**UNITED      STATES**

**SECURITIES      AND EXCHANGE COMMISSION**

**Washington,      D.C. 20549**

**FORM      10-K/A**

**x**
**ANNUAL      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES **
**EXCHANGE      ACT OF 1934**

**or**

**o**
**TRANSITION      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES **
**EXCHANGE      ACT OF 1934**

**RESOURCE      AMERICA, INC.**

| **Delaware            ** (State                or other jurisdictionof                incorporation or organization)                                                         | **72-0654145**(I.R.S.                Employer Identification                No.) |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|----------------------------------------------------------------------------------|
| **One                Crescent Drive, Suite 203****Navy                Yard Corporate Center****Philadelphia,                PA        ** (Address                of principal executive offices) |   **19112**(Zip                Code)                                   |
| Registrant’s                telephone number, including area code:  **215-546-5005**                                                                                                                                               |                                                                             |
| Securities                registered pursuant to Section 12(b) of the Act:                                                                                                                                                                    |
| Title                of each class                                                                                                                                                                                                            | Name                of each exchange on which registered                         |
| **None**                                                                                                                                                                                                                                      | **None**                                                                         |

*Back          to Part IV*

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**EXPLANATORY      NOTE -- AMENDMENT**

*Back          to Part IV*

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**RESOURCE      AMERICA, INC. AND SUBSIDIARIES**

**INDEX      TO ANNUAL REPORT**

**ON      FORM 10-K**

|                        |                    | Page                                                                                                                                                                          |
|-----------------------------|-------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| **PART                I**   |                    |                                                                                                                                                                          |
|                        | Item                1:  | Business                                                                                                                                                                      | 3−                10 |
|                        | Item                1A: | Risk                Factors                                                                                                                                                   | 10                − 15 |
|                        | Item                1B: | Unresolved                Staff Comments                                                                                                                                      | 15 |
|                        | Item                2:  | Properties                                                                                                                                                                    | 16 |
|                        | Item                3:  | Legal                Proceedings                                                                                                                                              | 16 |
|                        | Item                4:  | Submission                of Matters to a Vote of Security Holders                                                                                                            | 16 |
|                        |                    |                                                                                                                                                                          |   |
| **PART                II**  |                    |                                                                                                                                                                          |
|                        | Item                5:  | Market                for Registrant's Common Equity, Related Stockholder Matters and                Issuer                Purchases of                Equity Securities | 17                − 18 |
|                        | Item                6:  | Selected                Financial Data                                                                                                                                        | 19 |
|                        | Item                7:  | Management’s                Discussion and Analysis of Financial Condition and Results                of Operations                                                     | 20                − 46 |
|                        | Item                7A: | Quantitative                and Qualitative Disclosures About Market Risk                                                                                                     | 47 |
|                        | Item                8:  | Financial                Statements and Supplementary Data                                                                                                                    | 48                − 93 |
|                        | Item                9:  | Changes                in and Disagreements with Accountants on Accounting and Financial                Disclosure                                                            | 94 |
|                        | Item                9A: | Controls                and Procedures                                                                                                                                        | 94                − 95 |
|                        | Item                9B: | Other                Information                                                                                                                                              | 96 |
|                        |                    |                                                                                                                                                                          |   |
| **PART                III** |                    |                                                                                                                                                                          |
|                        | Item                10: | Directors                and Executive Officers of the Registrant                                                                                                             | 97                − 99 |
|                        | Item                11: | Executive                Compensation                                                                                                                                         | 100                − 103 |
|                        | Item                12: | Security                Ownership of Certain Beneficial Owners and Management and Related                Stockholder Matters                                                  | 104                − 105 |
|                        | Item                13: | Certain                Relationships and Related Transactions                                                                                                                 | 106                − 107 |
|                        | Item                14: | Principal                Accounting Fees and Services                                                                                                                         | 108 |
|                        |                    |                                                                                                                                                                          |   |
| **PART                IV**  |                    |                                                                                                                                                                          |
|                        | Item                15: | Exhibits,                Financial Statement Schedules                                                                                                                        | 109                − 110 |
|                        |                    |                                                                                                                                                                          |   |
| **SIGNATURES**              | 111                     |

*Back          to Part IV*

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**PART      IV**

**ITEM      15.**
**EXHIBITS      AND FINANCIAL STATEMENT SCHEDULES **

|   | **1.** | **Financial                Statements** |
|--------|--------|-----------------------------------------|

|   | **2.** | **Financial                Statement Schedules** |
|--------|--------|--------------------------------------------------|

|   | a) | Consolidated                Financial Statements for Trapeza                Funding, LLC for the years ended December 31, 2006 and 2005                (unaudited) |
|--------|----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | b) | Consolidated                Financial Statements for Trapeza                Funding II, LLC for the years ended December 31, 2006 and 2005                (unaudited) |
|--------|----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | c) | Consolidated                Financial Statements for Trapeza Funding II, LLC for the years ended                December 31, 2005 and 2004 (unaudited)(1) |
|--------|----|-----------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | d) | Consolidated                Financial Statements for Trapeza                Funding III, LLC for the years ended December 31, 2006 and 2005                (unaudited) |
|--------|----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | e) | Trapeza                Capital Management, LLC Audited                Financial Statements for the years ended December 31, 2006 and                2005 |
|--------|----|----------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | f) | Trapeza                Management Group, LLC Financial                Statements for the years ended December 31, 2006 and 2005                (unaudited) |
|--------|----|------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | (1) | Filed                previously as an exhibit to our Annual Report on Form 10K/A for the                fiscal                year ended September 30, 2005 and by this reference incorporated                herein. |
|--------|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

*Back          to Part IV*

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**Schedule      (a)**

**UNAUDITED**

**Trapeza      Funding, LLC**

**Consolidated      Financial Statements (Unaudited)**

**Years      ended December 31, 2006 and 2005 **

*Back          to Part IV*

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**UNAUDITED**

**Trapeza      Funding, LLC**

**Consolidated      Financial Statements**

**Years      ended December 31, 2006 and 2005**

**Contents**

| Consolidated                Financial Statements                              |   |
|-------------------------------------------------------------------------------|--------|
| Consolidated                Statements of Financial Condition                 | 3      |
| Consolidated                Schedules of Investments                          | 4      |
| Consolidated                Statements of Operations                          | 6      |
| Consolidated                Statements of Changes in Members’ Interests | 7      |
| Consolidated                Statements of Cash Flows                          | 8      |
| Notes                to Consolidated Financial Statements                     | 9      |
|                                                                          |   |
| Other                Financial Information                                    |   |
| Consolidating                Statement of Financial Condition                 | 20     |
| Consolidating                Statement of Operations                          | 21     |

*Back          to Part IV*

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**UNAUDITED**

**Trapeza      Funding, LLC**

**Consolidated      Statements of Financial Condition**

|                                                                                                                                     |   | **December 31** |        |
|------------------------------------------------------------------------------------------------------------------------------------------|--------|----------------------|-------------|
|                                                                                                                                     |   | **2006**             |        | **2005** |   |
| **Assets**                                                                                                                               |   |                 |        |   |   |
| Investments                in trust preferred securities, at fair value (amortized cost $312,292,743                and $319,163,818)    |   | $                    | 314,978,303 |   | $ | 323,519,767 |   |
| Cash                and cash equivalents                                                                                                 |   |                 | 11,920,598  |   |   | 4,086,160 |   |
| Investment                in Trapeza Note I, LLC                                                                                         |   |                 | 9,304,230   |   |   | 8,893,125 |   |
| Deferred                debt issuance costs (net of accumulated amortization of $2,928,168                and                $2,218,100) |   |                 | 5,215,721   |   |   | 5,925,789 |   |
| Interest                receivable on trust preferred securities                                                                         |   |                 | 4,881,532   |   |   | 4,029,310 |   |
| Net                interest receivable from swap counterparty                                                                            |   |                 | 18,456      |   |   | 10,454 |   |
| Prepaid                expenses                                                                                                          |   |                 | 4,547       |   |   | 4,910 |   |
| Other                                                                                                                                    |   |                 | 7,743       |   |   | 1,248 |   |
| Total                Assets                                                                                                              |   | $                    | 346,331,130 |   | $ | 346,470,763 |   |
| **Liabilities                and Members’ Interests**                                                                              |   |                 |        |   |   |   |   |
| Liabilities                                                                                                                              |   |                 |        |   |   |   |   |
| Class                A-1 Notes                                                                                                           |   | $                    | 160,129,324 |   | $ | 160,129,324 |   |
| Class                A-2 Notes                                                                                                           |   |                 | 19,830,257  |   |   | 19,830,257 |   |
| Class                B-1 Notes                                                                                                           |   |                 | 54,600,000  |   |   | 54,600,000 |   |
| Class                B-2 Notes                                                                                                           |   |                 | 2,000,000   |   |   | 2,000,000 |   |
| Class                B-3 Notes                                                                                                           |   |                 | 16,000,000  |   |   | 16,000,000 |   |
| Class                C-1 Notes                                                                                                           |   |                 | 29,600,000  |   |   | 29,600,000 |   |
| Class                C-2 Notes                                                                                                           |   |                 | 10,000,000  |   |   | 10,000,000 |   |
| Class                D Notes                                                                                                             |   |                 | 15,829,493  |   |   | 16,408,511 |   |
| Interest                payable                                                                                                          |   |                 | 1,665,036   |   |   | 1,493,826 |   |
| Unrealized                depreciation on swap agreements                                                                                |   |                 | 137,650     |   |   | 43,540 |   |
| Professional                fees                                                                                                         |   |                 | 87,623      |   |   | 95,346 |   |
| Collateral                management fees                                                                                                |   |                 | 80,995      |   |   | 80,995 |   |
| Trustee                fees                                                                                                              |   |                 | 11,546      |   |   | 11,546 |   |
| Accrued                expenses                                                                                                          |   |                 | 41,250      |   |   | 41,250 |   |
| Total                Liabilities                                                                                                         |   |                 | 310,013,174 |   |   | 310,334,595 |   |
|                                                                                                                                     |   |                 |        |   |   |   |   |
| Minority                interest                                                                                                         |   |                 | 35,617,993  |   |   | 35,472,597 |   |
|                                                                                                                                     |   |                 |        |   |   |   |   |
| Members’                Interests                                                                                                  |   |                 | 699,963     |   |   | 663,571 |   |
| Total                Liabilities and Members’ Interests                                                                            |   | $                    | 346,331,130 |   | $ | 346,470,763 |   |

*See      accompanying notes to consolidated financial statements.*

*Back          to Part IV*

----

**UNAUDITED**

**Trapeza      Funding, LLC**

**Consolidated      Schedules of Investments**

|                                                                                                                                                  | **December 31,                  2006** |    | **December 31,                  2005** |
|-------------------------------------------------------------------------------------------------------------------------------------------------------|---------------------------------------------|---------|---------------------------------------------|
|                                                                                                                                                  | **Principal****Amount****(000)**            |    |   **Fair                  Value** |   | **Principal****Amount****(000)** |   |   **Fair                  Value** |
| Investments                  in Trust Preferred Securities - (100%) *                                                                                 |                                        |    |                                        |   |   |   |   |
| Banks                  (81.76% and 82.24%)*                                                                                                           |                                        |    |                                        |   |   |   |   |
| 1st                  Source Capital Trust III, 6.95%, callable 11/15/2007, due 11/14/2032                  (a)                                        | $                                           | 10,000  |                                        | $ | 9,935,910 |   | $ | 10,000 |   | $ | 9,935,056 |
| Access                  National Capital Trust I, 3ML + 4.125%, callable 9/30/2007, due                  9/30/2032                  (a)               |                                        | 4,000   |                                        |   | 3,981,839 |   |   | 4,000 |   |   | 3,981,653 |
| Ambank                  Capital Trust I, 3ML + 3.625%, callable 7/30/2007, due 7/30/2032                  (a)                                         |                                        | 8,000   |                                        |   | 7,942,474 |   |   | 8,000 |   |   | 7,941,800 |
| Bank                  of Kentucky Capital Trust I, 3ML+ 3.35%, callable 11/15/2007, due                  11/14/2032 (a)                               |                                        | 11,000  |                                        |   | 11,001,212 |   |   | 11,000 |   |   | 11,001,226 |
| Banponce                  Trust I, 8.327%, callable 2/1/2007, due 2/1/2027                                                                            |                                        | 1,200   |                                        |   | 1,257,000 |   |   | 1,200 |   |   | 1,284,000 |
| Colonial                  Capital II, 8.92%, callable 1/29/2007, due 1/15/2027                                                                        |                                        | 5,000   |                                        |   | 5,212,500 |   |   | 5,000 |   |   | 5,382,855 |
| Community                  Bancshares Capital Trust III, 6ML+ 3.625%, callable 7/30/2007,                  due                  7/30/2032 (a)         |                                        | 5,000   |                                        |   | 4,858,616 |   |   | 5,000 |   |   | 4,856,866 |
| Community                  Capital Trust I, 9.75%, callable 1/31/2007, due 1/31/2027                                                                  |                                        | 1,850   |                                        |   | 1,914,750 |   |   | 1,850 |   |   | 1,979,500 |
| FBOP                  Capital Trust XII, 6ML+ 3.625%, callable 7/30/2007, due 7/30/2032                  (a)                                          |                                        | 11,000  |                                        |   | 11,000,000 |   |   | 11,000 |   |   | 11,000,000 |
| FCB/SC                  Capital Trust I, 8.25%, callable 3/15/2008, due 3/15/2028                  (a)                                                |                                        | 2,000   |                                        |   | 2,027,672 |   |   | 2,000 |   |   | 2,028,133 |
| First                  Gothenburg Capital Trust I, 3ML + 3.35%, callable 11/15/2007, due                  11/15/2032 (a)                              |                                        | 4,000   |                                        |   | 3,943,687 |   |   | 4,000 |   |   | 3,943,027 |
| First                  Group Capital Statutory Trust III, 3ML + 3.35%, callable 11/15/2007,                  due                  11/15/2032 (a)      |                                        | 10,000  |                                        |   | 10,087,848 |   |   | 10,000 |   |   | 10,086,842 |
| First                  Indiana Capital Trust I, 6.92%, callable 10/30/2007, due 10/30/2032                  (a)                                       |                                        | 2,000   |                                        |   | 1,998,372 |   |   | 2,000 |   |   | 1,998,350 |
| Franklin                  Bank Capital Trust I, 3ML + 3.35%, callable 11/15/2007, due 11/14/2032                  (a)                                 |                                        | 11,000  |                                        |   | 10,906,244 |   |   | 11,000 |   |   | 10,905,145 |
| GB&T                  Bancshares Statutory Trust I, 3ML + 3.40%, callable 10/30/2007,                  due                  10/30/2032 (a)        |                                        | 11,000  |                                        |   | 10,877,097 |   |   | 11,000 |   |   | 10,875,704 |
| Hanmi                  Capital Trust II, 3ML + 2.90%, callable 3/15/2009, due 3/15/2034                  (a)                                          |                                        | 6,479   |                                        |   | 6,479,000 |   |   | 6,479 |   |   | 6,479,000 |
| Iberiabank                  Statutory Trust I, 3ML+ 3.25%, callable 11/15/2007, due 11/15/2032                  (a)                                   |                                        | 10,000  |                                        |   | 9,888,786 |   |   | 10,000 |   |   | 9,887,502 |
| Industry                  Bancshares Capital Trust I, 6ML + 3.625%, callable 7/30/2007, due                  7/30/2032 (a)                            |                                        | 5,000   |                                        |   | 4,952,871 |   |   | 5,000 |   |   | 4,952,288 |
| Local                  Financial Capital Trust II, 6ML + 3.625%, callable 7/30/2007, due                  7/30/2032 (a)                               |                                        | 10,000  |                                        |   | 9,860,500 |   |   | 10,000 |   |   | 9,858,773 |
| Main                  Street Banks Statutory Trust I, 3ML + 3.25%, callable 11/15/2007,                  due                  11/15/2032 (a)          |                                        | 5,000   |                                        |   | 4,944,334 |   |   | 5,000 |   |   | 4,943,690 |
| MB                  Financial Capital Trust I, 8.60%, callable 9/30/2007, due 9/30/2032                  (a)                                          |                                        | 5,000   |                                        |   | 5,000,000 |   |   | 5,000 |   |   | 5,000,000 |
| MBNA                  Capital B, 3 ML+ 0.80%, callable 2/1/2007, due 2/1/2027                                                                         |                                        | 8,000   |                                        |   | 7,970,000 |   |   | 8,000 |   |   | 7,840,000 |
| Merchants                  and Manufacturers Statutory Trust I, 3ML +3.35%, callable 11/12/2007,                  due                  11/12/2032 (a) |                                        | 8,000   |                                        |   | 7,924,899 |   |   | 8,000 |   |   | 7,924,046 |
| Onbank                  Capital Trust I, 9.25%, callable 2/1/2007, due 2/1/2027                                                                       |                                        | 2,000   |                                        |   | 2,090,000 |   |   | 2,000 |   |   | 2,140,000 |
| Pacific                  Mercantile Capital Trust I, 3ML+ 3.75%, callable 6/30/2007, due                  7/15/2032                  (a)              |                                        | 5,000   |                                        |   | 4,977,259 |   |   | 5,000 |   |   | 4,977,136 |
| PMB                  Capital Trust I, 6ML + 3.625%, callable 8/30/2007, due 8/22/2032                  (a)                                            |                                        | 5,000   |                                        |   | 4,952,866 |   |   | 5,000 |   |   | 4,952,300 |
| Progress                  Capital Trust III, 3ML+ 3.35%, callable 11/15/2007, due 11/15/2032                  (a)                                     |                                        | 6,000   |                                        |   | 5,952,045 |   |   | 6,000 |   |   | 5,951,483 |
| Provident                  Capital Trust I, 8.60%, callable 12/1/2006, due 12/1/2026                  (b)                                             |                                        | − |                                        |   | − |   |   | 7,500 |   |   | 8,025,000 |
| Provident                  Trust I, 8.29%, callable 4/15/2008, due 4/15/2028                                                                          |                                        | 5,500   |                                        |   | 5,472,500 |   |   | 5,500 |   |   | 5,830,000 |
| Reliance                  Capital Trust I, 8.17%, callable 5/1/2008, due 5/1/2028                  (a)                                                |                                        | 1,000   |                                        |   | 1,002,828 |   |   | 1,000 |   |   | 1,002,875 |
| Riverside                  Bancshares Statutory Trust I, 3ML + 3.45%, callable 10/1/2007,                  due                  10/1/2032 (a)         |                                        | 10,000  |                                        |   | 9,888,235 |   |   | 10,000 |   |   | 9,886,970 |
| Riverside                  Gulf Coast Capital Trust I, 3ML + 3.25%, callable 9/30/2007, due                  7/29/2032                  (a)           |                                        | 5,000   |                                        |   | 4,977,315 |   |   | 5,000 |   |   | 4,977,045 |
| Sky                  Financial Capital Trust I, 9.34%, callable 5/1/2010, due 5/1/2030                  (a)                                           |                                        | 3,500   |                                        |   | 3,676,519 |   |   | 3,500 |   |   | 3,678,539 |
| South                  Financial Capital Trust II, 6 ML+ 3.625%, callable 7/30/2007, due                  7/30/2032 (a)                               |                                        | 11,000  |                                        |   | 10,896,317 |   |   | 11,000 |   |   | 10,895,033 |
| Southcoast                  Capital Trust I, 3 ML+ 3.75%, callable 6/30/2007, due 5/3/2032                  (a)                                       |                                        | 4,000   |                                        |   | 3,982,090 |   |   | 4,000 |   |   | 3,981,890 |
| Sterling                  Bancshares Statutory Trust One, 3ML+ 3.45%, callable 8/30/2007,                  due                  8/30/2032 (a)         |                                        | 10,000  |                                        |   | 9,888,283 |   |   | 10,000 |   |   | 9,887,008 |
| Texas                  Capital Bancshares Statutory Trust I, 3ML + 3.35%, callable 11/19/2007,                  due                  11/19/2032 (a)   |                                        | 10,000  |                                        |   | 9,888,764 |   |   | 10,000 |   |   | 9,887,501 |
| UCBH                  Capital Trust II, 3ML + 3.45%, callable 11/7/2007, due 11/7/2032                  (a)                                           |                                        | 11,000  |                                        |   | 11,000,000 |   |   | 11,000 |   |   | 11,000,000 |
| Umpqua                  Statutory Trust II, 3ML+ 3.35%, callable 10/17/2007, due 10/17/2032                  (a)                                      |                                        | 11,000  |                                        |   | 10,864,874 |   |   | 11,000 |   |   | 10,863,250 |
| Union                  State Capital Trust I, 9.58%, callable 2/1/2007, due 2/1/2027                  (a)                                             |                                        | 1,000   |                                        |   | 1,074,449 |   |   | 1,000 |   |   | 1,075,618 |
| VCBI                  Capital Trust I, 6ML+ 3.40%, callable 11/15/2007, due 11/15/2032                  (a)                                           |                                        | 3,000   |                                        |   | 2,971,816 |   |   | 3,000 |   |   | 2,971,500 |
| Total                  Banks (amortized cost $254,836,211 and $261,712,655)                                                                           |                                        |    |                                        | $ | 257,521,771 |   |   |   |   | $ | 266,068,604 |

*                     *

*                     See accompanying notes to consolidated financial statements.*

*Back          to Part IV*

----

**UNAUDITED**

**Trapeza      Funding, LLC**

**Consolidated      Schedules of Investments (continued)**

|                                                                                                                                              | **December 31,                  2006**    |   | **December 31,                  2005** |   |
|---------------------------------------------------------------------------------------------------------------------------------------------------|------------------------------------------------|--------|---------------------------------------------|--------|
|                                                                                                                                              | **Principal                  Amount****(000)** |   |   **Fair                  Value** |   | **Principal                  Amount****(000)** |   |   **Fair                  Value** |   |
| Investments                  in Trust Preferred Securities - (100%) * (continued)                                                                 |                                           |   |                                        |   |   |   |   |   |
| Thrifts                  (18.24% and 17.76%)                                                                                                      |                                           |   |                                        |   |   |   |   |   |
| BBC                  Capital Trust V, 3ML + 3.40%, callable 9/30/2007, due 9/27/2032                  (a)                                         | $                                              | 10,000 |                                        | $      | 9,920,408 |   | $ | 10,000 |   | $ | 9,919,498 |   |
| BankUnited                  Statutory Trust IV, 3ML + 3.40%, callable 11/15/2007, due 11/15/2032                  (a)                             |                                           | 11,000 |                                        |   | 10,877,464 |   |   | 11,000 |   |   | 10,876,086 |   |
| Beal                  Financial Trust I, 6ML + 3.625%, callable 7/30/2007, due 7/30/2032                  (a)                                     |                                           | 11,000 |                                        |   | 10,896,317 |   |   | 11,000 |   |   | 10,895,033 |   |
| First                  Keystone Capital Trust I, 9.70%, callable 8/15/2007, due 8/15/2027                  (a)                                    |                                           | 1,500  |                                        |   | 1,624,873 |   |   | 1,500 |   |   | 1,626,680 |   |
| HFC                  Capital Trust IV, 6ML + 3.35%, callable 11/15/2007, due 11/15/2032                  (a)                                      |                                           | 8,450  |                                        |   | 8,272,997 |   |   | 8,450 |   |   | 8,270,995 |   |
| ITLA                  Capital Statutory Trust III, 6ML+ 3.40%, callable 10/30/2007, due                  10/30/2032 (a)                           |                                           | 11,000 |                                        |   | 10,905,960 |   |   | 11,000 |   |   | 10,904,877 |   |
| Matrix                  Bancorp Capital Trust V, 6ML+ 3.625%, callable 7/25/2007, due 7/25/2032                  (a)                              |                                           | 5,000  |                                        |   | 4,958,513 |   |   | 5,000 |   |   | 4,957,994 |   |
| Total                  Thrifts (amortized cost $57,456,532 and $57,451,163)                                                                       |                                           |   |                                        |   | 57,456,532 |   |   |   |   |   | 57,451,163 |   |
| Total                  Investments in Trust Preferred Securities (amortized cost $312,292,743                  and                  $319,163,818) |                                           |   |                                        | $      | 314,978,303 |   |   |   |   | $ | 323,519,767 |   |
|                                                                                                                                              |                                           |   |                                        |   |   |   |   |   |   |   |   |   |
|                                                                                                                                              |                                           |   |                                        |   | **Fair                  Value** |   |   |   |   |   | **Fair                  Value** |   |
| **Interest                  Rate Swap Agreements**                                                                                                |                                           |   |                                        |   |   |   |   |   |   |   |   |   |
| Credit                  Suisse                                                                                                                    |                                           |   |                                        | $      | (137,650 | ) |   |   |   | $ | (43,540 | ) |
| Total                  Interest Rate Swap Agreements                                                                                              |                                           |   |                                        | $      | (137,650 | ) |   |   |   | $ | (43,540 | ) |

