##### Table of Contents



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, DC 20549
 FORM 10-QSB
  þ
    
    QUARTERLY REPORT UNDER SECTION 13 or 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 For
the quarterly period ended March 31, 2006
 o
    
    TRANSITION REPORT UNDER SECTION 13 or 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 For the transition period from  to
 Commission
File No. 000-24043
 ebank Financial Services, Inc.
  Georgia
    
    58-2349097(State of Incorporation)
    
    (I.R.S. Employer Identification No.)
 2410 Paces Ferry Road, Suite 190, Atlanta, Georgia 30339
 (770) 863-9225
 Not Applicable
 þ o
 o þ
   o þ




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TABLE OF CONTENTS  PART I  FINANCIAL INFORMATIONItem 2. Managements Discussion and Analysis of Financial Condition and Results of OperationsItem 3. Controls and ProceduresPART IIItem 1. Legal ProceedingsItem 2. Changes in Securities and Small Business Issuer Purchases of Equity SecuritiesItem 3. Defaults Upon Senior SecuritiesItem 4. Submission of Matters to a Vote of Security HoldersItem 5. Other InformationItem 6. ExhibitsSIGNATURESEX-10.1 LEASE AGREEMENTEX-10.2 FIRST AMENDMENT TO LEASE AGREEMENTEX-10.3 SECOND AMENDMENT TO LEASE AGREEMENTEX-10.4 THIRD AMENDMENT TO LEASE AGREEMENTEX-31.1 SECTION 302 CERTIFICATION OF THE CEOEX-31.2 SECTION 302 CERTIFICATION OF THE CFOEX-32.1 SECTION 906 CERTIFICATION OF THE CEOEX-32.2 SECTION 906 CERTIFICATION OF THE CFO    Table of Contents   2




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ebank Financial Services, Inc. and Subsidiary
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
 For the three months endedMarch 31,2006
    
    
    2005Interest income:Loans, including fees
    
    $
    1,935,837
    
    
    $
    1,518,922Interest-bearing deposits
    
    
    6,487
    
    
    
    385Investment securities:U.S. Government agencies and corporations
    
    
    344,603
    
    
    
    237,527Other investments
    
    
    11,861
    
    
    
    10,425Federal funds sold
    
    
    67,196
    
    
    
    26,090Total interest income
    
    
    2,365,984
    
    
    
    1,793,349Interest expense:Deposits
    
    
    1,017,852
    
    
    
    473,120Other borrowings
    
    
    74,195
    
    
    
    166,922Total interest expense
    
    
    1,092,047
    
    
    
    640,042Net interest income
    
    
    1,273,937
    
    
    
    1,153,307Provision for loan losses
    
    
    52,000
    
    
    
    27,000Interest income after provision for loan losses
    
    
    1,221,937
    
    
    
    1,126,307Other income:Deposit fees
    
    
    35,798
    
    
    
    28,746Miscellaneous
    
    
    28,734
    
    
    
    5,037Total other income
    
    
    64,532
    
    
    
    33,783Other expense:Salaries and other compensation
    
    
    471,403
    
    
    
    423,924Employee benefits
    
    
    104,607
    
    
    
    85,940Net occupancy and equipment expense
    
    
    205,931
    
    
    
    179,191Professional and other outside services
    
    
    136,735
    
    
    
    126,483Other expense
    
    
    182,294
    
    
    
    128,972Total other expenses
    
    
    1,100,970
    
    
    
    944,510Net earnings
    
    
    185,499
    
    
    
    215,580Preferred stock dividends paid during the quarter upon
conversion of shares of preferred stock
    
    
    (9,696
    )
    
    
    (2,036
    )Preferred stock dividends arising during the quarter
    
    
    (113,470
    )
    
    
    (116,843
    )Net earnings attributable to common stockholders
    
    $
    62,333
    
    
    $
    96,701Basic and fully diluted earnings per common share
    
    $
    .01
    
    
    $
    .02
  3




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ebank Financial Services, Inc. and Subsidiary
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
 For the three months endedMarch 31,2006
    
