----

----

**UNITED          STATES**

**SECURITIES          AND EXCHANGE COMMISSION **

**Washington,          D.C. 20549**

**_______________________**

**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**                                           |
|    |                                                                                                                                       |
|  o | **TRANSITION                    REPORT PURSUANT TO SECTION 13 OR 15(****d****)                    OF THE SECURITIES EXCHANGE ACT OF 1934** |
|    |                                                                                                                                       |
|    | **For                    the transition period from __________ to                    ___________**                                         |

**VAIL          BANKS, INC.**

| **Colorado**                                       | **84-1250561**                         |
|----------------------------------------------------|----------------------------------------|
| (State                    or other jurisdiction of | (I.R.S.                    Employer    |
| incorporation                    or organization)  | Identification                    No.) |

** 0015          Benchmark Road, Suite 300, P.O. Box 6580, Avon, Colorado          81620**

**(970)          476-2002**

**N/A **

**As        of October 31, 2005, there were 5,606,235 common shares ($1.00 par value        per        share) outstanding.**

----

Table            of Contents

**VAIL      BANKS, INC.**

**FORM      10-Q**

**FOR      THE QUARTER ENDED SEPTEMBER 30, 2005**

**TABLEOF      CONTENTS**

|  **P****ART                I**** **  |  **FINANCIAL                INFORMATION**                                                                       |   |
|-----------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------|--------|
| ITEM                1.                              | FINANCIAL                STATEMENTS                                                                                       |   |
|                                                | *Consolidated                Balance Sheets                (unaudited)*                                                   | *3*    |
|                                                | *Consolidated                Statements of Income and Comprehensive Income                (unaudited)*                    | *4*    |
|                                                | *Consolidated                Statements of Cash Flows                (unaudited)*                                         | *6*    |
|                                                | *Notes                to Unaudited Consolidated Financial                Statements*                                      | *8*    |
|                                                |                                                                                                                      |   |
| ITEM                2.                              | MANAGEMENT’S                DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION                AND RESULTS OF OPERATIONS |   |
|                                                | *Forward                Looking Statements*                                                                               | *16*   |
|                                                | *Basis                of Presentation*                                                                                    | *16*   |
|                                                | *Overview*                                                                                                                | *16*   |
|                                                | *Results                of Operations - Quarter to                Date*                                                   | *16*   |
|                                                | *Results                of Operations - Year to Date*                                                                     | *18*   |
|                                                | *Financial                Condition*                                                                                      | *19*   |
|                                                | *Asset                Quality*                                                                                            | *20*   |
|                                                | *Liquidity*                                                                                                               | *21*   |
|                                                | *Capital                Resources*                                                                                        | *24*   |
|                                                |                                                                                                                      |   |
| ITEM                3.                              | QUANTITATIVE                AND QUALITATIVE DISCLOSURES ABOUT MARKET                RISK                                  | 25     |
|                                                |                                                                                                                      |   |
| ITEM                4.                              | CONTROLS                AND PROCEDURES                                                                                    | 25     |
|                                                |                                                                                                                      |   |
| **PART                II**                          | **OTHER                INFORMATION**                                                                                      |   |
|                                                |                                                                                                                      |   |
| ITEM                1.                              | LEGAL                PROCEEDINGS                                                                                          | 26     |
| ITEM                2.                              | UNREGISTERED                SALES OF EQUITY SECURITIES AND USE OF                PROCEEDS                                 | 26     |
| ITEM                3.                              | DEFAULTS                UPON SENIOR SECURITIES                                                                            | 26     |
| ITEM                4.                              | SUBMISSION                OF MATTERS TO A VOTE OF SECURITY                HOLDERS                                         | 26     |
| ITEM                5.                              | OTHER                INFORMATION                                                                                          | 26     |
| ITEM                6.                              | EXHIBIITS                                                                                                                 | 26     |
|                                                |                                                                                                                      |   |
| SIGNATURES                                          |  27                                                                                                                  |

