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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington D.C. 20549
 FORM 10-K
 þ Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 For the fiscal year ended October 31, 2005
    
    Commission File Number 002-50219
 Metrocorp, Inc.
  Illinois
    
    36-2786335(State or other jurisdiction of
    
    (I.R.S. Employerincorporation or organization)
    
    Identification No.)
 1523 8th Street, East Moline, Illinois
    
    
    
    61244(Address of principal executive offices)
    
    (Zip Code)
    Title of Each Class
    
    Name of Exchange on Which RegisteredCommon stock ($0.20 par value)
    
    None
  o þ
  þ o
  o þ
 þ
 o o þ
  o þ




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TABLE OF CONTENTS
 PageFORWARD LOOKING STATEMENTS
    
    
    1PART I
    
    
    1ITEM 1. BUSINESS
    
    
    1ITEM 1A. RISK FACTORS
    
    
    9ITEM 2. PROPERTIES
    
    
    16ITEM 3. LEGAL PROCEEDINGS
    
    
    17ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
    
    
    17PART II
    
    
    17ITEM 5. MARKET FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER
MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
    
    
    17ITEM 6. SELECTED FINANCIAL DATA
    
    
    20ITEM 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
    
    
    21ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT
MARKET RISK
    
    
    38ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
    
    
    42ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
    
    
    42ITEM 9A. CONTROLS AND PROCEDURES
    
    
    42ITEM 9B. OTHER INFORMATION
    
    
    42PART III
    
    
    42ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
    
    
    42ITEM 11. EXECUTIVE COMPENSATION
    
    
    45ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT AND RELATED STOCKHOLDER MATTERS
    
    
    47ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
    
    
    48ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
    
    
    49PART IV
    
    
    50ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
    
    
    50SIGNATURES
    
    
    52Audited consolidated financial statements
    
    
    F-1ExhibitsArticles of IncorporationBylawsAmended and Restated Trust AgreementSubordinated Loan AgreementGuarantee AgreementForm of Trust Preferred CertificateForm of Indemnification AgreementForm of Incentive Bonus AgreementChange of Control Severance PlanStay Bonus PlanRenewal of Lease AgreementReplacement Revolving NoteLoan AgreementCode of EthicsCode of Business ConductRule 13a-14(a)/15d-14(a) Certification of CEORule 13a-14(a)/15d-14(a) Certification of CFOSection 1350 Certification of CEOSection 1350 Certification of CFOCharter of Audit Committee
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FORWARD LOOKING STATEMENTS
  
 PART I
 
 ITEM 1. BUSINESS
 History and Business
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Lending Activities
      Other Activities
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Employees
  Competition
     Regulation and Supervision
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Metrocorp
  Restrictions on Dividends.
 Holding Company Activities and Financial Modernization.
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Safe and Sound Banking Practices.
 Anti-Tying Restrictions.
 Capital Adequacy Requirements.
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Imposition of Liability for Undercapitalized Subsidiaries.
 Bankruptcy
 Securities Laws.
 Sarbanes-Oxley Act of 2002.
 Metrobank
  Restrictions on Transactions with Affiliates and Insiders.
 Restrictions on Distribution of Subsidiary Bank Dividends and Assets.
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Examinations
 Capital Adequacy Requirements.
 Corrective Measures for Capital Deficiencies.
  Deposit Insurance Assessments.
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Enforcement Powers.
 Community Reinvestment Act.
 Privacy
 USA PATRIOT Act.
 Consumer Laws and Regulations.
 Recent Developments
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ITEM 1A. RISK FACTORS
  The types of loans in our portfolio have a higher degree of credit risk and a downturn in our real
estate markets could hurt our business.
   Decreasing interest rates could hurt our profits.
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An economic downturn in Illinois and Iowa could hurt our profits.
  
    
    problem assets and foreclosures may increase,
    
    demand for our products and services may decline,
    
    low cost or non-interest bearing deposits may decrease, and
    
    collateral for loans made by us, especially real estate, may decline in value, in
turn reducing customers borrowing power, and reducing the value of assets and
collateral associated with our existing loans.
  Strong competition in Illinois and Iowa could hurt our profits.
  We operate in a highly regulated environment and we may be adversely affected by changes in laws
and regulations. Regulations may prevent or impair our ability to pay dividends, engage in
acquisitions or operate in other ways.
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
    
    the payment of dividends to its shareholders,
    
    possible mergers with or acquisitions of or by other institutions,
    
    desired investments,
    
    loans and interest rates on loans,
    
    interest rates paid on deposits,
    
    the possible expansion of branch offices, and
    
    the ability to provide securities or trust services.
  We are exposed to risks in connection with the loans we make.
  Technological advances impact our business.
  Compliance with changing regulation of corporate governance and public disclosure may result in
additional risks and expenses.
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We depend on key personnel and the loss of one or more of those key personnel may materially and
adversely affect our prospects.
  Our balance sheet is liability sensitive. Our business is subject to interest rate risk and
variations in interest rates may negatively affect our financial performance.
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If we cannot attract deposits, our growth may be inhibited.
  Our allowance for loan and lease losses may not be adequate to cover actual losses.
  We rely on communications, information, operating and financial control systems technology from
third-party service providers, and we may suffer an interruption in those systems that may result
in lost business. We may not be able to obtain substitute providers on terms that are as favorable
if our relationships with our existing service providers are interrupted.
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Our future ability to pay dividends is subject to restrictions. As a result, capital appreciation,
if any, of our common stock may be your sole source of gains in the future.
   No trading market exists for our common stock.
  If we fail to maintain an effective system of internal and disclosure control, we may not be able
to accurately report our financial results or prevent fraud. As a result, current and potential
shareholders could lose confidence in our financial reporting, which would harm our business and
the trading price of our securities.
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There is no guarantee that any change of control arrangement will be consummated.
  Directors and officers of Metrocorp have potential conflicts of interest with any acquisition.
  Anti-takeover provisions, compensation arrangements and federal law may limit or delay the ability
of another party to acquire us, which could cause our stock price to decline.
  