    
    2005Net earnings
    
    $
    185,499
    
    
    $
    215,580Other comprehensive income:Unrealized (losses) gains on securities available for sale:Holding losses arising during the period, net of
taxes of $56,841 and $92,344, respectively
    
    
    (92,898
    )
    
    
    (150,923
    )Comprehensive income
    
    $
    92,601
    
    
    $
    64,657
  4




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ebank Financial Services, Inc. and Subsidiary
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
 For the three months endedMarch 31,2006
    
    
    2005Cash flows from operating activities:Net earnings
    
    $
    185,499
    
    
    $
    215,580Adjustments to reconcile net earnings to net cash
provided by operating activities:Loss on sale and write-down of real estate owned
    
    
    127,916
    
    
    
    Net accretion of investment securities
    
    
    2,352
    
    
    
    1,717Depreciation expense
    
    
    42,846
    
    
    
    44,979Provision for loan losses
    
    
    52,000
    
    
    
    27,000Change in deferred loan fees and costs
    
    
    18,425
    
    
    
    14,777Change in other assets
    
    
    (417,218
    )
    
    
    18,758Change in accrued interest receivable
    
    
    52,231
    
    
    
    86,526Change in accrued interest payable
    
    
    42,595
    
    
    
    42,180Change in other liabilities
    
    
    (71,741
    )
    
    
    (36,827
    )Net cash provided by operating activities
    
    
    34,905
    
    
    
    414,690Cash flows from investing activities:Maturities of securities available for sale
    
    
    44,037
    
    
    
    1,000,000Purchase of securities available-for-sale
    
    
    (6,017,379
    )
    
    
    (1,038,595
    )Purchase of other securities
    
    
    (37,400
    )
    
    
    Proceeds from sale of other investments
    
    
    
    
    
    
    5,800Loan repayments, net of loans originated
    
    
    2,620,498
    
    
    
    (5,436,617
    )Proceeds from sale of other real estate owned
    
    
    1,212,811
    
    
    
    Purchases of premises and equipment
    
    
    (101,994
    )
    
    
    (34,583
    )Net cash used by investing activities
    
    
    (2,279,427
    )
    
    
    (5,503,995
    )Cash flows from financing activities:Net increase in deposits
    
    
    18,542,124
    
    
    
    12,848,829Proceeds from overnight borrowings
    
    
    
    
    
    
    2,959,000Repayments on other borrowings
    
    
    
    
    
    
    (11,500,000
    )Stock offering costs
    
    
    
    
    
    
    (2,600
    )Net cash provided by financing activities
    
    
    18,542,124
    
    
    
    4,305,229Change in cash and cash equivalents
    
    
    16,297,602
    
    
    
    (784,076
    )Cash and cash equivalents:Beginning of period
    
    
    6,378,774
    
    
    
    1,924,266End of period
    
    $
    22,676,376
    
    
    $
    1,140,190
  5




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ebank Financial Services, Inc. and Subsidiary
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
 NOTE 1  BASIS OF PRESENTATION
    Significant Accounting Policies
   Use of Estimates
  6




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Stock Compensation Plans
 Accounting for Stock
Issued to Employees Accounting for Stock-Based Compensation Accounting for Stock-Based
Compensation Transition and Disclosure Share-Based Payment ,
   Weighted-Number of
    
    
    Range of Per
    
    
    Aggregate Per
    
    
    AggregateShares
    
    
    Option Price
    
    
    Share Price
    
    
    Option PriceOutstanding at
December 31, 2005
and March 31,
2006
    
    
    150,000
    
    
    $
    1.25
    
    
    
    1.25
    
    
    
    0.43
 7




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Weighted-Weighted-
    
    
    AverageAverage
    
    
    Remaining
    
    
    AggregateExercise
    
    
    Contractual
    
    
    IntrinsicOptions
    
    Shares
    
    
    Price
    
    
    Term
    
    
    ValueOutstanding at December 31,
2005
    
    
    468,917
    
    
    $
    2.08Granted
    
    
    85,000
    
    
    