----

Table            of Contents

**PART      I.     FINANCIALINFORMATION**

**Item      1.    **
**FINANCIALSTATEMENTS**

| **VAIL                BANKS, INC.**                                                                                                                                                                                              |   |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
| **Consolidated                Balance Sheets**(unaudited)                                                                                                                                                                        |   |
|                                                                                                                                                                                                                             |   | **September                30,** |   | December                31, |   |
| (in                thousands, except share data)                                                                                                                                                                                 |   | **2005** |   | 2004 |   |
| **ASSETS**                                                                                                                                                                                                                       |   |   |   |   |   |   |   |
| Cash                and due from banks                                                                                                                                                                                           |   | **$** | **21,228** |   | $ | 18,360 |   |
| Federal                funds sold                                                                                                                                                                                                |   |   | **48,810** |   |   | 17,295 |   |
| Total                cash and cash equivalents                                                                                                                                                                                   |   |   | **70,038** |   |   | 35,655 |   |
| Investment                securities, available for sale                                                                                                                                                                         |   |   | **91,761** |   |   | 103,779 |   |
| Investment                securities, held to maturity                                                                                                                                                                           |   |   | **180** |   |   | 246 |   |
| Investments                in Trust I and Trust II                                                                                                                                                                               |   |   | **743** |   |   | 743 |   |
| Loans                held for sale                                                                                                                                                                                               |   |   | **1,006** |   |   | 7,110 |   |
| Loans,                net (includes related party loans of **$13,566**and                $10,682 at                September 30, 2005 and December 31, 2004, respectively)                                                       |   |   | **423,342** |   |   | 402,458 |   |
| Investments                in bank stocks, at cost                                                                                                                                                                               |   |   | **4,532** |   |   | 4,457 |   |
| Premises                and equipment, net                                                                                                                                                                                       |   |   | **38,889** |   |   | 38,721 |   |
| Interest                receivable                                                                                                                                                                                               |   |   | **2,698** |   |   | 2,172 |   |
| Goodwill                                                                                                                                                                                                                         |   |   | **35,970** |   |   | 35,970 |   |
| Other                intangible assets, net                                                                                                                                                                                      |   |   | **129** |   |   | 159 |   |
| Other                assets                                                                                                                                                                                                      |   |   | **2,622** |   |   | 3,125 |   |
|                                                                                                                                                                                                                             |   | $ | **671,910** |   | $ | 634,595 |   |
| **LIABILITIES                AND SHAREHOLDERS’ EQUITY**                                                                                                                                                                    |   |   |   |   |   |   |   |
| Liabilities                                                                                                                                                                                                                      |   |   |   |   |   |   |   |
| Deposits                (includes related party deposits of **$7,729**                and $5,618 at September 30, 2005 and December 31, 2004,                respectively)                                                       |   |   |   |   |   |   |   |
| Non-interest                bearing                                                                                                                                                                                              |   | **$** | **131,431** |   | $ | 120,127 |   |
| Interest                bearing                                                                                                                                                                                                  |   |   | **406,400** |   |   | 380,317 |   |
| Total                deposits                                                                                                                                                                                                    |   |   | **537,831** |   |   | 500,444 |   |
| Securities                sold under agreements to repurchase                                                                                                                                                                    |   |   | **13,738** |   |   | 894 |   |
| Federal                Home Loan Bank advances, short term                                                                                                                                                                       |   |   | **3,554** |   |   | 15,719 |   |
| Federal                Home Loan Bank advances, long term                                                                                                                                                                        |   |   | **23,530** |   |   | 26,725 |   |
| Subordinated                notes to Trust I and Trust II                                                                                                                                                                        |   |   | **24,743** |   |   | 24,743 |   |
| Interest                payable and other liabilities                                                                                                                                                                            |   |   | **3,342** |   |   | 3,605 |   |
| Total                liabilities                                                                                                                                                                                                 |   |   | **606,738** |   |   | 572,130 |   |
| Minority                interest                                                                                                                                                                                                 |   |   | **2,468** |   |   | 2,563 |   |
| Commitments                and contingencies (Notes 7 and 12)                                                                                                                                                                    |   |   |   |   |   |   |   |
| Shareholders’                equity                                                                                                                                                                                        |   |   |   |   |   |   |   |
| Preferred                shares - $1 par value; 2,250,000 shares authorized, no shares issued                and                outstanding                at September 30, 2005 and December 31, 2004, respectively             |   |   | **—** |   |   | **—** |   |
| Common                shares - $1 par value; 20,000,000 shares authorized, 5,604,235 and                5,326,504                issued and outstanding at September 30, 2005 and December 31, 2004,                respectively |   |   | **5,605** |   |   | 5,327 |   |
| Additional                paid-in capital                                                                                                                                                                                        |   |   | **35,795** |   |   | 34,944 |   |
| Retained                earnings                                                                                                                                                                                                 |   |   | **22,290** |   |   | 20,249 |   |
| Accumulated                other comprehensive loss, net of tax benefit of **$579**                and $364 at September 30, 2005 and December 31, 2004, respectively                                                            |   |   | **(986** | **)** |   | (618 | ) |
| Total                shareholders’ equity                                                                                                                                                                                  |   |   | **62,704** |   |   | 59,902 |   |
|                                                                                                                                                                                                                             |   | **$** | **671,910** |   | $ | 634,595 |   |
|                                                                                                                                                                                                                             |   |   |   |   |   |   |   |

| The                accompanying notes are an integral part of these unaudited consolidated                financial statements. |
|---------------------------------------------------------------------------------------------------------------------------------|

----

Table            of Contents

**VAIL        BANKS, INC.**

**Consolidated        Statements of Income and Comprehensive        Income**

|                                                                                                                                        |   | Three                months endedSeptember                30, |       | Nine                months endedSeptember                30, |   |
|---------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------------------------------------------------|------------|--------------------------------------------------------------|--------|
|                                                                                                                                        |   | **2005**                                                      |       | 2004                                                         |   | **2005** |   | 2004 |   |
| Interest                income                                                                                                              |   |                                                          |       |                                                         |   |   |   |   |   |   |   |   |   |
| Interest                and fees on loans                                                                                                   |   | **$**                                                         | **8,916**  |                                                         | $      | 6,704 |   | **$** | **24,773** |   | $ | 18,934 |   |
| Interest                on investment securities                                                                                            |   |                                                          | **792**    |                                                         |   | 1,081 |   |   | **3,078** |   |   | 2,795 |   |
| Interest                on federal funds sold and other short-term investments                                                              |   |                                                          | **499**    |                                                         |   | 25 |   |   | **910** |   |   | 314 |   |
| Investments                in Trust I and II                                                                                                |   |                                                          | **19**     |                                                         |   | 19 |   |   | **57** |   |   | 57 |   |
| Interest                on bank stocks                                                                                                      |   |                                                          | **60**     |                                                         |   | 53 |   |   | **173** |   |   | 157 |   |
| Total                interest income                                                                                                        |   |                                                          | **10,286** |                                                         |   | 7,882 |   |   | **28,991** |   |   | 22,257 |   |
| Interest                expense                                                                                                             |   |                                                          |       |                                                         |   |   |   |   |   |   |   |   |   |
| Deposits                                                                                                                                    |   |                                                          | **1,962**  |                                                         |   | 1,028 |   |   | **4,914** |   |   | 3,052 |   |
| Borrowings                                                                                                                                  |   |                                                          | **279**    |                                                         |   | 340 |   |   | **884** |   |   | 1,057 |   |
| Federal                funds purchased and securities sold under agreements to                repurchase                                    |   |                                                          | **122**    |                                                         |   | 3 |   |   | **245** |   |   | 5 |   |
| Subordinated                notes to Trust I and II                                                                                         |   |                                                          | **631**    |                                                         |   | 631 |   |   | **1,892** |   |   | 1,892 |   |
| Total                interest expense                                                                                                       |   |                                                          | **2,994**  |                                                         |   | 2,002 |   |   | **7,935** |   |   | 6,006 |   |
|                                                                                                                                        |   |                                                          |       |                                                         |   |   |   |   |   |   |   |   |   |
| Net                interest income                                                                                                          |   |                                                          | **7,292**  |                                                         |   | 5,880 |   |   | **21,056** |   |   | 16,251 |   |
| Provision                for loan losses                                                                                                    |   |                                                          | **50**     |                                                         |   | 323 |   |   | **79** |   |   | 524 |   |
| Net                interest income after provision for loan losses                                                                          |   |                                                          | **7,242**  |                                                         |   | 5,557 |   |   | **20,977** |   |   | 15,727 |   |
|                                                                                                                                        |   |                                                          |       |                                                         |   |   |   |   |   |   |   |   |   |
| Non-interest                income                                                                                                          |   |                                                          |       |                                                         |   |   |   |   |   |   |   |   |   |
| Gain                (loss) on sale of premises and equipment                                                                                |   |                                                          | —    |                                                         |   | (11 | ) |   | **3** |   |   | 1,770 |   |
| Deposit                related                                                                                                              |   |                                                          | **648**    |                                                         |   | 717 |   |   | **1,913** |   |   | 2,094 |   |
| Mortgage                broker fees                                                                                                         |   |                                                          | **588**    |                                                         |   | 756 |   |   | **1,441** |   |   | 2,334 |   |
| Other                                                                                                                                       |   |                                                          | **1,022**  |                                                         |   | 781 |   |   | **2,147** |   |   | 1,981 |   |
| Total                non-interest income                                                                                                    |   |                                                          | **2,258**  |                                                         |   | 2,243 |   |   | **5,504** |   |   | 8,179 |   |
| Non-interest                expense                                                                                                         |   |                                                          |       |                                                         |   |   |   |   |   |   |   |   |   |
| Salaries                and employee benefits                                                                                               |   |                                                          | **4,596**  |                                                         |   | 4,096 |   |   | **12,900** |   |   | 12,109 |   |
| Occupancy                                                                                                                                   |   |                                                          | **972**    |                                                         |   | 1,000 |   |   | **3,015** |   |   | 2,691 |   |
| Furniture                and equipment                                                                                                      |   |                                                          | **646**    |                                                         |   | 608 |   |   | **1,979** |   |   | 1,781 |   |
| Other                                                                                                                                       |   |                                                          | **1,295**  |                                                         |   | 1,348 |   |   | **3,926** |   |   | 3,606 |   |
| Total                non-interest expense                                                                                                   |   |                                                          | **7,509**  |                                                         |   | 7,052 |   |   | **21,820** |   |   | 20,187 |   |
| Income                before income tax expense                                                                                             |   |                                                          | **1,991**  |                                                         |   | 748 |   |   | **4,661** |   |   | 3,719 |   |
| Provision                for income taxes                                                                                                   |   |                                                          | **648**    |                                                         |   | 189 |   |   | **1,462** |   |   | 1,406 |   |
| Net                income                                                                                                                   |   |                                                          | **1,343**  |                                                         |   | 559 |   |   | **3,199** |   |   | 2,313 |   |
| Other comprehensive              (loss) income                                                                                         |   |                                                          |       |                                                         |   |   |   |   |   |   |   |   |   |
| Net                change in unrealized gain/(loss) on investment securities available                for                sale, net of taxes |   |                                                          | **(321**   | **)**                                                        |   | 987 |   |   | **(368** | **)** |   | (491 | ) |
| Comprehensive                income                                                                                                         |   | **$**                                                         | **1,022**  |                                                         | $      | 1,546 |   | **$** | **2,831** |   | $ | 1,822 |   |
|                                                                                                                                        |   |                                                          |       |                                                         |   |   |   |   |   |   |   |   |   |
|                                                                                                                                        |   |                                                          |       |                                                         |   |   |   |   |   |   |   |   |   |
|                                                                                                                                        |   |                                                          |       |                                                         |   |   |   |   |   |   |   |   |   |