----

*             See      accompanying notes to consolidated financial statements.*

*Back          to Part IV*

----

**UNAUDITED**

**Trapeza      Funding, LLC**

**Consolidated      Statements of Operations**

|                                                                                                      |   | **Years                ended December 31,** |       |
|-----------------------------------------------------------------------------------------------------------|--------|--------------------------------------------------|------------|
|                                                                                                      |   | **2006**                                         |       | **2005** |   |
| **Investment                income**                                                                      |   |                                             |       |   |   |
| Interest                                                                                                  |   | $                                                | 29,229,081 |   | $ | 23,590,716 |   |
| Equity                in earnings of Trapeza Note I, LLC                                                  |   |                                             | 2,169,846  |   |   | 2,875,914 |   |
| **Total                investment income**                                                                |   |                                             | 31,398,927 |   |   | 26,466,630 |   |
| **Expenses**                                                                                              |   |                                             |       |   |   |   |   |
| Interest                                                                                                  |   |                                             | 18,616,059 |   |   | 14,139,658 |   |
| Collateral                management fees                                                                 |   |                                             | 809,948    |   |   | 813,323 |   |
| Amortization                of deferred debt issuance costs                                               |   |                                             | 710,068    |   |   | 719,516 |   |
| Trustee                fees                                                                               |   |                                             | 121,440    |   |   | 124,448 |   |
| Professional                fees                                                                          |   |                                             | 120,501    |   |   | 104,933 |   |
| Administration                fee                                                                         |   |                                             | 67,253     |   |   | 64,085 |   |
| Taxes                                                                                                     |   |                                             | 3,334      |   |   | 6,120 |   |
| Other                                                                                                     |   |                                             | 185,845    |   |   | 193,895 |   |
| Total                expenses                                                                             |   |                                             | 20,634,448 |   |   | 16,165,978 |   |
| **Net                investment income**                                                                  |   |                                             | 10,764,479 |   |   | 10,300,652 |   |
|                                                                                                      |   |                                             |       |   |   |   |   |
| Net                unrealized (depreciation) appreciation on                investment transactions: |   |                                             |       |   |   |   |   |
| Investments                in trust preferred securities                                                  |   |                                             | (1,670,389 | ) |   | (481,207 | ) |
|                    Interest rate swap agreements                                           |   |                                             | (94,110    | ) |   | 206,613 |   |
| Net                unrealized depreciation on investment transactions                                     |   |                                             | (1,764,499 | ) |   | (274,594 | ) |
|                                                                                                      |   |                                             |       |   |   |   |   |
| Net                income before minority interest                                                        |   |                                             | 8,999,980  |   |   | 10,026,058 |   |
| Minority                interest                                                                          |   |                                             | 7,292,720  |   |   | 8,137,839 |   |
| **Net                income**                                                                             |   | $                                                | 1,707,260  |   | $ | 1,888,219 |   |

*See      accompanying notes to consolidated financial statements.*

*Back          to Part IV*

----

**UNAUDITED**

**Trapeza      Funding, LLC**

**Consolidated      Statements of Changes in Members’ Interests**

**Years      ended December 31, 2006 and 2005**

| Balance                at January 1, 2005        |   | $      | 349,113    |   |
|--------------------------------------------------|--------|--------|------------|--------|
| Net                income                        |   |   | 1,888,219  |   |
| Distributions                to members          |   |   | (1,573,761 | )      |
| Balance                at December 31, 2005 |   |   | 663,571    |   |
| Net                income                        |   |   | 1,707,260  |   |
| Distributions                to members          |   |   | (1,670,868 | )      |
| Balance                at December 31, 2006 |   | $      | 699,963    |   |

*See      accompanying notes to consolidated financial statements.*

*Back          to Part IV*

----

**UNAUDITED**

**Trapeza      Funding, LLC**

**Consolidated      Statements of Cash Flows**

|                                                                                                                                                |   | **Years                ended December 31,** |       |
|-----------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------------------------------|------------|
|                                                                                                                                                |   | **2006**                                         |       | **2005** |   |
| **Cash                flows from operating activities**                                                                                             |   |                                             |       |   |   |
| Net                income                                                                                                                           |   | $                                                | 1,707,260  |   | $ | 1,888,219 |   |
| Adjustments                to reconcile net income to net cash and cash equivalents provided                by                operating activities: |   |                                             |       |   |   |   |   |
| Amortization                of deferred debt issuance costs                                                                                         |   |                                             | 710,068    |   |   | 719,516 |   |
| Accretion                of discount of investments in trust preferred securities                                                                   |   |                                             | (628,925   | ) |   | (325,175 | ) |
| Minority                interest                                                                                                                    |   |                                             | 7,292,720  |   |   | 8,137,839 |   |
| Net                unrealized depreciation on investment transactions                                                                               |   |                                             | 1,764,499  |   |   | 274,594 |   |
| Net                change in operating assets and liabilities:                                                                                      |   |                                             |       |   |   |   |   |
| Investment                in trust preferred securities                                                                                             |   |                                             | 7,500,000  |   |   | 1,500,000 |   |
| Interest                receivable on trust preferred securities                                                                                    |   |                                             | (852,222   | ) |   | (829,660 | ) |
| Net                interest receivable from swap counterparty                                                                                       |   |                                             | (8,002     | ) |   | (20,150 | ) |
| Investment                in Trapeza Note I, LLC                                                                                                    |   |                                             | (411,105   | ) |   | (1,341,378 | ) |
| Prepaid                expenses                                                                                                                     |   |                                             | 363        |   |   | (1,219 | ) |
| Other                                                                                                                                               |   |                                             | (6,495     | ) |   | 10,138 |   |
| Interest                payable                                                                                                                     |   |                                             | 171,210    |   |   | 436,160 |   |
| Professional                fees                                                                                                                    |   |                                             | (7,723     | ) |   | 6,150 |   |
| Collateral                management fees                                                                                                           |   |                                             | −    |   |   | (375 | ) |
| Trustee                fees                                                                                                                         |   |                                             | −    |   |   | (46 | ) |
| Minority                interest                                                                                                                    |   |                                             | (7,147,324 | ) |   | (6,723,018 | ) |
| Net                cash and cash equivalents provided by operating activities                                                                       |   |                                             | 10,084,324 |   |   | 3,731,595 |   |
| **Cash                flows from financing activities**                                                                                             |   |                                             |       |   |   |   |   |
| Principal                payments on notes                                                                                                          |   |                                             | (579,018   | ) |   | (1,591,488 | ) |
| Distributions                to partners                                                                                                            |   |                                             | (1,670,868 | ) |   | (1,573,761 | ) |
| Net                cash and cash equivalents used in financing activities                                                                           |   |                                             | (2,249,886 | ) |   | (3,165,249 | ) |
|                                                                                                                                                |   |                                             |       |   |   |   |   |
| Net                increase in cash and cash equivalents                                                                                            |   |                                             | 7,834,438  |   |   | 566,346 |   |
| Cash                and cash equivalents, beginning of year                                                                                         |   |                                             | 4,086,160  |   |   | 3,519,814 |   |
| Cash                and cash equivalents, end of year                                                                                               |   | $                                                | 11,920,598 |   | $ | 4,086,160 |   |
| **Supplemental                disclosure of cash flow information**                                                                                 |   |                                             |       |   |   |   |   |
| Net                interest paid                                                                                                                    |   | $                                                | 18,452,850 |   | $ | 13,723,648 |   |

*See      accompanying notes to consolidated financial statements.*

*Back          to Part IV*

----

**UNAUDITED**

**Trapeza      Funding, LLC**

**Notes      to Consolidated Financial Statements**

**December 31,      2006**

| **1.** | **Organization                and Purpose** |
|--------|---------------------------------------------|

*Back          to Part IV*

----

**UNAUDITED**

**Trapeza      Funding, LLC**

**Notes      to Consolidated Financial Statements (continued)**

| **1.** | **Organization                  and Purpose (continued)** |
|--------|-----------------------------------------------------------|

| **2.** | **Summary                of Significant Accounting                Policies** |
|--------|------------------------------------------------------------------------------|

**Basis      of Accounting**

**Cash      and Cash Equivalents**

**Investment      Transactions **

*Back          to Part IV*

----

**UNAUDITED**

**Trapeza        Funding, LLC**

**Notes        to Consolidated Financial Statements (continued)**

| **2.** | **Summary                      of Significant Accounting Policies                      (continued)** |
|--------|------------------------------------------------------------------------------------------------------|

**Investment      Valuation**

**Credit      Risks and General Liquidity Considerations**

**Allocation      of Profits and Losses**

*Back          to Part IV*

----

**UNAUDITED**

**Trapeza        Funding, LLC**

**Notes        to Consolidated Financial Statements (continued)**

| **2.** | **Summary                        of Significant Accounting Policies                        (continued)** |
|--------|----------------------------------------------------------------------------------------------------------|

**Allocation              of Profits and Losses (continued)**

**Taxation**

**Use              of Estimates**

*Back          to Part IV*

----

**UNAUDITED**

**Trapeza      Funding, LLC**

**Notes      to Consolidated Financial Statements (continued)**

| **3.** | **Contributions,                Withdrawals and                Distributions** |
|--------|--------------------------------------------------------------------------------|

| **4.** | **Issuer                I** |
|--------|-----------------------------|

**Deferred      Debt Issuance Costs**

*Back          to Part IV*

----

**UNAUDITED**

**Trapeza        Funding, LLC**

**Notes        to Consolidated Financial Statements (continued)**

| **4.** | **Issuer                  I (continued)** |
|--------|-------------------------------------------|

**Collateral      Management and Trustee Fees **

*Back          to Part IV*

----

**UNAUDITED**

**Trapeza          Funding, LLC**

**Notes          to Consolidated Financial Statements (continued)**

| **4.** | **Issuer                    I (continued)** |
|--------|---------------------------------------------|

**Notes      Payable**

|                           |   | **2006**      |        | **2005**      |   |                             |   |                               |                                                                                                                                                                       |
|--------------------------------|--------|---------------|-------------|---------------|--------|----------------------------------|--------|------------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                           |   | **Principal** |        | **Principal** |   | **Interest                Rate** |   | **Stated                Maturity** |                                                                                                                                                                       |
| Class                A-1 Notes |   | $             | 160,129,324 |          | $      | 160,129,324                      |   |                               | For                the period to but excluding the distribution date in November 2012,                Libor                + 0.78%; at all times thereafter, Libor + 1.28% |   |   | November                30, 2032 |   |
|                           |   |          |        |          |   |                             |   |                               |                                                                                                                                                                       |   |   |   |   |
| Class                A-2 Notes |   | $             | 19,830,257  |          | $      | 19,830,257                       |   |                               | For                the period to but excluding the distribution date in November 2012,                4.974%; at all times thereafter, 5.474%                              |   |   | November                30, 2032 |   |
|                           |   |          |        |          |   |                             |   |                               |                                                                                                                                                                       |   |   |   |   |
| Class                B-1 Notes |   | $             | 54,600,000  |          | $      | 54,600,000                       |   |                               | See                Class B-1 note                                                                                                                                          |   |   | November                30, 2032 |   |
|                           |   |          |        |          |   |                             |   |                               |                                                                                                                                                                       |   |   |   |   |
| Class                B-2 Notes |   | $             | 2,000,000   |          | $      | 2,000,000                        |   |                               | Libor                + 1.20%                                                                                                                                               |   |   | November                30, 2032 |   |
|                           |   |          |        |          |   |                             |   |                               |                                                                                                                                                                       |   |   |   |   |
| Class                B-3 Notes |   | $             | 16,000,000  |          | $      | 16,000,000                       |   |                               | 5.932%                                                                                                                                                                     |   |   | November                30, 2032 |   |
|                           |   |          |        |          |   |                             |   |                               |                                                                                                                                                                       |   |   |   |   |
| Class                C-1 Notes |   | $             | 29,600,000  |          | $      | 29,600,000                       |   |                               | Libor                + 1.80%                                                                                                                                               |   |   | November                30, 2032 |   |
|                           |   |          |        |          |   |                             |   |                               |                                                                                                                                                                       |   |   |   |   |
| Class                C-2 Notes |   | $             | 10,000,000  |          | $      | 10,000,000                       |   |                               | 6.482%                                                                                                                                                                     |   |   | November                30, 2032 |   |
|                           |   |          |        |          |   |                             |   |                               |                                                                                                                                                                       |   |   |   |   |
| Class                D Notes   |   | $             | 15,829,493  |          | $      | 16,408,511                       |   |                               | Libor                + 2.65%                                                                                                                                               |   |   | November                30, 2032 |   |

*Back          to Part IV*

----

**UNAUDITED**

**Trapeza            Funding, LLC**

**Notes            to Consolidated Financial Statements (continued)**

| **4.** | **Issuer                      I                      (continued)** |
|--------|--------------------------------------------------------------------|

**Interest      Payments **

**Principal      Payments **

*Principal      Turboing*

*Back          to Part IV*

----

**UNAUDITED**

**Trapeza            Funding, LLC**

**Notes            to Consolidated Financial Statements (continued)**

| **4.** | **Issuer                      I (continued)** |
|--------|-----------------------------------------------|

**Principal      Payments (continued)**

*Principal      Proceeds*

**Acceleration      of Maturity and Redemption**

*Back          to Part IV*

----

**UNAUDITED**

**Trapeza            Funding, LLC**

**Notes            to Consolidated Financial Statements (continued)**

| **4.** | **Issuer                      I (continued)** |
|--------|-----------------------------------------------|

**Acceleration      of Maturity and Redemption (continued)**

| **5.** | **Interest                    Rate Swap                    Agreements** |
|--------|-------------------------------------------------------------------------|

*Back          to Part IV*

----

**UNAUDITED**

**Trapeza        Funding, LLC**

**Notes        to Consolidated Financial Statements (continued)**

| **5.** | **Interest                            Rate Swap Agreements                            (continued)** |
|--------|-----------------------------------------------------------------------------------------------------|

|                         |   |         |     | **Floating                Rate** |   | **Rate                Paid**          |   | **December                31** |                                 |
|------------------------------|--------|--------------|----------|----------------------------------|--------|---------------------------------------|--------|--------------------------------|--------------------------------------|
| **Notional**                 |   | **Maturity** |     | **Received                by**   |   | **by                the**             |   | **2006**                       |                                 | **2005** |   |
| **Amount**                   |   | **Date**     |     | **the                Company**   |   | **Company**                           |   | **Fair                Value**  |                                 | **Fair                Value** |   |
| $   2,000,000 |   |         | 11/30/07 |                             |   | 6                month Libor + 3.41%  |   |                           | 6.92%                                |   | $ | 34,770 |   | $ | 47,912 |   |
| $                10,000,000  |   |         | 11/30/07 |                             |   | 6                month Libor + 3.37%  |   |                           | 6.95%                                |   |   | 167,003 |   |   | 226,130 |   |
| $                54,600,000  |   |         | 11/30/12 |                             |   | 1                month Libor + 1.015% |   |                           | 6                month Libor + 1.05% |   |   | (339,423 | ) |   | (317,582 | ) |
|                         |   |         |     |                             |   |                                  |   |                           |                                 |   | $ | (137,650 | ) | $ | (43,540 | ) |

| **6.** | **Related                        Party                        Transactions** |
|--------|------------------------------------------------------------------------------|

*Back          to Part IV*

----

*Back          to Part IV*

----

**UNAUDITED**

**Trapeza      Funding, LLC**

**Consolidating      Statement of Financial Condition**

**December 31,      2006**

|                                                                                                                             | **Trapeza****Funding,                LLC** |    | **Trapeza****Partners                L.P.****Consolidated** |   | **Total**   |   | **Eliminations** |        | **Trapeza****Funding,                LLC****Consolidated** |   |
|----------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------|---------|-------------------------------------------------------------|--------|-------------|--------|------------------|-------------|------------------------------------------------------------|--------|
| **Assets**                                                                                                                       |                                       |    |                                                        |   |        |   |             |        |                                                       |   |
| Investments                in trust preferred securities, at fair value (amortized                  cost $312,292,743) | $                                          | − |                                                        | $      | 314,978,303 |   | $                | 314,978,303 |                                                       | $      | − |   | $ | 314,978,303 |   |
| Cash                and cash equivalents                                                                                         |                                       | 19,835  |                                                        |   | 11,900,763  |   |             | 11,920,598  |                                                       |   | − |   |   | 11,920,598 |   |
| Investment                in Trapeza Note I, LLC                                                                                 |                                       | − |                                                        |   | 9,304,230   |   |             | 9,304,230   |                                                       |   | − |   |   | 9,304,230 |   |
| Deferred                debt issuance costs (net of accumulated amortization of                    $2,928,168)    |                                       | − |                                                        |   | 5,215,721   |   |             | 5,215,721   |                                                       |   | − |   |   | 5,215,721 |   |
| Interest                receivable on trust preferred securities                                                                 |                                       | − |                                                        |   | 4,881,532   |   |             | 4,881,532   |                                                       |   | − |   |   | 4,881,532 |   |
| Net                interest receivable from swap counterparty                                                                    |                                       | − |                                                        |   | 18,456      |   |             | 18,456      |                                                       |   | − |   |   | 18,456 |   |
| Prepaid                expenses                                                                                                  |                                       | − |                                                        |   | 4,547       |   |             | 4,547       |                                                       |   | − |   |   | 4,547 |   |
| Other                                                                                                                            |                                       | − |                                                        |   | 7,743       |   |             | 7,743       |                                                       |   | − |   |   | 7,743 |   |
| Investment                in Trapeza Partners I L.P.                                                                             |                                       | 693,531 |                                                        |   | −     |   |             | 693,531     |                                                       |   | (693,531 | ) |   | − |   |
| Total                Assets                                                                                                      | $                                          | 713,366 |                                                        | $      | 346,311,295 |   | $                | 347,024,661 |                                                       | $      | (693,531 | ) | $ | 346,331,130 |   |
| **Liabilities                and Partners’ Capital/Members’ Interest**                                               |                                       |    |                                                        |   |        |   |             |        |                                                       |   |   |   |   |   |   |
| Liabilities                                                                                                                      |                                       |    |                                                        |   |        |   |             |        |                                                       |   |   |   |   |   |   |
| Class                A-1 Notes                                                                                                   | $                                          | − |                                                        | $      | 160,129,324 |   | $                | 160,129,324 |                                                       | $      | − |   | $ | 160,129,324 |   |
| Class                A-2 Notes                                                                                                   |                                       | − |                                                        |   | 19,830,257  |   |             | 19,830,257  |                                                       |   | − |   |   | 19,830,257 |   |
| Class                B-1 Notes                                                                                                   |                                       | − |                                                        |   | 54,600,000  |   |             | 54,600,000  |                                                       |   | − |   |   | 54,600,000 |   |
| Class                B-2 Notes                                                                                                   |                                       | − |                                                        |   | 2,000,000   |   |             | 2,000,000   |                                                       |   | − |   |   | 2,000,000 |   |
| Class                B-3 Notes                                                                                                   |                                       | − |                                                        |   | 16,000,000  |   |             | 16,000,000  |                                                       |   | − |   |   | 16,000,000 |   |
| Class                C-1 Notes                                                                                                   |                                       | − |                                                        |   | 29,600,000  |   |             | 29,600,000  |                                                       |   | − |   |   | 29,600,000 |   |
| Class                C-2 Notes                                                                                                   |                                       | − |                                                        |   | 10,000,000  |   |             | 10,000,000  |                                                       |   | − |   |   | 10,000,000 |   |
| Class                D Notes                                                                                                     |                                       | − |                                                        |   | 15,829,493  |   |             | 15,829,493  |                                                       |   | − |   |   | 15,829,493 |   |
| Interest                payable                                                                                                  |                                       | − |                                                        |   | 1,665,036   |   |             | 1,665,036   |                                                       |   | − |   |   | 1,665,036 |   |
| Unrealized                depreciation on swap agreements                                                                        |                                       | − |                                                        |   | 137,650     |   |             | 137,650     |                                                       |   | − |   |   | 137,650 |   |
| Professional                fees                                                                                                 |                                       | 13,403  |                                                        |   | 74,220      |   |             | 87,623      |                                                       |   | − |   |   | 87,623 |   |
| Collateral                management fees                                                                                        |                                       | − |                                                        |   | 80,995      |   |             | 80,995      |                                                       |   | − |   |   | 80,995 |   |
| Trustee                fees                                                                                                      |                                       | − |                                                        |   | 11,546      |   |             | 11,546      |                                                       |   | − |   |   | 11,546 |   |
| Accrued                expenses                                                                                                  |                                       | − |                                                        |   | 41,250      |   |             | 41,250      |                                                       |   | − |   |   | 41,250 |   |
| Total                Liabilities                                                                                                 |                                       | 13,403  |                                                        |   | 309,999,771 |   |             | 310,013,174 |                                                       |   | − |   |   | 310,013,174 |   |
| Minority                interest                                                                                                 |                                       | − |                                                        |   | 6,017,363   |   |             | 6,017,363   |                                                       |   | 29,600,630 |   |   | 35,617,993 |   |
| Partners’                Capital/Members’ Interests                                                                  |                                       |    |                                                        |   |        |   |             |        |                                                       |   |   |   |   |   |   |
| General                Partner                                                                                                   |                                       | − |                                                        |   | 693,531     |   |             | 693,531     |                                                       |   | (693,531 | ) |   | − |   |
| Limited                Partners                                                                                                  |                                       | − |                                                        |   | 29,600,630  |   |             | 29,600,630  |                                                       |   | (29,600,630 | ) |   | − |   |
| Members’                Interests                                                                                          |                                       | 699,963 |                                                        |   | −     |   |             | 699,963     |                                                       |   | − |   |   | 699,963 |   |
| Total                Partners’ Capital/Members’ Interests                                                            |                                       | 699,963 |                                                        |   | 30,294,161  |   |             | 30,994,124  |                                                       |   | (30,294,161 | ) |   | 699,963 |   |
| Total                Liabilities and Partners’ Capital/Members’ Interests                                            | $                                          | 713,366 |                                                        | $      | 346,311,295 |   | $                | 347,024,661 |                                                       | $      | (693,531 | ) | $ | 346,331,130 |   |