    
    a change of control severance plan described at Item 11Executive Compensation,
    
    a stay bonus plan described at Item 11Executive Compensation,
    
    incentive bonus agreements with executives and key employees described at Item
11Executive Compensation, and
    
    the authorization to issue preferred stock by action of the board of directors
acting alone, thus without obtaining shareholder approval.
  We are exposed to risk of environmental liabilities with respect to properties to which we take
title.
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We could sustain losses if our asset quality declines.
  Our recent results may not be indicative of our future results.
  We may issue additional common stock or other equity securities in the future which could dilute
the ownership interest of existing shareholders
  Holders of our junior subordinated debentures have rights that are senior to those of our common
stockholders.
  
 ITEM 2. PROPERTIES
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Head Office
    
    1523 Eighth Street, East Moline, IllinoisPaul Revere Square
    
    2322 East Kimberly, Davenport, Iowa53rd Street Branch
    
    2533 East 53rd Street, Davenport, IowaAvenue of the Cities Branch
    
    701 Avenue of the Cities, East Moline, IowaHampton Branch
    
    629 State Street, Hampton, IllinoisMilan Branch
    
    102 East First Avenue, Milan, IllinoisMoline Branch
    
    2115 48th Street, Moline, IllinoisWal-mart Branch
    
    3930 44th Avenue Drive, Moline, IllinoisSilvis Branch
    
    1300 John Deere Expressway, Silvis, IllinoisRapids City Branch
    
    1700 Second Avenue, Rapids City, IllinoisPreston Branch
    
    One West White Street, Preston, IllinoisAndover Branch
    
    4330 140th Street, Andover, IowaDelmar Branch
    
    301 Western Avenue, Delmar, IowaMiles Branch
    
    329 Ferry Road, Miles, IowaSabula Branch
    
    404 Sycamore, Sabula, IowaMount Carroll Branch
    
    642 South East Street, Mount Carroll, IllinoisChadwick Branch
    
    123 Main Street, Chadwick, IllinoisMorrison Branch
    
    211 West Main Street, Morrison, IllinoisOperations Office
    
    1505 Seventh Street, East Moline, IllinoisCommunity Insurance Office
    
    329 Ferry Road, Miles, IowaRock Island Branch
    
    1800 5th Avenue, Rock Island, Illinois
 
 ITEM 3. LEGAL PROCEEDINGS
  
 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
  
 PART II
 
 ITEM 5. MARKET FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF
EQUITY SECURITIES
 Common Stock
 Description.
 Voting.
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
    
    amendment to the Articles of Incorporation,
    
    a plan of merger or consolidation,
    
    the sale, lease, change, transfer or other disposition of substantially all of the
property of Metrocorp,
    
    the granting of consent to the disposition of property other than in the ordinary
course of business by an entity controlled by Metrocorp, or
    
    a plan for the liquidation or dissolution of Metrocorp.
  Dividends.
 Year ended
    
    Per share dividends paidOctober 31, 2005
    
    $
    0.360October 31, 2004
    
    
    0.352October 31, 2003
    
    
    0.344
  Restrictions on Transfer.
 2005
    
    2004Quarter Ended
    
    Low
    
    High
    
    Low
    
    HighJanuary 31
    
    $
    35.80
    
    
    $
    35.80
    
    
    $
    34.50
    
    
    $
    34.50April 30
    
    
    38.20
    
    
    
    38.20
    
    
    
    35.80
    
    
    
    35.80July 31
    
    
    38.20
    
    
    
    38.20
    
    
    
    35.80
    
    
    
    35.80October 31
    
    
    39.00
    
    
    
    40.50
    
    
    
    35.80
    
    
    
    35.80
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Subordinated Debentures and Trust Preferred Securities
   Junior Subordinated Debentures
  Recent Sales of Unregistered Securities
  Repurchases of Equity Securities
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ITEM 6. SELECTED FINANCIAL DATA
  METROCORP, INC.
Financial Summary
 Year ended October 31,
    
    2005
    
    2004
    
    2003
    
    2002
    
    2001Statement of Income Data:Interest income
    
    $
    24,703
    
    
    $
    24,022
    
    
    $
    26,229
    
    
    $
    32,198
    
    
    $
    26,003Interest expense
    
    
    9,673
    
    
    
    7,204
    
    
    
    9,106
    
    
    
    13,774
    
    
    
    14,650Net interest income
    
    
    15,030
    
    
    
    16,818
    
    
    
    17,123
    
    
    
    18,424
    
    
    
    11,353Provision for loan losses
    
    
    (1,150
    )
    
    
    
    
    
    
    1,766
    
    
    
    755
    
    
    
    83Noninterest income
    
    
    4,893
    
    
    
    5,114
    
    
    
    6,536
    
    
    