----

Table              of Contents

|                                                                                                                                                                                             |   |                                                              |          |                                                             |   |      |   |   |          |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------------------------------------------------------|---------------|------------------------------------------------------------------|--------|-----------|--------|--------|---------------|
| **VAIL                  BANKS, INC.****Consolidated                  Statements of Income and Comprehensive Income****(Continued)**(in                  thousands, except share data)(unaudited) |   |
|                                                                                                                                                                                             |   |                                                              |          |                                                             |   |      |   |   |          |
|                                                                                                                                                                                             |   | Three                  months endedSeptember                  30, |          | Nine                  months endedSeptember                  30, |   |
|                                                                                                                                                                                             |   | **2005**                                                          |          | 2004                                                             |   | **2005**  |   | 2004   |          |
|                                                                                                                                                                                             |   |                                                              |          |                                                             |   |      |   |   |          |
| Earnings                  per share                                                                                                                                                              |   |                                                              |          |                                                             |   |      |   |   |          |   |   |   |   |
| Basic                                                                                                                                                                                            |   | **$**                                                             | **0.26**      |                                                             | $      | 0.11      |   | **$**  | **0.62**      |   | $ | 0.46 |   |
| Diluted                                                                                                                                                                                          |   | **$**                                                             | **0.25**      |                                                             | $      | 0.10      |   | **$**  | **0.59**      |   | $ | 0.43 |   |
|                                                                                                                                                                                             |   |                                                              |          |                                                             |   |      |   |   |          |   |   |   |   |
| Weighted                  average common shares                                                                                                                                                  |   |                                                              |          |                                                             |   |      |   |   |          |   |   |   |   |
| Basic                                                                                                                                                                                            |   |                                                              | **5,206,023** |                                                             |   | 5,079,123 |   |   | **5,157,440** |   |   | 5,049,624 |   |
| Diluted                                                                                                                                                                                          |   |                                                              | **5,380,120** |                                                             |   | 5,426,283 |   |   | **5,395,579** |   |   | 5,415,405 |   |

| The                  accompanying notes are an integral part of these unaudited consolidated                  financial statements. |
|-------------------------------------------------------------------------------------------------------------------------------------|