*Back          to Part IV*

----

**UNAUDITED**

**Trapeza      Funding, LLC**

**Consolidating      Statement of Operations**

**December 31,      2006**

|                                                                                | **Trapeza****Funding,                LLC** |      | **Trapeza****Partners                L.P. Consolidated** |   |  **Total** |   |  **Eliminations** |       | **Trapeza                Funding, LLC Consolidated** |   |
|-------------------------------------------------------------------------------------|--------------------------------------------|-----------|----------------------------------------------------------|--------|-----------------|--------|------------------------|------------|------------------------------------------------------|--------|
| **Investment                income**                                                |                                       |      |                                                     |   |            |   |                   |       |                                                 |   |
| Interest                                                                            | $                                          | −   |                                                     | $      | 29,229,081      |   | $                      | 29,229,081 |                                                 | $      | − |   | $ | 29,229,081 |   |
| Equity                in earnings of Trapeza Note I, LLC                            |                                       | −   |                                                     |   | 2,169,846       |   |                   | 2,169,846  |                                                 |   | − |   |   | 2,169,846 |   |
| Incentive                allocation                                                 |                                       | 1,423,644 |                                                     |   | −         |   |                   | 1,423,644  |                                                 |   | (1,423,644 | ) |   | − |   |
| Other                                                                               |                                       | 28        |                                                     |   | −         |   |                   | 28         |                                                 |   | (28 | ) |   | − |   |
| Administration                fee income                                            |                                       | 373,551   |                                                     |   | −         |   |                   | 373,551    |                                                 |   | (373,551 | ) |   | − |   |
| **Total                investment income**                                          |                                       | 1,797,223 |                                                     |   | 31,398,927      |   |                   | 33,196,150 |                                                 |   | (1,797,223 | ) |   | 31,398,927 |   |
| **Expenses**                                                                        |                                       |      |                                                     |   |            |   |                   |       |                                                 |   |   |   |   |   |   |
| Interest                                                                            |                                       | −   |                                                     |   | 18,616,059      |   |                   | 18,616,059 |                                                 |   | − |   |   | 18,616,059 |   |
| Collateral                management fees                                           |                                       | −   |                                                     |   | 809,948         |   |                   | 809,948    |                                                 |   | − |   |   | 809,948 |   |
| Amortization                of deferred debt issuance costs                         |                                       | −   |                                                     |   | 710,068         |   |                   | 710,068    |                                                 |   | − |   |   | 710,068 |   |
| Trustee                fees                                                         |                                       | −   |                                                     |   | 121,440         |   |                   | 121,440    |                                                 |   | − |   |   | 121,440 |   |
| Professional                fees                                                    |                                       | 19,112    |                                                     |   | 101,389         |   |                   | 120,501    |                                                 |   | − |   |   | 120,501 |   |
| Administration                fees                                                  |                                       | 67,253    |                                                     |   | 373,551         |   |                   | 440,804    |                                                 |   | (373,551 | ) |   | 67,253 |   |
| Taxes                                                                               |                                       | 3,334     |                                                     |   | −         |   |                   | 3,334      |                                                 |   | − |   |   | 3,334 |   |
| Other                                                                               |                                       | 264       |                                                     |   | 185,581         |   |                   | 185,845    |                                                 |   | − |   |   | 185,845 |   |
| Total                expenses                                                       |                                       | 89,963    |                                                     |   | 20,918,036      |   |                   | 21,007,999 |                                                 |   | (373,551 | ) |   | 20,634,448 |   |
| **Net                investment income**                                            |                                       | 1,707,260 |                                                     |   | 10,480,891      |   |                   | 12,188,151 |                                                 |   | (1,423,672 | ) |   | 10,764,479 |   |
| Net                unrealized depreciation on investment transactions               |                                       |      |                                                     |   |            |   |                   |       |                                                 |   |   |   |   |   |   |
|   Investments                in                trust preferred securities |                                       | −   |                                                     |   | (1,670,389      | )      |                   | (1,670,389 | )                                                    |   | − |   |   | (1,670,389 | ) |
|   Interest                rate swap                agreements             |                                       | −   |                                                     |   | (94,110         | )      |                   | (94,110    | )                                                    |   | − |   |   | (94,110 | ) |
| Net                unrealized depreciation on investment transactions               |                                       | −   |                                                     |   | (1,764,499      | )      |                   | (1,764,499 | )                                                    |   | − |   |   | (1,764,499 | ) |
|                                                                                |                                       |      |                                                     |   |            |   |                   |       |                                                 |   |   |   |   |   |   |
| Net                income before minority interest                                  |                                       | 1,707,260 |                                                     |   | 8,716,392       |   |                   | 10,423,652 |                                                 |   | (1,423,672 | ) |   | 8,999,980 |   |
| Minority                interest                                                    |                                       | −   |                                                     |   | 1,598,145       |   |                   | 1,598,145  |                                                 |   | 5,694,575 |   |   | 7,292,720 |   |
| **Net                income**                                                       | $                                          | 1,707,260 |                                                     | $      | 7,118,247       |   | $                      | 8,825,507  |                                                 | $      | (7,118,247 | ) | $ | 1,707,260 |   |

*Back          to Part IV*

----

**Schedule      (b)**

**UNAUDITED**

**Trapeza      Funding II, LLC**

**Consolidated      Financial Statements (Unaudited)**

**Years      ended December 31, 2006 and 2005 **

*Back          to Part IV*

----

**UNAUDITED**

**Trapeza      Funding II, LLC**

**Consolidated      Financial Statements**

**Years      ended December 31, 2006 and 2005**

**Contents**

| Consolidated                Financial Statements                              |   |
|-------------------------------------------------------------------------------|--------|
| Consolidated                Statements of Financial Condition                 | 2      |
| Consolidated                Schedules of Investments                          | 3      |
| Consolidated                Statements of Operations                          | 6      |
| Consolidated                Statements of Changes in Members’ Interests | 7      |
| Consolidated                Statements of Cash Flows                          | 8      |
| Notes                to Consolidated Financial Statements                     | 9      |
|                                                                          |   |
| Other                Financial Information                                    |   |
| Consolidating                Statement of Financial Condition                 | 27     |
| Consolidating                Statement of Operations                          | 28     |

*Back          to Part IV*

----

**UNAUDITED**

**Trapeza      Funding II, LLC**

**Consolidated      Statements of Financial Condition**

|                                                                                                                                     |   | **December 31** |        |
|------------------------------------------------------------------------------------------------------------------------------------------|--------|----------------------|-------------|
|                                                                                                                                     |   | **2006**             |        | **2005** |   |
| **Assets**                                                                                                                               |   |                 |        |   |   |
| Investments                in trust preferred securities, at fair value (amortized cost $680,566,011                and $689,352,865)    |   | $                    | 684,272,551 |   | $ | 694,986,541 |   |
| Cash                and cash equivalents                                                                                                 |   |                 | 33,006,291  |   |   | 19,627,097 |   |
| Deferred                debt issuance costs (net of accumulated amortization of $5,618,421                and                $4,119,838) |   |                 | 12,376,270  |   |   | 13,874,853 |   |
| Unrealized                appreciation on swap agreements                                                                                |   |                 | 5,252,592   |   |   | 5,865,799 |   |
| Interest                receivable on trust preferred securities                                                                         |   |                 | 4,498,164   |   |   | 4,189,666 |   |
| Net                interest receivable from swap counterparty                                                                            |   |                 | 1,353,765   |   |   | 436,729 |   |
| Prepaid                expenses                                                                                                          |   |                 | 27,451      |   |   | 25,960 |   |
| Total                Assets                                                                                                              |   | $                    | 740,787,084 |   | $ | 739,006,645 |   |
|                                                                                                                                     |   |                 |        |   |   |   |   |
| **Liabilities                and Members’ Interests**                                                                              |   |                 |        |   |   |   |   |
| Liabilities                                                                                                                              |   |                 |        |   |   |   |   |
| Class                A1A Notes                                                                                                           |   | $                    | 238,996,446 |   | $ | 238,996,446 |   |
| Class                A1B Notes                                                                                                           |   |                 | 171,500,000 |   |   | 171,500,000 |   |
| Class                B Notes                                                                                                             |   |                 | 52,000,000  |   |   | 52,000,000 |   |
| Class                C-1 Notes                                                                                                           |   |                 | 74,750,000  |   |   | 74,750,000 |   |
| Class                C-2 Notes                                                                                                           |   |                 | 86,050,000  |   |   | 86,050,000 |   |
| Class                D Notes                                                                                                             |   |                 | 29,523,828  |   |   | 31,709,797 |   |
| Class                E Notes                                                                                                             |   |                 | 3,428,569   |   |   | 4,285,713 |   |
| Class                BB Notes                                                                                                            |   |                 | 5,000,000   |   |   | 6,428,571 |   |
| Interest                payable                                                                                                          |   |                 | 13,905,741  |   |   | 11,232,196 |   |
| Collateral                management fees                                                                                                |   |                 | 590,570     |   |   | 590,570 |   |
| Professional                fees                                                                                                         |   |                 | 149,454     |   |   | 158,859 |   |
| Trustee                fees                                                                                                              |   |                 | 68,142      |   |   | 68,142 |   |
| Accrued                expenses                                                                                                          |   |                 | 111,667     |   |   | 111,667 |   |
| Total                Liabilities                                                                                                         |   |                 | 676,074,417 |   |   | 677,881,961 |   |
|                                                                                                                                     |   |                 |        |   |   |   |   |
| Minority                interest                                                                                                         |   |                 | 61,054,588  |   |   | 58,161,400 |   |
|                                                                                                                                     |   |                 |        |   |   |   |   |
| Members’                Interests                                                                                                  |   |                 | 3,658,079   |   |   | 2,963,284 |   |
| Total                Liabilities and Members’ Interests                                                                            |   | $                    | 740,787,084 |   | $ | 739,006,645 |   |

*See      accompanying notes to consolidated financial statements.*

*Back          to Part IV*

----

**UNAUDITED**

**Trapeza      Funding II, LLC**

**Consolidated      Schedules of Investments**

|                                                                                                                                       | **December                31, 2006** |   | **December                31, 2005** |   |
|--------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------|--------|--------------------------------------|--------|
|                                                                                                                                       | **Principal****Amount****(000)**     |   | **Fair                Value**        |   | **Principal****Amount****(000)** |   | **Fair                Value** |   |
| Investments                in Trust Preferred Securities - (100%) *                                                                        |                                 |   |                                 |   |   |   |   |   |
| Banks                (79.99% and 80.30%)*                                                                                                  |                                 |   |                                 |   |   |   |   |   |
| B.P.C.                Corp Statutory Trust I, 3ML+ 3.250%, callable 6/18/2008, due 6/18/2033                (a)                            | $                                    | 3,000  |                                 | $      | 3,000,000 |   | $ | 3,000 |   | $ | 3,000,000 |   |
| Bank                of Kentucky Capital Trust I, 3ML +3.350%, callable 11/15/2007, due                11/14/2032 (a)                       |                                 | 6,000  |                                 |   | 6,000,666 |   |   | 6,000 |   |   | 6,000,674 |   |
| Benjamin                Franklin Capital Trust I, 6.940%, callable 11/15/2007, due 11/01/2032                (a)                           |                                 | 9,000  |                                 |   | 8,931,600 |   |   | 9,000 |   |   | 8,930,681 |   |
| BNC                Bancorp Capital Trust I, 3ML+ 3.250%, callable 4/15/2008, due 4/15/2033                (a)                              |                                 | 5,000  |                                 |   | 4,952,739 |   |   | 5,000 |   |   | 4,952,173 |   |
| Catawba                Valley Capital Trust I, 3 ML + 3.350%, callable 12/30/2007, due 12/30/2032                (a)                       |                                 | 5,000  |                                 |   | 4,947,523 |   |   | 5,000 |   |   | 4,946,927 |   |
| Catawba                Valley Capital Trust II, 6.850%, callable 12/30/2007, due 12/30/2032                (a)                             |                                 | 5,000  |                                 |   | 4,947,036 |   |   | 5,000 |   |   | 4,946,318 |   |
| Cathay                Capital Trust I, 3ML+ 3.150%, callable 6/30/2008, due 6/30/2033                (a)                                   |                                 | 6,550  |                                 |   | 6,550,000 |   |   | 6,550 |   |   | 6,550,000 |   |
| Century                Bancshares Capital Trust I, 6.850%, callable 1/15/2008, due 1/15/2033                (a)                            |                                 | 3,000  |                                 |   | 3,003,344 |   |   | 3,000 |   |   | 3,003,389 |   |
| Colonial                Capital II, 8.920%, callable 1/29/2007, due 1/15/2027                                                              |                                 | 10,500 |                                 |   | 10,946,250 |   |   | 10,500 |   |   | 11,303,996 |   |
| Community                Bankshares Capital Trust IV, 6ML+ 3.300%, callable 4/15/2008, due                4/15/2033 (a)                    |                                 | 5,000  |                                 |   | 5,013,295 |   |   | 5,000 |   |   | 5,013,447 |   |
| Corus                Statutory Trust II, 3ML+ 3.100%, callable 6/30/2008, due 6/30/2033                (a)                                 |                                 | 9,000  |                                 |   | 8,932,953 |   |   | 9,000 |   |   | 8,932,198 |   |
| CPB                Capital Trust I, 3ML+ 3.250%, callable 4/7/2008, due 4/7/2033                (a)                                        |                                 | 5,000  |                                 |   | 5,000,000 |   |   | 5,000 |   |   | 5,000,000 |   |
| F.N.B                Statutory Trust I, 3ML + 3.250%, callable 3/31/2008, due 3/31/2033                (a)                                 |                                 | 22,330 |                                 |   | 22,330,000 |   |   | 22,330 |   |   | 22,330,000 |   |
| FBOP                Capital Trust XII, 6ML + 3.625%, callable 7/30/2007, due 7/30/2032                (a)                                  |                                 | 1,000  |                                 |   | 1,000,000 |   |   | 1,000 |   |   | 1,000,000 |   |
| FBOP                Capital Trust XV, 6ML+ 3.625%, callable 12/15/2007, due 12/15/2032                (a)                                  |                                 | 14,000 |                                 |   | 14,000,000 |   |   | 14,000 |   |   | 14,000,000 |   |
| FBR                Capital Trust I, 3ML+ 3.250%, callable 6/30/2008, due 3/30/2033                (a)                                      |                                 | 19,000 |                                 |   | 18,856,494 |   |   | 19,000 |   |   | 18,854,879 |   |
| First                Banks Statutory Trust I, 8.100%, callable 3/20/2008, due 3/20/2033                (a)                                 |                                 | 21,000 |                                 |   | 21,000,000 |   |   | 21,000 |   |   | 21,000,000 |   |
| First                Financial Statutory Trust II, 3ML+ 3.100%, callable 9/30/2008, due                9/30/2033 (a)                       |                                 | 9,000  |                                 |   | 9,000,000 |   |   | 9,000 |   |   | 9,000,000 |   |
| First                Group Capital Statutory Trust III, 3ML+ 3.350%, callable 11/15/2007,                due                11/15/2032 (a) |                                 | 5,000  |                                 |   | 5,039,029 |   |   | 5,000 |   |   | 5,039,490 |   |
| First                Group Capital Statutory Trust V, 3ML+ 3.250%, callable 4/15/2008,                due                4/15/2033 (a)     |                                 | 15,000 |                                 |   | 15,094,228 |   |   | 15,000 |   |   | 15,095,357 |   |
| First                Indiana Capital Trust I, 6.920%, callable 10/30/2007, due 10/30/2032                (a)                               |                                 | 10,000 |                                 |   | 9,991,843 |   |   | 10,000 |   |   | 9,991,732 |   |
| First                Mutual Capital Trust II, 6.870%, callable 1/15/2008, due 1/15/2033                (a)                                 |                                 | 4,000  |                                 |   | 3,955,578 |   |   | 4,000 |   |   | 3,954,982 |   |
| First                National Bank Group Inc, 6.580%, callable 4/7/2008, due 4/7/2013                (a)                                   |                                 | 8,500  |                                 |   | 8,316,920 |   |   | 8,500 |   |   | 8,314,391 |   |
| First                South Bancorp Statutory Trust I, 3ML+ 3.250%, callable 6/9/2008,                due                6/9/2033 (a)       |                                 | 9,000  |                                 |   | 9,000,000 |   |   | 9,000 |   |   | 9,000,000 |   |
| First                Southern Bancorp Statutory Trust I, 3ML+ 3.250%, callable 2/19/2008,                due                2/19/2033 (a)  |                                 | 11,000 |                                 |   | 11,000,000 |   |   | 11,000 |   |   | 11,000,000 |   |
| FNB/MT                Statutory II, 3ML+ 3.250%, callable 5/30/2008, due 5/30/2033                (a)                                      |                                 | 5,000  |                                 |   | 4,996,672 |   |   | 5,000 |   |   | 4,996,634 |   |
| Franklin                Bancorp Capital Trust I, 3ML+ 3.250%, callable 2/28/2008, due 2/25/2033                (a)                         |                                 | 7,000  |                                 |   | 6,932,918 |   |   | 7,000 |   |   | 6,932,138 |   |
| GB&T                Bancshares Statutory Trust I, 3ML+ 3.400%, callable 10/30/2007, due                10/30/2032 (a)                  |                                 | 4,000  |                                 |   | 4,000,000 |   |   | 4,000 |   |   | 4,000,000 |   |
| Guaranty                (TX) Capital Trust II, 7.940%, callable 10/30/2012, due 10/30/2032                (a)                              |                                 | 3,000  |                                 |   | 3,000,481 |   |   | 3,000 |   |   | 3,000,487 |   |
| Hanmi                Capital Trust II, 3ML+ 2.90%m, callable 3/15/2009, due 3/15/2034                (a)                                   |                                 | 5,301  |                                 |   | 5,301,000 |   |   | 5,301 |   |   | 5,301,000 |   |
| Hudson                United Capital Trust I, 6.850%, callable 3/30/2008, due 3/31/2033                (a)                                 |                                 | 20,000 |                                 |   | 19,931,743 |   |   | 20,000 |   |   | 19,930,843 |   |
| IBC                Capital Financial II, 8.250%, callable 3/1/2008, due 12/31/2026                (a)                                      |                                 | 300    |                                 |   | 300,000 |   |   | 300 |   |   | 300,000 |   |
| Iberiabank                Statutory Trust II, 3ML+ 3.150%, callable 6/17/2008, due 6/17/2033                (a)                            |                                 | 9,000  |                                 |   | 9,040,804 |   |   | 9,000 |   |   | 9,041,262 |   |
| ITLA                Capital Statutory Trust III, 6ML+ 3.400%, callable 10/30/2007, due                10/30/2032 (a)                       |                                 | 9,000  |                                 |   | 8,922,641 |   |   | 9,000 |   |   | 8,921,743 |   |
| ITLA                Capital Statutory Trust IV, 6ML+ 3.400%, callable 12/15/2007, due                12/10/2032 (a)                        |                                 | 4,330  |                                 |   | 4,293,041 |   |   | 4,330 |   |   | 4,292,636 |   |
| Lakeland                Bancorp Capital Trust II, 5.710%, callable 6/30/2008, due 6/30/2033                (a)                             |                                 | 9,000  |                                 |   | 8,960,834 |   |   | 9,000 |   |   | 8,960,218 |   |
| Macatawa                Statutory Trust I, 3ML+ 3.050%, callable 7/15/2008, due 7/15/2033                (a)                               |                                 | 9,000  |                                 |   | 9,000,000 |   |   | 9,000 |   |   | 9,000,000 |   |
| Main                Street Banks Statutory Trust II, 3ML + 3.250%, callable 6/30/2008,                due                6/30/2033 (a)     |                                 | 9,000  |                                 |   | 9,000,000 |   |   | 9,000 |   |   | 9,000,000 |   |
| MainSource                Statutory Trust II, 3ML+ 3.250%, callable 4/1/2008, due 4/1/2033                (a)                              |                                 | 14,000 |                                 |   | 14,000,000 |   |   | 14,000 |   |   | 14,000,000 |   |
| MainSource                Statutory Trust III, 3ML+ 3.150%, callable 6/15/2008, due 6/15/2033                (a)                           |                                 | 7,000  |                                 |   | 6,988,130 |   |   | 7,000 |   |   | 6,987,995 |   |
| Mariner                Capital Trust II, 3ML + 3.350%, callable 12/15/2007, due 12/10/2032                (a)                              |                                 | 6,000  |                                 |   | 5,944,429 |   |   | 6,000 |   |   | 5,943,794 |   |
| MBNA                Capital B, 3ML+ 0.800%, callable 2/1/2007, due 2/1/2027                                                                |                                 | 7,000  |                                 |   | 6,973,750 |   |   | 7,000 |   |   | 6,860,000 |   |

*             See accompanying notes to consolidated financial statements.*

*Back            to Part IV*

----

**UNAUDITED**

**Trapeza      Funding II, LLC**

**Consolidated      Schedules of Investments (continued)**

|                                                                                                                                                                  | **December                31, 2006** |    | **December                31, 2005** |   |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------|---------|--------------------------------------|--------|
|                                                                                                                                                                  | **Principal****Amount****(000)**     |    | **Fair                Value**        |   | **Principal****Amount****(000)** |   | **Fair                Value** |   |
| Investments                in Trust Preferred Securities - (100%) *                                                                                                   |                                 |    |                                 |   |   |   |   |   |
| Banks                (79.99% and 80.30%)*                                                                                                                             |                                 |    |                                 |   |   |   |   |   |
| Merchants                & Manufacturers Statutory Trust I, 3ML+ 3.350%, callable 11/12/2007,                                   due 11/12/2032 (a) | $                                    | 2,000   |                                 | $      | 2,000,000 |   | $ | 2,000 |   | $ | 2,000,000 |   |
| Merchants                and Manufacturers Statutory Trust II, 8.250%, callable 5/30/2008,                                   due 5/30/2033 (a)         |                                 | 9,000   |                                 |   | 9,000,000 |   |   | 9,000 |   |   | 9,000,000 |   |
| Mystic                Financial Capital Trust II, 3ML+ 3.250%, callable 2/15/2008, due                2/15/2033                (a)                                    |                                 | 7,000   |                                 |   | 6,925,402 |   |   | 7,000 |   |   | 6,924,525 |   |
| Nara                Capital Trust III, 3ML+ 3.150%, callable 6/15/2008, due 6/15/2033                (a)                                                              |                                 | 5,000   |                                 |   | 4,972,924 |   |   | 5,000 |   |   | 4,972,617 |   |
| New                Mexico Banquest Capital Trust I, 3ML + 3.350%, callable 12/30/2007,                due                12/19/2032 (a)                               |                                 | 9,000   |                                 |   | 9,064,792 |   |   | 9,000 |   |   | 9,065,528 |   |
| North                American Capital Trust I, 3ML+ 3.35%, callable 11/15/2007, due 11/15/2032                (a)                                                     |                                 | 5,000   |                                 |   | 5,117,086 |   |   | 5,000 |   |   | 5,118,470 |   |
| Northrim                Capital Trust I, 3ML+ 3.150%, callable 5/15/2008, due 5/15/2033                (a)                                                            |                                 | 8,000   |                                 |   | 7,918,384 |   |   | 8,000 |   |   | 7,917,428 |   |
| Old                Second Capital I, 7.800%, callable 6/30/2008, due 6/30/2033                (a)                                                                     |                                 | 1,500   |                                 |   | 1,500,000 |   |   | 1,500 |   |   | 1,500,000 |   |
| Orion                Bancorp Inc Statutory Trust I, 3ML+ 3.250%, callable 5/5/2008, due                5/5/2033 (a)                                                   |                                 | 9,000   |                                 |   | 9,000,000 |   |   | 9,000 |   |   | 9,000,000 |   |
| Pacific                Crest Capital Trust I, 6.335%, callable 3/30/2008, due 3/20/2033                (a)                                                            |                                 | 13,330  |                                 |   | 13,480,820 |   |   | 13,330 |   |   | 13,483,006 |   |
| Pacific                Crest Capital Trust II, 6.580%, callable 4/30/2008, due 4/30/2033                (a)                                                           |                                 | 6,000   |                                 |   | 6,022,504 |   |   | 6,000 |   |   | 6,022,813 |   |
| Provident                Capital Trust I, 8.600%, callable 12/1/2006, due 12/1/2026                (b)                                                                |                                 | − |                                 |   | − |   |   | 9,395 |   |   | 10,052,650 |   |
| Provident                Trust I, 8.290%, callable 4/15/2008, due 4/15/2028                                                                                           |                                 | 6,500   |                                 |   | 6,467,500 |   |   | 6,500 |   |   | 6,890,000 |   |
| Red                River Statutory Trust II, 3ML+ 3.250%, callable 5/28/2008, due 5/28/2033                (a)                                                        |                                 | 3,000   |                                 |   | 3,000,000 |   |   | 3,000 |   |   | 3,000,000 |   |
| Seacoast                Capital Trust II, 6.650%, callable 4/7/2008, due 4/7/2033                (a)                                                                  |                                 | 5,000   |                                 |   | 5,000,000 |   |   | 5,000 |   |   | 5,000,000 |   |
| South                Financial Capital Trust II, 6ML+ 3.25%, callable 7/30/2007, due 7/30/2032                (a)                                                     |                                 | 6,500   |                                 |   | 6,438,633 |   |   | 6,500 |   |   | 6,437,868 |   |
| Southcoast                Capital Trust II, 3ML+ 3.350%, callable 12/30/2007, due 12/16/2032                (a)                                                       |                                 | 7,000   |                                 |   | 6,935,443 |   |   | 7,000 |   |   | 6,934,710 |   |
| State                National Capital Trust I, 3ML+ 3.050%, callable 9/30/2008, due 9/30/2033                (a)                                                      |                                 | 6,000   |                                 |   | 6,014,437 |   |   | 6,000 |   |   | 6,014,597 |   |
| Stearns                Financial Capital Trust, 3ML+ 3.150%, callable 3/30/2008, due 3/30/2033                (a)                                                     |                                 | 10,000  |                                 |   | 9,984,888 |   |   | 10,000 |   |   | 9,984,714 |   |
| Sterling                Bank Houston Texas, 7.375%, callable 4/15/2013, due 4/15/2013                (a)                                                              |                                 | 12,330  |                                 |   | 12,326,792 |   |   | 12,330 |   |   | 12,326,402 |   |
| Sterling                Bancshares Statutory Trust I, 3ML+ 3.450%, callable 8/30/2007, due                8/30/2032 (a)                                               |                                 | 10,000  |                                 |   | 10,000,000 |   |   | 10,000 |   |   | 10,000,000 |   |
| UCBH                Capital Trust II, 3ML+ 3.450%, callable 11/7/2007, due 11/7/2032                (a)                                                               |                                 | 9,000   |                                 |   | 9,000,000 |   |   | 9,000 |   |   | 9,000,000 |   |
| Umpqua                Statutory Trust II Units, 3ML+ 3.350%, callable 10/17/2007, due 10/17/2032                (a)                                                   |                                 | 9,000   |                                 |   | 8,889,196 |   |   | 9,000 |   |   | 8,887,855 |   |
| United                Bancorporation of Wyoming Capital Trust I, 3ML + 3.100%, callable                9/30/2008,                   due 9/30/2033 (a)  |                                 | 6,000   |                                 |   | 6,011,403 |   |   | 6,000 |   |   | 6,011,528 |   |
| VCBI                Capital Trust II, 6 month libor + 3.300%, callable 12/30/2007, due                12/19/2032 (a)                                                  |                                 | 1,670   |                                 |   | 1,660,032 |   |   | 1,670 |   |   | 1,659,921 |   |
| Virginia                Capital Trust II, 6 month libor + 3.300%, callable 12/30/2007, due                12/19/2032 (a)                                              |                                 | 13,330  |                                 |   | 13,250,843 |   |   | 13,330 |   |   | 13,249,962 |   |
| Wesbanco                Capital Trust II, 5.800%, callable 6/30/2008, due 6/30/2033                (a)                                                                |                                 | 9,000   |                                 |   | 8,985,830 |   |   | 9,000 |   |   | 8,985,611 |   |
| Woodforest                Statutory Trust IV, 3ML+ 3.250%, callable 3/3/2008, due 3/3/2033                (a)                                                         |                                 | 10,000  |                                 |   | 10,000,000 |   |   | 10,000 |   |   | 10,000,000 |   |
| Total                Banks (amortized cost $544,654,504 and $553,474,532)                                                                                             |                                 |    |                                 | $      | 547,362,850 |   |   |   |   | $ | 558,069,589 |   |

