##### 



U.S. SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D.C. 20549
 FORM 10-KSB/A
 AMENDMENT NO. 1
  þ
    
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
 For the fiscal year ended December 31, 2005
 o
    
    TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from to
 Commission File Number
 THE PB FINANCIAL SERVICES CORPORATION
  Georgia
    
    58-2466560(State or other jurisdiction of
incorporation or organization)
    
    (I.R.S. Employer
Identification Number)
 9570 Medlock Bridge Road, Duluth, Georgia
    
    30097(Address of principal executive offices)
    
    (Zip Code)
 (770) 814-8100
 None
 Common Stock, Par
Value $5 Per Share
 o
  Yes þ
    
    No o
 þ
  Yes o
    
    No þ
    1,766,517 as of April 12, 2006
 o þ




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##### 



2




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##### 



EXPLANATORY NOTE
  
    
    To file Exhibit 13.1 The PB Financial Services Corporation 2005 Annual Report to shareholders, which was inadvertently omitted from the
Original filing
  3




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##### 



THE PB FINANCIAL SERVICES CORPORATION
 Consolidated Financial Statements
 December 31, 2005 and 2004
 (with Independent Registered Public Accounting Firms Report thereon)




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##### 



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM




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##### 



TABLE OF CONTENTS  ITEM 13. EXHIBITSSIGNATURESEX-31.1 SECTION 302, CERTIFICATION OF THE CEOEX-31.2 SECTION 302, CERTIFICATION OF THE CFOEX-32.1 SECTION 906, CERTIFICATION OF THE CEO AND CFO THE PB FINANCIAL SERVICES CORPORATION
 Consolidated Balance Sheets
 December 31, 2005 and 2004
 2005
    
    
    2004AssetsCash and due from banks
    
    $
    6,639,943
    
    
    
    13,605,257Interest-bearing deposits with banks
    
    
    1,761,498
    
    
    
    851,546Federal funds sold
    
    
    16,307,000
    
    
    
    5,755,000Cash and cash equivalents
    
    
    24,708,441
    
    
    
    20,211,803Investment securities available for sale
    
    
    38,187,752
    
    
    
    24,271,001Investment securities held to maturity, fair value
of $2,468,421 and $2,781,245, respectively
    
    
    2,493,326
    
    
    
    2,774,383Other investments
    
    
    1,921,680
    
    
    
    2,022,750Loans, net
    
    
    374,807,020
    
    
    
    291,536,663Premises and equipment, net
    
    
    4,081,927
    
    
    
    4,418,128Bank owned life insurance
    
    
    4,302,590
    
    
    
    4,153,731Accrued interest receivable and other assets
    
    
    5,345,883
    
    
    
    4,032,360$
    455,848,619
    
    
    
    353,420,819Deposits:Noninterest-bearing demand
    
    $
    50,465,269
    
    
    
    52,377,541Interest-bearing demand
    
    
    38,907,444
    
    
    
    33,598,579Savings
    
    
    161,725,045
    
    
    
    63,999,141Time, $100,000 or more
    
    
    85,833,509
    
    
    
    77,835,516Other time
    
    
    72,863,894
    
    
    
    76,093,746Total deposits
    
    
    409,795,161
    
    
    
    303,904,523Note payable and other borrowings
    
    
    1,000,000
    
    
    
    18,100,000Junior subordinated debentures
    
    
    9,275,000
    
    
    
    4,120,000Accrued interest payable and other liabilities
    
    
    824,480
    
    
    
    2,432,090Total liabilities
    
    
    420,894,641
    
    
    
    328,556,613CommitmentsShareholders equity:Common stock, $5 par value, 10,000,000 shares authorized, 1,766,517 and
1,484,437 shares issued and outstanding, respectively
    
    
    8,832,585
    
    
    
    7,422,185Additional paid-in capital
    
    
    16,570,373
    
    
    
    12,464,914Retained earnings
    
    
    9,962,689
    
    
    
    5,038,543Accumulated other comprehensive income (loss)
    
    
    (411,669
    )
    
    
    (61,436
    )Total shareholders equity
    
    
    34,953,978
    
    
    
    24,864,206$
    455,848,619
    
    
    
    353,420,819
  -6-




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##### 



THE PB FINANCIAL SERVICES CORPORATION
 Consolidated Statements of Earnings
 For the Years Ended December 31, 2005 and 2004
 2005
    
    
    2004Interest income:Interest and fees on loans
    
    $
    25,114,285
    
    
    
    16,040,700Interest on federal funds sold
    
    
    544,210
    
    
    
    105,094Interest and dividends on investment securities:U.S. Government agencies and mortgage-backed securities
    
    
    1,206,085
    
    
    
    725,479Municipals
    
    
    111,384
    
    
    
    57,815Trust preferred securities
    
    
    90,000
    
    
    
    90,000Other
    
    
    110,619
    
    
    
    84,455Total interest income
    
    
    27,176,583
    
    
    
    17,103,543Interest expense:Interest-bearing demand deposits
    
    
    292,455
    
    
    
    185,482Savings deposits
    
    
    4,488,063
    
    
    
