.



Net Interest
Income and Net Interest Margin



Net interest income
increased $36.3 million from $14.9 million for the six months ended June 30, 2004 to $51.2 million for the six months ended June 30, 2005. Interest income increased $41.3 million from $21.1 for the six months ended June 30, 2004 to $62.4 million for
the six months ended June 30, 2005. Interest expense increased $4.9 million from $6.3 million for the six months ended June 30, 2004 to $11.2 million for the six months ended June 30, 2005. Excluding the net interest income of $34.7 million
generated by the subsidiary banks we acquired from Guaranty, net income increased $1.6 million from $14.9 million. Excluding the interest income and interest expense of the subsidiary banks we acquired from Guaranty, total interest income increased
$0.6 million to $21.8 million for the six months ended June 30, 2005 and total interest expense decreased $1.0 million to $5.3 million for the six months ended June 30, 2005. The $0.9 million decrease in interest expense is primarily due to the
accretion of $0.9 million during the first six months of 2005 of fair value adjustments on CDs that resulted from the acquisition of our predecessor completed in the third quarter of 2004. There was no similar accretion recorded in the first six
months of 2004. Average interest-earning assets increased $1,177.1 million from $657.5 million for the six months ended June 30, 2004 to $1,834.6 million for the six months ended June 30, 2005. Excluding the average balances of interest-earning
assets of the subsidiary banks we acquired from Guaranty, average interest-earning assets increased to $659.9 million for the first two quarters of 2005 from $657.5 million for the first two quarters of 2004.



Average yield on interest-earning assets increased from 6.5% for the six
months ended June 30, 2004 to 6.9% for the six months ended June 30, 2005. Excluding the average yield on interest-earning assets of the subsidiary banks we acquired from Guaranty, the average yield on our interest-earning assets still increased to
6.9% for the six months ended June 30, 2005 from 6.5% for the six months ended June 30, 2004. The majority of the increase in the average yield on our total interest earning assets resulted from an increase in the average yields on our loan
portfolio.



Interest expense on our interest-bearing
liabilities decreased from 2.2% for the six months ended June 30, 2004 to 1.7% for the six months ended June 30, 2005. Excluding the interest expense on our interest-bearing liabilities of the subsidiary banks we acquired from Guaranty, the interest
expense on our average interest-bearing liabilities decreased to 2.1% for the first half of 2005 from 2.2% for the first half of 2004. The ratio of average noninterest-bearing deposits to average total deposits increased from 12.4% for the six
months ended June 30, 2004 to 29.3% for the six months ended June 30, 2005. Excluding the average noninterest-bearing deposits and average total deposits of the subsidiary banks we acquired from Guaranty, the ratio of average noninterest-bearing
deposits to average total deposits increased during the first six months of 2005 to 15.6% from 12.4% for the first six months of 2004. The ratio of savings accounts to average total deposits increased from 4.5% for the six months ended June 30, 2004
to 5.2% for the six months ended June 30, 2005, excluding the deposit accounts of the subsidiary banks we acquired from Guaranty. Lower cost deposit accounts increased to 9.3% for the six months ended June 30, 2005 from 8.3% for the six months ended
June 30, 2004, excluding the deposit accounts of the subsidiary banks we acquired from Guaranty.



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Our net interest margin increased from 4.5% for the six months ended June 30, 2004 to 5.6% for the six
months ended June 30, 2005. Excluding the net interest income, average interest-earning and average interest-bearing liabilities of the subsidiary banks we acquired form Guaranty, our net interest income increased to 5.0% for the six months ended
June 30, 2005 from 4.5% for the six months ended June 30, 2004 as a result of the change in deposit mix discussed above.



The following tables present for the periods 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.



