##### 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 September 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 jurisdiction of 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)



---



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 x No ̈



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 October 31, 2005 there were 62,411,268 shares of the
registrants common stock outstanding, including 1,286,131 shares of unvested restricted stock.



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1



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##### Table of Contents



TABLE OF CONTENTS



|                             |  |                                                                                       |  |     
|---------------------------- |  | ------------------------------------------------------------------------------------- |  | ----
|                             |  |                                                                                       |  | Page
|PART IFINANCIAL INFORMATION |  | 3                                                                                    
|                             |  |                                                                                      
|ITEM 1.                      |  | Unaudited Consolidated Financial Statements                                           |  | 3   
|                             |  |                                                                                      
|                             |  | Unaudited Consolidated Balance Sheets                                                 |  | 3   
|                             |  |                                                                                      
|                             |  | Unaudited Consolidated Statements of Operations                                       |  | 5   
|                             |  |                                                                                      
|                             |  | Unaudited Consolidated Statements of Comprehensive Income (loss)                      |  | 7   
|                             |  |                                                                                      
|                             |  | Unaudited Consolidated Statements of Cash Flows                                       |  | 9   
|                             |  |                                                                                      
|                             |  | Notes to Unaudited Consolidated Financial Statements                                  |  | 10  
|                             |  |                                                                                      
|ITEM 2.                      |  | Managements Discussion and Analysis of Financial Condition and Results of Operations |  | 16  
|                             |  |                                                                                      
|ITEM 3.                      |  | Quantitative and Qualitative Disclosures About Market Risk                            |  | 28  
|                             |  |                                                                                      
|ITEM 4.                      |  | Controls and Procedures                                                               |  | 29  
|                             | 
|PART IIOTHER INFORMATION    |  | 30                                                                                   
|                             |  |                                                                                      
|ITEM 1.                      |  | Legal Proceedings                                                                     |  | 30  
|                             |  |                                                                                      
|ITEM 2.                      |  | Unregistered Sale of Equity Securities and Use of Proceeds                            |  | 30  
|                             |  |                                                                                      
|ITEM 3.                      |  | Defaults Upon Senior Securities                                                       |  | 30  
|                             |  |                                                                                      
|ITEM 4.                      |  | Submission of Matters to a Vote of Security Holders                                   |  | 30  
|                             |  |                                                                                      
|ITEM 5.                      |  | Other Information                                                                     |  | 30  
|                             |  |                                                                                      
|ITEM 6.                      |  | Exhibits                                                                              |  | 31  
|                             | 
|SIGNATURES                   |  | 32                                                                                   



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

(In thousands, except for share data)



|                                                                                                      |  |                   |           |   |                  |           |  
|----------------------------------------------------------------------------------------------------- |  | ----------------- | --------- | - | ---------------- | --------- | -
|                                                                                                      |  | September 30,2005 |           |   | December 31,2004 |          
|                                                                                                      |  | (Unaudited)       |           |   |                  |          
|Assets                                                                                                |  |                   |           |   |                  |           |  
|Cash and due from banks                                                                               |  | $                 | 94,033    |   |                  | 67,927    |  
|Federal funds sold                                                                                    |  |                   |          |   |                  | 23,000    |  
|                                                                                                      |  |                   |           |   |                  |           |  
|Cash and cash equivalents                                                                             |  |                   | 94,033    |   |                  | 90,927    |  
|                                                                                                      |  |                   |           |   |                  |           |  
|Time deposits with banks                                                                              |  |                   | 5,000     |   |                  | 5,000     |  
|Securities available for sale, at fair value                                                          |  |                   | 122,097   |   |                  | 125,687   |  
|Securities held to maturity (fair value of $386 and $645 at September 30, 2005 and December 31, 2004) |  |                   | 386       |   |                  | 640       |  
|Bank stocks, at cost                                                                                  |  |                   | 24,834    |   |                  | 12,770    |  
|Other investments                                                                                     |  |                   |          |   |                  | 1,405     |  
|                                                                                                      |  |                   |           |   |                  |           |  
|Total investments                                                                                     |  |                   | 152,316   |   |                  | 145,502   |  
|                                                                                                      |  |                   |           |   |                  |           |  
|Loans held for sale                                                                                   |  |                   | 6,015     |   |                  | 7,301     |  
|Loans, net of unearned discount                                                                       |  |                   | 1,763,533 |   |                  | 1,641,821 |  
|Less allowance for loan losses                                                                        |  |                   | (25,019   | ) |                  | (25,022   | )
|                                                                                                      |  |                   |           |   |                  |           |  
|Net loans                                                                                             |  |                   | 1,744,529 |   |                  | 1,624,100 |  
|                                                                                                      |  |                   |           |   |                  |           |  
|Premises and equipment, net                                                                           |  |                   | 48,472    |   |                  | 44,921    |  
|Foreclosed assets                                                                                     |  |                   | 2,532     |   |                  | 5,707     |  
|Accrued interest receivable                                                                           |  |                   | 11,375    |   |                  | 9,062     |  
|Goodwill                                                                                              |  |                   | 331,626   |   |                  | 328,185   |  
|Other intangible assets, net                                                                          |  |                   | 44,087    |   |                  | 53,360    |  
|Other assets                                                                                          |  |                   | 12,402    |   |                  | 7,795     |  
|Assets held for sale                                                                                  |  |                   | 98,797    |   |                  | 89,642    |  
|                                                                                                      |  |                   |           |   |                  |           |  
|Total assets                                                                                          |  | $                 | 2,540,169 |   |                  | 2,399,201 |  
|                                                                                                      |  |                   |           |   |                  |           |  



3



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##### Table of Contents

CENTENNIAL BANK HOLDINGS, INC. AND SUBSIDIARIES

Consolidated Balance Sheets

(In thousands, except for share data)



|                                                                                                                                                                                                                                    |  |                   |           |   |                  |           |  
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ----------------- | --------- | - | ---------------- | --------- | -
|                                                                                                                                                                                                                                    |  | September 30,2005 |           |   | December 31,2004 |          
|                                                                                                                                                                                                                                    |  | (Unaudited)       |           |   |                  |          
|Liabilities and Stockholders Equity                                                                                                                                                                                                |  |                   |           |   |                  |           |  
|Liabilities:                                                                                                                                                                                                                        |  |                   |           |   |                  |           |  
|Deposits:                                                                                                                                                                                                                           |  |                   |           |   |                  |           |  
|Noninterest-bearing demand                                                                                                                                                                                                          |  | $                 | 531,970   |   |                  | 477,999   |  
|Interest-bearing demand                                                                                                                                                                                                             |  |                   | 594,634   |   |                  | 581,580   |  
|Savings                                                                                                                                                                                                                             |  |                   | 73,575    |   |                  | 81,725    |  
|Time                                                                                                                                                                                                                                |  |                   | 521,430   |   |                  | 537,195   |  
|                                                                                                                                                                                                                                    |  |                   |           |   |                  |           |  
|Total deposits                                                                                                                                                                                                                      |  |                   | 1,721,609 |   |                  | 1,678,499 |  
|                                                                                                                                                                                                                                    |  |                  
|Securities sold under agreements to repurchase and federal fund purchases                                                                                                                                                           |  |                   | 31,304    |   |                  | 27,492    |  
|Accrued interest payable                                                                                                                                                                                                            |  |                   | 3,292     |   |                  | 2,313     |  
|Borrowings                                                                                                                                                                                                                          |  |                   | 118,335   |   |                  | 39,770    |  
|Subordinated debentures                                                                                                                                                                                                             |  |                   | 41,476    |   |                  | 42,079    |  
|Deferred tax liability, net                                                                                                                                                                                                         |  |                   | 12,278    |   |                  | 12,076    |  
|Other liabilities                                                                                                                                                                                                                   |  |                   | 8,987     |   |                  | 10,350    |  
|Liabilities associated with assets held for sale                                                                                                                                                                                    |  |                   | 80,854    |   |                  | 71,208    |  
|                                                                                                                                                                                                                                    |  |                   |           |   |                  |           |  
|Total liabilities                                                                                                                                                                                                                   |  |                   | 2,018,135 |   |                  | 1,883,787 |  
|                                                                                                                                                                                                                                    |  |                  
|Commitments and contingencies                                                                                                                                                                                                       |  |                   |           |   |                  |           |  
|                                                                                                                                                                                                                                    |  |                  
|Stockholders equity:                                                                                                                                                                                                               |  |                   |           |   |                  |           |  
|Common stock$.001 par value; 100,000,000 shares authorized, 53,509,650 and 52,333,334 shares issued at September 30, 2005 and
December 31, 2004; 53,079,250 and 52,333,334 outstanding at September 30, 2005 and December 31, 2004 |  |                   | 52        |   |                  | 52        |  
|Additional paid-in capital                                                                                                                                                                                                          |  |                   | 512,142   |   |                  | 511,588   |  
|Retained earnings                                                                                                                                                                                                                   |  |                   | 13,614    |   |                  | 3,796     |  
|Accumulated other comprehensive income (loss)                                                                                                                                                                                       |  |                   | 885       |   |                  | (22       | )
|                                                                                                                                                                                                                                    |  |                   |           |   |                  |           |  
|                                                                                                                                                                                                                                    |  |                   | 526,693   |   |                  | 515,414   |  
|Less cost of shares in treasury, 430,400 shares at September 30, 2005                                                                                                                                                               |  |                   | (4,659    | ) |                  |          |  
|                                                                                                                                                                                                                                    |  |                   |           |   |                  |           |  
|Total stockholders equity                                                                                                                                                                                                          |  |                   | 522,034   |   |                  | 515,414   |  
|                                                                                                                                                                                                                                    |  |                   |           |   |                  |           |  
|Total liabilities and stockholders equity                                                                                                                                                                                          |  | $                 | 2,540,169 |   |                  | 2,399,201 |  
|                                                                                                                                                                                                                                    |  |                   |           |   |                  |           |  



See Notes to
Unaudited Consolidated Financial Statements.



4



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##### Table of Contents

CENTENNIAL BANK HOLDINGS, INC.

AND SUBSIDIARIES

Consolidated Statements of Operations

(In thousands, except for share and per share data)