*See      accompanying notes to consolidated financial statements.*

*Back          to Part IV*

----

**UNAUDITED**

**Trapeza      Funding II, LLC**

**Consolidated      Schedules of Investments (continued)**

|                                                                                                                              |   | **December                31, 2006**         |   | **December                31, 2005** |   |
|-----------------------------------------------------------------------------------------------------------------------------------|--------|----------------------------------------------|--------|--------------------------------------|--------|
|                                                                                                                              |   | **Principal                Amount****(000)** |   | **Fair                Value**        |   | **Principal                Amount****(000)** |   |   **Fair                Value** |   |
| Investments                in Trust Preferred Securities - (100%) * (continued)                                                   |   |                                         |   |                                 |   |   |   |   |   |
| Thrifts                (20.01% and 19.70%)                                                                                        |   |                                         |   |                                 |   |   |   |   |   |
| BankUnited                Statutory Trust IV, 3ML+ 3.400%, callable 11/15/2007, due 11/15/2032                (a)                 |   | $                                            | 6,000  |                                 | $      | 6,000,000 |   | $ | 6,000 |   | $ | 6,000,000 |   |
| BBC                Capital Trust VI, 3ML+ 3.350%, callable 12/30/2007, due 12/10/2032                (a)                          |   |                                         | 15,000 |                                 |   | 14,865,654 |   |   | 15,000 |   |   | 14,864,128 |   |
| BBC                Capital Trust XII, 6.650%, callable 4/7/2008, due 4/7/2033                (a)                                  |   |                                         | 3,670  |                                 |   | 3,670,000 |   |   | 3,670 |   |   | 3,670,000 |   |
| Beal                Financial Trust I, 6ML+ 3.625%, callable 7/30/2007, due 7/30/2032                (a)                          |   |                                         | 9,000  |                                 |   | 8,915,009 |   |   | 9,000 |   |   | 8,913,949 |   |
| Beal                Financial Trust II, 3ML+ 3.350%, callable 3/27/2008, due 3/27/2033                (a)                         |   |                                         | 13,000 |                                 |   | 12,892,743 |   |   | 13,000 |   |   | 12,891,554 |   |
| Capital                One Capital I, 3ML+ 1.550%, callable 2/1/2007, due                2/1/2027                                 |   |                                         | 4,000  |                                 |   | 4,005,000 |   |   | 4,000 |   |   | 4,020,000 |   |
| Coastal                Financial Capital Trust I, 3ML+ 3.050%, callable 9/30/2008, due 7/3/2033                (a)                |   |                                         | 9,000  |                                 |   | 9,078,004 |   |   | 9,000 |   |   | 9,078,891 |   |
| Flagstar                Statutory Trust IV, 6.750%, callable 3/30/2008, due 3/19/2033                (a)                          |   |                                         | 22,330 |                                 |   | 22,237,499 |   |   | 22,330 |   |   | 22,236,250 |   |
| Franklin                Bank Capital Trust I, 3ML+ 3.35%, callable 11/15/2007, due 11/14/2032                (a)                  |   |                                         | 9,000  |                                 |   | 8,922,827 |   |   | 9,000 |   |   | 8,921,915 |   |
| HFC                Capital Trust IV, 6 ML+3.350%, callable 11/15/2007, due 11/15/2032                (a)                          |   |                                         | 6,550  |                                 |   | 6,411,958 |   |   | 6,550 |   |   | 6,410,385 |   |
| IndyMac                Capital Trust, 6.050%, callable 9/30/2008, due 7/11/2033                (a)                                |   |                                         | 9,000  |                                 |   | 8,973,900 |   |   | 9,000 |   |   | 8,973,513 |   |
| Progress                Capital Trust III, 3ML + 3.350%, callable 11/15/2007, due 11/15/2032                (a)                   |   |                                         | 4,000  |                                 |   | 3,967,855 |   |   | 4,000 |   |   | 3,967,474 |   |
| Sterling                Capital Trust IV, 3ML+ 3.150%, callable 5/15/2008, due 5/15/2033                (a)                       |   |                                         | 9,000  |                                 |   | 8,969,252 |   |   | 9,000 |   |   | 8,968,893 |   |
| Waypoint                Capital Trust II, 3ML+ 3.300%, callable 1/7/2008, due 1/7/2033                (a)                         |   |                                         | 3,000  |                                 |   | 3,000,000 |   |   | 3,000 |   |   | 3,000,000 |   |
| Waypoint                Capital Trust III, 3ML+ 3.250%, callable 3/13/2008, due 3/13/2033                (a)                      |   |                                         | 15,000 |                                 |   | 15,000,000 |   |   | 15,000 |   |   | 15,000,000 |   |
| Total                Thrifts (amortized cost $135,911,507 and $135,878,333)                                                       |   |                                         |   |                                 |   | 136,909,701 |   |   |   |   |   | 136,916,952 |   |
| Total                Investments in Trust Preferred Securities (amortized cost $680,566,011                and $689,352,865) |   |                                         |   |                                 | $      | 684,272,551 |   |   |   |   | $ | 694,986,541 |   |

|                                               |   | **Fair                Value** |      | **Fair                Value** |   |
|----------------------------------------------------|--------|-------------------------------|-----------|-------------------------------|--------|
| **Interest                Rate Swap Agreements**   |   |                          |      |                          |   |
| Credit                Suisse                       |   | $                             | 5,252,592 |                          | $      | 5,865,799 |   |
| Total                Interest Rate Swap Agreements |   | $                             | 5,252,592 |                          | $      | 5,865,799 |   |

----

*See        accompanying notes to consolidated financial statements.*

*Back          to Part IV*

----

**UNAUDITED**

**Trapeza      Funding II, LLC**

**Consolidated      Statements of Operations**

|                                                                                                          |   | **Years                  ended December 31,** |       |
|---------------------------------------------------------------------------------------------------------------|--------|----------------------------------------------------|------------|
|                                                                                                          |   | **2006**                                           |       | **2005** |   |
| **Investment                  income**                                                                        |   |                                               |       |   |   |
| Interest                                                                                                      |   | $                                                  | 57,653,716 |   | $ | 47,980,287 |   |
|                                                                                                          |   |                                               |       |   |   |   |   |
| **Expenses**                                                                                                  |   |                                               |       |   |   |   |   |
| Interest                                                                                                      |   |                                               | 36,745,732 |   |   | 30,382,232 |   |
| Collateral                  management fees                                                                   |   |                                               | 1,739,165  |   |   | 1,740,103 |   |
| Amortization                                                                                                  |   |                                               | 1,498,583  |   |   | 1,557,453 |   |
| Trustee                  fees                                                                                 |   |                                               | 267,049    |   |   | 269,990 |   |
| Professional                  fees                                                                            |   |                                               | 188,694    |   |   | 169,841 |   |
| Administration                  fees                                                                          |   |                                               | 111,861    |   |   | 102,584 |   |
| Other                                                                                                         |   |                                               | 350,324    |   |   | 359,125 |   |
| Total                  expenses                                                                               |   |                                               | 40,901,408 |   |   | 34,581,328 |   |
| **Net                  investment income**                                                                    |   |                                               | 16,752,308 |   |   | 13,398,959 |   |
|                                                                                                          |   |                                               |       |   |   |   |   |
| Net                  unrealized (depreciation) appreciation on                  investment transactions: |   |                                               |       |   |   |   |   |
| Investments                  in trust preferred securities                                                    |   |                                               | (1,927,136 | ) |   | (43,018 | ) |
| Interest                  rate swap agreements                                                                |   |                                               | (613,207   | ) |   | 4,893,712 |   |
| Net                  unrealized (depreciation) appreciation on investment                  transactions       |   |                                               | (2,540,343 | ) |   | 4,850,694 |   |
|                                                                                                          |   |                                               |       |   |   |   |   |
| Net                  income before minority interest                                                          |   |                                               | 14,211,965 |   |   | 18,249,653 |   |
| Minority                  interest                                                                            |   |                                               | 11,400,618 |   |   | 14,809,563 |   |
| **Net                  income**                                                                               |   | $                                                  | 2,811,347  |   | $ | 3,440,090 |   |

*See        accompanying notes to consolidated financial statements.*

*Back          to Part IV*

----

**UNAUDITED**

**Trapeza      Funding II, LLC**

**Consolidated      Statements of Changes in Members’ Interests**

**Years      ended December 31, 2006 and 2005**

| Balance                at January 1, 2005        |   | $      | 1,432,866  |   |
|--------------------------------------------------|--------|--------|------------|--------|
| Net                income                        |   |   | 3,440,090  |   |
| Distributions                to members          |   |   | (1,909,672 | )      |
| Balance                at December 31, 2005 |   |   | 2,963,284  |   |
| Net                income                        |   |   | 2,811,347  |   |
| Distributions                to members          |   |   | (2,116,552 | )      |
| Balance                at December 31, 2006 |   | $      | 3,658,079  |   |

*See      accompanying notes to consolidated financial statements.*

*Back          to Part IV*

----

**UNAUDITED**

**Trapeza      Funding II, LLC**

**Consolidated      Statements of Cash Flows**

|                                                                                                                                                |   | **Years                ended December 31,** |       |
|-----------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------------------------------|------------|
|                                                                                                                                                |   | **2006**                                         |       | **2005** |   |
| **Cash                flows from operating activities**                                                                                             |   |                                             |       |   |   |
| Net                income                                                                                                                           |   | $                                                | 2,811,347  |   | $ | 3,440,090 |   |
| Adjustments                to reconcile net income to net cash and cash equivalents provided                by                operating activities: |   |                                             |       |   |   |   |   |
| Amortization                of deferred debt issuance costs                                                                                         |   |                                             | 1,498,583  |   |   | 1,557,453 |   |
| Accretion                of discount on investments in trust preferred securities                                                                   |   |                                             | (608,146   | ) |   | (283,151 | ) |
| Minority                interest                                                                                                                    |   |                                             | 11,400,618 |   |   | 14,809,563 |   |
| Net                unrealized depreciation (appreciation) on investment                transactions                                                 |   |                                             | 2,540,343  |   |   | (4,850,694 | ) |
| Net                change in operating assets and liabilities:                                                                                      |   |                                             |       |   |   |   |   |
| Investment                in trust preferred securities                                                                                             |   |                                             | 9,395,000  |   |   | 1,500,000 |   |
| Interest                receivable on trust preferred securities                                                                                    |   |                                             | (308,498   | ) |   | (633,748 | ) |
| Net                interest receivable from swap counterparty                                                                                       |   |                                             | (917,036   | ) |   | (1,196,570 | ) |
| Prepaid                expenses                                                                                                                     |   |                                             | (1,491     | ) |   | 836 |   |
| Interest                payable                                                                                                                     |   |                                             | 2,673,545  |   |   | 3,726,407 |   |
| Collateral                management fees                                                                                                           |   |                                             | −    |   |   | (937 | ) |
| Professional                fees                                                                                                                    |   |                                             | (9,405     | ) |   | (15,275 | ) |
| Trustee                fees                                                                                                                         |   |                                             | −    |   |   | (278 | ) |
| Minority                interest                                                                                                                    |   |                                             | (8,507,430 | ) |   | (7,530,739 | ) |
| Net                cash and cash equivalents provided by operating activities                                                                       |   |                                             | 19,967,430 |   |   | 10,522,957 |   |
|                                                                                                                                                |   |                                             |       |   |   |   |   |
| **Cash                flows from financing activities**                                                                                             |   |                                             |       |   |   |   |   |
| Principal                payments on notes                                                                                                          |   |                                             | (4,471,684 | ) |   | (4,241,205 | ) |
| Distributions                to members                                                                                                             |   |                                             | (2,116,552 | ) |   | (1,909,672 | ) |
| Net                cash and cash equivalents used in financing activities                                                                           |   |                                             | (6,588,236 | ) |   | (6,150,877 | ) |
|                                                                                                                                                |   |                                             |       |   |   |   |   |
| Net                increase in cash and cash equivalents                                                                                            |   |                                             | 13,379,194 |   |   | 4,372,080 |   |
| Cash                and cash equivalents, beginning of year                                                                                         |   |                                             | 19,627,097 |   |   | 15,255,017 |   |
| Cash                and cash equivalents, end of year                                                                                               |   | $                                                | 33,006,291 |   | $ | 19,627,097 |   |
|                                                                                                                                                |   |                                             |       |   |   |   |   |
| **Supplemental                disclosure of cash flow information**                                                                                 |   |                                             |       |   |   |   |   |
| Net                interest paid                                                                                                                    |   | $                                                | 34,989,223 |   | $ | 27,852,395 |   |

*See        accompanying notes to consolidated financial statements.*

*Back          to Part IV*

----

**UNAUDITED**

**Trapeza      Funding II, LLC**

**Notes      to Consolidated Financial Statements**

**December 31,      2006**

**1.**
**Organization      and Purpose**

*Back          to Part IV*

----

**UNAUDITED**

**Trapeza      Funding II, LLC**

**Notes      to Consolidated Financial Statements (continued)**

**1.**
**Organization      and Purpose (continued)**

**2.**
**Summary      of Significant Accounting Policies**

**Basis      of Accounting**

**Cash      and Cash Equivalents**

*Back          to Part IV*

----

**UNAUDITED**

**Trapeza      Funding II, LLC**

**Notes      to Consolidated Financial Statements (continued)**

**2.**
**Summary      of Significant Accounting Policies (continued)**

**Investment      Transactions **

**Investment      Valuation**

**Credit      Risks and General Liquidity Considerations**

*Back          to Part IV*

----

**UNAUDITED**

**Trapeza      Funding II, LLC**

**Notes      to Consolidated Financial Statements (continued)**

**2.**
**Summary      of Significant Accounting Policies (continued)**

**Allocation      of Profits and Losses**

**Taxation**

**Use      of Estimates**

*Back          to Part IV*

----

**UNAUDITED**

**Trapeza      Funding II, LLC**

**Notes      to Consolidated Financial Statements (continued)**

**3.**
**Contributions,      Withdrawals and Distributions**

**3.**
**Contributions,      Withdrawals and Distributions (continued)**

**4.**
**Issuer      II**

**Deferred      Debt Issuance Costs**

*Back          to Part IV*

----

**UNAUDITED**

**Trapeza      Funding II, LLC**

**Notes      to Consolidated Financial Statements (continued)**

**4.**
**Issuer      II (continued)**

**Collateral      Management and Trustee Fees **

**Notes      Payable**

*Back          to Part IV*

----

**UNAUDITED**

**Trapeza      Funding II, LLC**

**Notes      to Consolidated Financial Statements (continued)**

**4.**
**Issuer      II (continued)**

**Notes      Payable (continued)**

|                                    |   | **2006****Principal** |        | **2005****Principal** |   | Interest                Rate |   | Stated                Maturity |                                                                                                               |
|-----------------------------------------|--------|-----------------------|-------------|-----------------------|--------|------------------------------|--------|--------------------------------|--------------------------------------------------------------------------------------------------------------------|
| Class                A1A Notes          |   | $                     | 130,499,115 |                  | $      | 130,499,115                  |   |                           | Libor                + 0.65% until the distribution date in April 2013 and Libor + 1.30%                thereafter |   |   | October                5, 2033 |   |
|                                    |   |                  |        |                  |   |                         |   |                           |                                                                                                               |   |   |   |   |
| Class                A1B Notes          |   | $                     | 100,000,000 |                  | $      | 100,000,000                  |   |                           | Libor                + 0.88%                                                                                       |   |   | October                5, 2033 |   |
|                                    |   |                  |        |                  |   |                         |   |                           |                                                                                                               |   |   |   |   |
| Class                B Notes            |   | $                     | 27,000,000  |                  | $      | 27,000,000                   |   |                           | Libor                + 0.70%                                                                                       |   |   | October                5, 2033 |   |
|                                    |   |                  |        |                  |   |                         |   |                           |                                                                                                               |   |   |   |   |
| Class                C-1 Floating Notes |   | $                     | 43,500,000  |                  | $      | 43,500,000                   |   |                           | Libor                + 1.90%                                                                                       |   |   | October                5, 2033 |   |
|                                    |   |                  |        |                  |   |                         |   |                           |                                                                                                               |   |   |   |   |
| Class                C-2 Fixed Notes    |   | $                     | 54,800,000  |                  | $      | 54,800,000                   |   |                           | 5.20%                until the distribution date in April 2008 and Libor + 1.90%                thereafter         |   |   | October                5, 2033 |   |
|                                    |   |                  |        |                  |   |                         |   |                           |                                                                                                               |   |   |   |   |
| Class                D Notes            |   | $                     | 17,549,087  |                  | $      | 18,450,000                   |   |                           | Libor                + 2.65%                                                                                       |   |   | October                5, 2033 |   |

**Interest      Payments**

*Back          to Part IV*

----

**UNAUDITED**

**Trapeza      Funding II, LLC**

**Notes      to Consolidated Financial Statements (continued)**

**4.**
**Issuer      II (continued)**

**Interest      Payments (continued)**

**Principal      Payments**

*Principal      Turboing*

*Principal      Proceeds*

*Back          to Part IV*

----

**UNAUDITED**

**Trapeza      Funding II, LLC**

**Notes      to Consolidated Financial Statements (continued)**

**4.**
**Issuer      II (continued)**

**Principal      Payments (continued)**

*Principal      Proceeds (continued)*

**Acceleration      of Maturity and Redemption**

*Back          to Part IV*

----

**UNAUDITED**

**Trapeza      Funding II, LLC**

**Notes      to Consolidated Financial Statements (continued)**

**5.**
**Note      I**

**Deferred      Debt Issuance Costs**

**Notes      Payable**

|                          |   | **2006                Principal** |      | **2005                Principal** |   | **Interest                Rate** |   | **Stated                Maturity** |   |
|-------------------------------|--------|-----------------------------------|-----------|-----------------------------------|--------|----------------------------------|--------|------------------------------------|--------|
| Class                BB Notes |   | $                                 | 5,000,000 |                              | $      | 6,428,571                        |   |                               | 11.00% |   |   | October                5, 2033 |   |

*Back          to Part IV*

----

**UNAUDITED**

**Trapeza      Funding II, LLC**

**Notes      to Consolidated Financial Statements (continued)**

**5.**
**Note          I**

**Notes          Payable (continued)**

*Back          to Part IV*

----

**UNAUDITED**

**Trapeza      Funding II, LLC**

**Notes      to Consolidated Financial Statements (continued)**

**6.**
**Issuer      III**

**Deferred      Debt Issuance Costs**

**Collateral      Management and Trustee Fees **

**Notes      Payable**

*Back          to Part IV*

----

**UNAUDITED**

**Trapeza      Funding II, LLC**

**Notes      to Consolidated Financial Statements (continued)**

**6.**
**Issuer      III (continued)**

**Notes      Payable (continued)**

|                             |   | **2006                Principal** |        | **2005                Principal** |   | **Interest                Rate** |   | **Stated                Maturity** |                            |
|----------------------------------|--------|-----------------------------------|-------------|-----------------------------------|--------|----------------------------------|--------|------------------------------------|---------------------------------|
| Class                A1A Notes   |   | $                                 | 108,497,331 |                              | $      | 108,497,331                      |   |                               | Libor                + 0.63%    |   |   | January                20, 2034 |   |
|                             |   |                              |        |                              |   |                             |   |                               |                            |   |   |   |   |
| Class                A1B Notes   |   | $                                 | 71,500,000  |                              | $      | 71,500,000                       |   |                               | Libor                + 0.85%    |   |   | January                20, 2034 |   |
|                             |   |                              |        |                              |   |                             |   |                               |                            |   |   |   |   |
| Class                B Notes     |   | $                                 | 25,000,000  |                              | $      | 25,000,000                       |   |                               | See                Class B note |   |   | January                20, 2034 |   |
|                             |   |                              |        |                              |   |                             |   |                               |                            |   |   |   |   |
| Class                C-1 Notes   |   | $                                 | 31,250,000  |                              | $      | 31,250,000                       |   |                               | Libor                + 1.75%    |   |   | January                20, 2034 |   |
|                             |   |                              |        |                              |   |                             |   |                               |                            |   |   |   |   |
| Class                C-2 Notes   |   | $                                 | 31,250,000  |                              | $      | 31,250,000                       |   |                               | Libor                + 1.75%    |   |   | January                20, 2034 |   |
|                             |   |                              |        |                              |   |                             |   |                               |                            |   |   |   |   |
| Class                D Notes     |   | $                                 | 11,974,741  |                              | $      | 13,259,797                       |   |                               | Libor                + 2.65%    |   |   | January                20, 2034 |   |
|                             |   |                              |        |                              |   |                             |   |                               |                            |   |   |   |   |
| Class                E Notes (1) |   | $                                 | 4,571,426   |                              | $      | 5,714,284                        |   |                               | 10.00%                          |   |   | January                20, 2034 |   |