|                                           |  |                                |           |                          |                                |                     |  |      |                |  |                          |         |                     |   |        |  |      |  
|------------------------------------------ |  | ------------------------------ | --------- | ------------------------ | ------------------------------ | ------------------- |  | ---- | -------------- |  | ------------------------ | ------- | ------------------- | - | ------ |  | ---- | -
|                                           |  | Six months Ended June 30, 2005 |           |                          | Six Months Ended June 30, 2004 |                    
|                                           |  | AverageBalance                 |           | InterestIncome orExpense |                                | AverageYield orCost |  |      | AverageBalance |  | InterestIncome orExpense |         | AverageYield orCost |  
|                                           |  | (Dollars in thousands)         |          
|ASSETS:                                    |  |                                |           |                          |                                |                     |  |      |                |  |                          |         |                     |   |        |  |      |  
|Interest-earning assets:                   |  |                                |           |                          |                                |                     |  |      |                |  |                          |         |                     |   |        |  |      |  
|Loans held for investment(1)(2)(3)         |  | $                              | 1,662,796 |                          | $                              | 59,082              |  | 7.17 | %              |  | $                        | 621,294 |                     | $ | 20,528 |  | 6.64 | %
|Investments:                               |  |                                |           |                          |                                |                     |  |      |                |  |                          |         |                     |   |        |  |      |  
|Taxable(1)                                 |  |                                | 89,578    |                          |                                | 1,396               |  | 3.14 | %              |  |                          | 31,483  |                     |   | 442    |  | 2.82 | %
|Tax-exempt(4)                              |  |                                | 41,937    |                          |                                | 1,082               |  | 5.20 | %              |  |                          | 448     |                     |   | 10     |  | 4.49 | %
|Equity securities                          |  |                                | 13,086    |                          |                                | 322                 |  | 4.96 | %              |  |                          | 4,108   |                     |   | 135    |  | 6.61 | %
|Other earning assets                       |  |                                | 27,238    |                          |                                | 529                 |  | 3.92 | %              |  |                          | 208     |                     |   | 7      |  | 6.77 | %
|                                           |  |                                |           |                          |                                |                     |  |      |                |  |                          |         |                     |   |        |  |      |  
|Total interest earning assets              |  |                                | 1,834,635 |                          |                                | 62,411              |  | 6.86 | %              |  |                          | 657,541 |                     |   | 21,122 |  | 6.46 | %
|Non-earning assets:                        |  |                                |           |                          |                                |                     |  |      |                |  |                          |         |                     |   |        |  |      |  
|Cash and due from banks                    |  |                                | 54,520    |                          |                                |                     |  |      |                |  |                          | 19,277  |                     |   |        |  |      |  
|Other assets                               |  |                                | 514,091   |                          |                                |                     |  |      |                |  |                          | 24,401  |                     |   |        |  |      |  
|                                           |  |                                |           |                          |                                |                     |  |      |                |  |                          |         |                     |   |        |  |      |  
|Total assets                               |  | $                              | 2,403,246 |                          |                                |                     |  |      |                |  | $                        | 701,219 |                     |   |        |  |      |  
|                                           |  |                                |           |                          |                                |                     |  |      |                |  |                          |         |                     |   |        |  |      |  
|LIABILITIES AND STOCKHOLDERS EQUITY:      |  |                                |           |                          |                                |                     |  |      |                |  |                          |         |                     |   |        |  |      |  
|Interest-bearing liabilities:              |  |                                |           |                          |                                |                     |  |      |                |  |                          |         |                     |   |        |  |      |  
|Deposits:                                  |  |                                |           |                          |                                |                     |  |      |                |  |                          |         |                     |   |        |  |      |  
|Interest-bearing demand                    |  | $                              | 116,553   |                          | $                              | 197                 |  | 0.34 | %              |  | $                        | 45,960  |                     | $ | 61     |  | 0.27 | %
|Money market                               |  |                                | 522,544   |                          |                                | 3,692               |  | 1.42 | %              |  |                          | 112,997 |                     |   | 613    |  | 1.09 | %
|Savings                                    |  |                                | 81,860    |                          |                                | 286                 |  | 0.70 | %              |  |                          | 25,328  |                     |   | 61     |  | 0.48 | %
|Time certificates of deposit               |  |                                | 437,401   |                          |                                | 4,218               |  | 1.94 | %              |  |                          | 303,398 |                     |   | 4,212  |  | 2.79 | %
|                                           |  |                                |           |                          |                                |                     |  |      |                |  |                          |         |                     |   |        |  |      |  
|Total interest-bearing deposits            |  |                                | 1,158,358 |                          |                                | 8,393               |  | 1.46 | %              |  |                          | 487,683 |                     |   | 4,947  |  | 2.04 | %
|Borrowings:                                |  |                                |           |                          |                                |                     |  |      |                |  |                          |         |                     |   |        |  |      |  
|Repurchase agreements                      |  |                                | 29,861    |                          |                                | 360                 |  | 2.43 | %              |  |                          | 9,128   |                     |   | 34     |  | 0.75 | %
|Federal funds purchased                    |  |                                | 5,275     |                          |                                | 84                  |  | 3.21 | %              |  |                          | 2,132   |                     |   | 12     |  | 1.13 | %
|Subordinated debentures                    |  |                                | 41,845    |                          |                                | 1,145               |  | 5.52 | %              |  |                          | 30,929  |                     |   | 961    |  | 6.25 | %
|Borrowings                                 |  |                                | 75,763    |                          |                                | 1,231               |  | 3.28 | %              |  |                          | 36,147  |                     |   | 318    |  | 1.77 | %
|                                           |  |                                |           |                          |                                |                     |  |      |                |  |                          |         |                     |   |        |  |      |  
|Total interest-bearing liabilities         |  |                                | 1,311,102 |                          |                                | 11,213              |  | 1.72 | %              |  |                          | 566,019 |                     |   | 6,272  |  | 2.23 | %
|Noninterest-bearing liabilities:           |  |                                |           |                          |                                |                     |  |      |                |  |                          |         |                     |   |        |  |      |  
|Demand deposits                            |  |                                | 479,144   |                          |                                |                     |  |      |                |  |                          | 69,017  |                     |   |        |  |      |  
|Other liabilities                          |  |                                | 94,827    |                          |                                |                     |  |      |                |  |                          | 3,474   |                     |   |        |  |      |  
|                                           |  |                                |           |                          |                                |                     |  |      |                |  |                          |         |                     |   |        |  |      |  
|Total liabilities                          |  |                                | 1,885,073 |                          |                                |                     |  |      |                |  |                          | 638,510 |                     |   |        |  |      |  
|Stockholders equity                       |  |                                | 518,173   |                          |                                |                     |  |      |                |  |                          | 62,709  |                     |   |        |  |      |  
|                                           |  |                                |           |                          |                                |                     |  |      |                |  |                          |         |                     |   |        |  |      |  
|Total liabilities and stockholders equity |  | $                              | 2,403,246 |                          |                                |                     |  |      |                |  | $                        | 701,219 |                     |   |        |  |      |  
|                                           |  |                                |           |                          |                                |                     |  |      |                |  |                          |         |                     |   |        |  |      |  
|Net interest income                        |  |                                |           |                          | $                              | 51,198              |  |      |                |  |                          |         |                     | $ | 14,850 |  |      |  
|                                           |  |                                |           |                          |                                |                     |  |      |                |  |                          |         |                     |   |        |  |      |  
|Net interest margin                        |  |                                |           |                          |                                |                     |  | 5.63 | %              |  |                          |         |                     |   |        |  | 4.54 | %
|                                           |  |                                |           |                          |                                |                     |  |      |                |  |                          |         |                     |   |        |  |      |  



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



|(2) | Includes average non-accrual loans of $10.5 million and $18.9 million for the six months ended June 30, 2005 and 2004, respectively.
|--- | ------------------------------------------------------------------------------------------------------------------------------------



|(3) | Net loan fees of $4.1 million and $2.0 million for the six months ended June 30, 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.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------



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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.