----

Table            of Contents

**VAIL        BANKS, INC.**

**ConsolidatedStatements        of Cash Flows**

|                                                                                                                                                    |   | Nine                months endedSeptember                30, |        |
|---------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------------------------------------------|-------------|
|                                                                                                                                                    |   | **2005**                                                     |        | 2004 |   |
|                                                                                                                                                    |   |                                                         |        |   |   |
|                                                                                                                                                    |   |                                                         |        |   |   |
| Cash                flows from operating activities                                                                                                     |   |                                                         |        |   |   |   |   |
| Net                income                                                                                                                               |   | **$**                                                        | **3,199**   |   | $ | 2,313 |   |
| Adjustments                to reconcile net income to net cash provided by operating                activities                                          |   |                                                         |        |   |   |   |   |
| Net                amortization of premiums on investment securities                                                                                    |   |                                                         | **416**     |   |   | 666 |   |
| Provision                for loan losses                                                                                                                |   |                                                         | **79**      |   |   | 524 |   |
| Amortization                of deferred loan fees                                                                                                       |   |                                                         | **(910**    | **)** |   | (601 | ) |
| Gain                on sale of premises and equipment                                                                                                   |   |                                                         | **(3**      | **)** |   | (1,770 | ) |
| Depreciation                and amortization                                                                                                            |   |                                                         | **1,567**   |   |   | 1,390 |   |
| Gain                on sale of foreclosed properties                                                                                                    |   |                                                         | **(42**     | **)** |   | (130 | ) |
| Recognition                of stock compensation on restricted common stock and stock                options                                       |   |                                                         | **411**     |   |   | 267 |   |
| Minority                interest expense                                                                                                                |   |                                                         | **60**      |   |   | 107 |   |
| Changes                in operating assets and liabilities                                                                                              |   |                                                         |        |   |   |   |   |
| Loans                held for sale                                                                                                                      |   |                                                         | **6,104**   |   |   | 220 |   |
| Interest                receivable                                                                                                                      |   |                                                         | **(526**    | **)** |   | (171 | ) |
| Other                assets                                                                                                                             |   |                                                         | **552**     |   |   | 403 |   |
| Interest                payable and other liabilities                                                                                                   |   |                                                         | **(263**    | **)** |   | (511 | ) |
| Net                cash provided by operating activities                                                                                                |   |                                                         | **10,644**  |   |   | 2,707 |   |
|                                                                                                                                                    |   |                                                         |        |   |   |   |   |
| Cash                flows from investing activities                                                                                                     |   |                                                         |        |   |   |   |   |
| Purchases                of investment securities, available for sale                                                                                   |   |                                                         | **(31,957** | **)** |   | (80,520 | ) |
| Increase                in bank stocks from stock dividends received                                                                                    |   |                                                         | **(75**     | **)** |   | (59 | ) |
| Proceeds                from maturities of investment securities, held to maturity                                                                      |   |                                                         | **65**      |   |   | 87 |   |
| Proceeds                from maturities/calls of investment securities, available for                sale                                               |   |                                                         | **42,975**  |   |   | 23,013 |   |
| Proceeds                from redemption of bank stocks                                                                                                  |   |                                                         | —     |   |   | 19 |   |
| Net                increase in loans                                                                                                                    |   |                                                         | **(20,290** | **)** |   | (73,264 | ) |
| Purchases                of premises and equipment                                                                                                      |   |                                                         | **(1,804**  | **)** |   | (6,086 | ) |
| Proceeds                from sales of premises and equipment                                                                                            |   |                                                         | **102**     |   |   | 8,318 |   |
| Proceeds                from sales of foreclosed properties                                                                                             |   |                                                         | **447**     |   |   | 968 |   |
| Net                cash used by investing activities                                                                                                    |   |                                                         | **(10,537** | **)** |   | (127,524 | ) |
|                                                                                                                                                    |   |                                                         |        |   |   |   |   |
| Cash                flows from financing activities                                                                                                     |   |                                                         |        |   |   |   |   |
| Net                increase in deposits                                                                                                                 |   |                                                         | **37,387**  |   |   | 51,782 |   |
| Net                increase (decrease) in federal funds purchased and securities                sold under                agreements to repurchase |   |                                                         | **12,844**  |   |   | (156 | ) |
| Net                decrease in Federal Home Loan Bank advances                                                                                          |   |                                                         | **(15,360** | **)** |   | (5,858 | ) |
| Proceeds                from issuance of common stock                                                                                                   |   |                                                         | **718**     |   |   | 569 |   |
| Distribution                to minority partners                                                                                                        |   |                                                         | **(155**    | **)** |   | — |   |
| Payment                of cash dividends on common stock                                                                                                |   |                                                         | **(1,158**  | **)** |   | (1,116 | ) |
| Net                cash provided by financing activities                                                                                                |   |                                                         | **34,276**  |   |   | 45,221 |   |
|                                                                                                                                                    |   |                                                         |        |   |   |   |   |
| Net                increase (decrease) in cash and cash equivalents                                                                                     |   |                                                         | **34,383**  |   |   | (79,596 | ) |
|                                                                                                                                                    |   |                                                         |        |   |   |   |   |
| Cash                and cash equivalents at beginning of period                                                                                         |   |                                                         | **35,655**  |   |   | 100,908 |   |
|                                                                                                                                                    |   |                                                         |        |   |   |   |   |
| Cash                and cash equivalents at end of period                                                                                               |   | **$**                                                        | **70,038**  |   | $ | 21,312 |   |

----

Table            of Contents

**VAIL        BANKS, INC.**

**Consolidated        Statements of Cash Flows (Continued)**

|                                                                                                                                   |   | Nine                months endedSeptember                30, |        |
|----------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------------------------------------------|-------------|
|                                                                                                                                   |   | **2005**                                                     |        | 2004 |   |
|                                                                                                                                   |   |                                                         |        |   |   |
| Supplemental                disclosures of cash flow information                                                                       |   |                                                         |        |   |   |   |   |
| Cash                paid during the period for                                                                                         |   |                                                         |        |   |   |   |   |
| Interest                expense                                                                                                        |   | **$**                                                        | **8,144**   |   | $ | 6,190 |   |
|                                                                                                                                   |   |                                                         |        |   |   |   |   |
| Income                taxes                                                                                                            |   | **$**                                                        | **690**     |   | $ | 1,177 |   |
|                                                                                                                                   |   |                                                         |        |   |   |   |   |
| Non-cash                investing and financing transactions                                                                           |   |                                                         |        |   |   |   |   |
| Foreclosure                of collateralized loans, net of reserve                                                                     |   | **$**                                                        | **237**     |   | $ | 1,082 |   |
| Net                increase in unrealized loss on investment securities available for                sale,                net of taxes |   | **$**                                                        | **(368**    | **)** | $ | (491 | ) |
| Reclassification                of other assets to premises and equipment                                                              |   | **$**                                                        | **—** |   | $ | 431 |   |
| Contribution                of land by minority partners                                                                               |   | **$**                                                        | **—** |   | $ | 1,736 |   |
| Restricted                shares                                                                                                       |   |                                                         |        |   |   |   |   |
| Original                issuance (205,000 shares in 2005; 10,000 shares in 2004)                                                       |   | **$**                                                        | **2,727**   |   | $ | 130 |   |
| Increases                in fair value of performance-based restricted shares                                                          |   |                                                         | **144**     |   |   | — |   |
| Total                estimated future compensation expense on restricted shares                                                        |   | **$**                                                        | **2,871**   |   | $ | 130 |   |
|                                                                                                                                   |   |                                                         |        |   |   |   |   |

|  The                accompanying notes are an integral part of these unaudited consolidated                financial statements. |
|---------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                  |