    6,235
    
    
    
    3,730Noninterest expense
    
    
    14,487
    
    
    
    15,488
    
    
    
    15,596
    
    
    
    14,333
    
    
    
    10,442Income before income taxes
    
    
    6,586
    
    
    
    6,444
    
    
    
    6,297
    
    
    
    9,571
    
    
    
    4,558Provision for income taxes
    
    
    1,499
    
    
    
    1,407
    
    
    
    1,542
    
    
    
    2,580
    
    
    
    796Net income
    
    $
    5,087
    
    
    $
    5,037
    
    
    $
    4,755
    
    
    $
    6,991
    
    
    $
    3,762Per Common Share Data:Earnings, basic and diluted
    
    $
    3.98
    
    
    $
    3.71
    
    
    $
    3.51
    
    
    $
    5.12
    
    
    $
    2.74Dividends paid
    
    
    0.360
    
    
    
    0.352
    
    
    
    0.344
    
    
    
    0.336
    
    
    
    0.328Book value at October 31
    
    
    35.57
    
    
    
    37.82
    
    
    
    35.44
    
    
    
    32.20
    
    
    
    26.24Balance Sheet Data:Loans, net
    
    $
    206,701
    
    
    $
    216,287
    
    
    $
    233,821
    
    
    $
    270,650
    
    
    $
    169,405Total assets
    
    
    578,977
    
    
    
    575,689
    
    
    
    558,306
    
    
    
    558,976
    
    
    
    389,577Total deposits
    
    
    511,411
    
    
    
    500,015
    
    
    
    486,946
    
    
    
    486,102
    
    
    
    337,548Total borrowings
    
    
    11,182
    
    
    
    11,898
    
    
    
    10,664
    
    
    
    15,135
    
    
    
    12,182Junior subordinated debentures
    
    
    10,309
    
    
    
    10,309
    
    
    
    10,309
    
    
    
    10,309
    
    
    
    Shareholders equity
    
    
    37,049
    
    
    
    39,177
    
    
    
    37,022
    
    
    
    35,009
    
    
    
    28,706Redeemable common stock held by ESOP plan
participants
    
    
    6,492
    
    
    
    11,767
    
    
    
    10,792
    
    
    
    9,153
    
    
    
    8,066Financial Ratios:Return on average assets
    
    
    0.90
    %
    
    
    0.88
    %
    
    
    0.86
    %
    
    
    1.24
    %
    
    
    0.94
    %Return on average equity
    
    
    13.56
    %
    
    
    13.41
    %
    
    
    12.67
    %
    
    
    22.30
    %
    
    
    16.27
    %Net interest margin (FTE)
    
    
    3.16
    %
    
    
    3.53
    %
    
    
    3.69
    %
    
    
    3.88
    %
    
    
    3.47
    %Noninterest expense to average total assets
    
    
    2.55
    %
    
    
    2.71
    %
    
    
    2.81
    %
    
    
    2.55
    %
    
    
    2.60
    %Net loan losses (recoveries) to average loans
    
    
    (0.09
    )%
    
    
    0.03
    %
    
    
    0.85
    %
    
    
    0.31
    %
    
    
    0.04
    %Average equity to average assets
    
    
    6.61
    %
    
    
    6.58
    %
    
    
    6.76
    %
    
    
    5.58
    %
    
    
    5.76
    %Dividend payout ratio
    
    
    9.05
    %
    
    
    9.49
    %
    
    
    9.80
    %
    
    
    6.56
    %
    
    
    11.97
    %At October 31:Equity to assets
    
    
    6.40
    %
    
    
    6.81
    %
    
    
    6.63
    %
    
    
    6.26
    %
    
    
    7.37
    %Allowance for loan losses to loans
    
    
    1.20
    %
    
    
    1.58
    %
    
    
    1.49
    %
    
    
    1.47
    %
    
    
    1.10
    %
 
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ITEM 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
    Corporate Developments in Fiscal 2005
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Critical Accounting Policies and Estimates
  Financial Condition
    - 22 -




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Results of Operations
    Comparison of Operating Results for the Years Ended October 31, 2005 and October 31, 2004
 General
  Net Interest Income
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Interest Income
   At October 31,
    
    2005
    
    2004
    
    2003Weighted Average Yield OnLoans, including held for sale
    
    
    6.19
    %
    
    
    5.62
    %
    
    
    5.77
    %Securities available for sale
    
    
    4.39
    
    
    
    4.41
    
    
    
    4.63Federal Funds Sold
    
    
    3.84
    
    
    
    1.98
    
    
    
    1.00Other
    
    
    5.03
    
    
    
    5.20
    
    
    
    5.13Combined weighted average yield
    
    
    5.07
    
    
    
    4.89
    
    
    
    5.16Weighted Average Rate Paid OnInterest-bearing and money market demand deposits
    
    
    1.83
    
    
    
    1.32
    
    
    
    1.19Savings deposits
    
    
    0.51
    
    
    
    0.51
    
    
    
    0.51Time deposits
    
    
    3.05
    
    
    
    2.18
    
    
    
    2.48Other borrowed money
    
    
    5.65
    
    
    
    4.14
    
    
    
    3.68Combined weighted average rate paid
    
    
    2.41
    
    
    
    1.75
    
    
    
    1.80Spread
    
    
    2.66
    
    
    
    3.14
    
    
    