|                                                            |  |                                     |            |             |                                               |            |                                         |           |  
|----------------------------------------------------------- |  | ----------------------------------- | ---------- | ----------- | --------------------------------------------- | ---------- | --------------------------------------- | --------- | -
|                                                            |  | Successor                           |            | Predecessor |                                              
|                                                            |  | Three MonthsEndedSeptember 30, 2005 |            |             | Period fromJuly 17, 2004 toSeptember 30, 2004 |            | Period fromJuly 1, 2004 toJuly 16, 2004 |          
|                                                            |  | (Unaudited)                         |            |             | (Unaudited)                                   |            | (Unaudited)                             |          
|Interest income:                                            |  |                                     |            |             |                                               |            |                                         |           |  
|Loans, including fees                                       |  | $                                   | 32,909     |             |                                               | 8,347      |                                         | 1,732     |  
|Investment securities:                                      |  |                                     |            |             |                                               |            |                                         |           |  
|Taxable                                                     |  |                                     | 49         |             |                                               | 102        |                                         | 42        |  
|Tax-exempt                                                  |  |                                     | 714        |             |                                               | 4          |                                         |          |  
|Dividends                                                   |  |                                     | 300        |             |                                               | 55         |                                         | 11        |  
|Federal funds sold and other                                |  |                                     | 542        |             |                                               | 121        |                                         | 5         |  
|                                                            |  |                                     |            |             |                                               |            |                                         |           |  
|Total interest income                                       |  |                                     | 34,514     |             |                                               | 8,629      |                                         | 1,790     |  
|                                                            |  |                                     |            |             |                                               |            |                                         |           |  
|Interest expense:                                           |  |                                     |            |             |                                               |            |                                         |           |  
|Deposits                                                    |  |                                     | 6,648      |             |                                               | 1,251      |                                         | 393       |  
|Federal funds purchased and repurchase agreements           |  |                                     | 293        |             |                                               | 37         |                                         | 4         |  
|Subordinated debentures                                     |  |                                     | 669        |             |                                               | 313        |                                         | 93        |  
|Borrowings                                                  |  |                                     | 1,031      |             |                                               | 94         |                                         | 35        |  
|                                                            |  |                                     |            |             |                                               |            |                                         |           |  
|Total interest expense                                      |  |                                     | 8,641      |             |                                               | 1,695      |                                         | 525       |  
|                                                            |  |                                     |            |             |                                               |            |                                         |           |  
|Net interest income                                         |  |                                     | 25,873     |             |                                               | 6,934      |                                         | 1,265     |  
|Provision for loan losses                                   |  |                                     |           |             |                                               |           |                                         | 3,700     |  
|                                                            |  |                                     |            |             |                                               |            |                                         |           |  
|Net interest income (loss), after provision for loan losses |  |                                     | 25,873     |             |                                               | 6,934      |                                         | (2,435    | )
|Noninterest income:                                         |  |                                     |            |             |                                               |            |                                         |           |  
|Customer service and other fees                             |  |                                     | 2,035      |             |                                               | 752        |                                         | 186       |  
|Gain on sale of loans                                       |  |                                     | 433        |             |                                               |           |                                         |          |  
|Gain on sale of assets                                      |  |                                     | 260        |             |                                               | 18         |                                         | 189       |  
|Other                                                       |  |                                     | 4          |             |                                               | 29         |                                         | 35        |  
|                                                            |  |                                     |            |             |                                               |            |                                         |           |  
|Total noninterest income                                    |  |                                     | 2,732      |             |                                               | 799        |                                         | 410       |  
|Noninterest expense:                                        |  |                                     |            |             |                                               |            |                                         |           |  
|Salaries and employee benefits                              |  |                                     | 9,828      |             |                                               | 2,334      |                                         | 971       |  
|Occupancy expense                                           |  |                                     | 1,651      |             |                                               | 435        |                                         | 102       |  
|Furniture and equipment                                     |  |                                     | 924        |             |                                               | 248        |                                         | 49        |  
|Amortization of intangible assets                           |  |                                     | 2,968      |             |                                               | 296        |                                         |          |  
|Merger, acquisition and transition expenses                 |  |                                     | 752        |             |                                               |           |                                         |          |  
|Other general and administrative                            |  |                                     | 4,604      |             |                                               | 1,243      |                                         | 2,304     |  
|                                                            |  |                                     |            |             |                                               |            |                                         |           |  
|Total noninterest expense                                   |  |                                     | 20,727     |             |                                               | 4,556      |                                         | 3,426     |  
|                                                            |  |                                     |            |             |                                               |            |                                         |           |  
|Income (loss) before income taxes                           |  |                                     | 7,878      |             |                                               | 3,177      |                                         | (5,451    | )
|Income tax expense                                          |  |                                     | 2,748      |             |                                               | 1,379      |                                         | (1,288    | )
|                                                            |  |                                     |            |             |                                               |            |                                         |           |  
|Income (loss) from continuing operations                    |  |                                     | 5,130      |             |                                               | 1,798      |                                         | (4,163    | )
|Loss on disposition of discontinued operations, net of tax  |  |                                     | (340       | )           |                                               |           |                                         |          |  
|Income from discontinued operations, net of tax             |  |                                     | 340        |             |                                               |           |                                         |          |  
|                                                            |  |                                     |            |             |                                               |            |                                         |           |  
|Net income (loss)                                           |  | $                                   | 5,130      |             |                                               | 1,798      |                                         | (4,163    | )
|                                                            |  |                                     |            |             |                                               |            |                                         |           |  
|Earnings (loss) per sharebasic:                            |  |                                     |            |             |                                               |            |                                         |           |  
|Income (loss) from continuing operations                    |  | $                                   | 0.10       |             |                                               | 0.09       |                                         | (2.67     | )
|Income from discontinued operations, net of tax             |  |                                     |           |             |                                               |           |                                         |          |  
|Net income (loss)                                           |  |                                     | 0.10       |             |                                               | 0.09       |                                         | (2.67     | )
|Earnings (loss) per sharediluted:                          |  |                                     |            |             |                                               |            |                                         |           |  
|Income (loss) from continuing operations                    |  | $                                   | 0.10       |             |                                               | 0.09       |                                         | (2.67     | )
|Income from discontinued operations, net of tax             |  |                                     |           |             |                                               |           |                                         |          |  
|Net income (loss)                                           |  |                                     | 0.10       |             |                                               | 0.09       |                                         | (2.67     | )
|Weighted average shares outstanding                         |  |                                     | 51,902,934 |             |                                               | 19,000,000 |                                         | 1,557,568 |  
|Effect of unvested share awards                             |  |                                     | 99,085     |             |                                               |           |                                         |          |  
|                                                            |  |                                     |            |             |                                               |            |                                         |           |  
|Fully diluted average shares outstanding                    |  |                                     | 52,002,019 |             |                                               | 19,000,000 |                                         | 1,557,568 |  
|                                                            |  |                                     |            |             |                                               |            |                                         |           |  



See Notes to
Unaudited Consolidated Financial Statements.



5



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##### Table of Contents

CENTENNIAL BANK HOLDINGS, INC.

AND SUBSIDIARIES

Consolidated Statements of Operations

(In thousands, except for share and per share data)



|                                                                     |  |                                    |            |             |                                               |            |                                           |           |  
|-------------------------------------------------------------------- |  | ---------------------------------- | ---------- | ----------- | --------------------------------------------- | ---------- | ----------------------------------------- | --------- | -
|                                                                     |  | Successor                          |            | Predecessor |                                              
|                                                                     |  | Nine MonthsEndedSeptember 30, 2005 |            |             | Period fromJuly 17, 2004 toSeptember 30, 2004 |            | Period fromJanuary 1, 2004 toJuly 16,2004 |          
|                                                                     |  | (Unaudited)                        |            |             | (Unaudited)                                   |            |                                           |          
|Interest income:                                                     |  |                                    |            |             |                                               |            |                                           |           |  
|Loans, including fees                                                |  | $                                  | 91,989     |             |                                               | 8,347      |                                           | 22,260    |  
|Investment securities:                                               |  |                                    |            |             |                                               |            |                                           |           |  
|Taxable                                                              |  |                                    | 697        |             |                                               | 102        |                                           | 485       |  
|Tax-exempt                                                           |  |                                    | 1,797      |             |                                               | 4          |                                           | 10        |  
|Dividends                                                            |  |                                    | 669        |             |                                               | 55         |                                           | 130       |  
|Federal funds sold and other                                         |  |                                    | 1,773      |             |                                               | 121        |                                           | 27        |  
|                                                                     |  |                                    |            |             |                                               |            |                                           |           |  
|Total interest income                                                |  |                                    | 96,925     |             |                                               | 8,629      |                                           | 22,912    |  
|                                                                     |  |                                    |            |             |                                               |            |                                           |           |  
|Interest expense:                                                    |  |                                    |            |             |                                               |            |                                           |           |  
|Deposits                                                             |  |                                    | 15,041     |             |                                               | 1,251      |                                           | 5,340     |  
|Federal funds purchased and repurchase agreements                    |  |                                    | 737        |             |                                               | 37         |                                           | 50        |  
|Subordinated debentures                                              |  |                                    | 1,839      |             |                                               | 313        |                                           | 1,054     |  
|Borrowings                                                           |  |                                    | 2,237      |             |                                               | 94         |                                           | 353       |  
|                                                                     |  |                                    |            |             |                                               |            |                                           |           |  
|Total interest expense                                               |  |                                    | 19,854     |             |                                               | 1,695      |                                           | 6,797     |  
|                                                                     |  |                                    |            |             |                                               |            |                                           |           |  
|Net interest income                                                  |  |                                    | 77,071     |             |                                               | 6,934      |                                           | 16,115    |  
|Provision for loan losses                                            |  |                                    | 1,700      |             |                                               |           |                                           | 4,700     |  
|                                                                     |  |                                    |            |             |                                               |            |                                           |           |  
|Net interest income, after provision for loan losses                 |  |                                    | 75,371     |             |                                               | 6,934      |                                           | 11,415    |  
|Noninterest income:                                                  |  |                                    |            |             |                                               |            |                                           |           |  
|Customer service and other fees                                      |  |                                    | 5,957      |             |                                               | 752        |                                           | 2,222     |  
|Gain (loss) on sale of securities                                    |  |                                    | 11         |             |                                               |           |                                           | (66       | )
|Gain on sale of loans                                                |  |                                    | 1,060      |             |                                               |           |                                           |          |  
|Gain on sale of assets                                               |  |                                    | 601        |             |                                               | 18         |                                           | 215       |  
|Other                                                                |  |                                    | 20         |             |                                               | 29         |                                           | 55        |  
|                                                                     |  |                                    |            |             |                                               |            |                                           |           |  
|Total noninterest income                                             |  |                                    | 7,649      |             |                                               | 799        |                                           | 2,426     |  
|Noninterest expense:                                                 |  |                                    |            |             |                                               |            |                                           |           |  
|Salaries and employee benefits                                       |  |                                    | 30,224     |             |                                               | 2,334      |                                           | 6,604     |  
|Occupancy expense                                                    |  |                                    | 4,939      |             |                                               | 435        |                                           | 1,200     |  
|Furniture and equipment                                              |  |                                    | 2,590      |             |                                               | 248        |                                           | 662       |  
|Amortization of intangible assets                                    |  |                                    | 9,157      |             |                                               | 296        |                                           |          |  
|Merger, acquisition and transition expenses                          |  |                                    | 8,436      |             |                                               |           |                                           |          |  
|Other general and administrative                                     |  |                                    | 11,581     |             |                                               | 1,243      |                                           | 6,048     |  
|                                                                     |  |                                    |            |             |                                               |            |                                           |           |  
|Total noninterest expense                                            |  |                                    | 66,927     |             |                                               | 4,556      |                                           | 14,514    |  
|                                                                     |  |                                    |            |             |                                               |            |                                           |           |  
|Income (loss) before income taxes                                    |  |                                    | 16,093     |             |                                               | 3,177      |                                           | (673      | )
|Income tax expense                                                   |  |                                    | 5,482      |             |                                               | 1,379      |                                           | 411       |  
|                                                                     |  |                                    |            |             |                                               |            |                                           |           |  
|Income (loss) from continuing operations                             |  |                                    | 10,611     |             |                                               | 1,798      |                                           | (1,084    | )
|Loss on disposition of discontinued operations, net of tax (Note 10) |  |                                    | (1,584     | )           |                                               |           |                                           |          |  
|Income from discontinued operations, net of tax (Note 10)            |  |                                    | 790        |             |                                               |           |                                           |          |  
|                                                                     |  |                                    |            |             |                                               |            |                                           |           |  
|Net income (loss)                                                    |  | $                                  | 9,817      |             |                                               | 1,798      |                                           | (1,084    | )
|                                                                     |  |                                    |            |             |                                               |            |                                           |           |  
|Earnings (loss) per sharebasic:                                     |  |                                    |            |             |                                               |            |                                           |           |  
|Income (loss) from continuing operations                             |  | $                                  | 0.20       |             |                                               | 0.09       |                                           | (0.70     | )
|Loss from discontinued operations, net of tax                        |  |                                    | (0.01      | )           |                                               |           |                                           |          |  
|Net income (loss)                                                    |  |                                    | 0.19       |             |                                               | 0.09       |                                           | (0.70     | )
|Earnings (loss) per sharediluted:                                   |  |                                    |            |             |                                               |            |                                           |           |  
|Income (loss) from continuing operations                             |  | $                                  | 0.20       |             |                                               | 0.09       |                                           | (0.70     | )
|Loss from discontinued operations, net of tax                        |  |                                    | (0.01      | )           |                                               |           |                                           |          |  
|Net income (loss)                                                    |  |                                    | 0.19       |             |                                               | 0.09       |                                           | (0.70     | )
|Weighted average shares outstanding                                  |  |                                    | 52,137,132 |             |                                               | 19,000,000 |                                           | 1,554,873 |  
|Effect of unvested share awards                                      |  |                                    | 33,391     |             |                                               |           |                                           |          |  
|                                                                     |  |                                    |            |             |                                               |            |                                           |           |  
|Fully diluted average shares outstanding                             |  |                                    | 52,170,523 |             |                                               | 19,000,000 |                                           | 1,554,873 |  
|                                                                     |  |                                    |            |             |                                               |            |                                           |           |  



See Notes to
Unaudited Consolidated Financial Statements.