----

Table            of Contents

**VAIL            BANKS, INC.**

**1.        **
**ORGANIZATIONAND      BASIS OF PRESENTATION**

*Consolidation      of Variable Interest Entities*

**2.        INVESTMENT SECURITIES **

|                                                                            |   | **September                30, 2005** |       | December                31, 2004 |   |
|---------------------------------------------------------------------------------|--------|---------------------------------------|------------|----------------------------------|--------|
|                                                                            |   | **Amortized**                         |       | **Fair**                         |   | Amortized |   | Fair |   |
| (in                thousands)                                                   |   | **Cost**                              |       | **Value**                        |   | Cost |   | Value |   |
|                                                                            |   |                                  |       |                             |   |   |   |   |   |
| Securities                available for sale                                    |   |                                  |       |                             |   |   |   |   |   |   |   |   |   |
| Government                agencies (1)                                          |   | **$**                                 | **22,669** |                             | **$**  | **22,248** |   | $ | 24,308 |   | $ | 23,962 |   |
| State                and municipal obligations                                  |   |                                  | **21,267** |                             |   | **21,558** |   |   | 19,663 |   |   | 19,938 |   |
| Mortgage-backed                securities                                       |   |                                  | **44,393** |                             |   | **43,312** |   |   | 56,294 |   |   | 55,747 |   |
| Agency                preferred stock                                           |   |                                  | **4,500**  |                             |   | **4,141** |   |   | 4,496 |   |   | 4,132 |   |
| Other                                                                           |   |                                  | **500**    |                             |   | **502** |   |   | — |   |   | — |   |
| Total                securities available for sale                              |   | **$**                                 | **93,329** |                             | **$**  | **91,761** |   | $ | 104,761 |   | $ | 103,779 |   |
|                                                                            |   |                                  |       |                             |   |   |   |   |   |   |   |   |   |
| Securities                held to maturity                                      |   |                                  |       |                             |   |   |   |   |   |   |   |   |   |
| Mortgage-backed                securities                                       |   | **$**                                 | **180**    |                             | **$**  | **190** |   | $ | 246 |   | $ | 262 |   |
| Total                securities held to maturity                                |   | **$**                                 | **180**    |                             | **$**  | **190** |   | $ | 246 |   | $ | 262 |   |
|                                                                            |   |                                  |       |                             |   |   |   |   |   |   |   |   |   |
| (1)                Includes mortgage-backed government                agencies. |

----

Table            of Contents

**VAIL            BANKS, INC.**

|                                      |   | Three                months ended September                30,** ** |    | Nine                months endedSeptember                30, |   |
|-------------------------------------------|--------|--------------------------------------------------------------------------|---------|--------------------------------------------------------------|--------|
| (in                thousands)             |   | **2005**                                                                 |    | 2004                                                         |   | **2005** |   | 2004 |   |
|                                      |   |                                                                     |    |                                                         |   |   |   |   |   |
| Taxable                interest income    |   | **$**                                                                    | **533** |                                                         | $      | 820 |   | **$** | **2,252** |   | $ | 1,998 |   |
| Nontaxable                interest income |   |                                                                     | **259** |                                                         |   | 261 |   |   | **826** |   |   | 797 |   |
|                                      |   | **$**                                                                    | **792** |                                                         | $      | 1,081 |   | **$** | **3,078** |   | $  | 2,795 |   |

**3.         LOANS**

| (in                    thousands)                         |   | **September                    30,****2005** |        | December                    31,2004  |   |
|----------------------------------------------------------------|--------|----------------------------------------------|-------------|-------------------------------------------|--------|
|                                                           |   |                                         |        |                                      |   |
| Commercial,                    industrial and land             |   | **$**                                        | **220,246** |                                      | $      | 239,946 |   |
| Real                    estate - construction                  |   |                                         | **128,909** |                                      |   | 92,705 |   |
| Real                    estate - mortgage                      |   |                                         | **72,885**  |                                      |   | 69,164 |   |
| Consumer                    and other                          |   |                                         | **6,386**   |                                      |   | 5,814 |   |
|                                                           |   |                                         | **428,426** |                                      |   | 407,629 |   |
| Less:                      Allowance for loan losses |   |                                         | **(4,050**  | **)**                                     |   | (3,895 | ) |
| Net                    deferred loan fees                      |   |                                         | **(1,034**  | **)**                                     |   | (1,276 | ) |
| Loans,                    Net                                  |   | **$**                                        | **423,342** |                                      | $      | 402,458 |   |

----

Table            of Contents

**VAIL            BANKS, INC.**

|                                                               |   | **September                30,** |      | December                31, |   |
|--------------------------------------------------------------------|--------|----------------------------------|-----------|-----------------------------|--------|
| (in                thousands)                                      |   | **2005**                         |      | 2004                        |   |
|                                                               |   |                             |      |                        |   |
| Impaired                loans without a valuation allowance        |   | **$**                            | **3,127** |                        | $      | 5,539 |   |
| Impaired                loans with a valuation allowance           |   |                             | **1,761** |                        |   | 2,006 |   |
| Total                impaired loans                                |   | **$**                            | **4,888** |                        | $      | 7,545 |   |
|  Valuation                allowance related to impaired loans |   | **$**                            | **286**   |                        | $      | 473 |   |

| (in                thousands)                |   | **2005** |       |
|----------------------------------------------|--------|----------|------------|
|                                         |   |     |       |
| Balance                at January 1, 2005    |   | **$**    | **10,682** |   |
| New                loans, including renewals |   |     | **4,579**  |   |
| Payments                                     |   |     | **(1,695** | **)** |
| Balance                at September 30, 2005 |   | **$**    | **13,566** |   |
|                                         |

**4.         ALLOWANCE FOR LOAN LOSSES **

| (in                thousands)                             |   | **2005** |      | 2004   |   |
|-----------------------------------------------------------|--------|----------|-----------|--------|--------|
|                                                      |   |     |      |   |   |
| Allowance                at January 1,                    |   | **$**    | **3,895** |   | $      | 3,503 |   |
| Loans                charged off                          |   |     | **(32**   | **)**  |   | (607 | ) |
| Recoveries                on loans previously charged off |   |     | **108**   |   |   | 322 |   |
| Provision                for loan losses                  |   |     | **79**    |   |   | 524 |   |
| Allowance                at September 30,                 |   | **$**    | **4,050** |   | $      | 3,742 |   |