    834,119Time deposits
    
    
    5,552,271
    
    
    
    3,653,684Other
    
    
    713,470
    
    
    
    503,784Total interest expense
    
    
    11,046,259
    
    
    
    5,177,069Net interest income
    
    
    16,130,324
    
    
    
    11,926,474Provision for loan losses
    
    
    753,757
    
    
    
    963,432Net interest income after provision for loan losses
    
    
    15,376,567
    
    
    
    10,963,042Other income:Service charges
    
    
    358,990
    
    
    
    342,801Gain on sale of securities
    
    
    
    
    
    
    148,586Mortgage referral commissions
    
    
    1,258,434
    
    
    
    865,981Other
    
    
    432,996
    
    
    
    340,334Total other income
    
    
    2,050,420
    
    
    
    1,697,702Other expenses:Salaries and employee benefits
    
    
    5,716,286
    
    
    
    5,061,196Occupancy
    
    
    955,200
    
    
    
    900,668Other operating
    
    
    2,919,455
    
    
    
    2,452,486Total other expenses
    
    
    9,590,941
    
    
    
    8,414,350Earnings before income taxes
    
    
    7,836,046
    
    
    
    4,246,394Income tax expense
    
    
    2,911,900
    
    
    
    1,610,711Net earnings
    
    $
    4,924,146
    
    
    
    2,635,683Basic earnings per share
    
    $
    3.22
    
    
    
    1.78Diluted earnings per share
    
    $
    2.94
    
    
    
    1.66
  -7-




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##### 



THE PB FINANCIAL SERVICES CORPORATION
 Consolidated Statements of Changes in Shareholders Equity
 For the Years Ended December 31, 2005 and 2004
 AccumulatedAdditional
    
    
    
    
    
    
    OtherCommon Stock
    
    
    Paid-In
    
    
    Retained
    
    
    ComprehensiveShares
    
    
    Amount
    
    
    Capital
    
    
    Earnings
    
    
    Income (Loss)
    
    
    TotalBalance, December 31, 2003
    
    
    1,484,437
    
    
    $
    7,422,185
    
    
    
    12,464,914
    
    
    
    2,402,860
    
    
    
    124,804
    
    
    
    22,414,763Net earnings
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,635,683
    
    
    
    
    
    
    
    2,635,683Change in net unrealized gain (loss)
on investment securities available
for sale, net of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (186,240
    )
    
    
    (186,240
    )Balance, December 31, 2004
    
    
    1,484,437
    
    
    
    7,422,185
    
    
    
    12,464,914
    
    
    
    5,038,543
    
    
    
    (61,436
    )
    
    
    24,864,206Net earnings
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,924,146
    
    
    
    
    
    
    
    4,924,146Exercise of stock options and
warrants,
including tax benefit of
$2,028,599
from exercise of non qualified
stock
options
    
    
    282,080
    
    
    
    1,410,400
    
    
    
    4,105,459
    
    
    
    
    
    
    
    
    
    
    
    5,515,859Change in net unrealized gain (loss)
on investment securities available
for sale, net of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (350,233
    )
    
    
    (350,233
    )Balance, December 31, 2005
    
    
    1,766,517
    
    
    $
    8,832,585
    
    
    
    16,570,373
    
    
    
    9,962,689
    
    
    
    (411,669
    )
    
    
    34,953,978
  -8-




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##### 



THE PB FINANCIAL SERVICES CORPORATION
 Consolidated Statements of Comprehensive Income
 For the Years Ended December 31, 2005 and 2004
 2005
    
    
    2004Net earnings
    
    $
    4,924,146
    
    
    
    2,635,683Other comprehensive income (loss):Unrealized losses arising during the period, net of taxes
of $180,424 and $45,423, respectively
    
    
    (350,233
    )
    
    
    (88,173
    )Reclassification adjustment for gains on sales of investment
securities available for sale included in net earnings, net of
taxes of $50,519 in 2004
    
    
    
    
    
    
    (98,067
    )Other comprehensive loss, net of tax
    
    
    (350,233
    )
    
    
    (186,240
    )Comprehensive income
    
    $
    4,573,913
    
    
    
    2,449,443
  -9-




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##### 



THE PB FINANCIAL SERVICES CORPORATION
 Consolidated Statements of Cash Flows
 For the Years Ended December 31, 2005 and 2004
 2005
    
    
    2004Cash flows from operating activities:Net earnings
    
    $
    4,924,146
    
    
    
    2,635,683Adjustments to reconcile net earnings to net cash
provided by operating activities:Depreciation, amortization and accretion
    
    
    527,361
    
    
    
    319,357Provision for loan losses
    
    
    753,757
    
    
    
    963,432Deferred income taxes
    
    
    (415,997
    )
    
    
    (298,160
    )Gain on sale of investment securities
    
    
    
    
    
    
    148,586Change in:Net deferred loan fees
    
    
    (79,084
    )
    
    
    (93,883
    )Cash surrender value life insurance
    
    
    (148,859
    )
    
    
    (105,100
    )Accrued interest receivable and other assets
    
    
    (723,157
    )
    
    
    (1,116,128
    )Accrued interest payable and other liabilities
    
    
    420,989
    
    
    