----

| (1) | The                Partnership owns 25% of the Class E                notes. |
|-----|------------------------------------------------------------------------------|

*Back          to Part IV*

----

**UNAUDITED**

**Trapeza      Funding II, LLC**

**Notes      to Consolidated Financial Statements (continued)**

**6.**
**Issuer      III (continued)**

**Interest      Payments **

**Principal      Payments**

*Principal      Turboing*

*Back          to Part IV*

----

**UNAUDITED**

**Trapeza      Funding II, LLC**

**Notes      to Consolidated Financial Statements (continued)**

**6.**
**Issuer      III (continued)**

**Principal      Payments (continued)**

*Principal      Proceeds*

**Acceleration        of Maturity and Redemption**

*Back          to Part IV*

----

**UNAUDITED**

**Trapeza      Funding II, LLC**

**Notes      to Consolidated Financial Statements (continued)**

**6.**
**Issuer      III (continued)**

**Acceleration        of Maturity and Redemption (continued)**

**7.**
**Interest      Rate Swap Agreements**

*Back          to Part IV*

----

**UNAUDITED**

**Trapeza      Funding II, LLC**

**Notes      to Consolidated Financial Statements (continued)**

**7.**
**Interest      Rate Swap Agreements (continued)**

|                             |   |         |    | **Floating                Rate** |   | **Rate/Amount**                        |   | **December                31** |                                 |
|----------------------------------|--------|--------------|---------|----------------------------------|--------|----------------------------------------|--------|--------------------------------|--------------------------------------|
| **Notional**                     |   | **Maturity** |    | **Received                by**   |   | **Paid                by the**         |   | **2006**                       |                                 | **2005** |   |
| **Amount**                       |   | **Date**     |    | **the                Company**   |   | **Company**                            |   | **Fair                Value**  |                                 | **Fair                Value** |   |
| $                 3,330,000 |   |         | 4/5/10  |                             |   | 6                month Libor + 3.4425% |   |                           | 7.375%                               |   | $ | 131,941 |   | $ | 125,378 |   |
| $                 8,670,000 |   |         | 4/5/08  |                             |   | 6                month Libor + 3.30%   |   |                           | 6.65%                                |   |   | 238,957 |   |   | 279,301 |   |
| $13,330,000                      |   |         | 4/5/08  |                             |   | 6                month Libor + 3.35%   |   |                           | 6.75%                                |   |   | 384,242 |   |   | 413,468 |   |
| $13,330,000                      |   |         | 4/5/08  |                             |   | 6                month Libor + 3.35%   |   |                           | 6.335%                               |   |   | 438,780 |   |   | 545,880 |   |
| $13,330,000                      |   |         | 4/5/08  |                             |   | 6                month Libor + 4.69%   |   |                           | 8.10%                                |   |   | 357,614 |   |   | 452,246 |   |
| $47,330,000                      |   |         | 4/5/08  |                             |   | 6                month Libor + 3.32%   |   |                           | 6.952%                               |   |   | 1,108,651 |   |   | 1,205,244 |   |
| $69,500,000                      |   |         | 7/20/08 |                             |   | 6                month Libor + 3.25%   |   |                           | 6.35%                                |   |   | 2,927,760 |   |   | 3,025,285 |   |
| $25,000,000                      |   |         | 7/20/13 |                             |   | 6                month Libor + 1.0875% |   |                           | 6                month Libor + 1.05% |   |   | (748,707 | ) |   | (555,025 | ) |
| $                 9,000,000 |   |         | 7/20/08 |                             |   | 6                month Libor + 3.145%  |   |                           | 6.05%                                |   |   | 413,354 |   |   | 442,046 |   |
|                             |   |         |    |                             |   |                                   |   |                           |                                 |   | $ | 5,252,592 |   | $ | 5,933,823 |   |

|         |   |         |   | **Floating                Rate** |   | **Rate/Amount**                                      |   | **December                31** |   |
|--------------|--------|--------------|--------|----------------------------------|--------|------------------------------------------------------|--------|--------------------------------|--------|
| **Notional** |   | **Maturity** |   | **Received                by**   |   | **Paid                by the**                       |   | **2006**                       |   | **2005** |   |
| **Amount**   |   | **Date**     |   | **the                Company**   |   | **Company**                                          |   | **Fair                Value**  |   | **Fair                Value** |   |
| $82,000,000  |   |         | 4/5/07 |                             |   | Excess                above 7.00% as discussed below |   | $                              | 69,000 |   | $ | − |   | $ | (68,024 | ) |

*Back          to Part IV*

----

**UNAUDITED**

**Trapeza      Funding II, LLC**

**Notes      to Consolidated Financial Statements (continued)**

**7.**
**Interest      Rate Swap Agreements (continued)**

**8.**
**Related      Party Transactions **

*Back          to Part IV*

----

*Back          to Part IV*

----

**UNAUDITED**

**Trapeza      Funding II, LLC**

**Consolidating      Statement of Financial Condition**

**December 31,      2006**

|                                                                                                                 | **Trapeza                Funding II, LLC** |      | **Trapeza****Partners                II L.P.****Consolidated** |   | **Total**   |   | **Eliminations** |        | **Trapeza                Funding II, LLC Consolidated** |   |
|----------------------------------------------------------------------------------------------------------------------|--------------------------------------------|-----------|----------------------------------------------------------------|--------|-------------|--------|------------------|-------------|---------------------------------------------------------|--------|
| **Assets**                                                                                                           |                                       |      |                                                           |   |        |   |             |        |                                                    |   |
| Investments                in trust preferred securities, at fair value (amortized cost                $680,566,011) | $                                          | −   |                                                           | $      | 684,272,551 |   | $                | 684,272,551 |                                                    | $      | − |   | $ | 684,272,551 |   |
| Cash                and cash equivalents                                                                             |                                       | 5,677     |                                                           |   | 33,000,614  |   |             | 33,006,291  |                                                    |   | − |   |   | 33,006,291 |   |
| Deferred                debt issuance costs (net of accumulated amortization of                $5,618,421)           |                                       | −   |                                                           |   | 12,376,270  |   |             | 12,376,270  |                                                    |   | − |   |   | 12,376,270 |   |
| Unrealized                appreciation on swap agreements                                                            |                                       | −   |                                                           |   | 5,252,592   |   |             | 5,252,592   |                                                    |   | − |   |   | 5,252,592 |   |
| Interest                receivable on trust preferred securities                                                     |                                       | −   |                                                           |   | 4,498,164   |   |             | 4,498,164   |                                                    |   | − |   |   | 4,498,164 |   |
| Net                interest receivable from swap counterparty                                                        |                                       | −   |                                                           |   | 1,353,765   |   |             | 1,353,765   |                                                    |   | − |   |   | 1,353,765 |   |
| Prepaid                expenses                                                                                      |                                       | −   |                                                           |   | 27,451      |   |             | 27,451      |                                                    |   | − |   |   | 27,451 |   |
| Investment                in Trapeza Partners II L.P.                                                                |                                       | 3,665,805 |                                                           |   | −     |   |             | 3,665,805   |                                                    |   | (3,665,805 | ) |   | − |   |
| Total                Assets                                                                                          | $                                          | 3,671,482 |                                                           | $      | 740,781,407 |   | $                | 744,452,889 |                                                    | $      | (3,665,805 | ) | $ | 740,787,084 |   |
| **Liabilities                and Partners’ Capital/Members’ Interests**                                  |                                       |      |                                                           |   |        |   |             |        |                                                    |   |   |   |   |   |   |
| Liabilities                                                                                                          |                                       |      |                                                           |   |        |   |             |        |                                                    |   |   |   |   |   |   |
| Class                A1A notes                                                                                       | $                                          | −   |                                                           | $      | 238,996,446 |   | $                | 238,996,446 |                                                    | $      | − |   | $ | 238,996,446 |   |
| Class                A1B notes                                                                                       |                                       | −   |                                                           |   | 171,500,000 |   |             | 171,500,000 |                                                    |   | − |   |   | 171,500,000 |   |
| Class                B notes                                                                                         |                                       | −   |                                                           |   | 52,000,000  |   |             | 52,000,000  |                                                    |   | − |   |   | 52,000,000 |   |
| Class                C-1 notes                                                                                       |                                       | −   |                                                           |   | 74,750,000  |   |             | 74,750,000  |                                                    |   | − |   |   | 74,750,000 |   |
| Class                C-2 notes                                                                                       |                                       | −   |                                                           |   | 86,050,000  |   |             | 86,050,000  |                                                    |   | − |   |   | 86,050,000 |   |
| Class                D notes                                                                                         |                                       | −   |                                                           |   | 29,523,828  |   |             | 29,523,828  |                                                    |   | − |   |   | 29,523,828 |   |
| Class                E notes                                                                                         |                                       | −   |                                                           |   | 3,428,569   |   |             | 3,428,569   |                                                    |   | − |   |   | 3,428,569 |   |
| Class                BB notes                                                                                        |                                       | −   |                                                           |   | 5,000,000   |   |             | 5,000,000   |                                                    |   | − |   |   | 5,000,000 |   |
| Interest                payable                                                                                      |                                       | −   |                                                           |   | 13,905,741  |   |             | 13,905,741  |                                                    |   | − |   |   | 13,905,741 |   |
| Collateral                management fees                                                                            |                                       | −   |                                                           |   | 590,570     |   |             | 590,570     |                                                    |   | − |   |   | 590,570 |   |
| Professional                fees                                                                                     |                                       | 13,403    |                                                           |   | 136,051     |   |             | 149,454     |                                                    |   | − |   |   | 149,454 |   |
| Trustee                fees                                                                                          |                                       | −   |                                                           |   | 68,142      |   |             | 68,142      |                                                    |   | − |   |   | 68,142 |   |
| Accrued                expenses                                                                                      |                                       | −   |                                                           |   | 111,667     |   |             | 111,667     |                                                    |   | − |   |   | 111,667 |   |
| Total                Liabilities                                                                                     |                                       | 13,403    |                                                           |   | 676,061,014 |   |             | 676,074,417 |                                                    |   | − |   |   | 676,074,417 |   |
|                                                                                                                 |                                       |      |                                                           |   |        |   |             |        |                                                    |   |   |   |   |   |   |
| Minority                interest                                                                                     |                                       | −   |                                                           |   | 9,304,230   |   |             | 9,304,230   |                                                    |   | 51,750,358 |   |   | 61,054,588 |   |
|                                                                                                                 |                                       |      |                                                           |   |        |   |             |        |                                                    |   |   |   |   |   |   |
| Partners’                Capital/Members’ Interests                                                      |                                       |      |                                                           |   |        |   |             |        |                                                    |   |   |   |   |   |   |
| Members’                Interests                                                                              |                                       | 3,658,079 |                                                           |   | −     |   |             | 3,658,079   |                                                    |   | − |   |   | 3,658,079 |   |
| General                Partner                                                                                       |                                       | −   |                                                           |   | 3,665,805   |   |             | 3,665,805   |                                                    |   | (3,665,805 | ) |   | − |   |
| Limited                Partners                                                                                      |                                       | −   |                                                           |   | 51,750,358  |   |             | 51,750,358  |                                                    |   | (51,750,358 | ) |   | − |   |
| Total                Partners’ Capital/Members’ Interests                                                |                                       | 3,658,079 |                                                           |   | 55,416,163  |   |             | 59,074,242  |                                                    |   | (55,416,163 | ) |   | 3,658,079 |   |
| Total                Liabilities and Partners’ Capital/Members’ Interests                                | $                                          | 3,671,482 |                                                           | $      | 740,781,407 |   | $                | 744,452,889 |                                                    | $      | (3,665,805 | ) | $ | 740,787,084 |   |

*Back          to Part IV*

----

**UNAUDITED**

**Trapeza      Funding II, LLC**

**Consolidating      Statement of Operations**

**Year      ended December 31, 2006**

|                                                                  | **Trapeza                Funding II, LLC** |      | **Trapeza****Partners                II L.P.****Consolidated** |   | **Total**  |   | **Eliminations** |       | **Trapeza                Funding II, LLC Consolidated** |   |
|-----------------------------------------------------------------------|--------------------------------------------|-----------|----------------------------------------------------------------|--------|------------|--------|------------------|------------|---------------------------------------------------------|--------|
| **Investment                income**                                  |                                       |      |                                                           |   |       |   |             |       |                                                    |   |
| Interest                                                              | $                                          | −   |                                                           | $      | 57,653,716 |   | $                | 57,653,716 |                                                    | $      | − |   | $ | 57,653,716 |   |
| Incentive                allocation                                   |                                       | 2,307,689 |                                                           |   | −    |   |             | 2,307,689  |                                                    |   | (2,307,689 | ) |   | − |   |
| Administration                fee income                              |                                       | 657,583   |                                                           |   | −    |   |             | 657,583    |                                                    |   | (657,583 | ) |   | − |   |
| Other                                                                 |                                       | 29        |                                                           |   | −    |   |             | 29         |                                                    |   | (29 | ) |   | − |   |
| Total                investment income                                |                                       | 2,965,301 |                                                           |   | 57,653,716 |   |             | 60,619,017 |                                                    |   | (2,965,301 | ) |   | 57,653,716 |   |
|                                                                  |                                       |      |                                                           |   |       |   |             |       |                                                    |   |   |   |   |   |   |
| **Expenses**                                                          |                                       |      |                                                           |   |       |   |             |       |                                                    |   |   |   |   |   |   |
| Interest                                                              |                                       | −   |                                                           |   | 36,745,732 |   |             | 36,745,732 |                                                    |   | − |   |   | 36,745,732 |   |
| Collateral                management fees                             |                                       | −   |                                                           |   | 1,739,165  |   |             | 1,739,165  |                                                    |   | − |   |   | 1,739,165 |   |
| Amortization                                                          |                                       | −   |                                                           |   | 1,498,583  |   |             | 1,498,583  |                                                    |   | − |   |   | 1,498,583 |   |
| Trustee                fees                                           |                                       | −   |                                                           |   | 267,049    |   |             | 267,049    |                                                    |   | − |   |   | 267,049 |   |
| Professional                fees                                      |                                       | 19,112    |                                                           |   | 169,582    |   |             | 188,694    |                                                    |   | − |   |   | 188,694 |   |
| Administration                fees                                    |                                       | 111,861   |                                                           |   | 657,578    |   |             | 769,439    |                                                    |   | (657,578 | ) |   | 111,861 |   |
| Other                                                                 |                                       | 22,981    |                                                           |   | 327,343    |   |             | 350,324    |                                                    |   | − |   |   | 350,324 |   |
| Total                expenses                                         |                                       | 153,954   |                                                           |   | 41,405,032 |   |             | 41,558,986 |                                                    |   | (657,578 | ) |   | 40,901,408 |   |
| **Net                investment income**                              |                                       | 2,811,347 |                                                           |   | 16,248,684 |   |             | 19,060,031 |                                                    |   | (2,307,723 | ) |   | 16,752,308 |   |
|                                                                  |                                       |      |                                                           |   |       |   |             |       |                                                    |   |   |   |   |   |   |
| Net                unrealized depreciation on investment transactions |                                       |      |                                                           |   |       |   |             |       |                                                    |   |   |   |   |   |   |
| Investments                in trust preferred securities              |                                       | −   |                                                           |   | (1,927,136 | )      |             | (1,927,136 | )                                                       |   | − |   |   | (1,927,136 | ) |
| Interest                rate swap agreements                          |                                       | −   |                                                           |   | (613,207   | )      |             | (613,207   | )                                                       |   | − |   |   | (613,207 | ) |
| Net                unrealized depreciation on investment transactions |                                       | −   |                                                           |   | (2,540,343 | )      |             | (2,540,343 | )                                                       |   | − |   |   | (2,540,343 | ) |
|                                                                  |                                       |      |                                                           |   |       |   |             |       |                                                    |   |   |   |   |   |   |
| Net                income before minority interest                    |                                       | 2,811,347 |                                                           |   | 13,708,341 |   |             | 16,519,688 |                                                    |   | (2,307,723 | ) |   | 14,211,965 |   |
| Minority                interest                                      |                                       | −   |                                                           |   | 2,169,846  |   |             | 2,169,846  |                                                    |   | 9,230,772 |   |   | 11,400,618 |   |
| **Net                income**                                         | $                                          | 2,811,347 |                                                           | $      | 11,538,495 |   | $                | 14,349,842 |                                                    | $      | (11,538,495 | ) | $ | 2,811,347 |   |

*Back          to Part IV*

----

**Schedule      (d) **

**UNAUDITED**

**Trapeza      Funding III, LLC**

**Consolidated      Financial Statements (Unaudited)**

**Years      ended December 31, 2006 and 2005**

*Back          to Part IV*

----

**UNAUDITED**

**Trapeza      Funding III, LLC**

**Consolidated      Financial Statements**

**Years      ended December 31, 2006 and 2005**

**Contents**

| Consolidated                Financial Statements                              |   |
|-------------------------------------------------------------------------------|--------|
| Consolidated                Statements of Financial Condition                 | 2      |
| Consolidated                Schedules of Investments                          | 3      |
| Consolidated                Statements of Operations                          | 5      |
| Consolidated                Statements of Changes in Members’ Interests | 6      |
| Consolidated                Statements of Cash Flows                          | 7      |
| Notes                to Consolidated Financial Statements                     | 8      |
|                                                                          |   |
| Other                Financial Information                                    |   |
| Consolidating                Statement of Financial Condition                 | 20     |
| Consolidating                Statement of Operations                          | 21     |

*Back          to Part IV*

----

**UNAUDITED**

**Trapeza      Funding III, LLC**

**Consolidated      Statements of Financial Condition**

|                                                                                                                                     |   | **December 31** |        |
|------------------------------------------------------------------------------------------------------------------------------------------|--------|----------------------|-------------|
|                                                                                                                                     |   | **2006**             |        | **2005** |   |
| **Assets**                                                                                                                               |   |                 |        |   |   |
| Investments                in trust preferred securities, at fair value (amortized cost $399,514,182                and $399,499,096)    |   | $                    | 400,160,302 |   | $ | 400,172,908 |   |
| Cash                and cash equivalents                                                                                                 |   |                 | 8,697,140   |   |   | 7,360,269 |   |
| Deferred                debt issuance costs (net of accumulated amortization of $2,520,541                and                $1,730,717) |   |                 | 6,940,081   |   |   | 7,729,905 |   |
| Unrealized                appreciation on swap agreements                                                                                |   |                 | 2,633,121   |   |   | 3,073,174 |   |
| Interest                receivable on trust preferred securities                                                                         |   |                 | 898,945     |   |   | 800,625 |   |
| Net                interest receivable from swap counterparty                                                                            |   |                 | 164,573     |   |   | 85,208 |   |
| Prepaid                expenses                                                                                                          |   |                 | 30,790      |   |   | 28,617 |   |
| Other                                                                                                                                    |   |                 | 156,103     |   |   | 142,966 |   |
| Total                Assets                                                                                                              |   | $                    | 419,681,055 |   | $ | 419,393,672 |   |
|  **Liabilities                and Members’ Interests**                                                                        |   |                 |        |   |   |   |   |
| Liabilities                                                                                                                              |   |                 |        |   |   |   |   |
| Class                A1A Notes                                                                                                           |   | $                    | 144,996,417 |   | $ | 144,996,417 |   |
| Class                A1B Notes                                                                                                           |   |                 | 95,000,000  |   |   | 95,000,000 |   |
| Class                B Notes                                                                                                             |   |                 | 33,000,000  |   |   | 33,000,000 |   |
| Class                C-1 Notes                                                                                                           |   |                 | 44,500,000  |   |   | 44,500,000 |   |
| Class                C-2 Notes                                                                                                           |   |                 | 44,500,000  |   |   | 44,500,000 |   |
| Class                D Notes                                                                                                             |   |                 | 12,635,371  |   |   | 13,500,000 |   |
| Class                E Notes                                                                                                             |   |                 | 5,714,284   |   |   | 7,142,856 |   |
| Interest                payable                                                                                                          |   |                 | 2,428,836   |   |   | 2,124,435 |   |
| Collateral                management fees                                                                                                |   |                 | 122,222     |   |   | 122,222 |   |
| Professional                fees                                                                                                         |   |                 | 89,816      |   |   | 93,275 |   |
| Trustee                fees                                                                                                              |   |                 | 13,535      |   |   | 13,535 |   |
| Accrued                expenses                                                                                                          |   |                 | 166,390     |   |   | 183,466 |   |
| Total                Liabilities                                                                                                         |   |                 | 383,166,871 |   |   | 385,176,206 |   |
|                                                                                                                                     |   |                 |        |   |   |   |   |
| Minority                interest                                                                                                         |   |                 | 34,931,801  |   |   | 32,951,996 |   |
|                                                                                                                                     |   |                 |        |   |   |   |   |
| Members’                Interests                                                                                                  |   |                 | 1,582,383   |   |   | 1,265,470 |   |
| Total                Liabilities and Members’ Interests                                                                            |   | $                    | 419,681,055 |   | $ | 419,393,672 |   |