    3.36
 Rate/Volume Analysis
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YEAR ENDED OCTOBER 31,
    
    2005 VS. 2004
    
    2004 VS. 2003Increase
    
    Increase
    
    Total
    
    Increase
    
    Increase
    
    Total(Decrease)
    
    (Decrease)
    
    Increase
    
    (Decrease)
    
    (Decrease)
    
    Increase(in Thousands)
    
    Due to Volume
    
    Due to Rate
    
    (Decrease)
    
    Due to Volume
    
    Due to Rate
    
    (Decrease)INTEREST-EARNING ASSETSLoans, including held for sale
    
    $
    (640
    )
    
    $
    1,094
    
    
    $
    454
    
    
    $
    (1,456
    )
    
    $
    (1,452
    )
    
    $
    (2,908
    )Securities available for sale
    
    
    529
    
    
    
    (427
    )
    
    
    102
    
    
    
    2,470
    
    
    
    (1,726
    )
    
    
    744Federal funds sold
    
    
    29
    
    
    
    14
    
    
    
    43
    
    
    
    (64
    )
    
    
    4
    
    
    
    (60
    )Other
    
    
    115
    
    
    
    (32
    )
    
    
    83
    
    
    
    6
    
    
    
    11
    
    
    
    17Total interest-earning assets
    
    $
    33
    
    
    $
    649
    
    
    $
    682
    
    
    $
    956
    
    
    $
    (3,163
    )
    
    $
    (2,207
    )INTEREST-BEARING LIABILITIESInterest-bearing and money market demand deposits
    
    $
    (172
    )
    
    $
    691
    
    
    $
    519
    
    
    $
    262
    
    
    $
    (356
    )
    
    $
    (94
    )Savings deposits
    
    
    13
    
    
    
    
    
    
    
    13
    
    
    
    10
    
    
    
    (22
    )
    
    
    (12
    )Time deposits
    
    
    (7
    )
    
    
    1,542
    
    
    
    1,535
    
    
    
    (347
    )
    
    
    (1,556
    )
    
    
    (1,903
    )Other borrowed money
    
    
    (63
    )
    
    
    466
    
    
    
    403
    
    
    
    282
    
    
    
    (175
    )
    
    
    107Total interest-bearing liabilities
    
    $
    (229
    )
    
    $
    2,699
    
    
    $
    2,470
    
    
    $
    207
    
    
    $
    (2,109
    )
    
    $
    (1,902
    )Net effect on net interest income
    
    $
    262
    
    
    $
    (2,050
    )
    
    $
    (1,788
    )
    
    $
    749
    
    
    $
    (1,054
    )
    
    $
    (305
    )
 Average Balances, Interest Rates and Yields
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YEAR ENDEDOCTOBER 31,
    
    2005
    
    
    2004
    
    
    2003AVERAGE
    
    
    INTEREST
    
    
    
    
    
    
    AVERAGE
    
    
    INTEREST
    
    
    
    
    
    
    AVERAGE
    
    
    INTEREST(Dollars in
    
    OUTSTANDING
    
    
    EARNED/
    
    
    YIELD
    
    
    OUTSTANDING
    
    
    EARNED
    
    
    YIELD
    
    
    OUTSTANDING
    
    
    EARNED
    
    
    YIELDThousands)
    
    BALANCE
    
    
    PAID
    
    
    /RATE
    
    
    BALANCE
    
    
    /PAID
    
    
    /RATE
    
    
    BALANCE
    
    
    /PAID
    
    
    /RATEINTEREST-EARNING
ASSETSLoans, including
held for sale
    
    $
    226,602
    
    
    $
    13,311
    
    
    
    5.87
    %
    
    $
    238,469
    
    
    $
    12,857
    
    
    
    5.39
    %
    
    $
    263,985
    
    
    $
    15,766
    
    
    
    5.97
    %Securities
available for
sale
    
    
    288,153
    
    
    
    11,084
    
    
    
    3.85
    
    
    
    275,594
    
    
    
    10,982
    
    
    
    3.98
    
    
    
    223,619
    
    
    
    10,236
    
    
    
    4.58Federal funds sold
    
    
    1,505
    
    
    
    53
    
    
    
    3.52
    
    
    
    368
    
    
    
    9
    
    
    
    2.45
    
    
    
    5,137
    
    
    
    70
    
    
    
    1.36Other
    
    
    4,732
    
    
    
    256
    
    
    
    5.41
    
    
    
    2,853
    
    
    
    174
    
    
    
    6.10
    
    
    
    2,741
    
    
    
    157
    
    
    
    5.73Total
interest-earning
assets
    
    
    520,992
    
    
    $
    24,704
    
    
    
    4.74
    %
    
    
    517,284
    
    
    $
    24,022
    
    
    
    4.64
    %
    
    
    495,482
    
    
    $
    26.229
    
    
    
    5.29
    %Non-interest-earning Assets
    
    
    46,947
    
    
    
    
    
    
    
    
    
    
    
    53,194
    
    
    
    
    
    
    
    
    
    
    
    59,635Total assets
    
    $
    567,939
    
    
    
    
    
    
    
    
    
    
    $
    570,478
    
    
    
    
    
    
    
    
    
    
    $
    555,117INTEREST-BEARING
LIABILITIESInterest -bearing
& money market
demand deposits
    
    $
    203,481
    
    
    $
    2,973
    
    
    
    1.46
    %
    
    $
    206,168
    
    
    $
    2,453
    
    
    