    458,932Net cash provided by operating activities
    
    
    5,259,156
    
    
    
    2,912,719Cash flows from investing activities:Purchase of investment securities available for sale
    
    
    (16,797,753
    )
    
    
    (15,985,918
    )Purchase of investment securities held to maturity
    
    
    
    
    
    
    (2,995,313
    )Proceeds from calls and maturities of investment securities
available for sale
    
    
    2,292,221
    
    
    
    8,797,552Proceeds from calls and maturities of investment securities
held to maturity
    
    
    281,621
    
    
    
    221,367Proceeds from sales of investment securities available for sale
    
    
    
    
    
    
    5,147,853Purchase of other investments
    
    
    (475,830
    )
    
    
    (1,262,750
    )Sales of other investments
    
    
    576,900
    
    
    
    Net change in loans
    
    
    (84,470,030
    )
    
    
    (88,445,466
    )Purchases of premises and equipment
    
    
    (127,545
    )
    
    
    (613,839
    )Purchase of cash value life insurance
    
    
    
    
    
    
    (1,462,000
    )Proceeds from sales of other real estate
    
    
    525,000
    
    
    
    Net cash used by investing activities
    
    
    (98,195,416
    )
    
    
    (96,598,514
    )Cash flows from financing activities:Net change in deposits
    
    
    105,890,638
    
    
    
    83,631,605Net change in securities sold under retail repurchase agreements
    
    
    
    
    
    
    (477,120
    )Proceeds from Federal Home Loan Bank borrowings
    
    
    
    
    
    
    18,000,000Repayments on Federal Home Loan Bank borrowings
    
    
    (17,100,000
    )
    
    
    (7,000,000
    )Proceeds from issuance of junior subordinated debentures
    
    
    5,155,000
    
    
    
    Exercise of stock option and warrants, net of tax benefit
    
    
    3,487,260
    
    
    
    Net cash provided by financing activities
    
    
    97,432,898
    
    
    
    94,154,485Net change in cash and cash equivalents
    
    
    4,496,638
    
    
    
    468,690Cash and cash equivalents at beginning of year
    
    
    20,211,803
    
    
    
    19,743,113Cash and cash equivalents at end of year
    
    $
    24,708,441
    
    
    
    20,211,803
 -10-




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##### 



THE PB FINANCIAL SERVICES CORPORATION
 Consolidated Statements of Cash Flows, continued
 For the Years Ended December 31, 2005 and 2004
 2005
    
    
    2004Supplemental disclosures of cash flow information:Cash paid during the year for:Interest
    
    $
    10,194,919
    
    
    
    4,943,601Income taxes
    
    $
    3,371,150
    
    
    
    1,551,000Noncash investing and financing activities:Change in net unrealized gain on investment
Securities available for sale, net of tax
    
    $
    350,233
    
    
    
    (186,240
    )Transfer of loans to other real estate
    
    $
    525,000
    
    
    
    Tax benefit from exercise of non qualified options
    
    $
    2,028,599
    
    
    
    
  -11-




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##### 



THE PB FINANCIAL SERVICES CORPORATION
 Notes to Consolidated Financial Statements
 (1)
    
    Summary of Significant Accounting Policies
 Organization
   Principles of Consolidation
 Basis of Presentation
 Cash and Cash Equivalents
 Investment Securities
    -12-




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##### 



THE PB FINANCIAL SERVICES CORPORATION
 Notes to Consolidated Financial Statements, continued
 (1)
    
    Summary of Significant Accounting Policies, continued
 Investment Securities
 Other Investments
 Loans and Allowance for Loan Losses
      -13-




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##### 



THE PB FINANCIAL SERVICES CORPORATION
 Notes to Consolidated Financial Statements, continued
 (1)
    
    Summary of Significant Accounting Policies, continued
 Premises and Equipment
 Buildings and improvements
    
    10 - 40 yearsFurniture and equipment
    
    3 - 10 yearsLeasehold improvements
    
    10 years
 Income Taxes
  Mortgage Referral Commissions
 -14-




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##### 



THE PB FINANCIAL SERVICES CORPORATION
 Notes to Consolidated Financial Statements, continued
 (1)
    
    Summary of Significant Accounting Policies, continued
 Stock-Based Compensation
 2005
    
    
    2004Net earnings
    
    As reported
    
    $
    4,924,146
    
    
    
    2,635,683Effect of stock options, net of tax
    
    
    (456,870
    )
    
    
    (58,644
    )Proforma
    
    $
    4,467,276
    
    
    
    2,577,039Basic earnings per share
    
    As reported
    
    $
    3.22
    
    
    
    1.78Effect of stock options, net of tax
    
    
    (0.30
    )
    
    
    (0.04
    )Proforma
    
    $
    2.92
    
    
    
    1.74Diluted earnings per share
    
    As reported
    
    $
    2.94
    
    
    
    1.66Effect of stock options, net of tax
    
    
    (0.27
    )
    
    
    (0.04
    )Proforma
    
    $
    2.67
    
    
    