*See      accompanying notes to consolidated financial statements.*

*Back          to Part IV*

----

**UNAUDITED**

**Trapeza      Funding III, LLC**

**Consolidated      Schedules of Investments**

|                                                                                                                                                | **December 31,                2006** |   | **December 31,                2005** |
|-----------------------------------------------------------------------------------------------------------------------------------------------------|-------------------------------------------|--------|-------------------------------------------|
|                                                                                                                                                | **Principal                Amount (000)** |   | **Fair                Value**             |   | **Principal                Amount (000)** |   |   **Fair                Value** |
| Investments                in Trust Preferred Securities - (100%) *                                                                                 |                                      |   |                                      |   |   |   |   |
| Banks                (85.84% and 85.84%)*                                                                                                           |                                      |   |                                      |   |   |   |   |
| Alabama                National Statutory Trust III, 3 ML + 3.050%, callable 9/26/2008,                due                9/26/2033 (a)             | $                                         | 11,210 |                                      | $ | 11,210,000 |   | $ | 11,210 |   | $ | 11,210,000 |
| Ambank                Holdings Capital Trust I, 3 ML + 3.150%, callable 6/30/2008, due                6/30/2033                (a)                  |                                      | 9,000  |                                      |   | 8,936,973 |   |   | 9,000 |   |   | 8,936,265 |
| Arrow                Capital Statutory Trust II, 6.530%, callable 7/23/2008, due 7/23/2033                (a)                                       |                                      | 10,000 |                                      |   | 10,000,000 |   |   | 10,000 |   |   | 10,000,000 |
| Cathay                Capital Trust I, 3 ML + 3.150%, callable 6/30/2008, due 6/30/2033                (a)                                          |                                      | 10,450 |                                      |   | 10,450,000 |   |   | 10,450 |   |   | 10,450,000 |
| CB                Trico Capital Trust, 3 ML + 3.050%, callable 10/7/2008, due 10/20/2033                (a)                                         |                                      | 10,000 |                                      |   | 10,000,000 |   |   | 10,000 |   |   | 10,000,000 |
| Centerstate                Banks Florida Statutory Trust I, 3 ML + 3.050%, callable 9/22/2008,                due                9/22/2033 (a)      |                                      | 10,000 |                                      |   | 10,000,000 |   |   | 10,000 |   |   | 10,000,000 |
| Corus                Statutory Trust II, 3 ML + 3.100%, callable 6/30/2008, due 6/30/2033                (a)                                        |                                      | 11,000 |                                      |   | 10,917,574 |   |   | 11,000 |   |   | 10,916,638 |
| F.N.B.                Statutory Trust I, 3 ML + 3.250%, callable 3/31/2008, due 3/31/2033                (a)                                        |                                      | 1,000  |                                      |   | 1,000,000 |   |   | 1,000 |   |   | 1,000,000 |
| FBR                Capital Trust I, 3 ML + 3.250%, callable 6/30/2008, due 3/30/2033                (a)                                             |                                      | 1,000  |                                      |   | 992,394 |   |   | 1,000 |   |   | 992,309 |
| FBR                Capital Trust II, 3 ML + 3.100%, callable 9/30/2008, due 9/30/2033                (a)                                            |                                      | 11,000 |                                      |   | 11,014,716 |   |   | 11,000 |   |   | 11,014,878 |
| First                Community / CA Statutory Trust VI, 3 ML + 3.050%, callable 9/15/2008,                due                9/15/2033 (a)          |                                      | 10,000 |                                      |   | 10,104,066 |   |   | 10,000 |   |   | 10,105,239 |
| First                Financial OH Statutory Trust II, 3 ML + 3.100%, callable 9/30/2008,                due                9/30/2033 (a)            |                                      | 11,000 |                                      |   | 11,000,000 |   |   | 11,000 |   |   | 11,000,000 |
| First                Group Capital Statutory Trust VII, 3 ML + 2.900%, callable 10/30/2008,                due                10/30/2033 (a)        |                                      | 12,000 |                                      |   | 12,064,245 |   |   | 12,000 |   |   | 12,065,017 |
| First                South Preferred Trust I, 3 ML + 2.950%, callable 9/30/2008, due 9/30/2033                (a)                                   |                                      | 10,000 |                                      |   | 10,059,164 |   |   | 10,000 |   |   | 10,059,839 |
| FNB                Statutory Trust I, 3 ML + 3.250%, callable 3/31/2008, due 3/31/2033                (a)                                           |                                      | 11,000 |                                      |   | 11,000,000 |   |   | 11,000 |   |   | 11,000,000 |
| Heartland                Financial Statutory Trust III, 3 ML + 8.250%, callable 10/10/2008,                due                10/10/2033 (a)        |                                      | 11,000 |                                      |   | 11,000,000 |   |   | 11,000 |   |   | 11,000,000 |
| Iberiabank                Statutory Trust II, 3 ML + 3.150%, callable 6/17/2008, due 6/17/2033                (a)                                   |                                      | 1,000  |                                      |   | 1,004,560 |   |   | 1,000 |   |   | 1,004,610 |
| Industry                Bancshares Capital Trust II, 3 ML + 3.050%, callable 8/30/2008, due                8/30/2033 (a)                            |                                      | 2,000  |                                      |   | 1,971,375 |   |   | 2,000 |   |   | 1,971,045 |
| James                Monroe Statutory Trust II, 3 ML + 3.100%, callable 7/31/2008, due                7/31/2033 (a)                                 |                                      | 4,000  |                                      |   | 4,000,000 |   |   | 4,000 |   |   | 4,000,000 |
| Lakeland                Bancorp Capital Trust II, 5.710%, callable 6/30/2008, due 6/30/2033                (a)                                      |                                      | 11,000 |                                      |   | 10,951,939 |   |   | 11,000 |   |   | 10,951,180 |
| Lakeland                Statutory Trust II, 3 ML + 3.050%, callable 10/1/2008, due 10/1/2033                (a)                                     |                                      | 12,000 |                                      |   | 12,000,000 |   |   | 12,000 |   |   | 12,000,000 |
| Lone                Star National Capital Trust II, 3 ML + 2.950%, callable 9/30/2008,                due                9/30/2033 (a)              |                                      | 10,000 |                                      |   | 10,057,256 |   |   | 10,000 |   |   | 10,057,909 |
| Macatawa                Statutory Trust I, 3 ML + 3.050%, callable 7/15/2008, due 7/15/2033                (a)                                      |                                      | 11,000 |                                      |   | 11,000,000 |   |   | 11,000 |   |   | 11,000,000 |
| Main                Street Banks Statutory Trust II, 3 ML + 3.250%, callable 6/30/2008,                due                6/30/2033 (a)             |                                      | 9,000  |                                      |   | 9,000,000 |   |   | 9,000 |   |   | 9,000,000 |
| Mariner                Capital Trust IV, 3 ML + 3.050%, callable 8/30/2008, due 8/30/2033                (a)                                        |                                      | 12,000 |                                      |   | 12,052,472 |   |   | 12,000 |   |   | 12,053,077 |
| Merchants                and Manufacturers Statutory Trust II, 8.250%, callable 5/30/2008,                due                5/30/2033 (a)          |                                      | 1,000  |                                      |   | 1,000,000 |   |   | 1,000 |   |   | 1,000,000 |
| Merchants                and Manufacturers Statutory Trust III, 8.250%, callable 10/15/2008,                due                10/15/2033 (a)       |                                      | 3,500  |                                      |   | 3,500,000 |   |   | 3,500 |   |   | 3,500,000 |
| Merchants                and Manufacturers Statutory Trust IV, 3 ML + 2.950%, callable 10/15/2008,                due                10/15/2033 (a) |                                      | 7,500  |                                      |   | 7,500,000 |   |   | 7,500 |   |   | 7,500,000 |
| National                Bancshares Capital Trust II, 3 ML + 3.000%, callable 9/15/2008, due                9/15/2033 (a)                            |                                      | 7,000  |                                      |   | 7,004,231 |   |   | 7,000 |   |   | 7,004,279 |
| Orion                Bancorp, Inc. Statutory Trust I, 3 ML + 3.250%, callable 5/5/2008,                due                5/5/2033 (a)              |                                      | 11,000 |                                      |   | 11,000,000 |   |   | 11,000 |   |   | 11,000,000 |
| Ozark                Capital Statutory Trust II, 3 ML + 2.900%, callable 9/29/2008, due                9/29/2033 (a)                                |                                      | 6,000  |                                      |   | 6,000,000 |   |   | 6,000 |   |   | 6,000,000 |
| Raton                Capital Trust I, 3 ML + 2.900%, callable 9/30/2008, due 9/30/2033                (a)                                           |                                      | 5,000  |                                      |   | 5,047,694 |   |   | 5,000 |   |   | 5,048,242 |
| Salin                Statutory Trust I, 3 ML + 2.950%, callable 10/17/2008, due 10/17/2033                (a)                                       |                                      | 11,000 |                                      |   | 11,000,000 |   |   | 11,000 |   |   | 11,000,000 |
| Sleepy                Hollow Capital Trust I, 3 ML + 3.050%, callable 8/15/2008, due 8/30/2033                (a)                                   |                                      | 4,000  |                                      |   | 4,013,357 |   |   | 4,000 |   |   | 4,013,510 |
| SNB                Capital Trust IV, 3 ML + 3.000%, callable 9/30/2008, due 9/30/2033                (a)                                            |                                      | 5,000  |                                      |   | 5,028,162 |   |   | 5,000 |   |   | 5,028,481 |
| Southside                Statutory Trust III, 3 ML + 2.940%, callable 9/30/2008, due 9/4/2033                (a)                                    |                                      | 12,000 |                                      |   | 12,000,000 |   |   | 12,000 |   |   | 12,000,000 |
| St.                Josephs Financial Capital Trust I, 3 ML + 3.050%, callable 9/30/2008,                due                7/11/2033 (a)            |                                      | 3,000  |                                      |   | 3,036,268 |   |   | 3,000 |   |   | 3,036,681 |
| Sterling                Bank Houston Texas, 7.375%, callable 4/15/2013, due 4/15/2013 (a)                                                           |                                      | 4,670  |                                      |   | 4,670,000 |   |   | 4,670 |   |   | 4,670,000 |
| Summit                Bank Corporation Capital Trust I, 3 ML + 3.100%, callable 9/30/2008,                due                9/30/2033 (a)          |                                      | 12,000 |                                      |   | 11,939,808 |   |   | 12,000 |   |   | 11,939,140 |
| United                Bancorporation of Wyoming Capital Trust I, 3 ML + 3.100%, callable                9/30/2008, due                9/30/2033 (a) |                                      | 9,000  |                                      |   | 9,028,662 |   |   | 9,000 |   |   | 9,028,981 |
| Wesbanco                Capital Trust II, 5.800%, callable 6/30/2008, due 6/30/2033 (a)                                                             |                                      | 4,000  |                                      |   | 3,993,677 |   |   | 4,000 |   |   | 3,993,579 |
| West                Bancorporation Capital Trust I, 6.975%, callable 9/30/2010, due 7/18/2033                (a)                                    |                                      | 11,000 |                                      |   | 10,944,654 |   |   | 11,000 |   |   | 10,943,954 |
| Wintrust                Capital Trust III, 3 ML + 3.250%, callable 4/7/2008, due 4/7/2033                (a)                                        |                                      | 5,000  |                                      |   | 5,000,000 |   |   | 5,000 |   |   | 5,000,000 |
| Total                Banks (amortized cost $343,493,247 and 343,494,853)                                                                            |                                      |   |                                      | $ | 343,493,247 |   |   |   |   | $ | 343,494,853 |

*See        accompanying notes to consolidated financial statements.*

*Back          to Part IV*

----

**UNAUDITED**

**Trapeza      Funding III, LLC**

**Consolidated      Schedules of Investments (continued)**

|                                                                                                                                     | **December 31,                2006** |   | **December 31,                2005** |
|------------------------------------------------------------------------------------------------------------------------------------------|-------------------------------------------|--------|-------------------------------------------|
|                                                                                                                                     | **Principal                Amount (000)** |   | **Fair                Value**             |   | **Principal                Amount (000)** |   | **Fair                Value** |
| Investments                in Trust Preferred Securities - (100%) * (continued)                                                          |                                      |   |                                      |   |   |   |   |
| Thrifts                (14.16% and 14.16%)                                                                                               |                                      |   |                                      |   |   |   |   |
| BankSouth                of Georgia Statutory Trust I, 3ML + 3.150%, callable 9/23/2008,                due                9/23/2033 (a) | $                                         | 5,000  |                                      | $ | 5,000,000 |   | $ | 5,000 |   | $ | 5,000,000 |
| BSC                Capital Trust I, 3 ML + 2.900%, callable 9/30/2008, due 9/30/2033                (a)                                  |                                      | 12,000 |                                      |   | 12,032,628 |   |   | 12,000 |   |   | 12,033,000 |
| Capital                One Capital I, 3 ML + 1.550%, callable 2/1/2007, due                2/1/2027                                      |                                      | 3,000  |                                      |   | 3,003,751 |   |   | 3,000 |   |   | 3,015,000 |
| Coastal                Capital Trust II, 3 ML + 3.050%, callable 6/30/2008, due 6/30/2033                (a)                             |                                      | 10,000 |                                      |   | 9,970,421 |   |   | 10,000 |   |   | 9,970,082 |
| Coastal                Financial Capital Trust I, 3 ML + 3.050%, callable 9/30/2008, due                7/3/2033                (a)      |                                      | 6,000  |                                      |   | 6,052,303 |   |   | 6,000 |   |   | 6,052,897 |
| Flagstar                Statutory III, 6.550%, callable 4/7/2008, due 4/7/2033 (a)                                                       |                                      | 5,000  |                                      |   | 5,000,000 |   |   | 5,000 |   |   | 5,000,000 |
| Flagstar                Statutory Trust IV, 6.750%, callable 3/30/2008, due 3/19/2033 (a)                                                |                                      | 2,670  |                                      |   | 2,646,326 |   |   | 2,670 |   |   | 2,646,006 |
| IndyMac                Capital Trust V, 6.050%, callable 9/30/2008, due 7/11/2033 (a)                                                    |                                      | 12,000 |                                      |   | 11,965,061 |   |   | 12,000 |   |   | 11,964,543 |
| Sterling                Capital Trust IV, 3 ML + 3.150%, callable 5/15/2008, due 5/15/2033                (a)                            |                                      | 1,000  |                                      |   | 996,565 |   |   | 1,000 |   |   | 996,527 |
| Total                Thrifts (amortized cost $56,020,935 and $56,004,243)                                                                |                                      |   |                                      |   | 56,667,055 |   |   |   |   |   | 56,678,055 |
| Total                Investments in Trust Preferred Securities (amortized cost $399,514,182                and $399,499,096)             |                                      |   |                                      | $ | 400,160,302 |   |   |   |   | $ | 400,172,908 |

|                                               |   | **Fair                Value** |      | **Fair                Value** |
|----------------------------------------------------|--------|-------------------------------|-----------|-------------------------------|
| **Interest                Rate Swap Agreements**   |   |                          |      |                          |
| Credit                Suisse                       |   | $                             | 2,633,121 |                          | $ | 3,073,174 |
| Total                Interest Rate Swap Agreements |   | $                             | 2,633,121 |                          | $ | 3,073,174 |

----

*See      accompanying notes to consolidated financial statements*

*Back          to Part IV*

----

**UNAUDITED**

**Trapeza      Funding III, LLC**

**Consolidated      Statements of Operations**

|                                                                                                 |   | **Years                ended December 31,** |       |
|------------------------------------------------------------------------------------------------------|--------|---------------------------------------------|------------|
|                                                                                                 |   | **2006**                                    |       | **2005** |   |
| **Investment                income**                                                                 |   |                                        |       |   |   |
| Interest                                                                                             |   | $                                           | 32,722,335 |   | $ | 26,594,501 |   |
|                                                                                                 |   |                                        |       |   |   |   |   |
| **Expenses**                                                                                         |   |                                        |       |   |   |   |   |
| Interest                                                                                             |   |                                        | 21,706,749 |   |   | 17,283,476 |   |
| Collateral                management fees                                                            |   |                                        | 1,000,000  |   |   | 1,000,000 |   |
| Amortization                                                                                         |   |                                        | 789,824    |   |   | 813,316 |   |
| Trustee                fees                                                                          |   |                                        | 120,699    |   |   | 121,365 |   |
| Professional                fees                                                                     |   |                                        | 117,090    |   |   | 109,620 |   |
| Administration                fees                                                                   |   |                                        | 35,798     |   |   | 32,858 |   |
| Other                                                                                                |   |                                        | 190,452    |   |   | 203,786 |   |
| Total                expenses                                                                        |   |                                        | 23,960,612 |   |   | 19,564,421 |   |
| **Net                investment income**                                                             |   |                                        | 8,761,723  |   |   | 7,030,080 |   |
|                                                                                                 |   |                                        |       |   |   |   |   |
| Net                unrealized (depreciation) appreciation on investment                transactions: |   |                                        |       |   |   |   |   |
| Investments                in trust preferred securities                                             |   |                                        | (27,692    | ) |   | 9,759 |   |
| Interest                rate swap agreements                                                         |   |                                        | (440,053   | ) |   | 1,913,603 |   |
| Net                unrealized (depreciation) appreciation on investment                transactions  |   |                                        | (467,745   | ) |   | 1,923,362 |   |
|                                                                                                 |   |                                        |       |   |   |   |   |
| Net                income before minority interest                                                   |   |                                        | 8,293,978  |   |   | 8,953,442 |   |
| Minority                interest                                                                     |   |                                        | 6,914,556  |   |   | 7,500,787 |   |
| **Net                income**                                                                        |   | $                                           | 1,379,422  |   | $ | 1,452,655 |   |

*See      accompanying notes to consolidated financial statements*

*Back          to Part IV*

----

**UNAUDITED**

**Trapeza      Funding III, LLC**

**Consolidated      Statements of Changes in Members’ Interests**

**Years      ended December 31, 2006 and 2005**

| Balance                at January 1, 2005        |   | $      | 632,569    |   |
|--------------------------------------------------|--------|--------|------------|--------|
| Net                income                        |   |   | 1,452,655  |   |
| Distributions                to members          |   |   | (819,754   | )      |
| Balance                at December 31, 2005 |   |   | 1,265,470  |   |
| Net                income                        |   |   | 1,379,422  |   |
| Distributions                to members          |   |   | (1,062,509 | )      |
| Balance                at December 31, 2006 |   | $      | 1,582,383  |   |

*See      accompanying notes to consolidated financial statements*

*Back          to Part IV*

----

**UNAUDITED**

**Trapeza      Funding III, LLC**

**Consolidated      Statements of Cash Flows**

|                                                                                                                                                     |   | **Years                ended December 31,** |       |
|----------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------------------------------|------------|
|                                                                                                                                                     |   | **2006**                                    |       |  **2005** |   |
| Cash                flows from operating activities                                                                                                      |   |                                        |       |   |   |
| Net                income                                                                                                                                |   | $                                           | 1,379,422  |   | $ | 1,452,655 |   |
| Adjustments                to reconcile net income to net cash and cash equivalents provided                by                operating activities: |   |                                        |       |   |   |   |   |
| Amortization                of deferred debt issuance costs                                                                                              |   |                                        | 789,824    |   |   | 813,316 |   |
| Accretion                of discount on investments in trust preferred securities                                                                        |   |                                        | (15,086    | ) |   | (17,468 | ) |
| Minority                interest                                                                                                                         |   |                                        | 6,914,556  |   |   | 7,500,787 |   |
| Net                unrealized depreciation (appreciation) on investment                transactions                                                      |   |                                        | 467,745    |   |   | (1,923,362 | ) |
| Net                change in operating assets and liabilities:                                                                                           |   |                                        |       |   |   |   |   |
| Interest                receivable on trust preferred securities                                                                                         |   |                                        | (98,320    | ) |   | (183,445 | ) |
| Net                interest receivable from swap counterparty                                                                                            |   |                                        | (79,365    | ) |   | (149,864 | ) |
| Prepaid                expenses                                                                                                                          |   |                                        | (2,173     | ) |   | (1,357 | ) |
| Other                                                                                                                                                    |   |                                        | (13,137    | ) |   | (9,968 | ) |
| Interest                payable                                                                                                                          |   |                                        | 304,401    |   |   | 606,952 |   |
| Professional                fees                                                                                                                         |   |                                        | (3,459     | ) |   | 6,310 |   |
| Trustee                fees                                                                                                                              |   |                                        | −    |   |   | 375 |   |
| Accrued                expenses                                                                                                                          |   |                                        | (17,076    | ) |   | 10,917 |   |
| Minority                interest                                                                                                                         |   |                                        | (4,934,751 | ) |   | (3,700,381 | ) |
| Net                cash and cash equivalents provided by operating activities                                                                            |   |                                        | 4,692,581  |   |   | 4,405,467 |   |
|                                                                                                                                                     |   |                                        |       |   |   |   |   |
| **Cash                flows from financing activities**                                                                                                  |   |                                        |       |   |   |   |   |
| Principal                payments on notes                                                                                                               |   |                                        | (2,293,201 | ) |   | (1,678,572 | ) |
| Distributions                to members                                                                                                                  |   |                                        | (1,062,509 | ) |   | (819,754 | ) |
| Net                cash and cash equivalents used in financing activities                                                                                |   |                                        | (3,355,710 | ) |   | (2,498,326 | ) |
|                                                                                                                                                     |   |                                        |       |   |   |   |   |
| Net                increase in cash and cash equivalents                                                                                                 |   |                                        | 1,336,871  |   |   | 1,907,141 |   |
| Cash                and cash equivalents, beginning of year                                                                                              |   |                                        | 7,360,269  |   |   | 5,453,128 |   |
| Cash                and cash equivalents, end of year                                                                                                    |   | $                                           | 8,697,140  |   | $ | 7,360,269 |   |
|  **Supplemental                disclosure of cash flow information**                                                                                |   |                                        |       |   |   |   |   |
| Net                interest paid                                                                                                                         |   | $                                           | 22,481,713 |   | $ | 16,826,388 |   |

*See        accompanying notes to consolidated financial statements*

*Back          to Part IV*

----

**UNAUDITED**

**Trapeza      Funding III, LLC**

**Notes      to Consolidated Financial Statements**

**December 31,      2006**

**1.**
**Organization      and Purpose**

*Back          to Part IV*

----

**UNAUDITED**

**Trapeza      Funding III, LLC**

**Notes      to Consolidated Financial Statements (continued)**

**1.**
**Organization      and Purpose (continued)**

**2.**
**Summary      of Significant Accounting Policies**

**Basis      of Accounting**

**Cash      and Cash Equivalents**

**Investment      Transactions **

**Investment      Valuation**

*Back          to Part IV*

----

**UNAUDITED**

**Trapeza      Funding III, LLC**

**Notes      to Consolidated Financial Statements (continued)**

**2.**
**Summary      of Significant Accounting Policies (continued)**

**Investment      Valuation (continued)**

**Credit      Risks and General Liquidity Considerations**

**Allocation      of Profits and Losses**

*Back          to Part IV*

----

**UNAUDITED**

**Trapeza      Funding III, LLC**

**Notes      to Consolidated Financial Statements (continued)**

**2.**
**Summary      of Significant Accounting Policies (continued)**

**Allocation      of Profits and Losses (continued)**

**Taxation**

**Use      of Estimates**

**3.**
**Contributions,      Withdrawals and Distributions**

*Back          to Part IV*

----

**UNAUDITED**

**Trapeza      Funding III, LLC**

**Notes      to Consolidated Financial Statements (continued)**

**3.**
**Contributions,      Withdrawals and Distributions (continued)**

**4.**
**Issuer      IV**

**Deferred      Debt Issuance Costs**

*Back          to Part IV*

----

**UNAUDITED**

**Trapeza      Funding III, LLC**

**Notes      to Consolidated Financial Statements (continued)**

**4.**
**Issuer      IV (continued)**

**Collateral      Management and Trustee Fees **

*Back          to Part IV*

----

**UNAUDITED**

**Trapeza      Funding III, LLC**

**Notes      to Consolidated Financial Statements (continued)**

**4.**
**Issuer        IV (continued)**

**Notes      Payable **

|                                 |   | **2006                Principal** |        | **2005****Principal** |   | **Interest                Rate** |   | **Stated                Maturity** |                                                                                                                                                                                    |
|--------------------------------------|--------|-----------------------------------|-------------|-----------------------|--------|----------------------------------|--------|------------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| Class                A1A Notes       |   | $                                 | 144,996,417 |                  | $      | 144,996,417                      |   |                               | Libor                + 0.58% until and including the distribution date in November 2013;                at all                times thereafter, Libor + 1.16%                           |   |   | May                24, 2034 |   |
|  Class                A1B Notes |   | $                                 | 95,000,000  |                  | $      | 95,000,000                       |   |                               | Libor                + 0.83%                                                                                                                                                            |   |   | May                24, 2034 |   |
|  Class                B Notes   |   | $                                 | 33,000,000  |                  | $      | 33,000,000                       |   |                               | See                Class B note                                                                                                                                                         |   |   | May                24, 2034 |   |
|  Class                C-1 Notes |   | $                                 | 44,500,000  |                  | $      | 44,500,000                       |   |                               | Libor                + 1.65%                                                                                                                                                            |   |   | May                24, 2034 |   |
|                                 |   |                              |        |                  |   |                             |   |                               |                                                                                                                                                                                    |   |   |   |   |
| Class                C-2 Notes       |   | $                                 | 44,500,000  |                  | $      | 44,500,000                       |   |                               | 5.006%                until the last day of the interest period immediately prior to the                distribution date in November 2008 and Libor + 1.65%,                thereafter |   |   | May                24, 2034 |   |
|  Class                D Notes   |   | $                                 | 12,635,371  |                  | $      | 13,500,000                       |   |                               | Libor                + 2.60%                                                                                                                                                            |   |   | May                24, 2034 |   |
|  Class                E Notes   |   | $                                 | 5,714,284   |                  | $      | 7,142,856                        |   |                               | 10.00%                                                                                                                                                                                  |   |   | May                24, 2034 |   |