    1.19
    %
    
    $
    185,731
    
    
    $
    2,547
    
    
    
    1.37
    %Savings deposits
    
    
    42,510
    
    
    
    213
    
    
    
    0.50
    
    
    
    39,850
    
    
    
    200
    
    
    
    0.50
    
    
    
    38,037
    
    
    
    212
    
    
    
    0.56Time deposits
    
    
    196,219
    
    
    
    5,097
    
    
    
    2.60
    
    
    
    196,599
    
    
    
    3,563
    
    
    
    1.81
    
    
    
    210,750
    
    
    
    5,466
    
    
    
    2.59Other borrowed
funds
    
    
    29,689
    
    
    
    1,391
    
    
    
    4.69
    
    
    
    31,606
    
    
    
    988
    
    
    
    3.13
    
    
    
    22,421
    
    
    
    881
    
    
    
    3.93Total
interest-bearing
liabilities
    
    
    471,899
    
    
    $
    9,674
    
    
    
    2.05
    %
    
    
    474,223
    
    
    $
    7,204
    
    
    
    1.52
    %
    
    
    456,939
    
    
    $
    9,106
    
    
    
    1.99
    %Non-interest-bearing:Deposits
    
    
    47,051
    
    
    
    
    
    
    
    
    
    
    
    43,655
    
    
    
    
    
    
    
    
    
    
    
    44,516Liabilities
    
    
    2,344
    
    
    
    
    
    
    
    
    
    
    
    3,770
    
    
    
    
    
    
    
    
    
    
    
    6,172Total liabilities
    
    
    521,294
    
    
    
    
    
    
    
    
    
    
    
    521,648
    
    
    
    
    
    
    
    
    
    
    
    507,627Repurchase
Liability (ESOP)
    
    
    9,129
    
    
    
    
    
    
    
    
    
    
    
    11,279
    
    
    
    
    
    
    
    
    
    
    
    9,973Shareholders
equity
    
    
    37,516
    
    
    
    
    
    
    
    
    
    
    
    37,551
    
    
    
    
    
    
    
    
    
    
    
    37,517Total liabilities &
shareholders equity
    
    $
    567,939
    
    
    
    
    
    
    
    
    
    
    $
    570,478
    
    
    
    
    
    
    
    
    
    
    $
    555,117Net interest-earning
assets
    
    $
    49.093
    
    
    
    
    
    
    
    
    
    
    $
    43,061
    
    
    
    
    
    
    
    
    
    
    $
    38,543Net interest income
    
    
    
    
    
    $
    15,030
    
    
    
    
    
    
    
    
    
    
    $
    16,818
    
    
    
    
    
    
    
    
    
    
    $
    17,123Net interest rate
spread
    
    
    
    
    
    
    
    
    
    
    2.69
    %
    
    
    
    
    
    
    
    
    
    
    3.12
    %
    
    
    
    
    
    
    
    
    
    
    3.30
    %Net yield on average
interest-earning
assets
    
    
    
    
    
    
    
    
    
    
    2.88
    %
    
    
    
    
    
    
    
    
    
    
    3.25
    %
    
    
    
    
    
    
    
    
    
    
    3.46
    %Average
interest-earning
assets to average
interest-bearing
liabilities
    
    
    110.40
    %
    
    
    
    
    
    
    
    
    
    
    109.08
    %
    
    
    
    
    
    
    
    
    
    
    108.44
    %
 Interest Expense
  - 27 -




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##### Table of Contents



Provision for Loan Losses
    Noninterest Income
  - 28 -




---



##### Table of Contents



Noninterest Expense
  Income Tax Expense
  Comparison of Operating Results for the Years Ended October 31, 2004 and October 31, 2003
 General
  Net Interest Income
  Interest Income
  - 29 -




---



##### Table of Contents



Interest Expense
  Provision for Loan Losses
  Noninterest Income
  Noninterest Expense
  - 30 -




---



##### Table of Contents



Income Tax Expense
  Asset Quality
    Liquidity and Capital Resources
   - 31 -




---



##### Table of Contents



Contractual Obligations
    
    Total
    
    
    Less Than 1 year
    
    
    1 to 3 years
    
    
    3 to 5 years
    
    
    Over 5 yearsTime Deposits
    
    $
    200,753
    
    
    $
    158,722
    
    
    $
    40,083
    
    
    $
    1,902
    
    
    $
    46Long-term debt
    
    
    6,434
    
    
    
    672
    
    
    
    1,344
    
    
    
    2,344
    
    
    
    2,074Subordinated debentures
    
    
    10,309
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    10,309ESOP Repurchase Liability
    
    
    6,492
    
    
    
    6,492
    
    
    
    
    
    
    
    
    
    
    
    Total
    
    $
    223,988
    
    
    $
    165,885
    
    
    $
    41,427
    
    
    $
    4,246
    
    
    $
    12,429
  - 32 -




---



##### Table of Contents



Impact of Inflation and Changing Prices
  Impact of New Accounting Standards
  - 33 -




---



##### Table of Contents



Quarterly Results of Operations (Unaudited)
  Quarter Ended(in thousands except per share amounts)
    
    October 31
    
    July 31
    
    April 30
    
    January 31FISCAL YEAR 2005Total Interest Income
    
    $
    6,221
    
    
    $
    6,098
    
    
    $
    6,184
    
    
    $
    6,201Total Interest Expense
    
    
    2,769
    
    
    