|                             |  |                                                                         |        |      |   |        |  |   |       
|---------------------------- |  | ----------------------------------------------------------------------- | ------ | ---- | - | ------ |  | - | ------
|                             |  | Six Months Ended June 30, 2005Compared to Six Months EndedJune 30, 2004
|                             |  | Net Change                                                              |        | Rate |   | Volume
|                             |  | (In thousands)                                                         
|Interest income:             |  |                                                                         |        |      |   |        |  |   |       
|Loans held for investment    |  | $                                                                       | 38,554 |      | $ | 1,723  |  | $ | 36,831
|Investments:                 |  |                                                                         |        |      |   |        |  |   |       
|Taxable                      |  |                                                                         | 954    |      |   | 55     |  |   | 899   
|Tax-exempt                   |  |                                                                         | 1,072  |      |   | 2      |  |   | 1,070 
|Equity securities            |  |                                                                         | 187    |      |   | 19     |  |   | 168   
|Due from banks               |  |                                                                         | 410    |      |   | 2      |  |   | 408   
|Other earning assets         |  |                                                                         | 112    |      |   |       |  |   | 112   
|                             |  |                                                                         |        |      |   |        |  |   |       
|Total interest income        |  |                                                                         | 41,289 |      |   | 1,801  |  |   | 39,488
|Interest expense:            |  |                                                                         |        |      |   |        |  |   |       
|Deposits:                    |  |                                                                         |        |      |   |        |  |   |       
|Interest-bearing demand      |  |                                                                         | 136    |      |   | 21     |  |   | 115   
|Money market                 |  |                                                                         | 3,079  |      |   | 240    |  |   | 2,839 
|Savings                      |  |                                                                         | 225    |      |   | 38     |  |   | 187   
|Time certificates of deposit |  |                                                                         | 6      |      |   | 2      |  |   | 4     
|Repurchase agreements        |  |                                                                         | 326    |      |   | 162    |  |   | 164   
|Federal funds purchased      |  |                                                                         | 72     |      |   | 40     |  |   | 32    
|Subordinated debentures      |  |                                                                         | 184    |      |   | 46     |  |   | 138   
|Borrowings                   |  |                                                                         | 913    |      |   | 399    |  |   | 514   
|                             |  |                                                                         |        |      |   |        |  |   |       
|Total interest expense       |  |                                                                         | 4,941  |      |   | 948    |  |   | 3,993 
|                             |  |                                                                         |        |      |   |        |  |   |       
|Net interest income          |  | $                                                                       | 36,348 |      | $ | 853    |  | $ | 35,495
|                             |  |                                                                         |        |      |   |        |  |   |       



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##### Table of Contents

Provision for Loan Losses



The provision for loan losses represents a charge against earnings. The provision is that amount required to maintain the
allowance for loan losses at a level that in our judgment, is adequate to absorb loan losses inherent in the loan portfolio. In periods when an existing allowance for loan losses is determined to exceed the amount required, the allowance for loan
losses is reduced, which decreases the charge to earnings through the provision for loan losses. When an existing allowance for loan losses is deemed to be understated, an additional provision is recorded, resulting in an additional charge to
earnings through the provision for loan losses.



We recorded a
charge to earnings through the provision for loan losses of $1.7 million for the six months ended June 30, 2005 and $1.0 million for the six months ended June 30, 2004. The primary reason for the increase in our provision of $0.7 million was the
deterioration of several large loans during the first three months of 2005. The provisions for loan losses for the six months ended June 30, 2005 and 2004 do not include a provision related to banks acquired from Guaranty. Our net loan charge-offs
were $1.2 million for the six months ended June 30, 2005 compared to $1.4 million for the six months ended June 30, 2004.



Noninterest Income



The following table presents the major categories of noninterest income:



|                                  |  |                           |       |      |   |       |                    |  |   |       |  
|--------------------------------- |  | ------------------------- | ----- | ---- | - | ----- | ------------------ |  | - | ----- | -
|                                  |  | Six months Ended June 30, |      
|                                  |  | 2005                      |       | 2004 |   |       | Increase(Decrease) | 
|                                  |  | (In thousands)            |      
|Customer service fees             |  | $                         | 3,922 |      | $ | 2,036 |                    |  | $ | 1,886 |  
|Gain (loss) on sale of securities |  |                           | 9     |      |   | (66   | )                  |  |   | 75    |  
|Gain (loss) on sale of assets     |  |                           | 341   |      |   | 26    |                    |  |   | 315   |  
|Net gain on sale of loans         |  |                           | 627   |      |   |      |                    |  |   | 627   |  
|Other                             |  |                           | 18    |      |   | 20    |                    |  |   | (2    | )
|                                  |  |                           |       |      |   |       |                    |  |   |       |  
|Total noninterest income          |  | $                         | 4,917 |      | $ | 2,016 |                    |  | $ | 2,901 |  
|                                  |  |                           |       |      |   |       |                    |  |   |       |  



Total noninterest
income increased $2.9 million from $2.0 million for the first six months ended June 30, 2004 to $4.9 million in the first six months ended June 30, 2005. Excluding the noninterest income of $3.0 million of the subsidiary banks we acquired from
Guaranty, noninterest income decreased $0.1 million from the first six months of 2004 to $1.9 million for the first six months of 2005.



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##### Table of Contents

Noninterest Expense



The following table presents, for the years indicated, the major categories of noninterest expense:



|                                            |  |                           |        |      |   |                    |  |   |       
|------------------------------------------- |  | ------------------------- | ------ | ---- | - | ------------------ |  | - | ------
|                                            |  | Six Months Ended June 30,
|                                            |  | 2005                      |        | 2004 |   | Increase(Decrease)
|                                            |  | (In thousands)           
|Salaries and employee benefits              |  | $                         | 20,396 |      | $ | 5,633              |  | $ | 14,763
|Occupancy                                   |  |                           | 3,288  |      |   | 1,098              |  |   | 2,190 
|Furniture and equipment                     |  |                           | 1,666  |      |   | 613                |  |   | 1,053 
|Amortization                                |  |                           | 6,189  |      |   |                   |  |   | 6,189 
|Professional services                       |  |                           | 2,480  |      |   | 235                |  |   | 2,245 
|Merger, acquisition and transition expenses |  |                           | 5,448  |      |   |                   |  |   | 5,448 
|Other                                       |  |                           | 6,733  |      |   | 3,509              |  |   | 3,224 
|                                            |  |                           |        |      |   |                    |  |   |       
|Total noninterest expense                   |  | $                         | 46,200 |      | $ | 11,088             |  | $ | 35,112
|                                            |  |                           |        |      |   |                    |  |   |       



Total noninterest
expense increased $35.1 million from $11.1 million for the six months ended June 30, 2004 to $46.2 million for the six months ended June 30, 2005. Excluding the noninterest expense of $30.9 million of the subsidiary banks we acquired from Guaranty,
noninterest expense increased $4.2 million for the six months ended June 30, 2004 to $15.3 million for the six months ended June 30, 2005. In addition to the acquisition of Guaranty, several factors contributed to this increase in noninterest
expense. Professional services expenses increased $2.2 million due to a change in external auditors, the outsourcing of our internal audit functions, the outsourcing of loan review services, and the initiation of the process of complying with the
Sarbanes-Oxley Act. In addition to $4.5 million of merger, acquisition and transition related expenses incurred by the Guaranty banks, we incurred $0.9 million for the six months ended June 30, 2005. Our intangible amortization expense increased by
$0.8 million in excess of the $5.3 million of Guaranty amortization for the six months ended June 30, 2005 from the core deposit intangible that resulted from the acquisition of our predecessor.