    1.62
  Net Earnings Per Share
  Net
    
    
    Common
    
    
    Per ShareFor the year ended December 31, 2005
    
    Earnings
    
    
    Shares
    
    
    AmountBasic earnings per share
    
    $
    4,924,146
    
    
    
    1,528,548
    
    
    $
    3.22Effect of stock options
    
    
    
    
    
    
    144,619Diluted earnings per share
    
    $
    4,924,146
    
    
    
    1,673,167
    
    
    $
    2.94
 Net
    
    
    Common
    
    
    Per ShareFor the year ended December 31, 2004
    
    Earnings
    
    
    Shares
    
    
    AmountBasic earnings per share
    
    $
    2,635,683
    
    
    
    1,484,437
    
    
    $
    1.78Effect of stock options
    
    
    
    
    
    
    104,297Diluted earnings per share
    
    $
    2,635,683
    
    
    
    1,588,734
    
    
    $
    1.66
 -15-




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##### 



THE PB FINANCIAL SERVICES CORPORATION
 Notes to Consolidated Financial Statements, continued
 (1)
    
    Summary of Significant Accounting Policies, continued
 Recent Accounting Pronouncements  Accounting for Changes and Error Corrections  Accounting Changes and Error Corrections, a
replacement of APB Opinion No. 20 and FASB Statements No. 3.
 Share-Based Payment  Share-Based Payment
 (2)
    
    Investment Securities
  December 31, 2005Gross
    
    
    GrossAmortized
    
    
    Unrealized
    
    
    Unrealized
    
    
    EstimatedCost
    
    
    Gains
    
    
    Losses
    
    
    Fair ValueU.S. Government agencies
    
    $
    19,384,608
    
    
    
    
    
    
    
    394,555
    
    
    
    18,990,053Municipal securities
    
    
    7,574,846
    
    
    
    7,391
    
    
    
    45,105
    
    
    
    7,537,132Trust preferred securities
    
    
    1,000,000
    
    
    
    
    
    
    
    
    
    
    
    1,000,000Mortgage-backed securities
    
    
    10,852,038
    
    
    
    7,627
    
    
    
    199,098
    
    
    
    10,660,567Total
    
    $
    38,811,492
    
    
    
    15,018
    
    
    
    638,758
    
    
    
    38,187,752
 December 31, 2004Gross
    
    
    GrossAmortized
    
    
    Unrealized
    
    
    Unrealized
    
    
    EstimatedCost
    
    
    Gains
    
    
    Losses
    
    
    Fair ValueU.S. Government agencies
    
    $
    12,402,144
    
    
    
    21,088
    
    
    
    34,106
    
    
    
    12,389,126Municipal securities
    
    
    1,252,249
    
    
    
    8,197
    
    
    
    8,614
    
    
    
    1,251,832Trust preferred securities
    
    
    1,000,000
    
    
    
    
    
    
    
    
    
    
    
    1,000,000Mortgage-backed securities
    
    
    9,709,693
    
    
    
    19,491
    
    
    
    99,141
    
    
    
    9,630,043Total
    
    $
    24,364,086
    
    
    
    48,776
    
    
    
    141,861
    
    
    
    24,271,001
 -16-




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##### 



THE PB FINANCIAL SERVICES CORPORATION
 Notes to Consolidated Financial Statements, continued
 (2)
    
    Investment Securities, continued
  December 31, 2005Gross
    
    
    GrossAmortized
    
    
    Unrealized
    
    
    Unrealized
    
    
    EstimatedCost
    
    
    Gains
    
    
    Losses
    
    
    Fair ValueMortgage-backed securities
    
    $
    2,493,326
    
    
    
    
    
    
    
    24,905
    
    
    
    2,468,421
 December 31, 2004Gross
    
    
    GrossAmortized
    
    
    Unrealized
    
    
    Unrealized
    
    
    EstimatedCost
    
    
    Gains
    
    
    Losses
    
    
    Fair ValueMortgage-backed securities
    
    $
    2,774,383
    
    
    
    6,862
    
    
    
    
    
    
    
    2,781,245
  Less than 12 Months
    
    Greater than 12 MonthsEstimated
    
    Unrealized
    
    Estimated
    
    UnrealizedFair Value
    
    Losses
    
    Fair Value
    
    LossesU.S. Government agencies
    
    $
    10,482,363
    
    
    
    164,313
    
    
    
    8,507,690
    
    
    
    230,242Municipal securities
    
    $
    3,980,324
    
    
    
    36,352
    
    
    
    327,383
    
    
    
    8,753Mortgage-backed securities
    
    $
    5,611,931
    
    
    
    60,670
    
    
    
    7,100,741
    
    
    
    163,333
  Less than 12 Months
    
    Greater than 12 MonthsEstimated
    
    Unrealized
    
    Estimated
    
    UnrealizedFair Value
    
    Losses
    
    Fair Value
    
    LossesU.S. Government agencies
    
    $
    5,404,250
    
    
    
    34,106
    
    
    
    
    
    
    
    Municipal securities
    
    $
    853,635
    
    
    
    8,614
    
    
    
    
    
    
    
    Mortgage-backed securities
    
    $
    5,410,605
    
    
    
    66,051
    
    
    