    1.42Exercised
    
    
    0
    
    
    
    0Forfeited
    
    
    (33,417
    )
    
    
    3.20Expired
    
    
    0
    
    
    
    0Outstanding at March 31, 2006
    
    
    520,500
    
    
    $
    1.90
    
    
    
    7.6
    
    
    $
    68,300Exercisable at March 31, 2006
    
    
    425,500
    
    
    $
    2.01
    
    
    
    7.1
    
    
    $
    64,800
  For the three monthsendedMarch 31, 2006Expected volatility
    
    
    66.37
    %Expected dividend yield
    
    
    0
    %Expected life (in years)
    
    
    10.0Risk-free rate
    
    4.38% to 4.70
    %
   8




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For the three monthsendedMarch 31, 2005Net earnings
attributable to common
stockholders
    As reported
    $
    96,701Effect of stock
options grants
    
    (3,058
    )Pro forma
    $
    93,643Basic earnings per share
    As reported
    $
    .02Pro forma
    $
    .01
 NOTE 2  EARNINGS PER COMMON SHARE
  For the three months endedMarch 31,2006
    
    
    2005Basic earnings per common share:Weighted average common shares outstanding
    
    
    6,444,772
    
    
    
    6,365,986Net earnings
    
    $
    185,499
    
    
    $
    215,580Preferred stock dividend paid upon conversion of
shares of preferred stock
    
    
    (9,696
    )
    
    
    (2,036
    )Preferred stock dividend accrued
    
    
    (113,470
    )
    
    
    (116,843
    )Net earnings attributable to common stockholders
    
    $
    62,333
    
    
    $
    96,701Basic and fully diluted earnings per common share
    
    $
    .01
    
    
    $
    .02
  NOTE 3  ISSUANCE OF COMMON STOCK
  9




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NOTE 4 SUBSEQUENT EVENTS
       10




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
    
    maintain at all times ebank Mortgages members equity of at least $1 million;
    
    maintain a maximum ratio of indebtedness to ebank Mortgages members equity of 15.00
to 1.00; and
    
    maintain net income of ebank Mortgage at $5,000 or more per fiscal quarter beginning
with the fiscal quarter ending December 31, 2006.
  
    
    grant liens on the assets of ebank Mortgage;
    
    incur additional future indebtedness other than:
 o
    
    current liabilities for taxes and assessments incurred in the ordinary course of business;o
    
    accounts payable incurred in the ordinary course of business; ando
    
    indebtedness for the acquisition of fixed assets, not to exceed
$100,000 in the aggregate at any time; and
 
    
    pay any dividend or distribution (including any repurchase or redemption of membership
interests), except to the extent necessary to pay an amount equal to the combined federal
and state tax liability (if any) of the members arising from their respective allocable
share of the earning and profits of ebank Mortgage as long as any such payment does not
result in a Default or an Event of Default;
     11




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PART I  FINANCIAL INFORMATION
 
 
 Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations.
  
    
    significant increases in competitive pressure in the banking and financial services
industries;
    
    changes in the interest rate environment which could reduce anticipated or actual
margins;
    
    the evolving nature of the market for Internet banking and financial services generally;
    
    changes in political conditions or the legislative or regulatory environment;
    
    general economic conditions, either nationally or regionally and especially in our
primary service area, becoming less favorable than expected resulting in, among other
things, a deterioration in credit quality;
    
    changes occurring in business conditions and inflation;
    
    changes in technology;
    
    the adverse effects of any failure to satisfy regulatory capital requirements;
    
    changes in monetary and tax policies;
    
    reductions in earnings if we experience an increase in delinquencies and defaults of
mortgage loans;
    
    changes in the securities markets;
    
    the potential economic effects of terrorist attacks, such as those that occurred on
September 11, 2001, as well as other acts of violence or war, including the ongoing
military actions in Iraq and Afghanistan; and
    
    other risks and uncertainties detailed from time to time in our filings with the
Securities and Exchange Commission.
  12