**5.          **
**SECURITIES      SOLD UNDER AGREEMENTS TO REPURCHASE**

----

Table            of Contents

**VAIL            BANKS, INC.**

**6.          BORROWINGS **

**7.          SHAREHOLDERS’ EQUITY**

***Shares      Repurchase Plan***

***Restricted      Shares***

*Accounting      for Stock Issued to Employees*

***Earnings      Per Share***

----

Table            of Contents

**VAIL            BANKS, INC.**

|                                                         |   |   |                                                                            |   |   |                                                                           |   |   |           |   |   |       |   |
|--------------------------------------------------------------|--------|--------|---------------------------------------------------------------------------------|--------|--------|--------------------------------------------------------------------------------|--------|--------|----------------|--------|--------|------------|--------|
|                                                         |   |   | **Three                  months ended****September                  30,**  |   |   | **Nine                  months ended****September                  30,**  |   |
| (in                  thousands, except share data)           |   |   | **2005**                                                                   |   |   | 2004                                                                      |   |   | **2005**  |   |   | 2004  |   |
|                                                         |   |   |                                                                            |   |   |                                                                           |   |   |           |   |   |       |   |
| Basic                  earnings per share computation        |   |   |                                                                            |   |   |                                                                           |   |   |           |   |   |       |   |
|                                                         |   |   |                                                                            |   |   |                                                                           |   |   |           |   |   |            |   |
| Net                  income available to common shareholders |   | **$**  | **1,343**                                                                       |   | $      | 559                                                                            |   | **$**  | **3,199**      |   | $      | 2,313      |   |
|                                                         |   |   |                                                                            |   |   |                                                                           |   |   |           |   |   |       |   |
| Weighted                  average shares outstanding - basic |   |   | **5,206,023**                                                                   |   |   | 5,079,123                                                                      |   |   | **5,157,440**  |   |   | 5,049,624  |   |
|                                                         |   |   |                                                                            |   |   |                                                                           |   |   |           |   |   |       |   |
| Basic                  earnings per share                    |   | **$**  | **0.26**                                                                        |   | $      | 0.11                                                                           |   | **$**  | **0.62**       |   | $      | 0.46       |   |

|                                                           |   | **Three                  months ended****September                  30,** |          | **Nine                  months ended****September                  30,** |   |
|----------------------------------------------------------------|--------|---------------------------------------------------------------------------|---------------|--------------------------------------------------------------------------|--------|
| (in                  thousands, except share data)             |   | **2005**                                                                  |          | 2004                                                                     |   | **2005** |   | 2004 |   |
|                                                           |   |                                                                      |          |                                                                     |   |   |   |   |   |
| Diluted                  earnings per share computation        |   |                                                                      |          |                                                                     |   |   |   |   |   |
|                                                           |   |                                                                      |          |                                                                     |   |   |   |   |   |
| Net                  income available to common shareholders   |   | **$**                                                                     | **1,343**     |                                                                     | $      | 559 |   | **$** | **3,199** |   | $ | 2,313 |   |
| Weighted                  average shares outstanding - basic   |   |                                                                      | **5,206,023** |                                                                     |   | 5,079,123 |   |   | **5,157,440** |   |   | 5,049,624 |   |
| Shares                  assumed issued:                        |   |                                                                      |          |                                                                     |   |   |   |   |   |   |   |   |   |
| Stock                  options                                 |   |                                                                      | **131,627**   |                                                                     |   | 128,362 |   |   | **127,047** |   |   | 124,921 |   |
| Restricted                  shares                             |   |                                                                      | **42,470**    |                                                                     |   | 218,798 |   |   | **111,092** |   |   | 240,860 |   |
|                                                           |   |                                                                      |          |                                                                     |   |   |   |   |   |   |   |   |   |
| Weighted                  average shares outstanding - diluted |   |                                                                      | **5,380,120** |                                                                     |   | 5,426,283 |   |   | **5,395,579** |   |   | 5,415,405 |   |
|                                                           |   |                                                                      |          |                                                                     |   |   |   |   |   |   |   |   |   |
| Diluted                  earnings per share                    |   | **$**                                                                     | **0.25**      |                                                                     | $      | 0.10 |   | **$** | **0.59** |   | $ | 0.43 |   |

**Stock      Options**

*,*
*Accounting      for Stock Based Compensation,*

----

Table            of Contents

**VAIL            BANKS, INC.**

|                                                                          |   | **2005** |                       | 2004   |   |
|-------------------------------------------------------------------------------|--------|----------|----------------------------|--------|--------|
|                                                                          |   |     |                       |   |   |
| Dividend                yield                                                 |   |     | **2.10**                   | **%**  |   | ** |   |
| Expected                life                                                  |   |     | **6                years** |   |   | ** |   |
| Expected                volatility                                            |   |     | **25.0**                   | **%**  |   | ** |   |
| Risk-free                interest rate                                        |   |     | **4.2**                    | **%**  |   | ** |   |
|                                                                          |   |     |                       |   |   |   |   |
| ** There              were no              stock options granted during 2004. |   |     |                       |   |   |   |   |

|                                                                                                        |         | Three                  months ended September                  30, |      | Nine                  months endedSeptember                  30, |   |
|-------------------------------------------------------------------------------------------------------------|--------------|--------------------------------------------------------------------|-----------|------------------------------------------------------------------|--------|
| (in                  thousands, except share data)                                                          |         | **2005**                                                           |      | 2004                                                             |   | **2005** |   | 2004 |   |
|                                                                                                        |         |                                                               |      |                                                             |   |   |   |   |   |
| Net                  income                                                                                 |         |                                                               |      |                                                             |   |   |   |   |   |   |   |   |   |
|                                                                                                        |         |                                                               |      |                                                             |   |   |   |   |   |   |   |   |   |
| As                  reported                                                                                |         | **$**                                                              | **1,343** |                                                             | $      | 559 |   | **$** | **3,199** |   | $ | 2,313 |   |
| Deduct:                  Total stock-based employee compensation determined under                  the fair |         |                                                               |      |                                                             |   |   |   |   |   |   |   |   |   |
| value                  method, net of tax                                                                   |    |                                                               | **(11**   | **)**                                                            |   | (61 | ) |   | **(27** | **)** |   | (99 | ) |
| Pro                  forma                                                                                  |         | **$**                                                              | **1,332** |                                                             | $      | 498 |   | **$** | **3,172** |   | $ | 2,214 |   |
|                                                                                                        |         |                                                               |      |                                                             |   |   |   |   |   |   |   |   |   |
| Earnings                  per share - basic                                                                 |         |                                                               |      |                                                             |   |   |   |   |   |   |   |   |   |
| As                  reported                                                                                |         | **$**                                                              | **0.26**  |                                                             | $      | 0.11 |   | **$** | **0.62** |   | $ | 0.46 |   |
| Pro                  forma                                                                                  |         | **$**                                                              | **0.26**  |                                                             | $      | 0.10 |   | **$** | **0.62** |   | $ | 0.44 |   |
|                                                                                                        |         |                                                               |      |                                                             |   |   |   |   |   |   |   |   |   |
| Earnings                  per share - diluted                                                               |         |                                                               |      |                                                             |   |   |   |   |   |   |   |   |   |
| As                  reported                                                                                |         | **$**                                                              | **0.25**  |                                                             | $      | 0.10 |   | **$** | **0.59** |   | $ | 0.43 |   |
| Pro                  forma                                                                                  |         | **$**                                                              | **0.25**  |                                                             | $      | 0.09 |   | **$** | **0.59** |   | $ | 0.39 |   |