Financial Condition



The following table sets forth certain key consolidated balance sheet data:



|               |  |                 |           |                     |   |                    |  |   |         |  
|-------------- |  | --------------- | --------- | ------------------- | - | ------------------ |  | - | ------- | -
|               |  | At June 30,2005 |           | At December 31,2004 |   | Increase(Decrease) | 
|               |  | (In thousands)  |          
|Earning assets |  | $               | 1,891,027 |                     | $ | 1,828,853          |  | $ | 62,174  |  
|Total assets   |  |                 | 2,461,842 |                     |   | 2,399,201          |  |   | 63,435  |  
|Deposits       |  |                 | 1,589,180 |                     |   | 1,678,499          |  |   | (89,319 | )



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##### Table of Contents

Loans



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



|                                               |  |                |           |   |                  |   |           |                    |  |   |         |   |  |       |   
|---------------------------------------------- |  | -------------- | --------- | - | ---------------- | - | --------- | ------------------ |  | - | ------- | - |  | ----- | --
|                                               |  | June 30,2005   |           |   | December 31,2004 |   |           | Increase(Decrease) |  |   | %Change |  
|                                               |  | (In thousands) |          
|Real estatemortgage                           |  | $              | 785,938   |   |                  | $ | 719,943   |                    |  | $ | 65,995  |   |  | 9.2   | % 
|Real estateconstruction                       |  |                | 341,885   |   |                  |   | 308,545   |                    |  |   | 33,340  |   |  | 10.8  | % 
|Commercial                                     |  |                | 449,028   |   |                  |   | 458,171   |                    |  |   | (9,143  | ) |  | (2.0  | )%
|Agricultural                                   |  |                | 64,485    |   |                  |   | 62,199    |                    |  |   | 2,286   |   |  | 3.7   | % 
|Consumer                                       |  |                | 54,421    |   |                  |   | 64,625    |                    |  |   | (10,204 | ) |  | (15.8 | )%
|Leases receivable and other                    |  |                | 23,608    |   |                  |   | 28,505    |                    |  |   | (4,897  | ) |  | (17.2 | )%
|                                               |  |                |           |   |                  |   |           |                    |  |   |         |   |  |       |   
|Total gross loans                              |  |                | 1,719,365 |   |                  |   | 1,641,988 |                    |  |   | 77,377  |   |  | 4.7   | % 
|Less: allowance for loan losses                |  |                | (25,535   | ) |                  |   | (25,022   | )                  |  |   | 513     |   |  | 2.1   | % 
|Deferred loan fees                             |  |                | (1,152    | ) |                  |   | (167      | )                  |  |   | 985     |   |  | 589.8 | % 
|                                               |  |                |           |   |                  |   |           |                    |  |   |         |   |  |       |   
|Net loans                                      |  | $              | 1,692,678 |   |                  | $ | 1,616,799 |                    |  | $ | 75,879  |   |  | 4.7   | % 
|                                               |  |                |           |   |                  |   |           |                    |  |   |         |   |  |       |   
|Loans held for sale at lower of cost or market |  | $              | 6,030     |   |                  | $ | 7,301     |                    |  | $ | 1,271   |   |  | (17.4 | )%
|                                               |  |                |           |   |                  |   |           |                    |  |   |         |   |  |       |   



Our lending portfolio
increased 4.7%, or $77.4 million from December 31, 2004. In addition to loan portfolio growth, we also had a change in the mix of loans within the portfolio. We experienced a decrease in commercial loans, which is the continued result of a shift
away from high risk, lower yield loans, such as purchased accounts receivable from businesses and loans and leases from car dealerships. Our deferred loan fees increased from a minimal balance at December 31, 2004 established after the purchase
accounting associated with our acquisition of our predecessor and Guaranty.



Nonperforming Assets



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.



The following table summarizes the loans for which the accrual of interest has been discontinued, loans with payments more than 90 days past due and still accruing interest, loans that have been restructured, and
other real estate owned. For reporting purposes, other real estate owned (OREO) consists of all real estate, other than bank premises, actually owned or controlled by us, including real estate acquired through foreclosure.



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|                                              |  |                        |        |   |                  |   |        |                    |  |   |        |   
|--------------------------------------------- |  | ---------------------- | ------ | - | ---------------- | - | ------ | ------------------ |  | - | ------ | --
|                                              |  | June 30,2005           |        |   | December 31,2004 |   |        | Increase(Decrease) | 
|                                              |  | (Dollars in thousands) |       
|Nonaccrual loans and leases, not restructured |  | $                      | 9,975  |   |                  | $ | 11,905 |                    |  | $ | (1,930 | ) 
|Accruing loans past due 90 days or more       |  |                        | 280    |   |                  |   | 2,494  |                    |  |   | (2,214 | ) 
|                                              |  |                        |        |   |                  |   |        |                    |  |   |        |   
|Total nonperforming loans (NPLs)              |  |                        | 10,255 |   |                  |   | 14,399 |                    |  |   | (4,144 | ) 
|Other real estate owned                       |  |                        | 4,438  |   |                  |   | 5,707  |                    |  |   | (1,269 | ) 
|                                              |  |                        |        |   |                  |   |        |                    |  |   |        |   
|Total nonperforming assets (NPAs)             |  | $                      | 14,693 |   |                  | $ | 20,106 |                    |  | $ | (5,413 | ) 
|                                              |  |                        |        |   |                  |   |        |                    |  |   |        |   
|Selected ratios:                              |  |                        |        |   |                  |   |        |                    |  |   |        |   
|NPLs to total loans held for investment       |  |                        | 0.60   | % |                  |   | 0.88   | %                  |  |   | (0.28  | )%
|NPAs to total assets                          |  |                        | 0.60   | % |                  |   | 0.84   | %                  |  |   | (0.24  | )%



Nonperforming loans
decreased by $4.1 million from $14.4 million as of December 31, 2004 to $10.3 million as of June 30, 2005. The majority of this decrease is due to a $2.2 million decrease in the balance of loans 90 days or more past due as of June 30, 2005. Of this
$2.2 million decrease, $0.6 million is due to the reclassification of a loan 90 days or more past due as of December 31, 2004 to other real estate owned as of June 30, 2005 and $1.8 million of loans 90 days or more past due as of December 31, 2004
that are current as of June 30, 2005. Other real estate owned (OREO) decreased $1.3 million from $5.7 million as of June 30, 2004 to $4.4 million as of June 30, 2005. Of this $1.3 million decrease, $1.1 million is the result of the sale
of a commercial real estate property during the second quarter of 2005 that was carried as OREO property as of December 31, 2004.