6



---

##### Table of Contents

CENTENNIAL BANK HOLDINGS, INC.

AND SUBSIDIARIES

Consolidated Statements of Comprehensive Income (Loss)

(In thousands)



|                                                               |  |                                     |       |                                               |       |                                         |        |  
|-------------------------------------------------------------- |  | ----------------------------------- | ----- | --------------------------------------------- | ----- | --------------------------------------- | ------ | -
|                                                               |  | Successor                           |       | Predecessor                                   |      
|                                                               |  | Three MonthsEndedSeptember 30, 2005 |       | Period fromJuly 17, 2004 toSeptember 30, 2004 |       | Period fromJuly 1, 2004 toJuly 16, 2004 |       
|                                                               |  | (Unaudited)                         |       | (Unaudited)                                   |       | (Unaudited)                             |       
|Net income (loss)                                              |  | $                                   | 5,130 |                                               | 1,798 |                                         | (4,163 | )
|Other comprehensive income, net of tax                         |  |                                     |       |                                               |       |                                         |        |  
|Change in net unrealized gain on securities available for sale |  |                                     | 82    |                                               | 189   |                                         | 159    |  
|                                                               |  |                                     |       |                                               |       |                                         |        |  
|Comprehensive income (loss)                                    |  | $                                   | 5,212 |                                               | 1,987 |                                         | (4,004 | )
|                                                               |  |                                     |       |                                               |       |                                         |        |  



See Notes to
Unaudited Consolidated Financial Statements.



7



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##### Table of Contents

CENTENNIAL BANK HOLDINGS, INC.

AND SUBSIDIARIES

Consolidated Statements of Comprehensive Income (Loss)

(In thousands)



|                                                                      |  |                                    |        |                                               |       |                                             |        |  
|--------------------------------------------------------------------- |  | ---------------------------------- | ------ | --------------------------------------------- | ----- | ------------------------------------------- | ------ | -
|                                                                      |  | Successor                          |        | Predecessor                                   |      
|                                                                      |  | Nine MonthsEndedSeptember 30, 2005 |        | Period fromJuly 17, 2004 toSeptember 30, 2004 |       | Period fromJanuary 1, 2004 to July 16, 2004 |       
|                                                                      |  | (Unaudited)                        |        | (Unaudited)                                   |       |                                             |       
|Net income (loss)                                                     |  | $                                  | 9,817  |                                               | 1,798 |                                             | (1,084 | )
|Other comprehensive income (loss), net of tax                         |  |                                    |        |                                               |       |                                             |        |  
|Change in net unrealized gain (loss) on securities available for sale |  |                                    | 907    |                                               | 189   |                                             | (66    | )
|                                                                      |  |                                    |        |                                               |       |                                             |        |  
|Comprehensive income (loss)                                           |  | $                                  | 10,724 |                                               | 1,987 |                                             | (1,150 | )
|                                                                      |  |                                    |        |                                               |       |                                             |        |  



See Notes to
Unaudited Consolidated Financial Statements.



8



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##### Table of Contents

CENTENNIAL BANK HOLDINGS, INC.

AND SUBSIDIARIES

Consolidated Statements of Cash Flows

(In thousands)



|                                                                                               |  |                                                |          |   |                                              |   |          |                                            |  |   |          |  
|---------------------------------------------------------------------------------------------- |  | ---------------------------------------------- | -------- | - | -------------------------------------------- | - | -------- | ------------------------------------------ |  | - | -------- | -
|                                                                                               |  | (Successor)                                    |          |   | Predecessor                                  |  
|                                                                                               |  | Nine months EndedSeptember 30, 2005(Successor) |          |   | Period from July17, 2004 toSeptember 30,2004 |   |          | Period fromJanuary 1, 2004to July 16, 2004 | 
|                                                                                               |  | (Unaudited)                                    |          |   | (Unaudited)                                  |   |          |                                            | 
|Cash flows from operating activities:                                                          |  |                                                |          |   |                                              |   |          |                                            |  |   |          |  
|Net income                                                                                     |  | $                                              | 9,817    |   |                                              |   | 1,798    |                                            |  |   | (1,084   | )
|Adjustments to reconcile net income to net cash provided by operating activities:              |  |                                                |          |   |                                              |   |          |                                            |  |   |         |  
|Depreciation and amortization of premises and equipment                                        |  |                                                | 2,888    |   |                                              |   | 211      |                                            |  |   | 600      |  
|Equity based compensation                                                                      |  |                                                | 275      |   |                                              |   |         |                                            |  |   |         |  
|Loss on disposition of discontinued operations                                                 |  |                                                | 1,584    |   |                                              |   |          |                                            |  |   |         |  
|Gain on sale of foreclosed assets                                                              |  |                                                | (503     | ) |                                              |   | 2        |                                            |  |   | 18       |  
|Loss on disposal of premises and equipment                                                     |  |                                                | (98      | ) |                                              |   | (18      | )                                          |  |   | (51      | )
|Gain on sale of securities and mortgages                                                       |  |                                                | (1,071   | ) |                                              |   | (36      | )                                          |  |   | 66       |  
|Stock dividends received                                                                       |  |                                                | (211     | ) |                                              |   | (25      | )                                          |  |   | (40      | )
|Net accretion and amortization on securities                                                   |  |                                                | 636      |   |                                              |   | 12       |                                            |  |   | (38      | )
|Provision for loan losses                                                                      |  |                                                | 1,700    |   |                                              |   |         |                                            |  |   | 4,700    |  
|Deferred income tax benefit                                                                    |  |                                                | (3,323   | ) |                                              |   | 1,379    |                                            |  |   | (1,616   | )
|Amortization of intangibles and purchase accounting adjustments                                |  |                                                | 9,157    |   |                                              |   | 182      |                                            |  |   |         |  
|Proceeds from sales of loans held for sale                                                     |  |                                                | 78,056   |   |                                              |   |         |                                            |  |   |         |  
|Originations of loans held for sale                                                            |  |                                                | (75,708  | ) |                                              |   |         |                                            |  |   |         |  
|Other                                                                                          |  |                                                | 559      |   |                                              |   |         |                                            |  |   |         |  
|Net change in:                                                                                 |  |                                                |          |   |                                              |   |          |                                            |  |   |          |  
|Accrued interest receivable and other assets                                                   |  |                                                | (15,553  | ) |                                              |   | (1,153   | )                                          |  |   | (991     | )
|Accrued interest payable and other liabilities                                                 |  |                                                | 12,669   |   |                                              |   | 262      |                                            |  |   | 1,675    |  
|                                                                                               |  |                                                |          |   |                                              |   |          |                                            |  |   |          |  
|Net cash provided by operating activities                                                      |  |                                                | 20,874   |   |                                              |   | 2,614    |                                            |  |   | 3,239    |  
|                                                                                               |  |                                                |          |   |                                              |   |          |                                            |  |   |          |  
|Cash flows from investing activities (net of assets and liabilities acquired in acquisitions): |  |                                                |          |   |                                              |   |          |                                            |  |   |          |  
|Cash paid for acquisitions, net of cash acquired of $19,884                                    |  |                                                |         |   |                                              |   | (135,116 | )                                          |  |   |         |  
|Activity in available-for-sale securities:                                                     |  |                                                |          |   |                                              |   |          |                                            |  |   |          |  
|Sales, maturities, prepayments, and calls                                                      |  |                                                | 135,374  |   |                                              |   | 15,044   |                                            |  |   | 151,089  |  
|Purchases                                                                                      |  |                                                | (143,164 | ) |                                              |   | (37,370  | )                                          |  |   | (153,116 | )
|Activity in held-to-maturity securities:                                                       |  |                                                |          |   |                                              |   |          |                                            |  |   |          |  
|Maturities, prepayments, and calls                                                             |  |                                                | 250      |   |                                              |   | 250      |                                            |  |   | 174      |  
|Loan originations and principal collections, net                                               |  |                                                | (125,525 | ) |                                              |   | 3,243    |                                            |  |   | 12,676   |  
|Proceeds from sales of foreclosed assets                                                       |  |                                                | 5,204    |   |                                              |   | 301      |                                            |  |   | 4,260    |  
|Proceeds from sale of other investments                                                        |  |                                                | 1,516    |   |                                              |   |         |                                            |  |   |         |  
|Proceeds from sale of premises and equipment                                                   |  |                                                | 373      |   |                                              |   |         |                                            |  |   | 172      |  
|Payments on discontinued operations                                                            |  |                                                | (74      | ) |                                              |   |         |                                            |  |   |         |  
|Additions to premises and equipment                                                            |  |                                                | (11,910  | ) |                                              |   | (140     | )                                          |  |   | (187     | )
|                                                                                               |  |                                                |          |   |                                              |   |          |                                            |  |   |          |  
|Net cash provided (used) by investing activities                                               |  |                                                | (137,956 | ) |                                              |   | (153,788 | )                                          |  |   | 15,068   |  
|                                                                                               |  |                                                |          |   |                                              |   |          |                                            |  |   |          |  
|Cash flows from financing activities (net of assets and liabilities acquired in acquisitions): |  |                                                |          |   |                                              |   |          |                                            |  |   |          |  
|Net change in deposits                                                                         |  |                                                | 42,466   |   |                                              |   | (38,631  | )                                          |  |   | (16,986  | )
|Net change in short-term borrowings                                                            |  |                                                | 58,405   |   |                                              |   | 10,558   |                                            |  |   | (21,570  | )
|Net proceeds from (payments on) long-term debt                                                 |  |                                                | 20,163   |   |                                              |   | (85      | )                                          |  |   | 19,423   |  
|Net change in federal funds purchased and repurchase agreements                                |  |                                                | 3,813    |   |                                              |   | 19,366   |                                            |  |   | (2,976   | )
|Net proceeds from sale of common stock                                                         |  |                                                |         |   |                                              |   | 179,450  |                                            |  |   | 2,186    |  
|Repurchase of common stock                                                                     |  |                                                | (4,659   | ) |                                              |   |         |                                            |  |   | (2,716   | )
|                                                                                               |  |                                                |          |   |                                              |   |          |                                            |  |   |          |  
|Net cash provided (used) by financing activities                                               |  |                                                | 120,188  |   |                                              |   | 170,658  |                                            |  |   | (22,639  | )
|                                                                                               |  |                                                |          |   |                                              |   |          |                                            |  |   |          |  
|Net change in cash and cash equivalents                                                        |  |                                                | 3,106    |   |                                              |   | 19,484   |                                            |  |   | (4,332   | )
|Cash and cash equivalents, beginning of period                                                 |  |                                                | 90,927   |   |                                              |   |         |                                            |  |   | 23,731   |  
|                                                                                               |  |                                                |          |   |                                              |   |          |                                            |  |   |          |  
|Cash and cash equivalents, end of period                                                       |  | $                                              | 94,033   |   |                                              |   | 19,484   |                                            |  |   | 19,399   |  
|                                                                                               |  |                                                |          |   |                                              |   |          |                                            |  |   |          |  
|Supplemental disclosure of cash flow activity:                                                 |  |                                                |          |   |                                              |   |          |                                            |  |   |          |  
|Interest paid on deposits and borrowed funds                                                   |  | $                                              | 20,236   |   |                                              | $ | 1,340    |                                            |  | $ | 7,034    |  
|                                                                                               |  |                                                |          |   |                                              |   |          |                                            |  |   |          |  
|Income taxes paid                                                                              |  | $                                              | 5,798    |   |                                              | $ | 1,436    |                                            |  | $ | 664      |  
|                                                                                               |  |                                                |          |   |                                              |   |          |                                            |  |   |          |  
|Supplemental disclosure of noncash activities:                                                 |  |                                                |          |   |                                              |   |          |                                            |  |   |          |  
|Loans transferred to other real estate owned                                                   |  | $                                              | 1,791    |   |                                              | $ | 852      |                                            |  | $ | 1,859    |  
|                                                                                               |  |                                                |          |   |                                              |   |          |                                            |  |   |          |  



See Notes to
Unaudited Consolidated Financial Statements.