*Back          to Part IV*

----

**UNAUDITED**

**Trapeza      Funding III, LLC**

**Notes      to Consolidated Financial Statements (continued)**

**4.**
**Issuer      IV (continued)**

**Interest      Payments **

**Principal      Payments**

*Principal      Turboing*

*Back          to Part IV*

----

**UNAUDITED**

**Trapeza      Funding III, LLC**

**Notes      to Consolidated Financial Statements (continued)**

**4.**
**Issuer      IV (continued)**

**Principal      Payments (continued)**

*Principal      Turboing (continued)*

*Principal      Proceeds*

*Back          to Part IV*

----

**UNAUDITED**

**Trapeza      Funding III, LLC**

**Notes      to Consolidated Financial Statements (continued)**

**4.**
**Issuer      IV (continued)**

**Acceleration      of Maturity and Redemption**

**5.**
**Interest      Rate Swap Agreements**

*Back          to Part IV*

----

**UNAUDITED**

**Trapeza      Funding III, LLC**

**Notes      to Consolidated Financial Statements (continued)**

**5.**
**Interest      Rate Swap Agreements (continued)**

| **Notional****Amount** |   | **Maturity                Date** |     | **Floating                Rate Received****by                the Company** |   | **Rate/Amount                Paid****by                the Company** |   | **2006****Fair                Value** |                                | **2005****Fair                Value** |   |
|------------------------|--------|----------------------------------|----------|----------------------------------------------------------------------------|--------|----------------------------------------------------------------------|--------|---------------------------------------|-------------------------------------|---------------------------------------|--------|
| $75,000,000            |   |                             | 11/24/08 |                                                                       |   | 6                month Libor + 3.15%                                 |   |                                  | 6.385%                              |                                  | $      | 2,701,922 |   | $ | 3,214,102 |   |
| $33,000,000            |   |                             | 11/24/13 |                                                                       |   | 1                month Libor + 1.25%                                 |   |                                  | 6                month Libor + 1.29 |                                  |   | (245,691 | ) |   | (195,703 | ) |
|                   |   |                             |     |                                                                       |   |                                                                 |   |                                  |                                |                                  | $      | 2,456,231 |   | $ | 3,018,399 |   |

| **Notional****Amount** |   | **Maturity                Date** |    | **Floating                Rate Received****by                the Company** |   | **Rate/Amount                Paid****by                the Company** |   | **2006****Fair                Value** |   | **2005****Fair                Value** |   |
|------------------------|--------|----------------------------------|---------|----------------------------------------------------------------------------|--------|----------------------------------------------------------------------|--------|---------------------------------------|--------|---------------------------------------|--------|
| $52,500,000            |   |                             | 5/24/20 |                                                                       |   | N/A                                                                  |   | $                                     | 85,000 |                                  | $      | 176,890 |   | $ | 54,775 |   |

*Back          to Part IV*

----

**UNAUDITED**

**Trapeza      Funding III, LLC**

**Notes      to Consolidated Financial Statements (continued)**

**6.**
**Related      Party Transactions **

*Back          to Part IV*

----

*Back          to Part IV*

----

**UNAUDITED**

**Trapeza      Funding III, LLC**

**Consolidating      Statement of Financial Condition**

**December 31,      2006**

|                                                                                                                 |   | **Trapeza                Funding III, LLC** |      | **Trapeza****Partners                III L.P. Consolidated** |   | **Total**   |   | **Eliminations** |        | **Trapeza                Funding III, LLC Consolidated** |   |
|----------------------------------------------------------------------------------------------------------------------|--------|---------------------------------------------|-----------|--------------------------------------------------------------|--------|-------------|--------|------------------|-------------|----------------------------------------------------------|--------|
| **Assets**                                                                                                           |   |                                        |      |                                                         |   |        |   |             |        |                                                     |   |
| Investments                in trust preferred securities, at fair value (amortized cost                $399,514,182) |   | $                                           | −   |                                                         | $      | 400,160,302 |   | $                | 400,160,302 |                                                     | $      | − |   | $ | 400,160,302 |   |
| Cash                and cash equivalents                                                                             |   |                                        | 30,018    |                                                         |   | 8,667,122   |   |             | 8,697,140   |                                                     |   | − |   |   | 8,697,140 |   |
| Deferred                debt issuance costs (net of accumulated amortization of                $2,520,541)           |   |                                        | −   |                                                         |   | 6,940,081   |   |             | 6,940,081   |                                                     |   | − |   |   | 6,940,081 |   |
| Unrealized                appreciation on swap agreements                                                            |   |                                        | −   |                                                         |   | 2,633,121   |   |             | 2,633,121   |                                                     |   | − |   |   | 2,633,121 |   |
| Interest                receivable on trust preferred securities.                                                    |   |                                        | −   |                                                         |   | 898,945     |   |             | 898,945     |                                                     |   | − |   |   | 898,945 |   |
| Net                interest receivable from swap counterparty                                                        |   |                                        | −   |                                                         |   | 164,573     |   |             | 164,573     |                                                     |   | − |   |   | 164,573 |   |
| Prepaid                expenses                                                                                      |   |                                        | 27,794    |                                                         |   | 2,996       |   |             | 30,790      |                                                     |   | − |   |   | 30,790 |   |
| Other                                                                                                                |   |                                        | −   |                                                         |   | 156,103     |   |             | 156,103     |                                                     |   | − |   |   | 156,103 |   |
| Investment                in Trapeza Partners III L.P.                                                               |   |                                        | 1,689,899 |                                                         |   | −     |   |             | 1,689,899   |                                                     |   | (1,689,899 | ) |   | − |   |
| Total                Assets                                                                                          |   | $                                           | 1,747,711 |                                                         | $      | 419,623,243 |   | $                | 421,370,954 |                                                     | $      | (1,689,899 | ) | $ | 419,681,055 |   |
|                                                                                                                 |   |                                        |      |                                                         |   |        |   |             |        |                                                     |   |   |   |   |   |   |
| **Liabilities                and Partners’ Capital/Members’ Interests**                                  |   |                                        |      |                                                         |   |        |   |             |        |                                                     |   |   |   |   |   |   |
| Liabilities                                                                                                          |   |                                        |      |                                                         |   |        |   |             |        |                                                     |   |   |   |   |   |   |
| Class                A1A Notes                                                                                       |   | $                                           | −   |                                                         | $      | 144,996,417 |   | $                | 144,996,417 |                                                     | $      | − |   | $ | 144,996,417 |   |
| Class                A1B Notes                                                                                       |   |                                        | −   |                                                         |   | 95,000,000  |   |             | 95,000,000  |                                                     |   | − |   |   | 95,000,000 |   |
| Class                B Notes                                                                                         |   |                                        | −   |                                                         |   | 33,000,000  |   |             | 33,000,000  |                                                     |   | − |   |   | 33,000,000 |   |
| Class                C-1 Notes                                                                                       |   |                                        | −   |                                                         |   | 44,500,000  |   |             | 44,500,000  |                                                     |   | − |   |   | 44,500,000 |   |
| Class                C-2 Notes                                                                                       |   |                                        | −   |                                                         |   | 44,500,000  |   |             | 44,500,000  |                                                     |   | − |   |   | 44,500,000 |   |
| Class                D Notes                                                                                         |   |                                        | −   |                                                         |   | 12,635,371  |   |             | 12,635,371  |                                                     |   | − |   |   | 12,635,371 |   |
| Class                E Notes                                                                                         |   |                                        | −   |                                                         |   | 5,714,284   |   |             | 5,714,284   |                                                     |   | − |   |   | 5,714,284 |   |
| Interest                payable                                                                                      |   |                                        | −   |                                                         |   | 2,428,836   |   |             | 2,428,836   |                                                     |   | − |   |   | 2,428,836 |   |
| Collateral                management fees                                                                            |   |                                        | −   |                                                         |   | 122,222     |   |             | 122,222     |                                                     |   | − |   |   | 122,222 |   |
| Professional                fees                                                                                     |   |                                        | 13,938    |                                                         |   | 75,878      |   |             | 89,816      |                                                     |   | − |   |   | 89,816 |   |
| Trustee                fees                                                                                          |   |                                        | −   |                                                         |   | 13,535      |   |             | 13,535      |                                                     |   | − |   |   | 13,535 |   |
| Accrued                expenses                                                                                      |   |                                        | 151,390   |                                                         |   | 15,000      |   |             | 166,390     |                                                     |   | − |   |   | 166,390 |   |
| Total                Liabilities                                                                                     |   |                                        | 165,328   |                                                         |   | 383,001,543 |   |             | 383,166,871 |                                                     |   | − |   |   | 383,166,871 |   |
|                                                                                                                 |   |                                        |      |                                                         |   |        |   |             |        |                                                     |   |   |   |   |   |   |
| Minority                interest                                                                                     |   |                                        | −   |                                                         |   | 10,420,234  |   |             | 10,420,234  |                                                     |   | 24,511,567 |   |   | 34,931,801 |   |
|                                                                                                                 |   |                                        |      |                                                         |   |        |   |             |        |                                                     |   |   |   |   |   |   |
| Partners’                Capital/Members’ Interests                                                      |   |                                        |      |                                                         |   |        |   |             |        |                                                     |   |   |   |   |   |   |
| Members’                Interests                                                                              |   |                                        | 1,582,383 |                                                         |   | −     |   |             | 1,582,383   |                                                     |   | − |   |   | 1,582,383 |   |
| General                Partner                                                                                       |   |                                        | −   |                                                         |   | 1,689,899   |   |             | 1,689,899   |                                                     |   | (1,689,899 | ) |   | − |   |
| Limited                Partners                                                                                      |   |                                        | −   |                                                         |   | 24,511,567  |   |             | 24,511,567  |                                                     |   | (24,511,567 | ) |   | − |   |
| Total                Partners’ Capital/Members’ Interests                                                |   |                                        | 1,582,383 |                                                         |   | 26,201,466  |   |             | 27,783,849  |                                                     |   | (26,201,466 | ) |   | 1,582,383 |   |
| Total                Liabilities and Partners’ Capital/Members’ Interests                                |   | $                                           | 1,747,711 |                                                         | $      | 419,623,243 |   | $                | 421,370,954 |                                                     | $      | (1,689,899 | ) | $ | 419,681,055 |   |

*Back          to Part IV*

----

**UNAUDITED**

**Trapeza      Funding III, LLC**

**Consolidating      Statement of Operations**

**Year      ended December 31, 2006**

|                                                                   |   | **Trapeza                Funding III, LLC** |      | **Trapeza****Partners                III L.P. Consolidated** |   | **Total**  |   | **Eliminations** |       | **Trapeza                Funding III, LLC Consolidated** |   |
|------------------------------------------------------------------------|--------|---------------------------------------------|-----------|--------------------------------------------------------------|--------|------------|--------|------------------|------------|----------------------------------------------------------|--------|
| **Investment                income**                                   |   |                                        |      |                                                         |   |       |   |             |       |                                                     |   |
| Interest                                                               |   | $                                           | −   |                                                         | $      | 32,722,335 |   | $                | 32,722,335 |                                                     | $      | − |   | $ | 32,722,335 |   |
| Administration                fee income                               |   |                                        | 342,323   |                                                         |   | −    |   |             | 342,323    |                                                     |   | (342,323 | ) |   | − |   |
| Incentive                allocation                                    |   |                                        | 1,120,573 |                                                         |   | −    |   |             | 1,120,573  |                                                     |   | (1,120,573 | ) |   | − |   |
| Other                                                                  |   |                                        | 31        |                                                         |   | −    |   |             | 31         |                                                     |   | (31 | ) |   | − |   |
| **Total                investment income**                             |   |                                        | 1,462,927 |                                                         |   | 32,722,335 |   |             | 34,185,262 |                                                     |   | (1,462,927 | ) |   | 32,722,335 |   |
|                                                                   |   |                                        |      |                                                         |   |       |   |             |       |                                                     |   |   |   |   |   |   |
| **Expenses**                                                           |   |                                        |      |                                                         |   |       |   |             |       |                                                     |   |   |   |   |   |   |
| Interest                                                               |   |                                        | −   |                                                         |   | 21,706,749 |   |             | 21,706,749 |                                                     |   | − |   |   | 21,706,749 |   |
| Collateral                management fees                              |   |                                        | −   |                                                         |   | 1,000,000  |   |             | 1,000,000  |                                                     |   | − |   |   | 1,000,000 |   |
| Amortization                                                           |   |                                        | −   |                                                         |   | 789,824    |   |             | 789,824    |                                                     |   | − |   |   | 789,824 |   |
| Trustee                fees                                            |   |                                        | −   |                                                         |   | 120,699    |   |             | 120,699    |                                                     |   | − |   |   | 120,699 |   |
| Professional                fees                                       |   |                                        | 19,682    |                                                         |   | 97,408     |   |             | 117,090    |                                                     |   | **−** |   |   | 117,090 |   |
| Administration                fees                                     |   |                                        | 35,798    |                                                         |   | 342,323    |   |             | 378,121    |                                                     |   | (342,323 | ) |   | 35,798 |   |
| Other                                                                  |   |                                        | 28,025    |                                                         |   | 162,427    |   |             | 190,452    |                                                     |   | − |   |   | 190,452 |   |
| Total                expenses                                          |   |                                        | 83,505    |                                                         |   | 24,219,430 |   |             | 24,302,935 |                                                     |   | (342,323 | ) |   | 23,960,612 |   |
| **Net                investment income**                               |   |                                        | 1,379,422 |                                                         |   | 8,502,905  |   |             | 9,882,327  |                                                     |   | (1,120,604 | ) |   | 8,761,723 |   |
|                                                                   |   |                                        |      |                                                         |   |       |   |             |       |                                                     |   |   |   |   |   |   |
| Net                unrealized depreciation on investment transactions: |   |                                        |      |                                                         |   |       |   |             |       |                                                     |   |   |   |   |   |   |
| Investments                in trust preferred securities               |   |                                        | −   |                                                         |   | (27,692    | )      |             | (27,692    | )                                                        |   | − |   |   | (27,692 | ) |
| Interest                rate swap agreements                           |   |                                        | −   |                                                         |   | (440,053   | )      |             | (440,053   | )                                                        |   | − |   |   | (440,053 | ) |
| Net                unrealized depreciation on investment transactions  |   |                                        | −   |                                                         |   | (467,745   | )      |             | (467,745   | )                                                        |   | − |   |   | (467,745 | ) |
|                                                                   |   |                                        |      |                                                         |   |       |   |             |       |                                                     |   |   |   |   |   |   |
| Net                income before minority interest                     |   |                                        | 1,379,422 |                                                         |   | 8,035,160  |   |             | 9,414,582  |                                                     |   | (1,120,604 | ) |   | 8,293,978 |   |
| Minority                interest                                       |   |                                        | −   |                                                         |   | 2,432,263  |   |             | 2,432,263  |                                                     |   | 4,482,293 |   |   | 6,914,556 |   |
| **Net                income**                                          |   | $                                           | 1,379,422 |                                                         | $      | 5,602,897  |   | $                | 6,982,319  |                                                     | $      | (5,602,897 | ) | $ | 1,379,422 |   |

*Back          to Part IV*

----

**Schedule        (e)**

**Trapeza        Capital Management Group,        LLC**

**Audited        Financial Statements**

**Years        ended December 31, 2006 and 2005 with Report of Independent        Auditors**

*Back            to Part IV*

----

**Trapeza      Capital Management, LLC**

**Audited      Financial Statements**

**Years      ended December 31, 2006 and 2005 **

**Contents**

| Report                  of                  Independent Auditors     | 1      |
|----------------------------------------------------------------------|--------|
| Audited Financial                    Statements                 |   |
|  Statements                    of Financial Condition           | 2      |
| Statements                    of Operations                          | 3      |
| Statements                    of Changes in Members’ Interests | 4      |
| Statements                    of Cash Flows                          | 5      |
| Notes                    to Audited Financial Statements        | 6      |

*Back            to Part IV*

----

*Back            to Part IV*

----

**Trapeza      Capital Management, LLC**

**Statements      of Financial Condition **

|                                                                                                                                                |   | **December 31** |      |
|-----------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------------------|-----------|
|                                                                                                                                                |   | **2006**             |      | **2005** |   |
| **Assets**                                                                                                                                          |   |                 |      |   |   |
| Collateral                management fees                                                                                                           |   | $                    | 2,456,957 |   | $ | 1,630,506 |   |
| Cash                and cash equivalents                                                                                                            |   |                 | 876,088   |   |   | 462,006 |   |
| Prepaid                expenses                                                                                                                     |   |                 | 179,006   |   |   | 134,462 |   |
| Computer                equipment and database configuration (net of accumulated depreciation                of                $94,559 and $57,327) |   |                 | 22,041    |   |   | 51,293 |   |
| Investment                   in Trapeza Partners II L.P.                                                                                            |   |                 | −   |   |   | 4,444,074 |   |
| Website                redesign (net of accumulated depreciation of $39,100 and $27,153)                                                            |   |                 | −   |   |   | 11,947 |   |
| Total                Assets                                                                                                                         |   | $                    | 3,534,092 |   | $ | 6,734,288 |   |
|  **Liabilities                and Members’ Interests**                                                                                   |   |                 |      |   |   |   |   |
| Liabilities                                                                                                                                         |   |                 |      |   |   |   |   |
| Loan                payable                                                                                                                         |   | $                    | −   |   | $ | 700,000 |   |
| Interest                payable                                                                                                                     |   |                 | −   |   |   | 7,998 |   |
| Trustee                fees                                                                                                                         |   |                 | 245,000   |   |   | 445,000 |   |
| Professional                fees                                                                                                                    |   |                 | 44,000    |   |   | 44,000 |   |
| Accounts                payable                                                                                                                     |   |                 | 14,976    |   |   | 18,485 |   |
| Accrued                expenses                                                                                                                     |   |                 | 809,682   |   |   | 283,521 |   |
| Total                Liabilities                                                                                                                    |   |                 | 1,113,658 |   |   | 1,499,004 |   |
|                                                                                                                                                |   |                 |      |   |   |   |   |
| Members’                Interests                                                                                                             |   |                 | 2,420,434 |   |   | 5,235,284 |   |
| Total                Members’ Interests                                                                                                       |   |                 | 2,420,434 |   |   | 5,235,284 |   |
| Total                Liabilities and Members’ Interests                                                                                       |   | $                    | 3,534,092 |   | $ | 6,734,288 |   |

*See      accompanying notes to financial statements*
*.*

*Back            to Part IV*

----

**Trapeza      Capital Management, LLC**

**Statements      of Operations**

|                                                          |   | **Years                ended December 31,** |      |
|---------------------------------------------------------------|--------|--------------------------------------------------|-----------|
|                                                          |   | **2006**                                         |      | **2005** |   |
| **Investment                income**                          |   |                                             |      |   |   |
| Collateral                management fees                     |   | $                                                | 6,834,693 |   | $ | 4,841,971 |   |
| Structuring                and portfolio management fee       |   |                                             | 1,818,167 |   |   | − |   |
| Equity                in earnings of Trapeza Partners II L.P. |   |                                             | 433,147   |   |   | 1,076,438 |   |
| Reimbursement                income                           |   |                                             | 114,309   |   |   | − |   |
| Interest                                                      |   |                                             | 16,459    |   |   | 5,960 |   |
| Assignment                fee                                 |   |                                             | −   |   |   | 758,715 |   |
| **Total                investment income**                    |   |                                             | 9,216,775 |   |   | 6,683,084 |   |
|  **Expenses**                                            |   |                                             |      |   |   |   |   |
| Wages,                payroll taxes and benefits              |   |                                             | 1,010,012 |   |   | 400,171 |   |
| Consulting                and advisory fees                   |   |                                             | 528,000   |   |   | 528,000 |   |
| Professional                fees                              |   |                                             | 389,035   |   |   | 39,810 |   |
| Licensing                fees                                 |   |                                             | 218,370   |   |   | 129,413 |   |
| Rent                                                          |   |                                             | 66,889    |   |   | 42,525 |   |
| Taxes                                                         |   |                                             | 56,429    |   |   | 96,091 |   |
| Amortization/depreciation                                     |   |                                             | 49,179    |   |   | 49,203 |   |
| Telephone                and internet                         |   |                                             | 18,206    |   |   | 10,354 |   |
| Supplies                                                      |   |                                             | 18,063    |   |   | 14,247 |   |
| Meals,                entertainment and travel                |   |                                             | 17,384    |   |   | − |   |
| Financial                publications                         |   |                                             | 15,196    |   |   | 14,028 |   |
| Delivery                services                              |   |                                             | 11,214    |   |   | 10,229 |   |
| Interest                expense                               |   |                                             | 10,802    |   |   | 55,139 |   |
| Printing                                                      |   |                                             | 1,583     |   |   | 1,461 |   |
| Other                                                         |   |                                             | 51,879    |   |   | 24,554 |   |
| Total                expenses                                 |   |                                             | 2,462,241 |   |   | 1,415,225 |   |
| **Net                income**                                 |   | $                                                | 6,754,534 |   | $ | 5,267,859 |   |

*See      accompanying notes to financial statements*
*.*

*Back            to Part IV*

----

**Trapeza      Capital Management, LLC**

**Statements      of Changes in Members’ Interests**

**Years      ended December 31, 2006 and 2005**

| Balance                at January 1, 2005               |   | $      | 3,374,182  |   |
|--------------------------------------------------------------|--------|--------|------------|--------|
| Capital                contributions, net of placement costs |   |   | 72,000     |   |
| Net                income                                    |   |   | 5,267,859  |   |
| Distributions                to members                      |   |   | (3,478,757 | )      |
| Balance                at December 31, 2005             |   |   | 5,235,284  |   |
| Net                income                                    |   |   | 6,754,534  |   |
| Distributions                to members - cash               |   |   | (4,993,568 | )      |
| Distributions                to members - non-cash           |   |   | (4,575,816 | )      |
| Balance                at December 31, 2006             |   | $      | 2,420,434  |   |

*See      accompanying notes to financial statements*
*.*

*Back            to Part IV*

----

**Trapeza      Capital Management, LLC**

**Statements      of Cash Flows**

|                                                                                                                                                |   | **Years                ended December 31,** |       |
|-----------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------------------------------|------------|
|                                                                                                                                                |   | **2006**                                         |       | **2005** |   |
| **Cash                flows from operating activities**                                                                                             |   |                                             |       |   |   |
| Net                income                                                                                                                           |   | $                                                | 6,754,534  |   | $ | 5,267,859 |   |
| Adjustments                to reconcile net income to net cash and cash equivalents provided                by                operating activities: |   |                                             |       |   |   |   |   |
| Amortization/depreciation                                                                                                                           |   |                                             | 49,179     |   |   | 49,203 |   |
| Equity                in earnings of Trapeza Partners II L.P.                                                                                       |   |                                             | (433,147   | ) |   | (1,076,438 | ) |
| Net                change in operating assets and liabilities:                                                                                      |   |                                             |       |   |   |   |   |
| Collateral                management fees                                                                                                           |   |                                             | (826,451   | ) |   | (247,432 | ) |
| Prepaid                expenses                                                                                                                     |   |                                             | (44,544    | ) |   | (55,317 | ) |
| Investment                in Trapeza Partners II L.P.                                                                                               |   |                                             | 301,405    |   |   | 540,867 |   |
| Accounts                receivable                                                                                                                  |   |                                             | −    |   |   | 30,000 |   |
| Computer                equipment and database configuration                                                                                        |   |                                             | (7,980     | ) |   | 557 |   |
| Interest                payable                                                                                                                     |   |                                             | (7,998     | ) |   | (4,838 | ) |
| License                fee payable                                                                                                                  |   |                                             | −    |   |   | (5,110 | ) |
| Trustee                fees                                                                                                                         |   |                                             | (200,000   | ) |   | (98,001 | ) |
| Accounts                payable                                                                                                                     |   |                                             | (3,509     | ) |   | 3,485 |   |
| Accrued                expenses                                                                                                                     |   |                                             | 526,161    |   |   | 24,936 |   |
| Net                cash and cash equivalents provided by operating activities                                                                       |   |                                             | 6,107,650  |   |   | 4,429,771 |   |
|  **Cash                flows from financing activities**                                                                                       |   |                                             |       |   |   |   |   |
| Principal                payments on loan                                                                                                           |   |                                             | (700,000   | ) |   | (1,200,000 | ) |
| Proceeds                from capital contributions, net of placement costs                                                                          |   |                                             | −    |   |   | 72,000 |   |
| Distributions                to members - cash                                                                                                      |   |                                             | (4,993,568 | ) |   | (3,478,757 | ) |
| Net                cash and cash equivalents used in financing activities                                                                           |   |                                             | (5,693,568 | ) |   | (4,606,757 | ) |
|                                                                                                                                                |   |                                             |       |   |   |   |   |
| Net                increase (decrease) in cash and cash equivalents                                                                                 |   |                                             | 414,082    |   |   | (176,986 | ) |
| Cash                and cash equivalents, beginning of year                                                                                         |   |                                             | 462,006    |   |   | 638,992 |   |
| Cash                and cash equivalents, end of year                                                                                               |   | $                                                | 876,088    |   | $ | 462,006 |   |
|  **Supplemental                disclosure of cash flow information**                                                                           |   |                                             |       |   |   |   |   |
| Interest                paid                                                                                                                        |   | $                                                | 18,800     |   | $ | 61,079 |   |
|                                                                                                                                                |   |                                             |       |   |   |   |   |
| Distributions                to members - non-cash                                                                                                  |   | $                                                | 4,575,816  |   | $ | − |   |