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General
  Financial Condition
   Results of Operations
    13




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Allowance for Loan Losses
    14




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15




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Total
    
    
    
    
    
    
    
    
    
    
    Potential
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Non-Classified
    
    
    
    
    
    
    Allocated
    
    
    Problem
    
    
    
    
    
    
    Allocated
    
    
    Impaired
    
    
    
    
    
    
    Allocated
    
    
    performing
    
    
    
    
    
    
    AllocatedLoans
    
    
    No.
    
    
    Provision
    
    
    Loans
    
    
    No.
    
    
    Provision
    
    
    Loans
    
    
    No.
    
    
    Provision
    
    
    Loans
    
    
    No.
    
    
    ProvisionCommercial
    
    $
    222,796
    
    
    
    1
    
    
    $
    111,398
    
    
    $
    
    
    
    
    
    
    
    $
    
    
    
    $
    222,796
    
    
    
    1
    
    
    $
    111,398
    
    
    $
    222,796
    
    
    
    1
    
    
    $
    111,398Real Estate 
Commercial
    
    
    1,891,587
    
    
    
    5
    
    
    
    18,933
    
    
    
    771,350
    
    
    
    3
    
    
    
    4,626
    
    
    
    1,120,237
    
    
    
    2
    
    
    
    14,307
    
    
    
    1,120,237
    
    
    
    2
    
    
    
    14,307Real Estate 
Individual
    
    
    756,720
    
    
    
    4
    
    
    
    20,488
    
    
    
    565,769
    
    
    
    3
    
    
    
    1,393
    
    
    
    190,951
    
    
    
    1
    
    
    
    19,095
    
    
    
    190,951
    
    
    
    1
    
    
    
    19,095Installment 
Individual
    
    
    103,748
    
    
    
    3
    
    
    
    13,165
    
    
    
    19,700
    
    
    
    1
    
    
    
    1,970
    
    
    
    84,048
    
    
    
    2
    
    
    
    11,195
    
    
    
    84,048
    
    
    
    2
    
    
    
    11,195Totals
    
    $
    2,974,851
    
    
    
    13
    
    
    $
    163,984
    
    
    $
    1,356,819
    
    
    
    7
    
    
    $
    7,989
    
    
    $
    1,618,032
    
    
    
    6
    
    
    $
    155,995
    
    
    $
    1,618,032
    
    
    
    6
    
    
    $
    155,995
   Total
    
    
    
    
    
    
    
    
    
    
    Potential
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Non-Classified
    
    
    
    
    
    
    Allocated
    
    
    Problem
    
    
    
    
    
    
    Allocated
    
    
    Impaired
    
    
    
    
    
    
    Allocated
    
    
    performing
    
    
    
    
    
    
    AllocatedLoans
    
    
    No.
    
    
    Provision
    
    
    Loans
    
    
    No.
    
    
    Provision
    
    
    Loans
    
    
    No.
    
    
    Provision
    
    
    Loans
    
    
    No.
    
    
    ProvisionCommercial
    
    $
    293,981
    
    
    
    2
    
    
    $
    146,990
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    293,981
    
    
    
    2
    
    
    $
    146,990
    
    
    $
    293,981
    
    
    
    2
    
    
    $
    146,990Real Estate 
Commercial
    
    
    2,271,671
    
    
    
    6
    
    
    
    21,215
    
    
    
    378,613
    
    
    
    1
    
    
    
    2,272
    
    
    
    1,893,058
    
    
    
    5
    
    
    
    18,943
    
    
    
    1,893,058
    
    
    
    5
    
    
    
    18,943Real Estate 
Individual
    
    
    1,064,780
    
    
    
    6
    
    
    
    75,637
    
    
    
    866,153
    
    
    
    4
    
    
    
    51,004
    
    
    
    198,627
    
    
    