9



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##### Table of Contents



CENTENNIAL BANK HOLDINGS, INC.

AND SUBSIDIARIES



Notes to Unaudited 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 operations and comprehensive income (loss) are
presented for the three and nine months ended September 30, 2005 and the period from July 17, 2004 to September 30, 2004 (Successor) and the periods from July 1, 2004 to July 16, 2004 and January 1, 2004 to July 16, 2004 (Predecessor).
Consolidated cash flows are presented for the nine months ended September 30, 2005 (Successor) and the periods from July 17, 2004 to September 30, 2004 and January 1, 2004 to July 16, 2004 (Predecessor). On December 31, 2004, Centennial Bank
Holdings, Inc. purchased all of the outstanding stock of Guaranty Corporation. Guaranty Corporations subsidiaries included Guaranty Bank and Trust Company, First National Bank of Strasburg, and Collegiate Peaks Bank. Accordingly, the
consolidated balance sheets as of September 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 financial statements do not reflect the effects of purchase accounting. As such, the consolidated financial
statements of the Company are not comparable to the Predecessor financial statements for the periods prior to the acquisitions.



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



The accounting and reporting policies of the Company conform to U.S. generally accepted accounting principles. 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 U.S. generally accepted accounting principles requires
management to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the dates of the consolidated balance sheet and income and expense for the periods. 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 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) | Goodwill and Other Intangible Assets
| | --- | ------------------------------------



Goodwill represents the excess of the purchase price over the estimated fair value of identifiable net assets associated with acquisition
transactions. 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. SFAS No. 142 requires that goodwill and intangible assets with indefinite useful lives no longer be amortized, but instead tested for
impairment at least annually in accordance with the provisions in SFAS No. 142. SFAS No. 142 requires that intangible assets with definite useful lives be amortized over their respective estimated useful lives to their estimated residual values, and
reviewed for impairment in accordance with SFAS No. 144, Accounting for the Impairment of Disposal of Long-Lived Assets(SFAS No. 144).



| | (e) | 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



10



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##### Table of Contents

Bank of the West, Guaranty Bank and Trust Company, and Collegiate Peaks Bank. The Company applies the provisions of SFAS No. 131, Disclosures about
Segments of an Enterprise and Related Information, in determining its reportable segments and related disclosures. None of the Companys other subsidiaries meets the 10% threshold for disclosure under SFAS No. 131.



| | (f) | 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 unit awards, stock awards with performance, service and market vesting conditions, 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. In accordance with SFAS 123(R), Share-Based Payment, the Company records cost of
services based on the fair value of the equity instruments issued as estimated at the grant date. The costs are recorded over the estimated requisite service period.



On August 11, 2005, pursuant to the Plan, the Company granted 1,178,816 shares of stock with performance or service
vesting conditions. As of September 30, 2005, the Company had a total of 1,176,316 unvested shares of stock issued, which consisted of 996,500 of unvested shares with unfulfilled performance conditions and 182,316 unvested shares with
unfulfilled service conditions. In accordance with SFAS 128 (As Amended), Earnings Per Share, diluted earnings per share does not include the potentially dilutive shares that may result from the stock awards with performance-based vesting
conditions that may eventually vest.



The shares granted with
performance vesting conditions vest based on the Company achieving certain performance measures. The Company expects 50% of the performance-based awards to vest based on financial results to be achieved for the year ending December 31, 2007,
and the remaining 50% of the performance-based awards to vest during the years ending December 31, 2008 through December 31, 2011. The shares granted with service-based vesting conditions vest over a period of one to four years from the
date of grant. Compensation expense related to the stock awards for the three and nine months ended September 30, 2005 was $275,000. No stock-based compensation expense was incurred in 2004.



| | (g) | 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:



|                               |  |                    |         |                        |       |                         |      |   |           |        
|------------------------------ |  | ------------------ | ------- | ---------------------- | ----- | ----------------------- | ---- | - | --------- | -------
|                               |  | September 30, 2005
|                               |  | Amortized Cost     |         | Gross Unrealized Gains |       | Gross Unrealized Losses |      |   | FairValue
|                               |  | (In thousands)    
|Securities available for sale: |  |                    |         |                        |       |                         |      |   |           |        
|U.S. treasuries                |  | $                  | 16,262  |                        |      |                         | (85  | ) |           | 16,177 
|U.S. government agencies       |  |                    | 9,491   |                        |      |                         | (8   | ) |           | 9,483  
|State and municipal            |  |                    | 53,277  |                        | 1,484 |                         | (28  | ) |           | 54,733 
|Mortgage-backed                |  |                    | 41,002  |                        | 93    |                         | (398 | ) |           | 40,697 
|Marketable equity securities   |  |                    | 1,003   |                        | 4     |                         |     |   |           | 1,007  
|                               |  |                    |         |                        |       |                         |      |   |           |        
|Securities available for sale  |  | $                  | 121,035 |                        | 1,581 |                         | (519 | ) |           | 122,097
|                               |  |                    |         |                        |       |                         |      |   |           |        
|Securities held to maturity:   |  |                    |         |                        |       |                         |      |   |           |        
|Mortgage-backed                |  | $                  | 386     |                        |      |                         |     |   |           | 386    
|                               |  |                    |         |                        |       |                         |      |   |           |        
|                               | 
|                               |  | December 31, 2004 
|                               |  | 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    
|                               |  |                    |         |                        |       |                         |      |   |           |        



11



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



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



|                                    |  |                   |           |   |                  |           |  
|----------------------------------- |  | ----------------- | --------- | - | ---------------- | --------- | -
|                                    |  | September 30,2005 |           |   | December 31,2004 |          
|                                    |  | (In thousands)    |          
|Loans on real estate:               |  |                   |           |   |                  |           |  
|Residential and commercial mortgage |  | $                 | 507,813   |   |                  | 638,007   |  
|Construction                        |  |                   | 451,137   |   |                  | 308,545   |  
|Equity lines of credit              |  |                   | 75,982    |   |                  | 81,936    |  
|Commercial loans                    |  |                   | 587,762   |   |                  | 458,171   |  
|Agricultural loans                  |  |                   | 65,466    |   |                  | 62,199    |  
|Lease financing                     |  |                   | 785       |   |                  | 912       |  
|Installment loans to individuals    |  |                   | 50,776    |   |                  | 64,625    |  
|Overdrafts                          |  |                   | 1,063     |   |                  | 5,589     |  
|SBA and other                       |  |                   | 24,493    |   |                  | 22,004    |  
|                                    |  |                   |           |   |                  |           |  
|                                    |  |                   | 1,765,277 |   |                  | 1,641,988 |  
|Less:                               |  |                   |           |   |                  |           |  
|Allowance for loan losses           |  |                   | (25,019   | ) |                  | (25,022   | )
|Net of unearned discount            |  |                   | (1,744    | ) |                  | (167      | )
|                                    |  |                   |           |   |                  |           |  
|                                    |  |                   | 1,738,514 |   |                  | 1,616,799 |  
|Loans held for sale                 |  |                   | 6,015     |   |                  | 7,301     |  
|                                    |  |                   |           |   |                  |           |  
|                                    |  | $                 | 1,744,529 |   |                  | 1,624,100 |  
|                                    |  |                   |           |   |                  |           |  



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



|                                           |  |                                     |        |   |                                    |   |        |  
|------------------------------------------ |  | ----------------------------------- | ------ | - | ---------------------------------- | - | ------ | -
|                                           |  | Three Months EndedSeptember 30,2005 |        |   | Nine months EndedSeptember 30,2005 |  
|                                           |  | (In thousands)                      |       
|Balance, beginning of period               |  | $                                   | 25,535 |   |                                    | $ | 25,022 |  
|Provision for loan losses                  |  |                                     |       |   |                                    |   | 1,700  |  
|Loans charged off                          |  |                                     | (592   | ) |                                    |   | (2,481 | )
|Recoveries on loans previously charged-off |  |                                     | 76     |   |                                    |   | 778    |  
|                                           |  |                                     |        |   |                                    |   |        |  
|Balance, end of period                     |  | $                                   | 25,019 |   |                                    | $ | 25,019 |  
|                                           |  |                                     |        |   |                                    |   |        |  



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



|                                                      |  |                    |        |                   |       
|----------------------------------------------------- |  | ------------------ | ------ | ----------------- | ------
|                                                      |  | September 30, 2005 |        | December 31, 2004
|                                                      |  | (In thousands)    
|Impaired loans with a specific valuation allowance    |  | $                  | 23,383 |                   | 27,970
|Impaired loans without a specific valuation allowance |  |                    | 4,374  |                   | 7,632 
|                                                      |  |                    |        |                   |       
|Total impaired loans                                  |  | $                  | 27,757 |                   | 35,602
|                                                      |  |                    |        |                   |       
|Valuation allowance related to impaired loans         |  | $                  | 10,445 |                   | 9,290 
|                                                      |  |                    |        |                   |       
|Average investment in impaired loans                  |  | $                  | 35,459 |                   | 11,422
|                                                      |  |                    |        |                   |       



Due to a recovery on
an impaired loan, interest income of $245,000 was recognized on impaired loans during the nine months ended September 30, 2005. No interest income was recognized for the periods from January 1, 2004 to July 16, 2004 and July 17,
2004 to September 30, 2004. At September 30, 2005, no additional funds were committed to be advanced in connection with impaired loans. At September 30, 2005 and December 31, 2004, the total investment in loans on nonaccrual was
approximately $8,352,000 and $11,905,000, respectively.



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|(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.



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



|                                       |  |                                     |         |                             |         |  
|-------------------------------------- |  | ----------------------------------- | ------- | --------------------------- | ------- | -
|                                       |  | Nine months EndedSeptember 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. 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     |  | September 30,2005 |        |   | December 31,2004 |       
|                                        |  |                 |  | (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 Guaranty Bank   |  | 9 to 13.6 years |  |                   | 45,700 |   |                  | 45,702 |  
|                                        |  |                 |  |                   |        |   |                  |        |  
|                                        |  |                 |  |                   | 54,021 |   |                  | 54,137 |  
|Accumulated amortization                |  |                 |  |                   | (9,934 | ) |                  | (777   | )
|                                        |  |                 |  |                   |        |   |                  |        |  
|                                        |  |                 |  | $                 | 44,087 |   |                  | 53,360 |  
|                                        |  |                 |  |                   |        |   |                  |        |  



Amortization expense
for intangible assets for the nine months ended September 30, 2005 and the period from July 17, 2004 to September 30, 2004 was $9,157,000 and $296,000, 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 $118,335,000 and $39,770,000 outstanding under these borrowings at September 30, 2005 and December 31, 2004, with a total commitment of
$275,219,000 at September 30, 2005.