*See      accompanying notes to financial statements.*

*Back            to Part IV*

----

**Trapeza      Capital Management, LLC**

**Notes      to Audited Financial Statements**

**December 31,      2006**

**1.**
**Organization      and Purpose**

*Back            to Part IV*

----

**Trapeza        Capital Management, LLC**

**Notes        to Audited Financial Statements (continued)**

**1.**
**Organization      and Purpose (continued)**

** **

**2.**
**Summary      of Significant Accounting Policies**

**Basis      of Accounting**

**Cash      and Cash Equivalents**

**Allocation      of Profits and Losses**

**Use      of Estimates**

*Back            to Part IV*

----

**Trapeza          Capital Management, LLC**

**Notes          to Audited Financial Statements          (continued)**

**2.**
**Summary      of Significant Accounting Policies (continued)**

**Taxation**

**3.**
**Note      Purchase and Security Agreement**

**4.**
**Trustee      Fees Payable**

*Back            to Part IV*

----

**Trapeza          Capital Management, LLC**

**Notes          to Audited Financial Statements (continued)**

**5.**
**Contributions,      Withdrawals and Distributions **

**6.**
**Related      Party Transactions**

| **Issuer** | ** ** | **Payment                Frequency** | ** ** | **Base                Collateral****Mgmt                Fee** | ** ** | **Subordinate                Collateral Mgmt Fee** | ** ** | **Total                Collateral Management****Fees                2006** | ** **                    | **Total****Collateral                Management****Fees                2005** |   |
|------------|------------|--------------------------------------|------------|---------------------------------------------------------------|------------|----------------------------------------------------|------------|----------------------------------------------------------------------------|-------------------------------|-------------------------------------------------------------------------------|--------|
| I          |       |                                 | Semiannual |                                                          |       | 0.10%(1)                                           |       |                                                                       | 0.15%                         |                                                                          | $      | 809,947 |   | $ | 813,323 |   |
| II         |       |                                 | Semiannual |                                                          |       | 0.25%(1)                                           |       |                                                                       | -                             |                                                                          |   | 989,165 |   |   | 990,103 |   |
| III        |       |                                 | Semiannual |                                                          |       | 0.10%(1)                                           |       |                                                                       | 0.15%                         |                                                                          |   | 750,000 |   |   | 749,999 |   |
| IV         |       |                                 | Semiannual |                                                          |       | 0.10%(1)                                           |       |                                                                       | 0.15%                         |                                                                          |   | 1,000,000 |   |   | 1,000,000 |   |
| V          |       |                                 | Semiannual |                                                          |       | 0.10%(1)                                           |       |                                                                       | 0.20%(3)                      |                                                                          |   | 1,050,000 |   |   | 1,050,046 |   |
| Edge       |       |                                 | Quarterly  |                                                          |       | 0.10%(2)                                           |       |                                                                       | 0.15%                         |                                                                          |   | 612,852 |   |   | 238,500 |   |
| IX         |       |                                 | Quarterly  |                                                          |       | 0.10%(2)                                           |       |                                                                       | 0.15%                         |                                                                          |   | 728,914 |   |   | - |   |
| X          |       |                                 | Quarterly  |                                                          |       | 0.10%(2)                                           |       |                                                                       | 0.15%(4)                      |                                                                          |   | 677,148 |   |   | - |   |
| XI         |       |                                 | Quarterly  |                                                          |       | 0.10%(2)                                           |       |                                                                       | 0.15%(5)                      |                                                                          |   | 216,667 |   |   | - |   |
|       |       |                                 |       |                                                          |       |                                               |       |                                                                       | **Total                Fees** |                                                                          | **$**  | **6,834,693** |   | **$** | **4,841,971** |   |

----

| (1)   | Fee                (per annum) based on the semi-annual asset amount of the net outstanding                portfolio collateral as defined in the                indenture. |
|-----------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2)   | Fee                (per annum) based on the quarterly asset amount of the net outstanding                portfolio collateral as defined in the                indenture. |
|-----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (3)   | The                Collateral Manager is also entitled to additional incentive fees                of 0.05%,                0.10%, and 0.15% per annum in arrears dependent upon the target returns                reached on the preference shares defined in the                indenture. |
|-----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (4)   | The                Collateral Manager is also entitled an additional incentive fee of                0.15%                per annum in arrears dependent upon the target returns reached on                the                preference shares defined in the                indenture. |
|-----------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (5)   | The                Collateral Manager is also entitled to an additional subordinate                collateral management fee of 0.05% per annum in arrears. The cumulative                amount will be payable on any redemption date of notes and on each                distribution date on or after the auction                date. |
|-----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

*Back            to Part IV*

----

**Trapeza            Capital Management, LLC**

**Notes            to Audited Financial Statements (continued)**

**7.**
**Assignment      Fee**

**8.**
**Portfolio      Management Fee**

*Back          to Part IV*

----

**Schedule      (f)**

**UNAUDITED**

**Trapeza      Management Group, LLC**

**Financial      Statements (Unaudited)**

**Years      ended December 31, 2006 and 2005**

*Back          to Part IV*

----

**UNAUDITED**

**Trapeza      Management Group, LLC**

**Financial      Statements**

**Years      ended December 31, 2006 and 2005**

**Contents**

| Consolidated                  Financial Statements                              |   |
|---------------------------------------------------------------------------------|--------|
| Consolidated                  Statements of Financial Condition                 | 2      |
| Consolidated                  Statements of Operations                          | 3      |
| Consolidated                  Statements of Changes in Members’ Interests | 4      |
| Consolidated                  Statements of Cash Flows                          | 5      |
| Notes                  to Consolidated Financial Statements                     | 6      |

*Back          to Part IV*

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**UNAUDITED**

**Trapeza      Management Group, LLC**

**Statements      of Financial Condition**

|                                                                                                          |   | **December 31** |      |
|---------------------------------------------------------------------------------------------------------------|--------|----------------------|-----------|
|                                                                                                          |   | **2006**             |      | **2005** |   |
| **Assets**                                                                                                    |   |                 |      |   |   |
| Collateral                management fees                                                                     |   | $                    | 1,242,638 |   | $ | 903,624 |   |
| Cash                and cash equivalents                                                                      |   |                 | 70,414    |   |   | 87,558 |   |
| Prepaid                expenses                                                                               |   |                 | 34,803    |   |   | 46,458 |   |
| Database                configuration (net of accumulated amortization of $18,923 and                $11,598) |   |                 | 3,052     |   |   | 10,377 |   |
| Total                Assets                                                                                   |   | $                    | 1,350,907 |   | $ | 1,048,017 |   |
| **Liabilities                and Members’ Interests**                                                   |   |                 |      |   |   |   |   |
| Liabilities                                                                                                   |   |                 |      |   |   |   |   |
| Professional                fees                                                                              |   | $                    | 8,400     |   | $ | 12,500 |   |
| Accrued                expenses                                                                               |   |                 | 23,928    |   |   | 31,630 |   |
| Total                Liabilities                                                                              |   |                 | 32,328    |   |   | 44,130 |   |
|                                                                                                          |   |                 |      |   |   |   |   |
| Members’                Interests                                                                       |   |                 | 1,318,579 |   |   | 1,003,887 |   |
| Total                Members’ Interests                                                                 |   |                 | 1,318,579 |   |   | 1,003,887 |   |
| Total                Liabilities and Members’ Interests                                                 |   | $                    | 1,350,907 |   | $ | 1,048,017 |   |

*See      accompanying notes to financial statements.*
* *

*Back          to Part IV*

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**UNAUDITED**

**Trapeza      Management Group, LLC**

**Statements      of Operations**

|                                             |   | **Years                ended December 31,** |      |
|--------------------------------------------------|--------|--------------------------------------------------|-----------|
|                                             |   | **2006**                                         |      | **2005** |   |
| **Investment                income**             |   |                                             |      |   |   |
| Collateral                management fees        |   | $                                                | 2,722,269 |   | $ | 2,737,777 |   |
| Reimbursement                income              |   |                                             | 8,332     |   |   | − |   |
| Total                investment income           |   |                                             | 2,730,601 |   |   | 2,737,777 |   |
| **Expenses**                                     |   |                                             |      |   |   |   |   |
| Wages,                payroll taxes and benefits |   |                                             | 103,840   |   |   | 131,644 |   |
| Licensing                fees                    |   |                                             | 53,372    |   |   | 87,348 |   |
| Insurance                                        |   |                                             | 43,825    |   |   | 45,204 |   |
| Professional                fees                 |   |                                             | 23,937    |   |   | 19,036 |   |
| Rent                                             |   |                                             | 11,662    |   |   | 15,678 |   |
| Taxes                                            |   |                                             | 8,827     |   |   | 73,960 |   |
| Amortization/depreciation                        |   |                                             | 7,325     |   |   | 7,325 |   |
| Supplies                                         |   |                                             | 3,907     |   |   | 5,500 |   |
| Financial                publications            |   |                                             | 3,847     |   |   | 5,172 |   |
| Telephone                                        |   |                                             | 2,840     |   |   | 3,818 |   |
| Delivery                services                 |   |                                             | 2,805     |   |   | 3,523 |   |
| Printing                                         |   |                                             | 220       |   |   | 135 |   |
| Other                                            |   |                                             | 549       |   |   | 3,431 |   |
| Total                expenses                    |   |                                             | 266,956   |   |   | 401,774 |   |
| **Net                income**                    |   | $                                                | 2,463,645 |   | $ | 2,336,003 |   |

*See      accompanying notes to financial statements.*

*Back          to Part IV*

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**UNAUDITED**

**Trapeza      Management Group, LLC**

**Statements      of Changes in Members’ Interests**

**Years      ended December 31, 2006 and 2005**

| Balance                at January 1, 2005   |   | $      | 574,862    |   |
|--------------------------------------------------|--------|--------|------------|--------|
| Net                income                        |   |   | 2,336,003  |   |
| Distributions                to members          |   |   | (1,906,978 | )      |
| Balance                at December 31, 2005 |   |   | 1,003,887  |   |
| Net                income                        |   |   | 2,463,645  |   |
| Distributions                to members          |   |   | (2,148,953 | )      |
| Balance                at December 31, 2006 |   | $      | 1,318,579  |   |

*See      accompanying notes to financial statements.*

*Back          to Part IV*

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**UNAUDITED**

**Trapeza      Management Group, LLC**

**Statements      of Cash Flows**

|                                                                                                                                                |   | **Years                ended December 31,** |       |
|-----------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------------------------------|------------|
|                                                                                                                                                |   | **2006**                                         |       | **2005** |   |
| **Cash                flows from operating activities**                                                                                             |   |                                             |       |   |   |
| Net                income                                                                                                                           |   | $                                                | 2,463,645  |   | $ | 2,336,003 |   |
| Adjustments                to reconcile net income to net cash and cash equivalents provided                by                operating activities: |   |                                             |       |   |   |   |   |
| Amortization/depreciation                                                                                                                           |   |                                             | 7,325      |   |   | 7,325 |   |
| Net                change in operating assets and liabilities:                                                                                      |   |                                             |       |   |   |   |   |
| Collateral                management fees                                                                                                           |   |                                             | (339,014   | ) |   | (335,118 | ) |
| Prepaid                expenses                                                                                                                     |   |                                             | 11,655     |   |   | (15,120 | ) |
| Accounts                payable                                                                                                                     |   |                                             | (4,100     | ) |   | (2,500 | ) |
| Accrued                expenses                                                                                                                     |   |                                             | (7,702     | ) |   | 7,091 |   |
| License                fee payable                                                                                                                  |   |                                             | −    |   |   | (2,023 | ) |
| Taxes                payable                                                                                                                        |   |                                             | −    |   |   | (32,293 | ) |
| Net                cash and cash equivalents provided by operating activities                                                                       |   |                                             | 2,131,809  |   |   | 1,963,365 |   |
| **Cash                flows from financing activities**                                                                                             |   |                                             |       |   |   |   |   |
| Distributions                to members                                                                                                             |   |                                             | (2,148,953 | ) |   | (1,906,978 | ) |
| Net                cash and cash equivalents used in financing activities                                                                           |   |                                             | (2,148,953 | ) |   | (1,906,978 | ) |
|                                                                                                                                                |   |                                             |       |   |   |   |   |
| Net                (decrease) increase in cash and cash equivalents                                                                                 |   |                                             | (17,144    | ) |   | 56,387 |   |
| Cash                and cash equivalents, beginning of year                                                                                         |   |                                             | 87,558     |   |   | 31,171 |   |
| Cash                and cash equivalents, end of year                                                                                               |   | $                                                | 70,414     |   | $ | 87,558 |   |

*See      accompanying notes to financial statements.*

*Back          to Part IV*

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**UNAUDITED**

**Trapeza      Management Group, LLC**

**Notes      to Financial Statements**

**December      31, 2006**

**1.**
**Organization      and Purpose**

*Back          to Part IV*

----

**UNAUDITED**

**Trapeza      Management Group, LLC**

**Notes      to Financial Statements (continued)**

**2.**
**Summary      of Significant Accounting Policies**

**Basis      of Accounting**

**Cash      and Cash Equivalents**

**Allocation      of Profits and Losses**

**Use      of Estimates**

**Taxation**

*Back          to Part IV*

----

**UNAUDITED**

**Trapeza      Management Group, LLC**

**Notes      to Financial Statements (continued)**

**3.**
**Contributions,      Withdrawals and Distributions**

**4.**
**Related      Party Transactions**

*Back          to Part IV*

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|   | **a)** | **Exhibits** |
|--------|--------|--------------|

** Exhibit        No.                  **
**Description**

|   | 3.1     | Restated                  Certificate of Incorporation of Resource America. (1)                                                                                                                                                                                                                                                                                                                                                                              |
|--------|---------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | 3.2     | Amended                  and Restated Bylaws of Resource America, Inc. (1)                                                                                                                                                                                                                                                                                                                                                                                   |
|   | 10.1    | Master                  Separation and Distribution Agreement between Atlas America, Inc.                  and                  Resource America, Inc. dated May 14, 2004. (2)                                                                                                                                                                                                                                                                               |
|   | 10.2    | Registration                  Rights Agreement between Atlas America, Inc. and Resource America,                  Inc.                  dated May 14, 2004. (2)                                                                                                                                                                                                                                                                                              |
|   | 10.3    | Tax                  Matters Agreement between Atlas America, Inc. and Resource America,                  Inc.                  dated May 14, 2004. (2)                                                                                                                                                                                                                                                                                                      |
|   | 10.4    | Transition                  Services Agreement between Atlas America, Inc. and Resource America,                  Inc.                  dated May 14, 2004. (2)                                                                                                                                                                                                                                                                                              |
|   | 10.5    | Employment                  Agreement between Steven J. Kessler and Resource America, Inc.,                  dated                  October 5, 1999. (1)                                                                                                                                                                                                                                                                                                     |
|   | 10.5(a) | Employment                  Agreement between Jonathan Z. Cohen and Resource America, Inc.,                  dated                  October 5, 1999. (9)                                                                                                                                                                                                                                                                                                     |
|   | 10.6(a) | Fourth                  Modification, dated June 30, 2005, of Revolving Credit Agreement,                  Revolving Credit Loan and Security Agreement dated July 27, 1999                  by and                  between Resource America, Inc., Resource Properties XXXIV, Inc.,                  Resource                  Properties XL, Inc., Resource Properties XXX, Inc., Resource Properties                  XXXI, Inc. and Sovereign Bank. (3) |

|   | 10.6(b) | Fifth                  Modification, dated September 29, 2005, of Revolving Credit Loan                  and                  Security Agreement dated July 27, 1999 by and between Resource                  America,                  Inc., Resource Properties XXXIV, Inc., Resource Properties XL,                  Inc.,                  Resource Properties XXX, Inc. Resource Properties XXXI, Inc. and                  Sovereign                  Bank. (4) |
|--------|---------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | 10.6(c) | Seventh                  Modification, dated July 2006, of Revolving Credit Loan and Security                  Agreement dated July 27, 1999 by and between Resource America,                  Inc.,                  Resource Properties XXX, Inc., Resource Properties XLI, Inc., Resource                  Capital Investor, Inc. and Sovereign Bank. (10)                                                                                                         |
|   | 10.7(a) | Credit                  Agreement dated July 31, 2006 between LEAF Financial Corporation,                  LEAF                  Funding, Inc. and National City Bank and between Resource America,                  Inc.                  and National City Bank. (7)                                                                                                                                                                                                |

|   | 10.7(b)                    | Guaranty                  and Suretyship Agreement dated July 31, 2006 between Resource America,                  Inc., Resource Leasing, Inc. and National City Bank. (7)                                                                                                                                                     |
|--------|----------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | 10.7(c)                    | First                  Amendment to Credit Agreement dated August 14, 2006 between LEAF                  Financial                  Corporation, LEAF Funding, Inc. and National City Bank. (8)                                                                                                                                |
|   | 10.8                       | First                  Amendment to Guaranty of Payment dated June 18, 2004 between Resource                  America, Inc. and Commerce Bank, National Association. (2)                                                                                                                                                       |
|   | 10.9                       | Revolving                  Credit Agreement and Assignment dated as of May 27, 2004 among                  Lease                  Equity Appreciation Fund I, L.P., LEAF Financial Corporation and                  Sovereign                  Bank. (2)                                                                       |
|   | 10.10                      | Pooling                  and Servicing Agreement, dated July 13, 2005, among LEAF Funding,                  Inc.,                  LEAF Financial Corporation, Merrill Lynch, Pierce, Fenner & Smith                  Incorporated and The Bank of New York.                  (4)                                          |
|   | 10.10                  (a) | Assignment,                  Assumption and Amendment Agreement, dated September 29, 2006, among                  LEAF                  Funding, Inc., Merrill                  Lynch Equipment Finance LLC, Merrill Lynch Commercial Finance                  Corp.                  and U.S. Bank National Association. (10) |
|   | 10.11                      | 2005                  Omnibus Equity Compensation Plan. (3)                                                                                                                                                                                                                                                                    |
|   | 10.12                      | Grant                  of Incentive Stock Option Pursuant to the Resource America, Inc.                  2005                  Omnibus Equity Compensation Plan. (6)                                                                                                                                                           |
|   | 10.13                      | Grant                  of Non-Qualified Stock Option Pursuant to the Resource America,                  Inc. 2005                  Omnibus Equity Compensation Plan. (6)                                                                                                                                                       |
|   | 10.14                      | 2005                  Omnibus Equity Compensation Plan - Form of Stock Award Agreement                  (5)                                                                                                                                                                                                                    |
|   | 10.15                      | Loan                  and Security Agreement, dated July 2006, among Resource America,                  Inc. and                  Commerce Bank, N.A. (10)                                                                                                                                                                     |
|   | 21.1                       | Subsidiaries                  of Resource America, Inc. (10)                                                                                                                                                                                                                                                                   |
|   | 23.1                       | Consent                  of Grant Thornton LLP. (10)                                                                                                                                                                                                                                                                           |
|   | 23.2        | Consent                of Ernst & Young LLP.                                                                                                                                                                                                                                                                          |
|   | 31.1                       | Certification                  of Chief Executive Officer pursuant to                  Section 302 of the Sarbanes-Oxley Act of 2002.                                                                                                                                                                                          |
|   | 31.2                       | Certification                  of Chief Financial Officer pursuant to                  Section 302 of the Sarbanes-Oxley Act of 2002.                                                                                                                                                                                          |
|   | 32.1                       | Certification                  of Chief Executive Officer pursuant to                  Section 1350 18 U.S.C., as adopted pursuant to Section 906 of the                  Sarbanes-Oxley Act of 2002.                                                                                                                          |
|   | 32.2                       | Certification                  of Chief Financial Officer pursuant to                  Section 1350 18 U.S.C., as adopted pursuant to Section 906 of the                  Sarbanes-Oxley Act of 2002.                                                                                                                          |

----

| (1) | Filed                  previously as an exhibit to our Quarterly Report on Form 10-Q for                  the                  quarter ended December 31, 1999 and by this reference incorporated                  herein. |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2) | Filed                  previously as an exhibit to our Quarterly Report on Form 10-Q for                  the                  quarter ended June 30, 2004 and by this reference incorporated                  herein. |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (3) | Filed                  previously as an exhibit to our Quarterly Report on Form 10-Q for the                  quarter ended June 30, 2005 and by this reference incorporated                  herein. |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (4) | Filed                  previously as an exhibit to our Annual Report on Form 10K for the                  fiscal                  year ended September 30, 2005 and by this reference incorporated                  herein. |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (5) | Filed                  previously as an exhibit to our Report on Form 8-K filed on February                  15,                  2006 and by this reference incorporated                  herein. |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (6) | Filed                  previously as an exhibit to our Annual Report on Form 10K/A for                  the fiscal                  year ended September 30, 2005 and by this reference incorporated                  herein. |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (7) | Filed                  previously as an exhibit to our Report on Form 8-K filed on August                  4, 2006                  and by this reference incorporated                  herein. |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (8) | Filed                  previously as an exhibit to our Report on Form 8-K filed on August                  17,                  2006 and by this reference incorporated                  herein. |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (9) | Filed                  previously as an exhibit to our Annual Report on Form 10K for the                  fiscal                  year ended September 30, 2000 and by this reference incorporated                  herein. |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (10) | Filed                  previously as an exhibit to our Annual Report on Form 10K for the                  fiscal                  year ended September 30, 2006 and by this reference incorporated                  herein. |
|------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

*Back            to Part IV*

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**SIGNATURES**

|                                                          |                                                 |                                            |
|---------------------------------------------------------------|------------------------------------------------------|-------------------------------------------------|
|                                                          | RESOURCE                AMERICA,                INC. |
| Date: March                29,                2007  | By:                                        | /s/ Jonathan                Z. Cohen  |
|                                                          | Chief                Executive Officer and President |

|  /s/ Edward E. Cohen                                         |  Chairman of the Board                            |  March                  29, 2007                  |
|-----------------------------------------------------------------------------|-------------------------------------------------------------|--------------------------------------------------------|
|  EDWARD E. COHEN          |                                                        |                                                   |
|                                |                                                        |           |
|  /s/ Jonathan Z.                  Cohen                      |  Director, President                              |  March                  29, 2007                  |
|  JONATHAN Z. COHEN                                                |  and Chief Executive Officer                           |                                                   |
|                                                                        |                                                        |                                                   |
|  /s/ Carlos C.                  Campbell                     |  Director                                              |  March                  29, 2007                  |
|  CARLOS C. CAMPBELL                                                    |                                                        |                                                   |
|                                                                        |                                                        |                                                   |
|  /s/ Andrew M. Lubin                                         |  Director                                              |  March 29, 2007                                   |
|  ANDREW M. LUBIN                                                       |                                                        |                                                   |
|                                                                        |                                                        |                                                   |
|  /s/ Michael J.                  Bradley                     |  Director                                              |  March                  29, 2007                  |
|  MICHAEL J. BRADLEY                                     |                                                        |                                                   |
|                                                                        |                                                        |                                                   |
| /s/                  Hersh Kozlov                                           |  Director                                              |  March                  29, 2007                  |
| HERSH                  KOZLOV                                               |                                                        |                                                   |
|                                                                        |                                                        |                                                   |
|  /s/ Kenneth A. Kind                                         |  Director                                              |  March 29, 2007                                   |
|  KENNETH A. KIND                                                       |                                                        |                                                   |
|                                                                        |                                                        |                                                   |
|  /s/ John S. White                                                     |  Director                                              |  March                  29, 2007                  |
|  JOHN S. WHITE                                                         |                                                        |                                                   |
|                                                                        |                                                        |                                                   |
|  /s/ Steven J.                  Kessler                      |  Executive Vice                  President   |  March 29, 2007                                   |
|  STEVEN J. KESSLER                                                     |  and Chief Financial Officer                           |                                                   |

*Back              to Part IV*

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