    2,787,400
    
    
    
    33,090
  -17-




---



##### 



THE PB FINANCIAL SERVICES CORPORATION
 Notes to Consolidated Financial Statements, continued
 (2)
    
    Investment Securities, continued
  Held to Maturity
    
    
    Available for SaleAmortized
    
    
    Estimated
    
    
    Amortized
    
    
    EstimatedCost
    
    
    Fair Value
    
    
    Cost
    
    
    Fair ValueDue from one to five years
    
    $
    
    
    
    $
    
    
    
    
    19,387,280
    
    
    
    19,009,824Due from five to ten years
    
    
    
    
    
    
    
    
    
    
    3,991,220
    
    
    
    3,954,869Due after ten years
    
    
    
    
    
    
    
    
    
    
    4,580,954
    
    
    
    4,562,492Mortgage-backed securities
    
    
    2,493,326
    
    
    
    2,468,421
    
    
    
    10,852,038
    
    
    
    10,660,567$
    2,493,326
    
    
    
    2,468,421
    
    
    
    38,811,492
    
    
    
    38,187,752
   (3)
    
    Loans
  2005
    
    
    2004Commercial
    
    $
    72,440,193
    
    
    
    38,793,340Real estate  commercial and residential
    
    
    166,342,308
    
    
    
    146,421,435Real estate  construction
    
    
    124,682,506
    
    
    
    88,607,022Real estate  home equity
    
    
    5,506,330
    
    
    
    8,351,273Consumer
    
    
    10,185,933
    
    
    
    12,890,848379,157,270
    
    
    
    295,063,918Less: Allowance for loan losses
    
    
    3,715,767
    
    
    
    2,971,856Net deferred loan fees
    
    
    634,483
    
    
    
    555,399$
    374,807,020
    
    
    
    291,536,663
   2005
    
    
    2004Balance at beginning of year
    
    $
    2,971,856
    
    
    
    2,123,509Provision charged to operations
    
    
    753,757
    
    
    
    963,432Loans charged off
    
    
    (61,211
    )
    
    
    (138,651
    )Recoveries
    
    
    51,365
    
    
    
    23,566Balance at end of year
    
    $
    3,715,767
    
    
    
    2,971,856
 -18-




---



##### 



THE PB FINANCIAL SERVICES CORPORATION
 Notes to Consolidated Financial Statements, continued
 (4)
    
    Premises and Equipment
  2005
    
    
    2004Land
    
    $
    610,482
    
    
    
    610,482Buildings and improvements
    
    
    2,729,907
    
    
    
    2,729,907Furniture and equipment
    
    
    2,803,322
    
    
    
    2,671,168Leasehold improvements
    
    
    348,507
    
    
    
    348,507Construction in process
    
    
    1,200
    
    
    
    11,0576,493,418
    
    
    
    6,371,121Less accumulated depreciation
    
    
    2,411,491
    
    
    
    1,952,993$
    4,081,927
    
    
    
    4,418,128
   (5)
    
    Deposits
  2006
    
    $
    135,050,8002007
    
    
    4,667,2112008
    
    
    4,583,8472009
    
    
    5,709,3832010
    
    
    8,686,162$
    158,697,403
 (6)
    
    Note Payable and Other Borrowings
   -19-




---



##### 



THE PB FINANCIAL SERVICES CORPORATION
 Notes to Consolidated Financial Statements, continued
 (6)
    
    Note Payable and Other Borrowings, continued
  Interest Rate
    
    RateMaturity Date
    
    December 31, 2005
    
    Type
    
    2005
    
    2004August 11, 2005
    
    
    
    
    
    Fixed
    
    
    
    
    
    
    5,000,000March 17, 2006
    
    
    
    
    
    Adjustable
    
    
    
    
    
    
    8,000,000May 12, 2006
    
    
    4.35
    %
    
    Adjustable
    
    $
    1,000,000
    
    
    
    1,000,000June 24, 2005
    
    
    
    
    
    Adjustable
    
    
    
    
    
    
    2,100,000November 22, 2005
    
    
    
    
    
    Daily
    
    
    
    
    
    
    2,000,000$
    1,000,000
    
    
    
    18,100,000
  (7)
    
    Junior Subordinated Debentures
   -20-




---



##### 



THE PB FINANCIAL SERVICES CORPORATION
 Notes to Consolidated Financial Statements, continued
 (7)
    
    Junior Subordinated Debentures, continued
  (8)
    
    Income Taxes
  2005
    
    
    2004Current
    
    
    3,327,897
    
    
    
    1,908,871Deferred
    
    
    (415,997
    )
    
    
    (298,160
    )2,911,900
    
    
    
    1,610,711
  2005
    
    
    2004Pre-tax income at statutory rates
    
    $
    2,664,256
    
    
    
    1,443,774Differences:Nondeductible meals and entertainment
    
    
    13,002
    
    
    
    12,525State taxes, net of federal benefit
    
    
    248,358
    
    
    
    114,694Tax exempt interest
    
    
    (32,925
    )
    
    
    (26,076
    )Increase in cash surrender value of life insurance
    
    
    (50,612
    )
    