Impaired Loans



Impaired loans are commercial, commercial real estate, other real estate-related and individually significant mortgage and consumer loans for which it is
probable that we will not be able to collect all amounts due according to the original contractual terms of the loan agreement. The category of impaired loans is not coextensive with the category of nonaccrual loans, although the two categories
overlap. Nonaccrual loans include impaired loans which are not reviewed on an individual basis for impairment, and represent loans on which the accrual of interest is discontinued when collectibility of principal and interest is uncertain or
payments of principal or interest have become contractually past due 90 days. We may choose to place a loan on nonaccrual status due to payment delinquency or uncertain collectibility, while not classifying the loan as impaired if it is probable
that we will collect all amounts due in accordance with the original contractual terms of the loan or the loan is not a commercial, commercial real estate, other real estate-related or an individually significant mortgage or consumer loan.



In determining whether or not a loan is impaired, we apply our
loan review procedures on a case-by-case basis taking into consideration the circumstances surrounding the loan and borrower, including the collateral value, the reasons for the delay, the borrowers prior payment record, the amount of the
shortfall in relation to the principal and interest owed, and the length of the delay. We measure impairment on a loan-by-loan basis using either the present value of expected future cash flows discounted at the loans effective interest rate
or at the fair value of the collateral if the loan is collateral dependent, less estimated selling costs.



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##### Table of Contents

We had OREO property with an aggregate carrying value of $4.4 million at June 30, 2005 and $5.7 million
at December 31, 2004. Of the $5.7 million at December 31, 2004 $3 million was acquired in the acquisition of Guaranty. We believe that our OREO properties are readily marketable.



Allowance for Loan Losses



The allowance for loan losses is maintained at a level that, in our judgment, is adequate to absorb loan losses inherent 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 identification of impaired loans and the measurement of impairment for each individual loan identified; and second, a method for estimating an allowance for all other loans.



As discussed above, a loan is considered impaired when it is probable that we
will be unable to collect all contractual principal and interest payments due in accordance with the terms of the loan agreement. A loan that has been purchased or acquired in a transfer is 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 plus additional cash flows expected to be collected arising from changes in estimates after acquisition. We have evaluated the loans we acquired in our
acquisitions of our predecessor and Guaranty for impairment, and management believes that no additional impairment exists at this time. 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 is measured based on the fair value of the collateral less estimated selling costs.



In estimating the general 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 general allowance portfolio segment, we apply loss factors to calculate the required allowance. These loss factors
are based upon three years of historical loss rates, adjusted for qualitative factors affecting loan portfolio collectibility as described above. Qualitative adjustment factors are expressed in basis points and adjust historical loss factors
downward up to 40 basis points and upward up to 75 basis points.



The specific allowance for impaired loans and the general allowance 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. As a practical matter, our allowance methodology may show that an unallocated allowance exists at quarter end.



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|                                                                                               |  |                               |           |  
|---------------------------------------------------------------------------------------------- |  | ----------------------------- | --------- | -
|                                                                                               |  | Six Months EndedJune 30, 2005 |          
|                                                                                               |  | (Dollars inthousands)         |          
|Allowance for loan losses:                                                                     |  |                               |           |  
|Beginning balance, December 31, 2004                                                           |  | $                             | 25,022    |  
|Allowance acquired through acquisitions                                                        |  |                               |          |  
|Loan charge offs                                                                               |  |                               |           |  
|Real estatemortgage                                                                           |  |                               | 881       |  
|Real estateconstruction                                                                       |  |                               | 20        |  
|Commercial                                                                                     |  |                               | 526       |  
|Agricultural                                                                                   |  |                               | 32        |  
|Consumer                                                                                       |  |                               | 227       |  
|Leases receivable and other                                                                    |  |                               | 23        |  
|                                                                                               |  |                               |           |  
|Total loan charge offs                                                                         |  |                               | 1,709     |  
|                                                                                               |  |                               |           |  
|Recoveries:                                                                                    |  |                               |           |  
|Real estatemortgage                                                                           |  |                               | 87        |  
|Real estateconstruction                                                                       |  |                               | 84        |  
|Commercial                                                                                     |  |                               | 190       |  
|Agricultural                                                                                   |  |                               | 11        |  
|Consumer                                                                                       |  |                               | 107       |  
|Lease receivable and other                                                                     |  |                               | 43        |  
|                                                                                               |  |                               |           |  
|Total recoveries                                                                               |  |                               | 522       |  
|                                                                                               |  |                               |           |  
|Net loan charge offs                                                                           |  |                               | 1,187     |  
|                                                                                               |  |                               |           |  
|Provision for the allowance for loan losses                                                    |  |                               | 1,700     |  
|                                                                                               |  |                               |           |  
|Ending balance, June 30, 2005                                                                  |  | $                             | 25,535    |  
|                                                                                               |  |                               |           |  
|Loans held for investment                                                                      |  | $                             | 1,718,213 |  
|Average loans held for investment                                                              |  |                               | 1,658,523 |  
|Non-performing loans                                                                           |  |                               | 10,255    |  
|Selected ratios:                                                                               |  |                               |           |  
|Net charge-offs to average loans held for investment                                           |  |                               | 0.14      | %
|Provision for the allowance for loans held for investment to average loans held for investment |  |                               | 0.21      | %
|Allowance for loans to loans held for investment at end of period                              |  |                               | 1.49      | %
|Allowance for loans to nonperforming loans                                                     |  |                               | 249.00    | %



The allowance for loan
losses of $25.5 million at June 30, 2005 represented 1.5% of total loans and 249.0% of nonperforming loans as of that date. At December 31, 2004 the allowance for loan losses of $25.0 million represented 1.5% of total loans and 173.78% of
nonperforming loans. Annualized charge-offs to average loans held for investment were 0.2% for the six months ended June 30, 2005 compared to annualized recoveries to average loans of 0.1% for the six months ended June 30, 2005.