    2,376
    
    
    
    2,300
    
    
    
    2,228Net Interest Income
    
    
    3,452
    
    
    
    3,722
    
    
    
    3,884
    
    
    
    3,973Provision for loan losses
    
    
    (1,150
    )
    
    
    
    
    
    
    
    
    
    
    Noninterest income
    
    
    1,308
    
    
    
    1,204
    
    
    
    1,276
    
    
    
    1,105Noninterest expense
    
    
    4,027
    
    
    
    3,467
    
    
    
    3,388
    
    
    
    3,605Income before income taxes
    
    
    1,883
    
    
    
    1,459
    
    
    
    1,772
    
    
    
    1,473Income tax expense
    
    
    469
    
    
    
    303
    
    
    
    424
    
    
    
    304Net Income
    
    $
    1,414
    
    
    $
    1,156
    
    
    $
    1,348
    
    
    $
    1,169Earnings per common share, basic and
diluted
    
    $
    1.11
    
    
    $
    0.90
    
    
    $
    1.06
    
    
    $
    0.91FISCAL YEAR 2004Total Interest Income
    
    $
    5,384
    
    
    $
    6,065
    
    
    $
    6,247
    
    
    $
    6,326Total Interest Expense
    
    
    1,421
    
    
    
    1,850
    
    
    
    1,895
    
    
    
    2,038Net Interest Income
    
    
    3,963
    
    
    
    4,215
    
    
    
    4,352
    
    
    
    4,288Provision for loan losses
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Noninterest income
    
    
    1,292
    
    
    
    1,263
    
    
    
    1,405
    
    
    
    1,154Noninterest expense
    
    
    3,790
    
    
    
    3,788
    
    
    
    3,934
    
    
    
    3,976Income before income taxes
    
    
    1,465
    
    
    
    1,690
    
    
    
    1,823
    
    
    
    1,466Income tax expense
    
    
    299
    
    
    
    372
    
    
    
    423
    
    
    
    313Net Income
    
    $
    1,166
    
    
    $
    1,318
    
    
    $
    1,400
    
    
    $
    1,153Earnings per common share, basic and
diluted
    
    $
    0.86
    
    
    $
    0.97
    
    
    $
    1.03
    
    
    $
    0.85
 Guide 3 Statistical Disclosure by Bank Holding Companies
 Securities Act Guide 3: Statistical Disclosure by Bank Holding
Companies
 I.
    
    Distribution of Assets, Liabilities and Stockholders Equity; Interest Rates and Interest
Differential
  - 34 -




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##### Table of Contents



II.
    
    Investment Portfolio
 Investment Securities
 October 31,
    
    2005
    
    2004
    
    2003U.S. Treasury
    
    $
    35,171,549
    
    
    $
    32,542,116
    
    
    $
    24,884,420U.S. government agencies
    
    
    67,611,208
    
    
    
    62,242,253
    
    
    
    60,255,773Tax-exempt municipal
    
    
    85,058,807
    
    
    
    78,059,581
    
    
    
    64,216,680Taxable municipal
    
    
    57,465,904
    
    
    
    53,457,279
    
    
    
    43,137,028Corporate
    
    
    46,537,992
    
    
    
    45,740,977
    
    
    
    42,451,584Trust preferred securities
    
    
    927,331
    
    
    
    926,120
    
    
    
    925,005Mortgage-backed
    
    
    4,140,154
    
    
    
    6,825,213
    
    
    
    11,731,444Total amortized cost
    
    $
    296,912,945
    
    
    $
    279,793,539
    
    
    $
    247,601,934
 Investment Securities, Maturities and Yields.
 Maturity at October 31, 2005After 1 Year
    
    After 5Years
    
    
    
    
    
    Maturity1 Year
    
    Through
    
    Through
    
    After
    
    Date Notor Less
    
    5 Years
    
    10 Years
    
    10 Years
    
    ApplicableU.S. Treasury
    
    $
    7,041,994
    
    
    $
    28,129,555
    
    
    $
    
    
    
    $
    
    
    
    $
    U.S. government agencies
    
    
    15,082,542
    
    
    
    41,233,266
    
    
    
    11,295,399
    
    
    
    
    
    
    
    Tax-exempt municipal
    
    
    11,802,451
    
    
    
    53,553,180
    
    
    
    13,572,729
    
    
    
    6,130,447
    
    
    
    Taxable municipal
    
    
    11,280,593
    
    
    
    43,869,257
    
    
    
    2,316,054
    
    
    
    
    
    
    
    Corporate
    
    
    8,643,449
    
    
    
    34,335,521
    
    
    
    3,559,023
    
    
    
    
    
    
    
    Trust preferred securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    927,331
    
    
    
    Mortgage-backed
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,140,154Total amortized cost
    
    $
    53,851,029
    
    
    $
    201,120,779
    
    
    $
    30,743,205
    
    
    $
    7,057,778
    
    
    $
    4,140,154Weighted average yield
    
    
    3.66
    %
    
    
    4.30
    %
    
    
    5.00
    %
    
    
    6.41
    %
    
    
    3.95
    %
 Investment Concentrations
 Issuer
    
    Total Book Value
    
    Total Market ValueCity of Rock Island, IL
    
    $
    5,595,248
    
    
    $
    5,547,079Village of Milan, IL
    
    
    4,500,000
    
    
    
    4,356,936
 - 35 -




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##### Table of Contents



III.
    