    2
    
    
    
    24,633
    
    
    
    198,626
    
    
    
    2
    
    
    
    24,633Installment 
Individual
    
    
    162,321
    
    
    
    4
    
    
    
    15,110
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    162,321
    
    
    
    4
    
    
    
    15,110
    
    
    
    162,321
    
    
    
    4
    
    
    
    15,110Totals
    
    $
    3,792,753
    
    
    
    18
    
    
    $
    258,952
    
    
    $
    1,244,766
    
    
    
    5
    
    
    $
    53,276
    
    
    $
    2,547,987
    
    
    
    13
    
    
    $
    205,676
    
    
    $
    2,547,987
    
    
    
    13
    
    
    $
    205,676
    16




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Allowance for Loan Losses
  For the Three
    
    
    For theMonths Ended
    
    
    Year EndedMarch 31,
    
    
    December 31,2006
    
    
    2005(Dollars in thousands)Average loans outstanding
    
    $
    94,610
    
    
    $
    94,583Loans outstanding at period end
    
    $
    91,921
    
    
    $
    95,406Total nonperforming loans
    
    $
    1,618
    
    
    $
    2,548Beginning balance of allowance
    
    $
    805
    
    
    $
    1,013Loans charged off:Commercial
    
    
    (57
    )
    
    
    (410
    )Real estate  commercial
    
    
    
    
    
    
    Real estate  individual
    
    
    (154
    )
    
    
    (64
    )Installment loans to
individuals
    
    
    0
    
    
    
    (44
    )Total charge-offs
    
    
    (211
    )
    
    
    (518
    )Recoveries of previous charge-offs:Commercial
    
    
    4
    
    
    
    10Total recoveries
    
    
    4
    
    
    
    10Net loans charged-off
    
    
    (207
    )
    
    
    (508
    )Provision for loan losses
    
    
    52
    
    
    
    300Balance at period end
    
    $
    650
    
    
    $
    805Net charge-offs to average loans
    
    
    0.22
    %
    
    
    0.54
    %Allowance as percent of total
loans
    
    
    0.71
    %
    
    
    0.84
    %Nonperforming loans as a
percentage of total loans
    
    
    1.76
    %
    
    
    2.67
    %Allowance as a percent of
nonperforming loans
    
    
    40.14
    %
    
    
    31.59
    %
  Percentage of
    
    
    
    
    
    
    Percentage ofThree Months
    
    
    loans in
    
    
    Year ended
    
    
    loans inEnded
    
    
    each category
    
    
    December 31,
    
    
    each categoryMarch 31, 2006
    
    
    to total loans
    
    
    2005
    
    
    to total loansCommercial
    
    $
    334,398
    
    
    
    10.36
    %
    
    $
    367,990
    
    
    
    9.94
    %Real estate 
individual
    
    
    110,488
    
    
    
    58.26
    %
    
    
    102,110
    
    
    
    59.14
    %Real estate 
commercial
    
    
    156,933
    
    
    
    24.00
    %
    
    
    169,215
    
    
    
    23.10
    %Installment loans
to individuals
    
    
    46,165
    
    
    
    7.38
    %
    
    
    111,637
    
    
    
    7.82
    %Unallocated
    
    
    1,572
    
    
    
    
    
    
    
    54,509
    
    
    
    Total
    
    $
    649,556
    
    
    
    100.00
    %
    
    $
    805,461
    
    
    
    100.00
    %
  17




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Average Balances, Income and Expense, and Rates
  Interest-
    
    
    
    
    
    InterestEarning Assets/
    
    Average
    
    
    Income/
    
    
    Yield/Bearing Liabilities
    
    Balance
    
    
    Cost
    
    
    CostFederal funds sold
    
    $
    6,236,267
    
    
    $
    67,196
    
    
    
    4.31
    %Interest-bearing deposits
    
    
    588,841
    
    
    
    6,487
    
    
    
    4.41
    %Investment securities
    
    
    25,203,569
    
    
    