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Investment Securities



We manage our investment portfolio principally to provide liquidity and balance our overall interest rate risk. To a lesser extent, we manage our
investment portfolio to provide earnings with a view to minimize credit risk.



The carrying value of our portfolio of investment securities at June 30, 2005 and December 31, 2004 was as follows:



|                                                |  |                |         |                  |   |                    |  |   |         |   |  |       |   
|----------------------------------------------- |  | -------------- | ------- | ---------------- | - | ------------------ |  | - | ------- | - |  | ----- | --
|                                                |  | June 30,2005   |         | December 31,2004 |   | Increase(Decrease) |  |   | %Change |  
|                                                |  | (In thousands) |        
|Securities available-for-sale:                  |  |                |         |                  |   |                    |  |   |         |   |  |       |   
|U.S. Treasury securities                        |  | $              | 19,823  |                  | $ | 38,170             |  | $ | (18,347 | ) |  | (48.1 | )%
|U.S. Government agencies                        |  |                | 11,483  |                  |   | 8,479              |  |   | 3,004   |   |  | 35.4  | % 
|Obligations of state and political subdivisions |  |                | 54,976  |                  |   | 34,321             |  |   | 20,655  |   |  | 60.2  | % 
|Mortgage backed securities                      |  |                | 44,730  |                  |   | 43,713             |  |   | 1,017   |   |  | 2.3   | % 
|Marketable equity securities                    |  |                | 1,006   |                  |   | 1,004              |  |   | 2       |   |  | 0.2   | % 
|                                                |  |                |         |                  |   |                    |  |   |         |   |  |       |   
|Total securities available-for-sale             |  | $              | 132,018 |                  | $ | 125,687            |  | $ | 6,331   |   |  | 5.0   | % 
|                                                |  |                |         |                  |   |                    |  |   |         |   |  |       |   
|Securities held-to-maturity:                    |  |                |         |                  |   |                    |  |   |         |   |  |       |   
|Mortgage-backed securities                      |  | $              | 506     |                  | $ | 640                |  | $ | (134    | ) |  | 20.9  | % 
|                                                |  |                |         |                  |   |                    |  |   |         |   |  |       |   
|Bank stocks, at cost                            |  | $              | 14,835  |                  | $ | 12,770             |  | $ | 2,065   |   |  | 16.2  | % 
|                                                |  |                |         |                  |   |                    |  |   |         |   |  |       |   



The carrying value of
our investment securities at June 30, 2005 totaled $147.4 million compared to $139.1 million at December 31, 2004. We restructured the makeup of our investment portfolio during the first six months of 2005 away from lower yielding securities to
somewhat higher yielding securities with acceptable risk profiles. This restructuring accounts for the majority of the changes in the carrying values from December 31, 2004 June 30, 2005. The acquisition of Guaranty accounted for $102.7 million of
the $105.5 million increase from 2003 to 2004. The remaining increase of $2.8 million was related to the additional available liquidity resulting from the decrease in our loan portfolio over this same period.



Borrowings



Excluding unamortized premium of $448,000, the Company had a $41,229,000 aggregate balance of subordinated debentures
outstanding with a weighted average cost of 7.9% at June 30, 2005. 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 million 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 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. We amortized $402,000 of premium for the six
months ended June 30, 2005.



Our borrowings increased by $119.7
million at June 30, 2005 from December 31, 2004. The use of borrowing was precipitated by a decrease in deposits of $89.3 million with a $75.1 million increase in our loan portfolio during the six month period ended June 30, 2005.



Borrowed funds include Treasury Tax and Loan notes, Federal Home Loan Bank
(FHLB) borrowings, and a line of credit with First Tennessee. The FHLB borrowings are collateralized by a blanket pledge and security agreement and the stock of the Companys subsidiaries. The Company had $159,441,000 and



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##### Table of Contents

$39,770,000 outstanding under these borrowings at June 30, 2005 and December 31, 2004, with a total commitment of $243,027,000 at June 30, 2005.



Capital Resources



Current risk-based regulatory capital standards generally require banks and bank holding companies to maintain a ratio of
core or Tier 1 capital (consisting principally of common equity) to risk-weighted assets of at least 4%, a ratio of Tier 1 capital to average total 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 risk-weighted assets of at least 8%. 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.



At June 30, 2005, the Company had a leverage ratio of 9.54%, Tier 1 risk-weighted capital ratio of 10.12% and total
risk-weighted capital ratio of 11.37%. The Company actively monitors its regulatory capital ratios to ensure that the Company and its bank subsidiaries are well capitalized under the applicable regulatory framework.



Contractual Obligations



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 the dates indicated, the following financial instruments
were outstanding whose contract amounts represented credit risk:



|                             |  |                          |         |                              |        
|---------------------------- |  | ------------------------ | ------- | ---------------------------- | -------
|                             |  | June 30,2005 (Successor) |         | December 31,2004 (Successor)
|                             |  | (In thousands)          
|Commitments to extend credit |  | $                        | 564,297 |                              | 468,059
|Standby letters of credit    |  |                          | 36,230  |                              | 71,266 
|Commercial letters of credit |  |                          | 479     |                              | 574    



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



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##### Table of Contents

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. Substantially 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.



Off
Balance Sheet Arrangements



We do not have off-balance
sheet arrangements that have or are reasonably likely to have a material current or future effect on our financial condition, liquidity, capital expenditures or capital resources.



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.



On a stand-alone basis, we currently rely on dividends from
our subsidiary banks as the main source of liquidity. At June 30, 2005, the amount available for dividends from our banks, including First National Bank of Strasburg, which was subsequently merged with Guaranty Bank and Trust Company, without
regulatory approval, was $16.7 million. We require liquidity for the payment of interest on the subordinated debentures, for operating expenses, principally salaries and benefits, and for the payment of dividends to our shareholders.



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. Our goal is to maintain a loan-to-deposit ratio (total loans held for sale plus total loans and leases held for investment to total deposits) below approximately 90% and a
liquidity ratio (liquid assets, including cash and due from banks, Federal funds sold and investment securities not pledged as collateral expressed as a percentage of total deposits) above approximately 15%.



Our deposits tend to be cyclical, decreasing at the beginning of the year and
ramping up during the balance of the year. In addition, while fluctuations in the balances of a few 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.



Our liquidity
may be impacted negatively, however, by several other factors, including expenses associated with unforeseen or pending litigation.