    Loan Portfolio
 Types of Loans
 2005
    
    2004
    
    2003
    
    2002
    
    2001Commercial
    
    $
    23,084,454
    
    
    $
    26,599,719
    
    
    $
    24,263,157
    
    
    $
    21,467,040
    
    
    $
    8,997,952Agricultural production
    
    
    32,077,481
    
    
    
    30,805,048
    
    
    
    31,305,214
    
    
    
    35,806,554
    
    
    
    Real estate:Construction
    
    
    1,244,334
    
    
    
    1,476,757
    
    
    
    1,931,682
    
    
    
    2,174,255
    
    
    
    3,676,604Residential
    
    
    41,996,174
    
    
    
    40,933,961
    
    
    
    43,227,263
    
    
    
    56,564,714
    
    
    
    35,405,598Commercial
    
    
    38,136,664
    
    
    
    39,679,155
    
    
    
    42,214,567
    
    
    
    40,215,734
    
    
    
    28,126,467Farmland
    
    
    41,052,340
    
    
    
    38,518,681
    
    
    
    36,489,092
    
    
    
    36,564,129
    
    
    
    Installment
    
    
    16,206,796
    
    
    
    20,189,753
    
    
    
    23,669,506
    
    
    
    31,539,328
    
    
    
    27,250,296Student
    
    
    11,818,866
    
    
    
    18,386,205
    
    
    
    30,993,251
    
    
    
    47,024,039
    
    
    
    63,972,326Other
    
    
    3,602,892
    
    
    
    3,168,508
    
    
    
    3,271,788
    
    
    
    3,326,326
    
    
    
    3,859,602Total Loans
    
    
    209,220,001
    
    
    
    219,757,787
    
    
    
    237,365,520
    
    
    
    274,682,119
    
    
    
    171,288,845Less allowance for loan losses
    
    
    2,519,213
    
    
    
    3,471,118
    
    
    
    3,544,619
    
    
    
    4,032,546
    
    
    
    1,883,870Loans, net
    
    $
    206,700,788
    
    
    $
    216,286,669
    
    
    $
    233,820,901
    
    
    $
    270,649,573
    
    
    $
    169,404,975
 Maturities and Sensitivities of Loans to Changes in Interest Rates.
 Due after one
    
    
    
    
    
    Maturities after one yearDue in one
    
    year through
    
    Due after
    
    Variable
    
    Fixedyear or less
    
    five years
    
    five years
    
    rate
    
    RateCommercial
    
    $
    10,263,462
    
    
    $
    10,035,118
    
    
    $
    2,785,874
    
    
    $
    2,864,005
    
    
    $
    9,956,987Agricultural production
    
    
    24,072,147
    
    
    
    7,163,363
    
    
    
    841,971
    
    
    
    2,390,696
    
    
    
    5,614,638Real estate:Construction
    
    
    169,915
    
    
    
    
    
    
    
    1,074,419
    
    
    
    1,074,419
    
    
    
    Residential
    
    
    1,979,732
    
    
    
    8,929,921
    
    
    
    31,086,521
    
    
    
    28,572,819
    
    
    
    11,443,623Commercial
    
    
    3,505,937
    
    
    
    10,141,331
    
    
    
    24,489,396
    
    
    
    25,352,682
    
    
    
    9,278,045Farmland
    
    
    1,126,869
    
    
    
    18,106,578
    
    
    
    21,818,893
    
    
    
    21,591,066
    
    
    
    18,334,405Installment
    
    
    1,726,516
    
    
    
    11,731,606
    
    
    
    2,748,674
    
    
    
    651,917
    
    
    
    13,828,363Student
    
    
    961,104
    
    
    
    3,844,416
    
    
    
    7,013,346
    
    
    
    10,857,762
    
    
    
    Other
    
    
    3,602,892
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total Loans
    
    $
    47,408,574
    
    
    $
    69,952,333
    
    
    $
    91,859,094
    
    
    $
    93,355,366
    
    
    $
    68,456,061
 Risk Elements.
 Nonaccrual, Past Due and Restructured Loans
 October 31,
    
    2005
    
    2004
    
    2003
    
    2002
    
    2001Loans accounted for on a nonaccrual
basis
    
    $
    585,972
    
    
    $
    793,863
    
    
    $
    801,558
    
    
    $
    1,470,613
    
    
    $
    326,745Accruing loans past due 90 days or more
    
    
    579,527
    
    
    
    1,191,556
    
    
    
    1,434,846
    
    
    
    1,108,838
    
    
    
    1,091,413Troubled debt restructurings
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Totals
    
    $
    1,165,499
    
    
    $
    1,985,419
    
    
    $
    2,236,404
    
    
    $
    2,579,451
    
    
    $
    1,418,158
  - 36 -




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##### Table of Contents



Potential Problem Loans
 Foreign Outstandings
 Loan Concentrations
 Other Interest-Bearing Assets.
 IV.
    