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



Excluding unamortized premium of $247,000, the Company had a $41,229,000 aggregate balance of subordinated debentures outstanding with a weighted average
cost of 7.9% at September 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, as applicable,



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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 September 30, 2005 (dollars in thousands):



|                           |  |            |  |        |        |              |           |           |           |                       |          |               |              |   |                          |      |   |                     |           
|-------------------------- |  | ---------- |  | ------ | ------ | ------------ | --------- | --------- | --------- | --------------------- | -------- | ------------- | ------------ | - | ------------------------ | ---- | - | ------------------- | ----------
|Series                     |  | DateIssued |  | Amount |        | MaturityDate |           | CallDate* |           | Fixed orVariable Rate |          | Rate Adjuster |              |   | Rate atSeptember30, 2005 |      |   | 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 | % |                          | 6.3  | % |                     | 10/15/2005
|Guaranty Capital Trust III |  | 7/7/2003   |  |        | 10,310 |              | 7/7/2033  |           | 7/7/2008  |                       | Variable |               | LIBOR + 3.10 | % |                          | 6.7  | % |                     | 10/15/2005

---

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



|(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.



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



|                             |  |                              |         |                             |        
|---------------------------- |  | ---------------------------- | ------- | --------------------------- | -------
|                             |  | September 30,2005(Successor) |         | December 31,2004(Successor)
|                             |  | (In thousands)              
|Commitments to extend credit |  | $                            | 563,214 |                             | 468,059
|Standby letters of credit    |  |                              | 33,425  |                             | 71,266 
|Commercial letters of credit |  |                              | 232     |                             | 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



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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 September 30, 2005 and December 31, 2004, the Company had leverage ratios of 9.01% and 8.70%, Tier 1 risk-weighted capital ratios of
9.61% and 9.39%, and total risk-weighted capital ratios of 10.86% 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 20, 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. The acquisition of First MainStreet was consummated as of October 1, 2005, pursuant to which First MainStreet Bank, N.A. was merged with and
into Centennial Bank of the West.



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



On August 25, 2005, the Company entered into a definitive agreement to sell 100% of the outstanding stock of Collegiate Peaks Bank. The transaction
is subject to regulatory approvals and is expected to close late in the fourth quarter of 2005. As of September 30, 2005, the Company has recorded an impairment of fair value for Collegiate Peaks Bank of $1,509,000. The $1,509,000 impairment
consisted of 2005 net income of $790,000 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 $74,000 of disposition costs during the nine months ended September 30, 2005. Earnings from Collegiate Peaks between September 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. 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 subsidiary which are held for sale at September 30, 2005 and the summary results of operations of the subsidiary for the nine months ended September 30, 2005:



|                                                       |  |                    |        |  
|------------------------------------------------------ |  | ------------------ | ------ | -
|                                                       |  | September 30, 2005 |       
|                                                       |  | (In thousands)     |       
|Assets held for sale:                                  |  |                    |        |  
|Cash and cash equivalents                              |  | $                  | 17,174 |  
|Investments                                            |  |                    | 16,377 |  
|Loans and leases, net                                  |  |                    | 51,060 |  
|Other intangible assets                                |  |                    | 3,551  |  
|Goodwill                                               |  |                    | 8,922  |  
|Other assets                                           |  |                    | 3,222  |  
|Fair value adjustment                                  |  |                    | (1,509 | )
|                                                       |  |                    |        |  
|Total assets held for sale                             |  | $                  | 98,797 |  
|                                                       |  |                    |        |  
|Liabilities associated with assets held for sale:      |  |                    |        |  
|Deposits                                               |  | $                  | 74,449 |  
|Securities sold under repurchase agreements            |  |                    | 4,729  |  
|Other liabilities                                      |  |                    | 1,676  |  
|                                                       |  |                    |        |  
|Total liabilities associated with assets held for sale |  | $                  | 80,854 |  
|                                                       |  |                    |        |  



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|                   |  |                                     |      
|------------------ |  | ----------------------------------- | -----
|                   |  | Nine months EndedSeptember 30, 2005
|                   |  | (In thousands)                     
|Interest income    |  | $                                   | 3,499
|Noninterest income |  |                                     | 317  
|Net income         |  |                                     | 790  



|(11) | Subsequent Events
|---- | -----------------



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 Wheat Ridge, Colorado, and had $137 million in assets, $93 million in net loans and $126 million in deposits at September 30, 2005. This transaction was consummated as of November 1,
2005, pursuant to which Foothills Bank was merged with and into Guaranty Bank and Trust Company.



On November 8, 2005, the Company entered into a $70 million 364-day Revolving Credit Agreement with U.S. Bank National Association. This new revolving
credit facility replaces the $20 million revolving credit facility the Company had in place with First Tennessee Bank National Association, which was terminated in connection with the Company entering into the new credit facility with U.S. Bank. The
new credit facility is secured by a pledge of 100% of the outstanding capital stock of the Companys bank subsidiary, Guaranty Bank and Trust Company, pursuant to a Pledge Agreement, dated as of November 8, 2005.



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



The following is managements discussion and analysis of the major factors that influenced our financial performance
for the three months and nine months ended September 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.



Forward-Looking Information



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, continued ability to attract and employ qualified personnel, 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 natural disasters, the war on terrorism, the conflict with Iraq and its
aftermath, and other Risk Factors referenced in our Form S-1 registration statement, as supplemented from time to time. 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 can give no assurance that any goal or plan set forth in forward-looking statements can be achieved and readers are cautioned not to place undue reliance on such statements, which
speak only as of the date made. 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.



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Background



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.



For purposes of comparison and analysis of the three months ended September 30, 2005 to the three months ended September 30, 2004, the period from July 17, 2004 to September 30, 2004 has been
combined with the Predecessor period from July 1 to July 16, 2004; and such combined period is hereinafter referred to as the combined three-month period. For purposes of comparison and analysis of the nine months ended
September 30, 2005 to the nine months ended September 30, 2004, the period from July 17, 2004 to September 30, 2004 has been combined with the Predecessor period from January 1 to July 16, 2004 and such combined period
is hereinafter referred to as the combined nine-month period.



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 consolidated
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 quarterly. If our underlying assumptions later prove to be inaccurate based on subsequent
loss evaluations, the allowance for loan losses is adjusted.



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



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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.



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 September 30, 2001 as well as all purchase method business combinations completed after September 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 registration statement as supplemented from time to time, 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 September 30, |            |                | Nine months Ended September 30, |           
|(In thousands, except share data)              |  | 2005(Successor)                  |            | 2004(Combined) |                                 |            | Change -Favorable(Unfavorable) |  |   | 2005(Successor) |   |  | 2004(Combined) |            |   | Change -Favorable(Unfavorable) |  
|Results of Operations:                         |  |                                  |            |                |                                 |            |                                |  |   |                 |   |  |                |            |   |                                |   |            |     |  |   |         |  
|Interest income                                |  | $                                | 34,514     |                | $                               | 10,419     |                                |  | $ | 24,095          |   |  | $              | 96,925     |   |                                | $ | 31,541     |     |  | $ | 65,384  |  
|Interest expense                               |  |                                  | 8,641      |                |                                 | 2,220      |                                |  |   | (6,421          | ) |  |                | 19,854     |   |                                |   | 8,492      |     |  |   | (11,362 | )
|                                               |  |                                  |            |                |                                 |            |                                |  |   |                 |   |  |                |            |   |                                |   |            |     |  |   |         |  
|Net interest income                            |  |                                  | 25,873     |                |                                 | 8,199      |                                |  |   | 17,674          |   |  |                | 77,071     |   |                                |   | 23,049     |     |  |   | 54,022  |  
|Provision for loan losses                      |  |                                  |           |                |                                 | 3,700      |                                |  |   | 3,700           |   |  |                | 1,700      |   |                                |   | 4,700      |     |  |   | 3,000   |  
|                                               |  |                                  |            |                |                                 |            |                                |  |   |                 |   |  |                |            |   |                                |   |            |     |  |   |         |  
|Net interest income after provision for losses |  |                                  | 25,873     |                |                                 | 4,499      |                                |  |   | 21,374          |   |  |                | 75,371     |   |                                |   | 18,349     |     |  |   | 57,022  |  
|Noninterest income                             |  |                                  | 2,732      |                |                                 | 1,209      |                                |  |   | 1,523           |   |  |                | 7,649      |   |                                |   | 3,225      |     |  |   | 4,424   |  
|Noninterest expense                            |  |                                  | 20,727     |                |                                 | 7,982      |                                |  |   | (12,745         | ) |  |                | 66,927     |   |                                |   | 19,070     |     |  |   | (47,857 | )
|                                               |  |                                  |            |                |                                 |            |                                |  |   |                 |   |  |                |            |   |                                |   |            |     |  |   |         |  
|Income (loss) before income taxes              |  |                                  | 7,878      |                |                                 | (2,274     | )                              |  |   | 10,152          |   |  |                | 16,093     |   |                                |   | 2,504      |     |  |   | 13,589  |  
|Provision for income taxes                     |  |                                  | 2,748      |                |                                 | 91         |                                |  |   | (2,657          | ) |  |                | 5,482      |   |                                |   | 1,790      |     |  |   | (3,692  | )
|                                               |  |                                  |            |                |                                 |            |                                |  |   |                 |   |  |                |            |   |                                |   |            |     |  |   |         |  
|Income from continuing operations              |  |                                  | 5,130      |                |                                 | (2,365     | )                              |  |   | 7,495           |   |  |                | 10,611     |   |                                |   | 714        |     |  |   | 9,897   |  
|Income (loss) from discontinued operations     |  |                                  |           |                |                                 |           |                                |  |   |                |   |  |                | (794       | ) |                                |   |           |     |  |   | (794    | )
|                                               |  |                                  |            |                |                                 |            |                                |  |   |                 |   |  |                |            |   |                                |   |            |     |  |   |         |  
|Net income (loss)                              |  | $                                | 5,130      |                | $                               | (2,365     | )                              |  | $ | 7,495           |   |  | $              | 9,817      |   |                                | $ | 714        |     |  | $ | 9,103   |  
|                                               |  |                                  |            |                |                                 |            |                                |  |   |                 |   |  |                |            |   |                                |   |            |     |  |   |         |  
|Share Data:                                    |  |                                  |            |                |                                 |            |                                |  |   |                 |   |  |                |            |   |                                |   |            |     |  |   |         |  
|Basic earnings per share                       |  | $                                | 0.10       |                | $                               | (0.12      | )(a)                           |  |   | nm              |   |  | $              | 0.19       |   |                                | $ | 0.04       | (a) |  |   | nm      |  
|Diluted earnings per share                     |  | $                                | 0.10       |                | $                               | (0.12      | )(a)                           |  |   | nm              |   |  | $              | 0.19       |   |                                | $ | 0.04       | (a) |  |   | nm      |  
|Average shares outstanding                     |  |                                  | 51,902,937 |                |                                 | 19,000,000 |                                |  |   | nm              |   |  |                | 52,137,132 |   |                                |   | 19,000,000 |     |  |   | nm      |  
|Diluted average shares outstanding             |  |                                  | 52,002,019 |                |                                 | 19,000,000 |                                |  |   | nm              |   |  |                | 52,170,523 |   |                                |   | 19,000,000 |     |  |   | nm      |  



|    |  |   |  |                                                                                                                                                               
|--- |  | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------
|(a) |  |  |  | Represents combined net loss of Predecessor and Successor divided by Successor weighted average basic or diluted shares outstanding for the respective period.
|    |  |  
|nm  |  | - |  | Change in earnings (loss) per share is not meaningful due to the change in outstanding shares resulting from the acquisition of the predecessor in July 2004. 