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|ITEM 3. | Quantitative and Qualitative Disclosure 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 do not have
any market risk sensitive instruments entered into 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 individual bank and holding company Asset Liability Management
Committees, or our ALCOs, address interest rate risk. The committees are comprised of members of our senior management, with a board member on the holding company ALCO. 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. 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.



Gap Analysis



A traditional measure of a financial institutions interest rate risk is the static gap analysis. A static gap is the difference between the amount
of assets and liabilities that are expected to mature or reprice 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.



At June 30, 2005, we had a positive
gap of $169,000, or 7% percent of our total assets, that would be subject to repricing within one year, with a total positive gap $527,000, or 21% of our total assets. The following table sets forth information concerning repricing opportunities for
our interest-earning assets and interest bearing liabilities as of June 30, 2005. 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 repricing date.



|                                                               |  |                   |           |   |                   |   |         |             |  |   |             |   |  |                   |         |   |       |   |           |   |  |   |          
|-------------------------------------------------------------- |  | ----------------- | --------- | - | ----------------- | - | ------- | ----------- |  | - | ----------- | - |  | ----------------- | ------- | - | ----- | - | --------- | - |  | - | ---------
|                                                               |  | Less than3 months |           |   | 3 monthsto 1 year |   |         | 1 to 5years |  |   | Over 5years |   |  | Non-ratesensitive |         |   | Total
|Interest-bearing cash and cash equivalents                     |  | $                 | 14,425    |   |                   | $ | 5,000   |             |  | $ |            |   |  | $                 |        |   |       | $ |          |   |  | $ | 19,425   
|Investment securities                                          |  |                   | 26,563    |   |                   |   | 21,072  |             |  |   | 40,748      |   |  |                   | 44,141  |   |       |   | 14,835    |   |  |   | 147,359  
|Loans, gross                                                   |  |                   | 1,162,189 |   |                   |   | 225,322 |             |  |   | 269,685     |   |  |                   | 58,253  |   |       |   | 8,794     |   |  |   | 1,724,243
|All other assets                                               |  |                   | 42,315    |   |                   |   | 10,485  |             |  |   | 10,872      |   |  |                   | 12,719  |   |       |   | 494,424   |   |  |   | 570,815  
|                                                               |  |                   |           |   |                   |   |         |             |  |   |             |   |  |                   |         |   |       |   |           |   |  |   |          
|Totals                                                         |  | $                 | 1,245,492 |   |                   | $ | 261,879 |             |  | $ | 321,305     |   |  | $                 | 115,113 |   |       | $ | 518,053   |   |  | $ | 2,461,842
|                                                               |  |                   |           |   |                   |   |         |             |  |   |             |   |  |                   |         |   |       |   |           |   |  |   |          
|Deposits                                                       |  | $                 | 795,777   |   |                   | $ | 258,009 |             |  | $ | 50,474      |   |  | $                 |        |   |       | $ | 484,920   |   |  | $ | 1,589,180
|Assets under repurchase agreements and federal funds purchases |  |                   | 53,797    |   |                   |   |        |             |  |   |            |   |  |                   |        |   |       |   |          |   |  |   | 53,797   
|Borrowings                                                     |  |                   | 150,352   |   |                   |   |        |             |  |   | 4,871       |   |  |                   | 4,218   |   |       |   |          |   |  |   | 159,441  
|Subordinated debentures                                        |  |                   |          |   |                   |   | 25,764  |             |  |   |            |   |  |                   | 15,913  |   |       |   |          |   |  |   | 41,677   
|All other liabilities                                          |  |                   | 48,070    |   |                   |   | 6,839   |             |  |   | 2,398       |   |  |                   |        |   |       |   | 43,099    |   |  |   | 100,406  
|Stockholders equity                                           |  |                   |          |   |                   |   |        |             |  |   |            |   |  |                   |        |   |       |   | 517,341   |   |  |   | 517,341  
|                                                               |  |                   |           |   |                   |   |         |             |  |   |             |   |  |                   |         |   |       |   |           |   |  |   |          
|Totals                                                         |  | $                 | 1,047,996 |   |                   | $ | 290,612 |             |  | $ | 57,743      |   |  | $                 | 20,131  |   |       | $ | 1,045,360 |   |  | $ | 2,461,842
|                                                               |  |                   |           |   |                   |   |         |             |  |   |             |   |  |                   |         |   |       |   |           |   |  |   |          
|Period gap                                                     |  |                   | 197,496   |   |                   |   | (28,733 | )           |  |   | 263,562     |   |  |                   | 94,982  |   |       |   | (527,307  | ) |  |   |          
|Cumulative gap                                                 |  |                   | 197,496   |   |                   |   | 168,763 |             |  |   | 432,325     |   |  |                   | 527,307 |   |       |   |           |   |  |   |          
|Cumulative rate sensitive gap %                                |  |                   | 8         | % |                   |   | 7       | %           |  |   | 18          | % |  |                   | 21      | % |       |   |           |   |  |   |          



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|ITEM 4. | 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 15d-15(e) under the Securities Exchange Act of 1934). The Companys disclosure controls were
designed to provide a 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. However, the controls have been designed to provide reasonable assurance of achieving the controls stated goals. Based on that
evaluation, the Companys Chief Executive Officer and Chief Financial Officer, have concluded that the Companys disclosure controls and procedures are effective at June 30, 2005 to ensure that information required to be disclosed in the
reports that we file or submit under the Securities Exchange Act of 1934 was (i) accumulated and communicated to management, including the Companys Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding
required disclosure and (ii) recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission.



There have been no changes in the Companys internal control over financial reporting (as defined in Rule 15d-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.



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##### Table of Contents

PART IIOTHER INFORMATION



|ITEM 1. | Legal Proceedings
|------- | -----------------



In December 2004, an adversary proceeding was filed 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. 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. The Court recently
granted our motion for summary judgment and dismissed $8.5 million of the claims relating to alleged transfers for payment of items credited in the check collection process. We intend to continue to vigorously contest the remaining claims, which
amount to approximately $2.5 million.



In July 2005 and
September 2005, two actions were filed in the Denver District Court, Denver, Colorado by investors who provided funds to Hoover, the Hoover Company or related entities against Guaranty Bank and Trust Company and a former officer. 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,
violations of the Colorado Organized Crime Control Act and a civil conspiracy causing the investors to incur damages. The investors are seeking actual and statutory treble damages against Guaranty Bank and its former officer. The alleged actual
losses claimed in connection with such activities are in excess of $13.1 million and statutory treble damages. At this time, we cannot determine whether the outcome of the above matters will have a material adverse impact on our consolidated
financial position or results of operations.