**8.          REGULATORY MATTERS**

----

Table            of Contents

**VAIL            BANKS, INC.**

**9.          SEGMENT INFORMATION**

*Disclosures      about Segments of an Enterprise and Related Information. *

|                                             |   | Nine                Months Ended September 30, 2004 |   |
|--------------------------------------------------|--------|-----------------------------------------------------|--------|
|                                             |   |                                                |   | Mortgage |   |   |   |   |   |
| (in                thousands)                    |   | Banking                                             |   | Brokerage |   | Other |   | Total |   |
|                                             |   |                                                |   |   |   |   |   |   |   |
| Condensed                income statement        |   |                                                |   |   |   |   |   |   |   |   |   |   |   |
|                                             |   |                                                |   |   |   |   |   |   |   |   |   |   |   |
| Total                income                      |   | $                                                   | 27,989 |   | $ | 2,406 |   | $ | 41 |   | $ | 30,426 |   |
| Total                expense                     |   |                                                | 21,472 |   |   | 2,060 |   |   | 3,185 |   |   | 26,717 |   |
| Income                (loss) before income taxes |   |                                                | 6,517  |   |   | 346 |   |   | (3,144 | ) |   | 3,719 |   |
| Income                tax expense (benefit)      |   |                                                | 2,444  |   |   | 109 |   |   | (1,147 | ) |   | 1,406 |   |
| Net                income (loss)                 |   | $                                                   | 4,073  |   | $ | 237 |   | $ | (1,997 | ) | $ | 2,313 |   |
|                                             |   |                                                |   |   |   |   |   |   |   |   |   |   |   |

**10.         **
**RECENT      ACCOUNTING PRONOUNCEMENTS**

*Share-Based      Payment*

*Accounting      Changes and Error Corrections - a replacement of APB Opinion No. 20 and FASB      Statement No. 3. *

*Determining      Whether to Aggregate Operating Segments That Do Not Meet the Quantitative      Thresholds*
*Disclosures      about Segments of an Enterprise and Related Information*

**11.         LEGAL CONTINGENCIES**

----

Table            of Contents

**VAIL            BANKS, INC.**

**12.         SUBSEQUENT EVENTS**

----

Table            of Contents

| **Item              2.** | **MANAGEMENT’SDISCUSSION                AND ANALYSIS OF FINANCIAL CONDITION                AND RESULTS OF OPERATIONS**** ** |
|--------------------------|----------------------------------------------------------------------------------------------------------------------------------------|

**ForwardLooking      Statements**

**Basisof      Presentation**
** **

**Overview**** **

**Resultsof      Operations**
**      - Quarter to Date **

*Net      Interest Income. *

----

Table            of Contents

*Non-Interest      Income*

*Non-Interest      Expense*
***WestStar      Bank*.      *Expect      Action***

----

Table            of Contents

*Income      Taxes. *

**Resultsof      Operations - Year to Date **

*Net      Interest Income. *

*Non-Interest      Income*

----

Table            of Contents

*Non-Interest      Expense*
***WestStar      Bank*.      *Expect      Action***

*Income      Taxes. *

**FinancialCondition**

----

Table            of Contents

**AssetQuality**

*Provision      and Allowance for Loan Losses.*

|  **Allowance                for Loan Losses Analysis**                (in thousands) |   | Nine                months endedSeptember                30, |        |
|-------------------------------------------------------------------------------------------|--------|--------------------------------------------------------------|-------------|
|                                                                                      |   | **2005**                                                     |        | 2004 |   |
|                                                                                      |   |                                                         |        |   |   |
| Average                total loans                                                        |   | **$**                                                        | **411,909** |   | $ | 335,685 |   |
|                                                                                      |   |                                                         |        |   |   |   |   |
| Total                loans at end of period                                               |   | **$**                                                        | **427,392** |   | $ | 384,272 |   |
|                                                                                      |   |                                                         |        |   |   |   |   |
| Allowance                at beginning of period                                      |   | **$**                                                        | **3,895**   |   | $ | 3,503 |   |
| Loans                charged off                                                          |   |                                                         | **(32**     | **)** |   | (607 | ) |
| Recoveries                on loans previously charged off                                 |   |                                                         | **108**     |   |   | 322 |   |
| Provision                for loan losses                                                  |   |                                                         | **79**      |   |   | 524 |   |
| Allowance                at end of period                                                 |   | **$**                                                        | **4,050**   | ** ** | $ | 3,742 |   |
|                                                                                      |   |                                                         |        |   |   |   |   |
| Annualized                net recoveries (charge-offs) to average loans                   |   |                                                         | **0.02**    | **%** |   | (0.11 | )% |
| Allowance                to total loans at end of period                                  |   |                                                         | **0.95**    | **%** |   | 0.97 | % |

----

Table            of Contents

*Non-Performing      Assets*

| **Non-Performing                Assets**(in                thousands)** ** |   | September                30, |        |
|---------------------------------------------------------------------------------|--------|------------------------------|-------------|
|                                                                            |   | **2005**                     |        | 2004 |   |
|                                                                            |   |                         |        |   |   |
| Nonaccrual                loans                                                 |   | **$**                        | **—** |   | $ | 814 |   |
| Restructured                loans                                               |   |                         | **—** |   |   | — |   |
| Total                non-performing loans                                       |   |                         | **—** |   |   | 814 |   |
| Foreclosed                properties                                            |   |                         | **617**     |   |   | 606 |   |
| Total                non-performing assets                                      |   |                         | **617**     |   |   | 1,420 |   |
| Loans                90 days or more past due and accruing                 |   |                         | **1,399**   |   |   | 3 |   |
| Total                risk assets                                                |   | **$**                        | **2,016**   |   | $ | 1,423 |   |
|                                                                            |   |                         |        |   |   |   |   |
| Non-performing                loans to total loans                              |   |                         | **0.00**    | **%** |   | 0.21 | % |
|                                                                            |   |                         |        |   |   |   |   |
| Non-performing                assets to loan related assets                     |   |                         | **0.14**    | **%** |   | 0.37 | % |
|                                                                            |   |                         |        |   |   |   |   |
| Non-performing                assets to total assets                            |   |                         | **0.09**    | **%** |   | 0.23 | % |
|                                                                            |   |                         |        |   |   |   |   |
| Risk                assets to loan related assets                               |   |                         | **0.47**    | **%** |   | 0.37 | % |