Net income increased
$9.1 million from the combined nine-month period ended September 30, 2004 to $9.8 million for the nine months ended September 30, 2005. Excluding the net income of $8.8 million from the acquisition of Guaranty, the most significant changes
between the nine-month period ended September 30, 2005 and the combined nine-month period ended September 30, 2004 are as follows: an increase in the provision for loan loss of $3.0 million and an increase in noninterest expenses of $3.7
million. During the nine months ended September 30, 2005, we experienced $0.8 million loss associated with our decision to sell our Collegiate Peaks Bank subsidiary, which represents the difference between the expected net proceeds from the
sale and the amount estimated as its value at December 31, 2004.



Net interest income increased $54.0 million to $77.1 million from combined nine-month period ended September 30, 2004. The acquisition of Guaranty accounted for an increase of $52.8 million. Excluding the net interest income from
Guaranty, net interest income increased by $1.3 million for the nine months ended September 30, 2005 from $23.0 million for the combined nine-month period ended September 30, 2004. This increase in net interest income was composed of a
$3.3 million increase in interest income against a $2.0 million increase in interest expense.



Net Interest Income and Net Interest Margin



The Company had net interest income of $77.1 million and $25.9 million for the nine months and three months ended September 30, 2005. The Companys interest income was $96.9 million and $34.5 million for the
nine and three months ended September 30, 2005. Interest expense was $19.9 million and $8.6 million for the nine and three months ended September 30, 2005. Interest income and interest expense increased by $63.5 million and $10.7 million,
respectively, in 2005 from the combined nine-month period ended September 30, 2004 due to the Guaranty acquisition.



19



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##### Table of Contents

The net interest income for the nine months ended September 30, 2005 increased by $54.0 million to
$77.1 million from the combined nine-month period ended September 30, 2005. Net interest income increased by $17.7 million to $25.9 million for the three months ended September 30, 2005 from the combined three-month period ended
September 30, 2004. The acquisition of Guaranty accounted for $52.8 million and $18.0 million for the nine and three-month period increases, respectively. Excluding the impact caused by the Guaranty transaction, the net interest income for the
nine month period ended September 30, 2005 increased by $1.3 million, or 5.5%, from the combined nine-month period ended September 30, 2004. The primary driver of this increase was an increase in interest rates.



The net interest margin for the nine months ended September 30, 2005 was
5.56%, with a spread of 5% between the earnings on assets of 7.0% and cost of interest bearing liabilities of 2.0%. Our interest margin for the three months ended September 30, 2005 was 5.45%, with an interest spread of 4.7% between our yield
on interest bearing assets and cost of interest bearing liabilities. The increasing interest rate environment led to an increase in both our yield on assets and cost of funds during the three months ended September 30, 2005, with the cost of
fund increasing more than the yield on the assets. The lower interest margin for the three months ended September 30, 2005 as compared to the nine months ended September 30, 2005 is the result of a temporary increase to our certificate of
deposit rates and money market rates that was implemented to increase our deposits.



20



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##### Table of Contents

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 annualized 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.



|                                           |  |                                       |           |                          |                                      |                     |  |      |                |  |                          |           |                     |   |        |  |      |  
|------------------------------------------ |  | ------------------------------------- | --------- | ------------------------ | ------------------------------------ | ------------------- |  | ---- | -------------- |  | ------------------------ | --------- | ------------------- | - | ------ |  | ---- | -
|                                           |  | Three months Ended September 30, 2005 |           |                          | Nine months Ended September 30, 2005 |                    
|                                           |  | AverageBalance                        |           | InterestIncome orExpense |                                      | AverageYield orCost |  |      | AverageBalance |  | InterestIncome orExpense |           | AverageYield orCost |  
|                                           |  | (Dollars in thousands)                |          
|ASSETS:                                    |  |                                       |           |                          |                                      |                     |  |      |                |  |                          |           |                     |   |        |  |      |  
|Interest-earning assets:                   |  |                                       |           |                          |                                      |                     |  |      |                |  |                          |           |                     |   |        |  |      |  
|Loans held for investment(1)(2)(3)         |  | $                                     | 1,728,822 |                          | $                                    | 32,909              |  | 7.55 | %              |  | $                        | 1,684,687 |                     | $ | 91,989 |  | 7.30 | %
|Investments:                               |  |                                       |           |                          |                                      |                     |  |      |                |  |                          |           |                     |   |        |  |      |  
|Taxable(1)                                 |  |                                       | 75,816    |                          |                                      | 638                 |  | 3.34 | %              |  |                          | 84,940    |                     |   | 2,121  |  | 3.34 | %
|Tax-exempt(4)                              |  |                                       | 54,822    |                          |                                      | 626                 |  | 4.53 | %              |  |                          | 46,279    |                     |   | 1,797  |  | 5.19 | %
|Equity securities                          |  |                                       | 20,435    |                          |                                      | 230                 |  | 4.47 | %              |  |                          | 15,563    |                     |   | 597    |  | 5.13 | %
|Other earning assets                       |  |                                       | 15,880    |                          |                                      | 111                 |  | 2.77 | %              |  |                          | 22,885    |                     |   | 421    |  | 2.45 | %
|                                           |  |                                       |           |                          |                                      |                     |  |      |                |  |                          |           |                     |   |        |  |      |  
|Total interest earning assets              |  |                                       | 1,895,775 |                          |                                      | 34,514              |  | 7.22 | %              |  |                          | 1,854,354 |                     |   | 96,925 |  | 6.99 | %
|Non-earning assets:                        |  |                                       |           |                          |                                      |                     |  |      |                |  |                          |           |                     |   |        |  |      |  
|Cash and due from banks                    |  |                                       | 62,416    |                          |                                      |                     |  |      |                |  |                          | 57,901    |                     |   |        |  |      |  
|Other assets                               |  |                                       | 514,748   |                          |                                      |                     |  |      |                |  |                          | 514,007   |                     |   |        |  |      |  
|                                           |  |                                       |           |                          |                                      |                     |  |      |                |  |                          |           |                     |   |        |  |      |  
|Total assets                               |  | $                                     | 2,472,939 |                          |                                      |                     |  |      |                |  | $                        | 2,426,262 |                     |   |        |  |      |  
|                                           |  |                                       |           |                          |                                      |                     |  |      |                |  |                          |           |                     |   |        |  |      |  
|LIABILITIES AND STOCKHOLDERS EQUITY:      |  |                                       |           |                          |                                      |                     |  |      |                |  |                          |           |                     |   |        |  |      |  
|Interest-bearing liabilities:              |  |                                       |           |                          |                                      |                     |  |      |                |  |                          |           |                     |   |        |  |      |  
|Deposits:                                  |  |                                       |           |                          |                                      |                     |  |      |                |  |                          |           |                     |   |        |  |      |  
|Interest-bearing demand                    |  | $                                     | 106,906   |                          | $                                    | 103                 |  | 0.38 | %              |  | $                        | 113,303   |                     | $ | 300    |  | 0.35 | %
|Money market                               |  |                                       | 498,507   |                          |                                      | 2,605               |  | 2.07 | %              |  |                          | 514,444   |                     |   | 6,298  |  | 1.64 | %
|Savings                                    |  |                                       | 76,858    |                          |                                      | 139                 |  | 0.72 | %              |  |                          | 80,174    |                     |   | 425    |  | 0.71 | %
|Time certificates of deposit               |  |                                       | 494,306   |                          |                                      | 3,801               |  | 3.05 | %              |  |                          | 455,962   |                     |   | 8,018  |  | 2.35 | %
|                                           |  |                                       |           |                          |                                      |                     |  |      |                |  |                          |           |                     |   |        |  |      |  
|Total interest-bearing deposits            |  |                                       | 1,176,577 |                          |                                      | 6,648               |  | 2.24 | %              |  |                          | 1,163,883 |                     |   | 15,041 |  | 1.73 | %
|Borrowings:                                |  |                                       |           |                          |                                      |                     |  |      |                |  |                          |           |                     |   |        |  |      |  
|Repurchase agreements                      |  |                                       | 31,252    |                          |                                      | 249                 |  | 3.16 | %              |  |                          | 30,330    |                     |   | 608    |  | 2.68 | %
|Federal funds purchased                    |  |                                       | 4,771     |                          |                                      | 44                  |  | 3.66 | %              |  |                          | 5,279     |                     |   | 132    |  | 3.34 | %
|Borrowings and subordinated debentures     |  |                                       | 157,590   |                          |                                      | 1,700               |  | 4.28 | %              |  |                          | 131,082   |                     |   | 4,076  |  | 4.16 | %
|                                           |  |                                       |           |                          |                                      |                     |  |      |                |  |                          |           |                     |   |        |  |      |  
|Total interest-bearing liabilities         |  |                                       | 1,370,190 |                          |                                      | 8,641               |  | 2.50 | %              |  |                          | 1,330,574 |                     |   | 19,854 |  | 2.00 | %
|Noninterest-bearing liabilities:           |  |                                       |           |                          |                                      |                     |  |      |                |  |                          |           |                     |   |        |  |      |  
|Demand deposits                            |  |                                       | 482,336   |                          |                                      |                     |  |      |                |  |                          | 480,793   |                     |   |        |  |      |  
|Other liabilities                          |  |                                       | 102,445   |                          |                                      |                     |  |      |                |  |                          | 96,879    |                     |   |        |  |      |  
|                                           |  |                                       |           |                          |                                      |                     |  |      |                |  |                          |           |                     |   |        |  |      |  
|Total liabilities                          |  |                                       | 1,954,971 |                          |                                      |                     |  |      |                |  |                          | 1,908,246 |                     |   |        |  |      |  
|Stockholders equity                       |  |                                       | 517,968   |                          |                                      |                     |  |      |                |  |                          | 518,016   |                     |   |        |  |      |  
|                                           |  |                                       |           |                          |                                      |                     |  |      |                |  |                          |           |                     |   |        |  |      |  
|Total liabilities and stockholders equity |  | $                                     | 2,472,939 |                          |                                      |                     |  |      |                |  | $                        | 2,426,262 |                     |   |        |  |      |  
|                                           |  |                                       |           |                          |                                      |                     |  |      |                |  |                          |           |                     |   |        |  |      |  
|Net interest income                        |  |                                       |           |                          | $                                    | 25,873              |  |      |                |  |                          |           |                     | $ | 77,071 |  |      |  
|                                           |  |                                       |           |                          |                                      |                     |  |      |                |  |                          |           |                     |   |        |  |      |  
|Net interest margin                        |  |                                       |           |                          |                                      |                     |  | 5.41 | %              |  |                          |           |                     |   |        |  | 5.56 | %
|                                           |  |                                       |           |                          |                                      |                     |  |      |                |  |                          |           |                     |   |        |  |      |  



|(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 $9.2 million and $10.3 million for the three and nine month periods ended September 30, 2005, respectively.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------



|(3) | Net loan fees of $1.8 million and $5.9 million for the three and nine month periods ended September 30, 2005, respectively, are included in the yield computation.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------



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



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 nine months ended September 30, 2005 and $4.7 million for the combined nine-month period ended September 30,
2004. We recorded the 2005 provision due to the deterioration of several large loans during the first three months of 2005. The 2004 change reflected a $3.7 million charge during the combined three-month period ended September 30, 2004 that was
due to a deterioration of several large loans in the loan portfolio.