We are party to
various other legal proceedings in the ordinary course of business. We do not believe that the outcome of any of these matters will have a material adverse effect on our consolidated financial position or results of operations.



|ITEM 2. | Unregistered Sales of Equity Securities and Use of Proceeds
|------- | -----------------------------------------------------------



(c) Issuer Repurchases of Common Stock



|           |  |                                             |  |                                          |       |                                                                                            |   |                                                                                         |  
|---------- |  | ------------------------------------------- |  | ---------------------------------------- | ----- | ------------------------------------------------------------------------------------------ | - | --------------------------------------------------------------------------------------- | -
|Period     |  | (a) TotalNumber ofShares (orUnits)Purchased |  | (b) AveragePrice Paid perShare (or Unit) |       | (c) Total Numberof Shares (or Units)Purchased as Partof PubliclyAnnounced Plansor Programs |   | (d) MaximumNumber of Shares(or Units) thatMay Yet BePurchased Underthe Plans orPrograms
|April 2005 |  |                                            |  | $                                        |      |                                                                                            |  |                                                                                         | 
|May 2005   |  |                                            |  |                                          |      |                                                                                            |  |                                                                                         | 
|June 2005  |  | 400,000                                     |  |                                          | 10.80 |                                                                                            |  |                                                                                         | 
|           |  |                                             |  |                                          |       |                                                                                            |   |                                                                                         |  
|Totals     |  | 400,000                                     |  | $                                        | 10.80 |                                                                                            |  |                                                                                         | 
|           |  |                                             |  |                                          |       |                                                                                            |   |                                                                                         |  



|ITEM 3. | Defaults Upon Senior Securities
|------- | -------------------------------



None.



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##### Table of Contents

|ITEM 4. | Submission of Matters to a Vote of Security Holders
|------- | ---------------------------------------------------



| | (a) | The Company held its annual meeting of shareholders on June 2, 2005.
| | --- | --------------------------------------------------------------------



| | (b) | The following directors were elected at the annual meeting to serve until the next annual meeting of shareholders and thereafter until their successors are duly elected and
qualified:
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



David C. Boyles

G. Hank Brown

Edward B. Cordes

John M. Eggemeyer

William R. Farr

Richard G. McClintock

Stephen B. Shraiberg

Matthew P. Wagner

Albert C. Yates



| | (c) | At the annual meeting, shareholders voted on (1) the election of the Companys directors; (2) an amendment and restatement of the Companys Certificate of Incorporation;
and (3) adoption of the Companys 2005 Stock Incentive Plan. All nominees for director were elected, the amendment and restatement of the Companys Certificate of Incorporation was approved, and the Companys 2005 Stock Incentive Plan
was adopted and approved. The results of the voting were as follows:
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|                                               |  |            |  |               |  |          |  |             |  |                 
|---------------------------------------------- |  | ---------- |  | ------------- |  | -------- |  | ----------- |  | ----------------
|Matter                                         |  | Votes For  |  | Votes Against |  | Withheld |  | Abstentions |  | Broker Non-votes
|Election of Directors:                         |  |            |  |               |  |          |  |             |  |                 
|David C. Boyles                                |  | 44,262,986 |  |              |  |         |  | 3,740,600   |  |                
|G. Hank Brown                                  |  | 47,584,586 |  |              |  |         |  | 419,000     |  |                
|Edward B. Cordes                               |  | 47,584,586 |  |              |  |         |  | 419,000     |  |                
|John M. Eggemeyer                              |  | 44,262,986 |  |              |  |         |  | 3,740,600   |  |                
|William R. Farr                                |  | 44,262,986 |  |              |  |         |  | 3,740,600   |  |                
|Richard G. McClintock                          |  | 47,584,586 |  |              |  |         |  | 419,000     |  |                
|Stephen B. Shraiberg                           |  | 47,584,586 |  |              |  |         |  | 419,000     |  |                
|Matthew P. Wagner                              |  | 47,584,586 |  |              |  |         |  | 419,000     |  |                
|Albert C. Yates                                |  | 47,584,586 |  |              |  |         |  | 419,000     |  |                
|                                               |  |            |  |               | 
|Matter                                         |  | Votes For  |  | Votes Against |  | Withheld |  | Abstentions |  | Broker Non-votes
|Amend and Restate Certificate of Incorporation |  | 28,152,752 |  | 5,693,000     |  |         |  |            |  | 14,157,834      
|2005 Stock Incentive Plan                      |  | 29,491,852 |  | 4,353,900     |  |         |  |            |  | 14,157,834      



|ITEM 5. | Other Information
|------- | -----------------



None to report.



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##### Table of Contents

|ITEM 6. | Exhibits
|------- | --------



|              |  |                                                                                                                                                                                                           
|------------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|ExhibitNumber |  | Description                                                                                                                                                                                               
|3.1           |  | Certificate of Incorporation of the Company, as amended to date (incorporated herein by reference from Exhibit 3.1 to the Companys Registration Statement on Form S-1 (File No.
333-124855), as amended).
|              | 
|3.2           |  | Bylaws of the Company, as amended to date (incorporated herein by reference from Exhibit 3.2 to the Companys Registration Statement on Form S-1 (File No. 333-124855), as
amended).                      
|              | 
|31.1          |  | 15d-14(a) Certification of Chief Executive Officer.                                                                                                                                                       
|              | 
|31.2          |  | 15d-14(a) Certification of Chief Financial Officer.                                                                                                                                                       
|              | 
|32.1          |  | Section 1350 Certification of Chief Executive Officer.                                                                                                                                                    
|              | 
|32.2          |  | Section 1350 Certification of Chief Financial Officer.                                                                                                                                                    



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##### Table of Contents



SIGNATURES



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



|                         |  |  |  |                                                     
|------------------------ |  |  |  | ----------------------------------------------------
|Date: September 26, 2005 |  |  |  | CENTENNIAL BANK HOLDINGS, INC.                      
|                         |  | 
|                         |  |  |  | /S/    PAUL W.
TAYLOR                               
|                         |  |  |  | Paul W. Taylor                                      
|                         |  |  |  | Executive Vice President and Chief Financial Officer



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