    
    (35,700
    )Other
    
    
    69,821
    
    
    
    101,494$
    2,911,900
    
    
    
    1,610,711
  2005
    
    
    2004Deferred tax assets:Allowance for loan losses
    
    $
    1,366,977
    
    
    
    1,083,330Deferred loan fees
    
    
    240,850
    
    
    
    210,829Deferred compensation
    
    
    331,056
    
    
    
    207,741Unrealized loss on investment securities and available for sale
    
    
    212,072
    
    
    
    31,649Other
    
    
    
    
    
    
    6,590Total gross deferred tax assets
    
    
    2,150,955
    
    
    
    1,540,139Deferred tax liabilities:Accumulated depreciation
    
    
    (225,068
    )
    
    
    (210,672
    )Total gross deferred tax liabilities
    
    
    (225,068
    )
    
    
    (210,672
    )Net deferred tax asset
    
    $
    1,925,887
    
    
    
    1,329,467
 -21-




---



##### 



THE PB FINANCIAL SERVICES CORPORATION
 Notes to Consolidated Financial Statements, continued
 (9)
    
    Related Party Transactions
  Beginning balance
    
    $
    6,596,622New loans
    
    
    17,521,319Repayments
    
    
    (12,030,742
    )Ending balance
    
    $
    12,087,199
   (10)
    
    Commitments
  Year Ending December 31,2006
    
    $
    236,6172007
    
    
    221,6332008
    
    
    196,0552009
    
    
    162,5952010
    
    
    167,153Thereafter
    
    
    331,112Total minimum obligation
    
    $
    1,315,165
     Contractual Amount2005
    
    2004Financial instruments whose contract
amounts represent credit risk:Commitments to extend credit
    
    $
    116,884,000
    
    
    
    89,249,000Standby letters of credit
    
    $
    2,476,000
    
    
    
    1,495,000
 -22-




---



##### 



THE PB FINANCIAL SERVICES CORPORATION
 Notes to Consolidated Financial Statements, continued
 (10)

    Commitments, continued
   (11)

    Benefit Plans
    2005
    
    
    2004Weighted
    
    
    
    
    
    
    WeightedOption
    
    
    Average Option
    
    
    Option
    
    
    Average OptionShares
    
    
    Price Per Share
    
    
    Shares
    
    
    Price Per ShareOutstanding, beginning of year
    
    
    310,383
    
    
    $
    11.88
    
    
    
    281,683
    
    
    $
    11.26Granted during the year
    
    
    47,850
    
    
    $
    18.25
    
    
    
    34,450
    
    
    $
    18.25Cancelled during the year
    
    
    
    
    
    
    
    
    
    
    (5,750
    )
    
    $
    18.25Exercised during the year
    
    
    (282,080
    )
    
    $
    12.36
    
    
    
    
    
    
    
    Outstanding, end of year
    
    
    76,153
    
    
    $
    14.09
    
    
    
    310,383
    
    
    $
    11.88Number of shares exercisable
    
    
    39,223
    
    
    $
    11.57
    
    
    
    230,673
    
    
    $
    10.38
 -23-




---



##### 



THE PB FINANCIAL SERVICES CORPORATION
 Notes to Consolidated Financial Statements, continued
 (11)
    
    Benefit Plans
  WeightedAverage OptionOptions
    
    Price Per Share ofOptions
    
    Price
    
    Years
    
    Currently
    
    Options CurrentlyOutstanding
    
    Per Share
    
    Remaining
    
    Exercisable
    
    Exercisable31,653
    
    $
    10.00
    
    
    
    3-6
    
    
    
    30,053
    
    
    $
    10.0012,000
    
    $
    13.61
    
    
    
    6-8
    
    
    
    3,000
    
    
    $
    13.6132,500
    
    $
    18.25
    
    
    
    8-10
    
    
    
    6,170
    
    
    $
    18.2576,153
    
    $
    14.09
    
    
    
    
    
    
    
    39,223
    
    
    $
    11.57
  (12)
    
    Regulatory Matters
     -24-




---



##### 



THE PB FINANCIAL SERVICES CORPORATION
 Notes to Consolidated Financial Statements, continued
 (12)
    
    Regulatory Matters, continued
  To Be WellCapitalized UnderFor Capital
    
    
    Prompt CorrectiveActual
    
    
    Adequacy Purposes
    
    
    Action ProvisionsAmount
    
    
    Ratio
    
    
    Amount
    
    
    Ratio
    
    
    Amount
    
    
    Ratio(dollars in thousands)As of December 31, 2005:Total Capital (to Risk-Weighted Assets)Consolidated
    
    $
    48,082
    
    
    
    11.81
    %
    
    $
    32,563
    
    
    
    8.0
    %
    
    
    N/A
    
    
    
    N/ABank
    
    $
    45,437
    
    
    
    11.18
    %
    
    $
    32,511
    
    
    
    8.0
    %
    
    $
    40,639
    
    
    
    10.0
    %Tier 1 Capital (to Risk-Weighted Assets)Consolidated
    
    $
    44,366
    
    
    
    10.90
    %
    
    $
    16,282
    
    
    
    4.0
    %
    
    
    N/A
    
    
    