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##### Table of Contents

Noninterest Income



The following table presents the major categories of noninterest income:



|                                  |  |                                 |       |               |   |       |                    |  |   |       |  
|--------------------------------- |  | ------------------------------- | ----- | ------------- | - | ----- | ------------------ |  | - | ----- | -
|                                  |  | Nine months Ended September 30, |      
|                                  |  | 2005                            |       | Combined 2004 |   |       | Increase(Decrease) | 
|                                  |  | (In thousands)                  |      
|Customer service and other fees   |  | $                               | 5,957 |               | $ | 2,974 |                    |  | $ | 2,983 |  
|Gain (loss) on sale of securities |  |                                 | 11    |               |   | (66   | )                  |  |   | 75    |  
|Gain on sale of assets            |  |                                 | 601   |               |   | 233   |                    |  |   | 368   |  
|Net gain on sale of loans         |  |                                 | 1,060 |               |   |      |                    |  |   | 1,060 |  
|Other                             |  |                                 | 20    |               |   | 84    |                    |  |   | (62   | )
|                                  |  |                                 |       |               |   |       |                    |  |   |       |  
|Total noninterest income          |  | $                               | 7,649 |               | $ | 3,225 |                    |  | $ | 4,424 |  
|                                  |  |                                 |       |               |   |       |                    |  |   |       |  



Total noninterest
income of $7.6 million for the nine months ended September 30, 2005 increased $4.4 million over the combined nine-month period ended September 30, 2004. The acquisition of Guaranty resulted in a $5.0 million increase to noninterest income.
Excluding the impact of the Guaranty transaction, noninterest income decreased by $0.3 million, primarily due to a decrease in service charges and insufficient check fees.



Noninterest Expense



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



|                                            |  |                                 |        |               |   |          |  |   |       
|------------------------------------------- |  | ------------------------------- | ------ | ------------- | - | -------- |  | - | ------
|                                            |  | Nine months Ended September 30,
|                                            |  | 2005                            |        | Combined 2004 |   | Increase
|                                            |  | (In thousands)                 
|Salaries and employee benefits              |  | $                               | 30,224 |               | $ | 8,938    |  | $ | 21,286
|Occupancy                                   |  |                                 | 4,939  |               |   | 1,635    |  |   | 3,304 
|Furniture and equipment                     |  |                                 | 2,590  |               |   | 910      |  |   | 1,680 
|Amortization                                |  |                                 | 9,157  |               |   | 296      |  |   | 8,861 
|Professional services                       |  |                                 | 1,795  |               |   | 644      |  |   | 1,151 
|Merger, acquisition and transition expenses |  |                                 | 8,436  |               |   | 2,240    |  |   | 6,196 
|Other                                       |  |                                 | 9,786  |               |   | 4,407    |  |   | 5,379 
|                                            |  |                                 |        |               |   |          |  |   |       
|Total noninterest expense                   |  | $                               | 66,927 |               | $ | 19,070   |  | $ | 47,857
|                                            |  |                                 |        |               |   |          |  |   |       



Total noninterest
expense increased $47.9 million from the combined nine-month period ended September 30, 2004 to $66.9 million for the nine months ended September 30, 2005. Excluding the $44.2 million of noninterest expenses that are the result of the
Guaranty acquisition, we incurred an increase in our noninterest expenses of $3.7 million. The primary drivers of the $3.7 million expense were $1.1 million in salaries and benefits, $1.4 million of merger and acquisition costs, $1.0 million in
professional services, and $0.9 million of amortization expense. These increases were offset by $0.7 million in reduced costs for other noninterest expenses. The increase in salaries and benefits is the result of compensation programs for designated
bank and holding company employees and officers deemed to be key contributors to the success of the Company. The costs associated with the programs have been recorded at the holding company. The merger and acquisition costs incurred during 2005 are
associated with the acquisition and integration of Guaranty, while the costs incurred during the combined nine-month period ended September 30, 2004 constituted acquisition related costs for the acquisition of our Predecessor. Our professional
services expense has increased primarily due to the costs of registering and operating as a company with publicly traded securities. We have contracted for internal audit and Sarbanes-Oxley implementation services and changed auditors in 2005. The
increased amortization expense is the result of amortization of the core deposit intangible asset that was recorded in connection with the acquisition of our Predecessor.



22



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##### Table of Contents

Financial Condition



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



|               |  |                       |           |                     |   |                    |  |   |        
|-------------- |  | --------------------- | --------- | ------------------- | - | ------------------ |  | - | -------
|               |  | At September 30, 2005 |           | At December 31,2004 |   | Increase(Decrease)
|               |  | (In thousands)       
|Earning assets |  | $                     | 1,917,580 |                     | $ | 1,828,853          |  | $ | 88,727 
|Total assets   |  |                       | 2,540,169 |                     |   | 2,399,201          |  |   | 140,968
|Deposits       |  |                       | 1,721,609 |                     |   | 1,678,499          |  |   | 43,110 



Loans



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



|                                               |  |                   |           |   |                  |   |           |                    |  |   |          |   |  |       |   
|---------------------------------------------- |  | ----------------- | --------- | - | ---------------- | - | --------- | ------------------ |  | - | -------- | - |  | ----- | --
|                                               |  | September 30,2005 |           |   | December 31,2004 |   |           | Increase(Decrease) |  |   | %Change  |  
|                                               |  | (In thousands)    |          
|Real estatemortgage                           |  | $                 | 583,795   |   |                  | $ | 719,943   |                    |  | $ | (136,148 | ) |  | (18.9 | )%
|Real estateconstruction                       |  |                   | 451,137   |   |                  |   | 308,545   |                    |  |   | 142,592  |   |  | 46.2  | % 
|Commercial                                     |  |                   | 587,762   |   |                  |   | 458,171   |                    |  |   | 129,591  |   |  | 28.3  | % 
|Agricultural                                   |  |                   | 65,466    |   |                  |   | 62,199    |                    |  |   | 3,267    |   |  | 5.3   | % 
|Consumer                                       |  |                   | 50,776    |   |                  |   | 64,625    |                    |  |   | (13,849  | ) |  | (21.4 | )%
|Leases receivable and other                    |  |                   | 26,341    |   |                  |   | 28,505    |                    |  |   | (2,164   | ) |  | (7.6  | )%
|                                               |  |                   |           |   |                  |   |           |                    |  |   |          |   |  |       |   
|Total gross loans                              |  |                   | 1,765,277 |   |                  |   | 1,641,988 |                    |  |   | 123,289  |   |  | 7.5   | % 
|Less: allowance for loan losses                |  |                   | (25,019   | ) |                  |   | (25,022   | )                  |  |   | (3       | ) |  | 0.0   | % 
|Unearned discount                              |  |                   | (1,744    | ) |                  |   | (167      | )                  |  |   | 1,577    |   |  | 944.3 | % 
|                                               |  |                   |           |   |                  |   |           |                    |  |   |          |   |  |       |   
|Net loans                                      |  | $                 | 1,738,514 |   |                  | $ | 1,616,799 |                    |  | $ | 121,715  |   |  | 7.5   | % 
|                                               |  |                   |           |   |                  |   |           |                    |  |   |          |   |  |       |   
|Loans held for sale at lower of cost or market |  | $                 | 6,015     |   |                  | $ | 7,301     |                    |  | $ | (1,286   | ) |  | (17.6 | )%
|                                               |  |                   |           |   |                  |   |           |                    |  |   |          |   |  |       |   



Our lending portfolio
increased 7.5%, or $121.7 million from December 31, 2004. We maintained a diversified loan portfolio and experienced balanced growth throughout our loan portfolio. The changes in balances for real estate  mortgage, real estate 
construction and commercial loans was primarily driven by a change in classification methodology implemented after the acquisition of Guaranty to ensure consistency between the bank subsidiaries.



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.



|                                        |  |                        |        |   |                  |   |        |                    |  |   |        |   
|--------------------------------------- |  | ---------------------- | ------ | - | ---------------- | - | ------ | ------------------ |  | - | ------ | --
|                                        |  | September 30,2005      |        |   | December 31,2004 |   |        | Increase(Decrease) | 
|                                        |  | (Dollars in thousands) |       
|Nonaccrual loans, not restructured      |  | $                      | 8,352  |   |                  | $ | 11,905 |                    |  | $ | (3,553 | ) 
|Accruing loans past due 90 days or more |  |                        | 1,806  |   |                  |   | 2,494  |                    |  |   | (688   | ) 
|                                        |  |                        |        |   |                  |   |        |                    |  |   |        |   
|Total nonperforming loans (NPLs)        |  |                        | 10,158 |   |                  |   | 14,399 |                    |  |   | (4,241 | ) 
|Other real estate owned                 |  |                        | 2,532  |   |                  |   | 5,707  |                    |  |   | (3,175 | ) 
|                                        |  |                        |        |   |                  |   |        |                    |  |   |        |   
|Total nonperforming assets (NPAs)       |  | $                      | 12,690 |   |                  | $ | 20,106 |                    |  | $ | (7,416 | ) 
|                                        |  |                        |        |   |                  |   |        |                    |  |   |        |   
|Selected ratios:                        |  |                        |        |   |                  |   |        |                    |  |   |        |   
|NPLs to total loans held for investment |  |                        | 0.58   | % |                  |   | 0.88   | %                  |  |   | (0.30  | )%
|NPAs to total assets                    |  |                        | 0.50   | % |                  |   | 0.84   | %                  |  |   | (0.34  | )%



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Nonperforming loans decreased by $4.2 million from December 31, 2004 to $10.2 million as of
September 30, 2005. The majority of this decrease is due to a $3.6 million decrease in the nonaccrual loans as of September 30, 2005. Other real estate owned (OREO) decreased $3.2 million from December 31, 2004 to $2.5
million as of September 30, 2005. During 2005, we sold two OREO properties for $3.1 million that were held by Guaranty and had a carrying value of approximately $2.7 million. We believe that our OREO properties are readily marketable.



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. At September 30, 2005, we had $27.8
million of impaired loans. We had $17.4 million of loans out of the $27.8 million of impaired loans that had sufficient collateral to ensure collection of the outstanding loan balance. Included in the allowance for loan losses was $10.4 million for
impaired loan balances in excess of the respective estimated collateral value.



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 at least 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.



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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.



|                                                                           |  |                                     |           |  
|-------------------------------------------------------------------------- |  | ----------------------------------- | --------- | -
|                                                                           |  | Nine months EndedSeptember 30, 2005 |          
|                                                                           |  | (Dollars inthousands)               |          
|Allowance for loan losses:                                                 |  |                                     |           |  
|Beginning balance, December 31, 2004                                       |  | $                                   | 25,022    |  
|                                                                           |  |                                     |           |  
|Loan charge offs                                                           |  |                                     |           |  
|Real estatemortgage                                                       |  |                                     | 1,216     |  
|Real estateconstruction                                                   |  |                                     | 20        |  
|Commercial                                                                 |  |                                     | 921       |  
|Agricultural                                                               |  |                                     |          |  
|Consumer                                                                   |  |                                     | 226       |  
|Leases receivable and other                                                |  |                                     | 98        |  
|                                                                           |  |                                     |           |  
|Total loan charge offs                                                     |  |                                     | 2,481     |  
|                                                                           |  |                                     |           |  
|Recoveries:                                                                |  |                                     |           |  
|Real estatemortgage                                                       |  |                                     | 95        |  
|Real estateconstruction                                                   |  |                                     | 84        |  
|Commercial                                                                 |  |                                     | 422       |  
|Agricultural                                                               |  |                                     | 7         |  
|Consumer                                                                   |  |                                     | 69        |  
|Lease receivable and other                                                 |  |                                     | 101       |  
|                                                                           |  |                                     |           |  
|Total recoveries                                                           |  |                                     | 778       |  
|                                                                           |  |                                     |           |  
|Net loan charge offs                                                       |  |                                     | 1,703     |  
|                                                                           |  |                                     |           |  
|Provision for the allowance for loan losses                                |  |                                     | 1,700     |  
|                                                                           |  |                                     |           |  
|Ending balance, September 30, 2005                                         |  | $                                   | 25,019    |  
|                                                                           |  |                                     |           |  
|Loans held for investment                                                  |  | $                                   | 1,763,533 |  
|Average loans held for investment                                          |  |                                     | 1,679,761 |  
|Non-performing loans                                                       |  |                                     | 10,158    |  
|Selected ratios:                                                           |  |                                     |           |  
|Net charge-offs to average loans held for investment                       |  |                                     | 0.10      | %
|Provision for the allowance for loans to average loans held for investment |  |                                     | 0.10      | %
|Allowance for loans to loans held for investment at end of period          |  |                                     | 1.42      | %
|Allowance for loans to nonperforming loans                                 |  |                                     | 246.30    | %



The allowance for loan
losses of $25.0 million at September 30, 2005 represented 1.4% of total loans and 246.3% 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 173.8%
of nonperforming loans.