**Liquidity**** **

----

Table            of Contents

***CashFlows***

*Net      Cash from Operating Activities*

*Net      Cash from Investing Activities*

*Net      Cash from Financing Activities*

----

Table            of Contents

***Borrowings***

***Dividends***

***Shares      Repurchase Plan***

----

Table            of Contents

**CapitalResources**
** **

**.**

----

Table            of Contents

| **Item              3.** | **QUANTITATIVEAND                QUALITATIVE DISCLOSURES ABOUT                MARKET RISK**** ** |
|--------------------------|-------------------------------------------------------------------------------------------------------|

| **Item              4.** | **CONTROLSAND                PROCEDURES** |
|--------------------------|-------------------------------------------|

----

Table            of Contents

**PART      II    **
**OTHERINFORMATION**

| **Item              1.** | **LEGAL                PROCEEDINGS.** |
|--------------------------|---------------------------------------|

| **Item              2.** | **UNREGISTEREDSALES                OF EQUITY SECURITIES AND USE OF                PROCEEDS.** |
|--------------------------|-----------------------------------------------------------------------------------------------|

| **Item              3.** | **DEFAULTSUPON                SENIOR SECURITIES.** |
|--------------------------|----------------------------------------------------|

| **Item              4.** | **SUBMISSIONOF                MATTERS TO A VOTE OF SECURITY                HOLDERS.** |
|--------------------------|---------------------------------------------------------------------------------------|

| **Item              5.** | **OTHER                INFORMATION.** |
|--------------------------|---------------------------------------|

| **Item              6.** | **EXHIBITS.** |
|--------------------------|---------------|

|   | Exhibit                  No. | Description                                                                                                                                                                                                                                                                                                                            |
|--------|------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                         |                                                                                                                                                                                                                                                                                                                                   |
|   | 10.1                         | Incentive                  Stock Option Agreement, dated August 22, 2005, between the Company                  and                  Brady Burt (incorporated by reference from Exhibit 10.1 on the                  Registrant’s Form 8-K filed on August 25, 2005, Commission File No.                  000-25081)              |
|   |                         |                                                                                                                                                                                                                                                                                                                                   |
|   | 10.2                         | Change                  in Control Severance Payment Agreement, dated August 22, 2005,                  between the                  Company and Brady Burt (incorporated                  by reference from Exhibit 10.2 on the Registrant’s Form 8-K filed on                  August 25, 2005, Commission File No. 000-25081) |
|   |                         |                                                                                                                                                                                                                                                                                                                                   |
|   | 31.1                         | Certification                  by Gary                  S. Judd, Chief Executive Officer and President of the Company,                  as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of                  2002                                                                                                          |
|   |                         |                                                                                                                                                                                                                                                                                                                                   |
|   | 31.2                         | Certification                  by Brady T. Burt, Chief Financial Officer of the Company, as adopted                  pursuant to Section 302 of the Sarbanes-Oxley Act of                  2002                                                                                                                                        |
|   |                         |                                                                                                                                                                                                                                                                                                                                   |
|   | 32.1                         | Certification                  by Gary                  S. Judd, Chief Executive Officer and President of the Company,                  pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section                  906 of                  the Sarbanes-Oxley Act of                  2002                                    |

----

Table            of Contents

**SIGNATURES**

|                                          | **VAIL                  BANKS, INC.**                    |
|-----------------------------------------------|----------------------------------------------------------|
|                                          |                                                     |
|                                          |                                                     |
|                                          |                                                     |
|                                          |                                                     |
| Date:                  November 10, 2005      | /s/                  Gary                  S. Judd       |
|                                          | Gary                  S. Judd                            |
|                                          | *Chief                  Executive Officer and President* |
|                                          | *(Principal                  Executive Officer)*         |
|                                          | *November                  10, 2005*                     |
|                                          |                                                     |
|                                          |                                                     |
|                                          |                                                     |
| Date: November                  10, 2005 | /s/                  Brady T. Burt                       |
|                                          | Brady                  T. Burt                           |
|                                          | *Chief                  Financial Officer*               |
|                                          | *(Principal                  Financial Officer)*         |
|                                          | *November                  10, 2005*                     |

----

Table                of Contents

**VAIL          BANKS,INC.**

**Exhibit          Index**

| Exhibit              No. | Description                                                                                                                                                                                                                                                                                                                  |
|--------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                     |                                                                                                                                                                                                                                                                                                                         |
| 10.1                     | Incentive                Stock Option Agreement, dated August 22, 2005, between the Company                and                Brady Burt (incorporated by reference from Exhibit 10.1 on the                Registrant’s Form 8-K filed on August 25, 2005, Commission File No.                000-25081)              |
|                     |                                                                                                                                                                                                                                                                                                                         |
| 10.2                     | Change                in Control Severance Payment Agreement, dated August 22, 2005, between                the                Company and Brady Burt (incorporated                by reference from Exhibit 10.2 on the Registrant’s Form 8-K filed on                August 25, 2005, Commission File No. 000-25081) |
|                     |                                                                                                                                                                                                                                                                                                                         |
| 31.1                     | Certification                by Gary                S. Judd, Chief Executive Officer and President of the Company,                as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of                2002                                                                                                        |
|                     |                                                                                                                                                                                                                                                                                                                         |
| 31.2                     | Certification                by Brady T. Burt, Chief Financial Officer of the Company, as adopted                pursuant to Section 302 of the Sarbanes-Oxley Act of                2002                                                                                                                                    |
|                     |                                                                                                                                                                                                                                                                                                                         |
| 32.1                     | Certification                by Gary                S. Judd, Chief Executive Officer and President of the Company,                pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section                906 of                the Sarbanes-Oxley Act of 2002                                                     |
|                     |                                                                                                                                                                                                                                                                                                                         |
| 32.2                     | Certification                by Brady T. Burt,                Chief Financial Officer of the Company,                pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section                906 of                the Sarbanes-Oxley Act of 2002                                                   |