    N/ABank
    
    $
    41,721
    
    
    
    10.27
    %
    
    $
    16,255
    
    
    
    4.0
    %
    
    $
    24,383
    
    
    
    6.0
    %Tier 1 Capital (to Average Assets)Consolidated
    
    $
    44,366
    
    
    
    9.21
    %
    
    $
    19,268
    
    
    
    4.0
    %
    
    
    N/A
    
    
    
    N/ABank
    
    $
    41,721
    
    
    
    9.37
    %
    
    $
    17,814
    
    
    
    4.0
    %
    
    $
    22,268
    
    
    
    5.0
    %As of December 31, 2004:Total Capital (to Risk-Weighted Assets)Consolidated
    
    $
    32,017
    
    
    
    10.38
    %
    
    $
    24,665
    
    
    
    8.0
    %
    
    
    N/A
    
    
    
    N/ABank
    
    $
    31,516
    
    
    
    10.24
    %
    
    $
    24,624
    
    
    
    8.0
    %
    
    $
    30,780
    
    
    
    10.0
    %Tier 1 Capital (to Risk-Weighted Assets)Consolidated
    
    $
    29,045
    
    
    
    9.42
    %
    
    $
    12,332
    
    
    
    4.0
    %
    
    
    N/A
    
    
    
    N/ABank
    
    $
    28,544
    
    
    
    9.27
    %
    
    $
    12,312
    
    
    
    4.0
    %
    
    $
    18,468
    
    
    
    6.0
    %Tier 1 Capital (to Average Assets)Consolidated
    
    $
    29,045
    
    
    
    8.91
    %
    
    $
    13,033
    
    
    
    4.0
    %
    
    
    N/A
    
    
    
    N/ABank
    
    $
    28,544
    
    
    
    8.28
    %
    
    $
    13,783
    
    
    
    4.0
    %
    
    $
    17,229
    
    
    
    5.0
    %
 (13)
    
    Shareholders Equity
  (14)
    
    Other Operating Expense
  2005
    
    
    2004Data processing
    
    $
    347,685
    
    
    
    262,634Directors fees
    
    $
    519,050
    
    
    
    335,250
 (15)
    
    Fair Value of Financial Instruments
  -25-




---



##### 



THE PB FINANCIAL SERVICES CORPORATION
 Notes to Consolidated Financial Statements, continued
 (15)
    
    Fair Value of Financial Instruments, continued
 Cash and Cash Equivalents
 Investment Securities
 Other Investments
 Loans
 Cash Surrender Value of Life Insurance
 Deposits
 Securities Sold Under Retail Repurchase Agreements
 FHLB Advances
 Junior Subordinated Debentures
 Commitments to Extend Credit and Standby Letters of Credit
 Limitations
  -26-




---



##### 



THE PB FINANCIAL SERVICES CORPORATION
 Notes to Consolidated Financial Statements, continued
 (15)
    
    Fair Value of Financial Instruments, continued
  2005
    
    
    2004Carrying
    
    
    Estimated
    
    
    Carrying
    
    
    EstimatedAmount
    
    
    Fair Value
    
    
    Amount
    
    
    Fair ValueAssets:Cash and cash equivalents
    
    $
    24,708,441
    
    
    
    24,708,441
    
    
    
    20,211,803
    
    
    
    20,211,803Investment securities available for sale
    
    $
    38,187,752
    
    
    
    38,187,752
    
    
    
    24,271,001
    
    
    
    24,271,001Investment securities held to maturity
    
    $
    2,493,326
    
    
    
    2,468,421
    
    
    
    2,774,383
    
    
    
    2,781,245Other investments
    
    $
    1,921,680
    
    
    
    1,921,680
    
    
    
    2,022,750
    
    
    
    2,022,750Loans, net
    
    $
    374,807,020
    
    
    
    372,685,911
    
    
    
    291,536,663
    
    
    
    291,170,552Cash surrender value of life insurance
    
    $
    4,302,590
    
    
    
    4,302,590
    
    
    
    4,153,731
    
    
    
    4,153,731Liabilities:Deposits
    
    $
    409,795,161
    
    
    
    409,116,275
    
    
    
    303,904,523
    
    
    
    303,742,151Federal Home Loan Bank advances
    
    $
    1,000,000
    
    
    
    1,000,000
    
    
    
    18,100,000
    
    
    
    18,069,820Junior subordinated debentures
    
    $
    9,275,000
    
    
    
    9,275,000
    
    
    
    4,120,000
    
    
    
    4,120,000
 -27-




---



##### 



THE PB FINANCIAL SERVICES CORPORATION
 Notes to Consolidated Financial Statements, continued
 (16)
    
    The PB Financial Services Corporation (Parent Company Only) Financial Information
 Balance Sheets
 December 31, 2005 and 2004
 2005
    
    
    2004AssetsCash
    
    $
    48,591
    
    
    
    17,714Investment in Bank
    
    
    41,309,562
    
    
    
    28,481,058Investment in Trust (unconsolidated)
    
    
    275,000
    
    
    
    120,000Other assets
    
    
    2,696,396
    
    
    