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 September 30, 2005 and December 31, 2004 was as
follows:



|                                                |  |                   |         |                  |   |                    |  |   |         |   |  |       |   
|----------------------------------------------- |  | ----------------- | ------- | ---------------- | - | ------------------ |  | - | ------- | - |  | ----- | --
|                                                |  | September 30,2005 |         | December 31,2004 |   | Increase(Decrease) |  |   | %Change |  
|                                                |  | (In thousands)    |        
|Securities available-for-sale:                  |  |                   |         |                  |   |                    |  |   |         |   |  |       |   
|U.S. Treasury securities                        |  | $                 | 16,177  |                  | $ | 38,170             |  | $ | (21,993 | ) |  | (57.6 | )%
|U.S. Government agencies                        |  |                   | 9,483   |                  |   | 8,479              |  |   | 1,004   |   |  | 11.8  | % 
|Obligations of state and political subdivisions |  |                   | 54,733  |                  |   | 34,321             |  |   | 20,412  |   |  | 59.5  | % 
|Mortgage backed securities                      |  |                   | 40,697  |                  |   | 43,713             |  |   | (3,016  | ) |  | (6.9  | )%
|Marketable equity securities                    |  |                   | 1,007   |                  |   | 1,004              |  |   | 3       |   |  | 0.3   | % 
|                                                |  |                   |         |                  |   |                    |  |   |         |   |  |       |   
|Total securities available-for-sale             |  | $                 | 122,097 |                  | $ | 125,687            |  | $ | (3,590  | ) |  | (2.9  | )%
|                                                |  |                   |         |                  |   |                    |  |   |         |   |  |       |   
|Securities held-to-maturity:                    |  |                   |         |                  |   |                    |  |   |         |   |  |       |   
|Mortgage-backed securities                      |  | $                 | 386     |                  | $ | 640                |  | $ | 254     |   |  | (39.7 | )%
|                                                |  |                   |         |                  |   |                    |  |   |         |   |  |       |   
|Bank stocks, at cost                            |  | $                 | 24,834  |                  | $ | 12,770             |  | $ | 12,064  |   |  | 94.5  | % 
|                                                |  |                   |         |                  |   |                    |  |   |         |   |  |       |   



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The carrying value of our investment securities at September 30, 2005 totaled $147.3 million
compared to $139.1 million at December 31, 2004. We restructured the makeup of our investment portfolio during the first nine 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.



Borrowings



Excluding unamortized premium of $247,000, the Company had a $41,229,000 aggregate balance of subordinated debentures outstanding with a weighted average
cost of 7.9% at September 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, as applicable, after issue if certain conditions are met, or
at any time upon the occurrence and continuation of certain changes in either the tax treatment or the capital treatment of the trusts, the debentures or the preferred securities. During the nine months ended September 30, 2005, $603,000 of
premium on these trust preferred securities was amortized against interest expense.



Our borrowings at September 30, 2005 increased by $78.6 million from December 31, 2004 to $118.3 million. The primary reason for the additional borrowings was to fund the increase in our loan portfolio. For
the period ended September 30, 2005, our loan portfolio increased by $120.4 million, which was funded by increased deposits of $43.1 million and the additional borrowings.



Borrowed funds include Treasury Tax and Loan notes, Federal Home Loan Bank (FHLB) borrowings, and a revolving
line of credit with First Tennessee Bank National Association (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
$118,335,000 and $39,770,000 outstanding under these borrowings at September 30, 2005 and December 31, 2004, with a total commitment of $275,219,000 at September 30, 2005.



On November 8, 2005, the Company entered into a $70 million 364-day Revolving Credit Agreement with U.S. Bank National
Association. This new revolving credit facility replaces the $20 million revolving credit facility the Company had in place with First Tennessee, which was terminated in connection with the Company entering into the new credit facility with U.S.
Bank. The new credit facility is secured by a pledge of 100% of the outstanding capital stock of the Companys bank subsidiary, Guaranty Bank and Trust Company, pursuant to a Pledge Agreement, dated as of November 8, 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 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 September 30, 2005, the Company had a leverage ratio of 9.01%, Tier 1 risk-weighted capital ratio of 9.61% and total
risk-weighted capital ratio of 10.86%. 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.



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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:



|                             |  |                               |         |                              |        
|---------------------------- |  | ----------------------------- | ------- | ---------------------------- | -------
|                             |  | September 30,2005 (Successor) |         | December 31,2004 (Successor)
|                             |  | (In thousands)               
|Commitments to extend credit |  | $                             | 563,214 |                              | 468,059
|Standby letters of credit    |  |                               | 33,425  |                              | 71,266 
|Commercial letters of credit |  |                               | 232     |                              | 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.



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 September 30, 2005, the amount available for dividends from our banks, without regulatory approval, was $22.0 million. We require liquidity for the payment of interest on the subordinated
debentures, for operating expenses, principally salaries and benefits, stock redemption and for the payment of dividends to our shareholders, if any.



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.



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



|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.



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At September 30, 2005, we had a positive gap of $198 million or 7.8% percent of our total assets,
that would be subject to repricing within one year, with a total positive gap of $555 million or 21.9% of our total assets. The following table sets forth information concerning repricing opportunities for our interest-earning assets and interest
bearing liabilities as of September 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 than 3months |           |   | 3 months to1 year |   |          | 1 to 5years |  |   | Over 5years |   |  | Non-ratesensitive |         |   | Total
|                                                               |  | (In thousands)   
|Interest-bearing cash and cash equivalents                     |  | $                 | 20,735    |   |                   | $ | 5,000    |             |  | $ |            |   |  | $                 |        |   |       | $ |          |   |  | $ | 25,735   
|Investment securities                                          |  |                   | 35,746    |   |                   |   | 20,880   |             |  |   | 22,995      |   |  |                   | 42,860  |   |       |   | 24,834    |   |  |   | 147,317  
|Loans, gross                                                   |  |                   | 1,183,637 |   |                   |   | 225,207  |             |  |   | 279,452     |   |  |                   | 74,694  |   |       |   | 6,558     |   |  |   | 1,769,548
|All other assets                                               |  |                   | 53,922    |   |                   |   | 8,242    |             |  |   | 11,456      |   |  |                   | 8,341   |   |       |   | 515,610   |   |  |   | 597,569  
|                                                               |  |                   |           |   |                   |   |          |             |  |   |             |   |  |                   |         |   |       |   |           |   |  |   |          
|Totals                                                         |  | $                 | 1,294,040 |   |                   | $ | 259,329  |             |  | $ | 313,903     |   |  | $                 | 125,895 |   |       | $ | 547,002   |   |  | $ | 2,540,169
|                                                               |  |                   |           |   |                   |   |          |             |  |   |             |   |  |                   |         |   |       |   |           |   |  |   |          
|Deposits                                                       |  | $                 | 784,777   |   |                   | $ | 350,378  |             |  | $ | 54,484      |   |  | $                 |        |   |       | $ | 531,970   |   |  | $ | 1,721,609
|Assets under repurchase agreements and federal funds purchases |  |                   | 31,304    |   |                   |   |         |             |  |   |            |   |  |                   |        |   |       |   |          |   |  |   | 31,304   
|Borrowings                                                     |  |                   | 109,246   |   |                   |   |         |             |  |   | 4,871       |   |  |                   | 4,218   |   |       |   |          |   |  |   | 118,335  
|Subordinated debentures                                        |  |                   |          |   |                   |   | 25,764   |             |  |   |            |   |  |                   | 15,712  |   |       |   |          |   |  |   | 41,476   
|All other liabilities                                          |  |                   | 47,235    |   |                   |   | 7,021    |             |  |   | 2,818       |   |  |                   |        |   |       |   | 48,337    |   |  |   | 105,411  
|Stockholders equity                                           |  |                   |          |   |                   |   |         |             |  |   |            |   |  |                   |        |   |       |   | 522,034   |   |  |   | 522,034  
|                                                               |  |                   |           |   |                   |   |          |             |  |   |             |   |  |                   |         |   |       |   |           |   |  |   |          
|Totals                                                         |  | $                 | 972,562   |   |                   | $ | 383,163  |             |  | $ | 62,173      |   |  | $                 | 19,930  |   |       | $ | 1,102,341 |   |  | $ | 2,540,169
|                                                               |  |                   |           |   |                   |   |          |             |  |   |             |   |  |                   |         |   |       |   |           |   |  |   |          
|Period gap                                                     |  |                   | 321,478   |   |                   |   | (123,834 | )           |  |   | 251,730     |   |  |                   | 105,965 |   |       |   | (555,339  | ) |  |   |          
|Cumulative gap                                                 |  |                   | 321,478   |   |                   |   | 197,644  |             |  |   | 449,374     |   |  |                   | 555,339 |   |       |   |           |   |  |   |          
|Cumulative rate sensitive gap %                                |  |                   | 12.7      | % |                   |   | 7.8      | %           |  |   | 17.7        | % |  |                   | 21.9    | % |       |   |           |   |  |   |          



|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 September 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
|------- | -----------------



On December 31, 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. On September 7,
2005, the Court granted in part 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. On November 10, 2005, the trustees filed a motion
requesting reconsideration of the order dismissing those claims. We intend to file a response opposing the trustees motion. We intend to continue to vigorously contest the remaining claims, which amount to approximately $2.5 million.



On July 22, 2005 and August 18, 2005, two separate but similar
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. We intend to vigorously defend these actions.



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
|------- | -----------------------------------------------------------



None.



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



None.



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



None.



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



On November 8, 2005, the Company entered into a $70 million 364-day Revolving Credit Agreement with U.S. Bank National Association. This new
revolving credit facility replaces the $20 million revolving credit facility the Company had in place with First Tennessee Bank National Association, which was terminated in connection with the Company entering into the new credit facility with U.S.
Bank. The new credit facility is secured by a pledge of 100% of the outstanding capital stock of the Companys bank subsidiary, Guaranty Bank and Trust Company, pursuant to a Pledge Agreement, dated as of November 8, 2005.



Under the new credit facility, the Company is able to borrow at an interest
rate equal to, at the Companys option, either (i) the lending banks federal funds rate plus 1.50%, (ii) the lending banks prime rate minus 0.75% or (iii) LIBOR plus 1.50%. As of November 10, 2005, the Company
had an aggregate of $11.7 million in debt outstanding under the new credit facility. The new credit facility requires the Company to maintain certain financial and capital ratios, and contains, among other things, other covenants, conditions,
representations and warranties and events of default customary for facilities of this type.



U.S. Bank performs various commercial banking services for the Company, for which they receive usual and customary fees.



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



|               |  |                                                                                                                                                                                                           
|-------------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit Number |  | 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).                      
|               | 
|10.1           |  | Revolving Credit Agreement, dated as of November 8, 2005, between the Company and U.S. Bank National Association.                                                                                         
|               | 
|10.2           |  | Pledge Agreement, dated as of November 8, 2005, between the Company and U.S. Bank National Association.                                                                                                   
|               | 
|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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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: November 11, 2005 |  |  |  | CENTENNIAL BANK HOLDINGS, INC.                      
|                        |  | 
|                        |  |  |  | /s/    PAUL W. TAYLOR                               
|                        |  |  |  | Paul W. Taylor                                      
|                        |  |  |  | Executive Vice President and Chief Financial Officer



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