    356,464
    
    
    
    5.66
    %Loans
    
    
    94,610,289
    
    
    
    1,935,837
    
    
    
    8.18
    %Total
    
    $
    126,638,966
    
    
    $
    2,365,984
    
    
    
    7.47
    %Deposits
    
    $
    104,024,263
    
    
    $
    1,017,852
    
    
    
    3.91
    %Other borrowings
    
    
    9,075,089
    
    
    
    74,195
    
    
    
    3.27
    %Total
    
    $
    113,099,353
    
    
    $
    1,092,047
    
    
    
    3.86
    %Net interest income/spread
    
    
    
    
    
    $
    1,273,937
    
    
    
    3.61
    %Net interest margin
    
    
    
    
    
    
    
    
    
    
    3.89
    %
  18




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Deposits
  Deposit CompositionMarch 31,
    
    
    December 31,2006
    
    
    2005Percent
    
    
    
    
    
    
    Percentof
    
    
    
    
    
    
    ofAmount
    
    
    Deposits
    
    
    Amount
    
    
    Deposits(Dollar in thousands)Demand deposits
    
    $
    7,110
    
    
    
    5.67
    %
    
    $
    7,040
    
    
    
    6.59
    %Escrow deposits
    
    
    7
    
    
    
    0.01
    %
    
    
    2
    
    
    
    0
    %Total non-interesting-bearing
    
    
    7,117
    
    
    
    5.68
    %
    
    
    7,042
    
    
    
    6.59
    %Now accounts
    
    
    8,154
    
    
    
    6.51
    %
    
    
    8,573
    
    
    
    8.03
    %MMDA
    
    
    73,918
    
    
    
    58.97
    %
    
    
    54,892
    
    
    
    51.40
    %Savings
    
    
    1,186
    
    
    
    0.95
    %
    
    
    1,190
    
    
    
    1.11
    %Certificates of deposits of
$100K or more
    
    
    11,050
    
    
    
    8.82
    %
    
    
    11,490
    
    
    
    10.76
    %Brokered deposits of $100K or
more
    
    
    4,224
    
    
    
    3.37
    %
    
    
    4,496
    
    
    
    4.21
    %Total certificates of deposit
of $100K or more
    
    
    15,274
    
    
    
    12.19
    %
    
    
    15,986
    
    
    
    14.97
    %Certificate of deposits less
than $100K
    
    
    18,786
    
    
    
    14.99
    %
    
    
    18,209
    
    
    
    17.05
    %Brokered deposits less than $100K
    
    
    891
    
    
    
    0.71
    %
    
    
    891
    
    
    
    0.83
    %Total certificates of deposit
less than $100K
    
    
    19,677
    
    
    
    15.70
    %
    
    
    19,100
    
    
    
    17.89
    %Total
    
    $
    125,326
    
    
    
    100.00
    %
    
    $
    106,784
    
    
    
    100.00
    %Total brokered deposits
    
    $
    5,115
    
    
    
    
    
    
    $
    5,387
 Liquidity and Sources of Capital
   19




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##### Table of Contents



Bank
    
    MinimumCapital
    
    RegulatoryRatio
    
    RequirementCapital ratios at March 31, 2006Tier 1 capital
    
    
    12.78
    %
    
    
    4.0
    %Tier 2 capital
    
    
    0.73
    %Total risk-based capital ratio
    
    
    13.51
    %
    
    
    8.0
    %Leverage ratio
    
    
    7.81
    %
    
    
    4.0
    %
  i.e.
  Liquidity And Rate Sensitivity
   20




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##### Table of Contents



After threeWithin
    
    
    but within
    
    
    After onethree
    
    
    twelve
    
    
    but within
    
    
    After fivemonths
    
    
    months
    
    
    five years
    
    
    years
    
    
    Total(Dollars in Thousands)Interest-earning assets:Interest-earning deposits
    
    $
    587
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    587Loans
    
    
    62,054
    
    
    
    4,878
    
    
    