    395,505$
    44,329,549
    
    
    
    29,014,277Liabilities and Shareholders EquityOther liabilities
    
    $
    100,571
    
    
    
    30,071Junior subordinated debentures
    
    
    9,275,000
    
    
    
    4,120,000Shareholders equity
    
    
    34,953,978
    
    
    
    24,864,206$
    44,329,549
    
    
    
    29,014,277
 Statements of Earnings
 For the Years Ended December 31, 2005 and 2004
 2005
    
    
    2004Dividend income from Bank
    
    $
    488,846
    
    
    
    213,933Dividend income from Trust
    
    
    16,481
    
    
    
    6,200Interest expense
    
    
    (488,846
    )
    
    
    (213,933
    )Other operating expenses
    
    
    (261,055
    )
    
    
    (99,721
    )Loss before income tax benefit and equity in
undistributed earnings of Bank
    
    
    (244,574
    )
    
    
    (93,521
    )Income tax benefit
    
    
    277,243
    
    
    
    80,017Earnings (loss) before equity in undistributed
earnings of Bank
    
    
    32,669
    
    
    
    (13,504
    )Equity in undistributed earnings of Bank
    
    
    4,891,477
    
    
    
    2,649,187Net earnings
    
    $
    4,924,146
    
    
    
    2,635,683
 -28-




---



##### 



THE PB FINANCIAL SERVICES CORPORATION
 Notes to Consolidated Financial Statements, continued
 (16)
    
    The PB Financial Services Corporation (Parent Company Only) Financial Information, continued
 Statements of Cash Flows
 For the Years Ended December 31, 2005 and 2004
 2005
    
    
    2004Cash flows from operating activities:Net earnings
    
    $
    4,924,146
    
    
    
    2,635,683Adjustments to reconcile net earnings to net cash used by
operating activities:Equity in undistributed earnings of Bank
    
    
    (4,891,477
    )
    
    
    (2,649,187
    )Amortization
    
    
    6,053
    
    
    
    6,053Change in other assets
    
    
    (278,345
    )
    
    
    (80,766
    )Change in other liabilities
    
    
    70,500
    
    
    
    11,871Net cash used by operating activities
    
    
    (169,123
    )
    
    
    (76,346
    )Cash flows used by investing activities:Capital infusions in Bank
    
    
    (8,287,260
    )
    
    
    Investment in junior subordinated debentures
    
    
    (155,000
    )
    
    
    Net cash used by investing activities
    
    
    (8,442,260
    )
    
    
    Cash flows from financing activities:Proceeds from issuance of junior subordinated debentures
    
    
    5,155,000
    
    
    
    Proceeds from exercise of stock options
    
    
    3,487,260
    
    
    
    Net cash provided by financing activities
    
    
    8,642,260
    
    
    
    Net change in cash
    
    
    30,877
    
    
    
    (76,346
    )Cash at beginning of year
    
    
    17,714
    
    
    
    94,060Cash at end of year
    
    $
    48,591
    
    
    
    17,714
 -29-




---



##### 



ITEM 13. EXHIBITS
  13.1
    
    The PB Financial Services Corporation 2005 Annual Report to shareholders.
Except with respect to those portions specifically incorporated by reference into this
Report, the Companys 2005 Annual Report to Shareholders is not deemed to be filed as
part of this Report.31.1
    
    Certification of Chief Executive Officer pursuant Rule 13a-14(a).31.2
    
    Certification of Chief Financial Officer pursuant Rule 13a-14(a).32.1
    
    Certification pursuant to 18 U.S.C. Section 1350 as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002.
 30




---



##### 



SIGNATURES
  THE PB FINANCIAL SERVICES CORPORATIONBy:
    
    /s/ Monty G. WatsonMonty G. WatsonPresident and Chief Executive Officer/s/ Kelly J. JohnsonKelly J. JohnsonChief and Principal Financial OfficerDate:
    
    April 12, 2006
    /s/ Robert D. Cheeley
    
    DATE: April 12, 2006Robert D. Cheeley, Director/s/ Daniel B. Cowart
    
    DATE: April 12, 2006Daniel B. Cowart, Director/s/ Paul D. Donaldson
    
    DATE: April 12, 2006Paul D. Donaldson, Director
 31




---



##### 



/s/ Dexter R. Floyd
    
    DATE: April 12, 2006Dexter R. Floyd, Director/s/ J. Edwin Howard
    
    DATE: April 12, 2006J. Edwin Howard, Director/s/ John J. Howard
    
    DATE: April 12, 2006John J. Howard, Director/s/ J. Stephen Hurst
    
    DATE: April 12, 2006J. Stephen Hurst, Director/s/ Kelly J. Johnson
    
    DATE: April 12, 2006Kelly J. Johnson, Chief Financial Officer(Principal Financial and Accounting Officer)/s/ Charles Machemehl, III
    
    DATE: April 12, 2006Charles Machemehl, III, Director/s/ J. Paul Maggard
    
    DATE: April 12, 2006J. Paul Maggard, Director/s/ Monty G. Watson
    
    DATE: April 12, 2006Monty G. Watson, Director, President, andChief Executive Officer
 32