    11,073
    
    
    
    14,073
    
    
    
    92,078Investment securities
    
    
    659
    
    
    
    992
    
    
    
    830
    
    
    
    25,129
    
    
    
    27,610Federal funds sold
    
    
    20,246
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    20,246Total earning assets
    
    
    83,546
    
    
    
    5,870
    
    
    
    11,903
    
    
    
    39,202
    
    
    
    140,521Interest-bearing liabilities:Money market and NOW
    
    
    82,072
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    82,072Savings deposits
    
    
    1,186
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,186Time deposits
    
    
    12,761
    
    
    
    18,710
    
    
    
    3,480
    
    
    
    
    
    
    
    34,952Other liabilities
    
    
    5,000
    
    
    
    
    
    
    
    
    
    
    
    4,000
    
    
    
    9,000Total interest-bearing liabilities
    
    
    101,019
    
    
    
    18,710
    
    
    
    3,480
    
    
    
    4,000
    
    
    
    127,210Interest-sensitivity gap
    
    $
    (17,473
    )
    
    $
    (12,841
    )
    
    $
    8,423
    
    
    $
    35,202
    
    
    $
    13,312Cumulative interest-sensitivity gap
    
    $
    (17,473
    )
    
    $
    (30,314
    )
    
    $
    (21,891
    )
    
    $
    13,312
    
    
    $
    13,312Ratio of interest-sensitivity gap
to total earning assets
    
    
    (12.43
    %)
    
    
    (9.14
    %)
    
    
    5.99
    %
    
    
    25.05
    %
    
    
    9.47
    %Ratio of cumulative interest-
sensitivity gap to total earning
assets
    
    
    (12.43
    %)
    
    
    (21.57
    %)
    
    
    (15.58
    %)
    
    
    9.47
    %
  Loan Portfolio
  21




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##### Table of Contents



PercentAmount
    
    
    of totalCommercial
    
    $
    9,540,288
    
    
    
    10.36
    %Real estate  individual
    
    
    53,639,778
    
    
    
    58.26
    %Real estate  commercial
    
    
    22,098,262
    
    
    
    24.00
    %Installment loans to individuals
    
    
    6,799,847
    
    
    
    7.38
    %Gross loans
    
    
    92,078,175
    
    
    
    100.00
    %Less: Net deferred loan fees
    
    
    (156,873
    )Allowance for loan loss
    
    
    (649,556
    )Total net loans
    
    $
    91,271,746
  Regulatory Matters
    
 Item 3. Controls and Procedures.
  22




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##### Table of Contents



PART II
OTHER INFORMATION
 
 Item 1. Legal Proceedings.
  
 Item 2. Changes in Securities and Small Business Issuer Purchases of Equity Securities.
  
 Item 3. Defaults Upon Senior Securities.
  
 Item 4. Submission of Matters to a Vote of Security Holders.
  
 Item 5. Other Information.
  
 Item 6. Exhibits.
 10.1
    
    Lease Agreement by and between the Company and Prentiss Properties Acquisition Partners, L.P.
dated June 30, 1999.10.2
    
    First Amendment to Lease Agreement by and between the Company and Prentiss Properties
Acquisition Partners, L.P. dated August 18, 1999.10.3
    
    Second Amendment to Lease Agreement by and between the Company and Cumberland Office Park,
LLC (as successor Landlord to Prentiss Properties Acquisition Partners, L.P.)10.4
    
    Third Amendment to Lease Agreement by and between the Company and Home Depot U.S.A., Inc. (as
successor Landlord to Cumberland Office Park, LLC)31.1
    
    Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.31.2
    
    Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.32.1
    
    Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.32.2
    
    Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.
 23




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##### Table of Contents



SIGNATURES
  ebank Financial Services, Inc.Date: May 15, 2006
    By:
    /s/ James L. BoxJames L. BoxPresident and Chief Executive OfficerBy:
    /s/ Wayne W. ByersWayne W. ByersChief Financial Officer 24