    Summary of Loan Loss Experience
 Analysis of the Allowance for Loan Losses
 Year ended October 31,2005
    
    2004
    
    2003
    
    2002
    
    2001Balance at beginning of period
    
    $
    3,471,118
    
    
    $
    3,544,619
    
    
    $
    4,032,546
    
    
    $
    1,883,870
    
    
    $
    1,869,630Charge-offs:Commercial and agricultural
    
    
    (23,896
    )
    
    
    (282,004
    )
    
    
    (1,873,398
    )
    
    
    (984,000
    )
    
    
    Real estate
    
    
    
    
    
    
    (3,426
    )
    
    
    (83,712
    )
    
    
    (6,482
    )
    
    
    (150
    )Installment, student, other
    
    
    (144,504
    )
    
    
    (244,610
    )
    
    
    (359,789
    )
    
    
    (251,533
    )
    
    
    (96,181
    )Total charge-offs
    
    
    (168,400
    )
    
    
    (530,040
    )
    
    
    (2,316,899
    )
    
    
    (1,242,015
    )
    
    
    (96,331
    )Recoveries:Commercial and agricultural
    
    
    287,717
    
    
    
    377,415
    
    
    
    3,908
    
    
    
    304,829
    
    
    
    Real estate
    
    
    
    
    
    
    9,995
    
    
    
    100
    
    
    
    
    
    
    
    Installment, student, other
    
    
    78,778
    
    
    
    69,129
    
    
    
    58,964
    
    
    
    59,071
    
    
    
    27,080Total recoveries
    
    
    366,495
    
    
    
    456,539
    
    
    
    62,972
    
    
    
    363,900
    
    
    
    27,080Net recoveries (charge-offs)
    
    
    198,095
    
    
    
    (73,501
    )
    
    
    (2,253,927
    )
    
    
    (878,115
    )
    
    
    (69,251
    )Provision charged to expense (income)
    
    
    (1,150,000
    )
    
    
    
    
    
    
    1,766,000
    
    
    
    755,259
    
    
    
    83,491Provision increase due to acquisition
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,271,532
    
    
    
    Balance at end of period
    
    $
    2,519,213
    
    
    $
    3,471,118
    
    
    $
    3,544,619
    
    
    $
    4,032,546
    
    
    $
    1,883,870Ratio of net charge-offs to average
loans outstanding
    
    
    (0.09
    )%
    
    
    0.03
    %
    
    
    0.85
    %
    
    
    0.31
    %
    
    
    0.04
    %
 Allocation of the Allowance for Loan Losses
 October 31,2005
    
    
    
    
    
    2004
    
    
    
    
    
    2003
    
    
    
    
    
    2002
    
    
    
    
    
    2001% of loans
    
    
    
    % of loans
    
    
    
    % of loans
    
    
    
    % of loans
    
    
    
    % of loansto total
    
    
    
    
    
    to total
    
    
    
    
    
    to total
    
    
    
    
    
    to total
    
    
    
    
    
    to total(Dollars in thousands)
    
    Amount
    
    loans
    
    Amount
    
    loans
    
    Amount
    
    loans
    
    Amount
    
    loans
    
    Amount
    
    loansCommercial
and agricultural
    
    $
    1,442
    
    
    
    64.22
    %
    
    $
    2,003
    
    
    
    61.70
    %
    
    $
    1,992
    
    
    
    56.57
    %
    
    $
    2,568
    
    
    
    48.80
    %
    
    $
    276
    
    
    
    21.67
    %Real estate
    
    
    295
    
    
    
    20.67
    %
    
    
    499
    
    
    
    19.30
    %
    
    
    283
    
    
    
    19.03
    %
    
    
    212
    
    
    
    21.38
    %
    
    
    199
    
    
    
    22.82
    %Installment,
student, other
    
    
    613
    
    
    
    15.11
    %
    
    
    525
    
    
    
    19.00
    %
    
    
    487
    
    
    
    24.40
    %
    
    
    494
    
    
    
    29.82
    %
    
    
    727
    
    
    
    55.51
    %Unallocated
    
    
    169
    
    
    
    
    
    
    
    444
    
    
    
    
    
    
    
    783
    
    
    
    
    
    
    
    759
    
    
    
    
    
    
    
    682
    
    
    
    Total
    
    $
    2,519
    
    
    
    100.00
    %
    
    $
    3,471
    
    
    
    100.00
    %
    
    $
    3,545
    
    
    
    100.00
    %
    
    $
    4,033
    
    
    
    100.00
    %
    
    $
    1,884
    
    
    
    100.00
    %
 - 37 -




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##### Table of Contents



V.
    
    Deposits
  MaturityOver 3months
    
    Over 6 months3 months
    
    through 6
    
    through 12
    
    Over 12or less
    
    Months
    
    months
    
    months
    
    TotalTime certificates
of $100,000 or more
    
    $
    39,160,309
    
    
    $
    9,801,598
    
    
    $
    12,758,032
    
    
    $
    7,592,905
    
    
    $
    69,312,844
 VI.

    Return on Equity and Assets
  VII.

    Short-Term Borrowings
  
 ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
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Volumes Subject to Repricing WithinOver three
    
    
    Over oneThree
    
    
    months
    
    
    yearmonths
    
    
    through
    
    
    through
    
    
    Overor less
    
    
    one year
    
    
    five years
    
    
    five years
    
    
    Total(Dollars in thousands)Interest-earning assets:Federal funds sold
    
    $
    8,650
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    8,650Investment securities
    
    
    22,625
    
    
    
    34,212
    
    
    
    199,468
    
    
    
    37,820
    
    
    
    294,125Loans held for sale
    
    
    14,160
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    14,160Loans
    
    
    49,948
    
    
    
    13,414
    
    
    
    135,517
    
    
    
    10,341
    
    
    
    209,220Other
    
    
    544
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    544Total interest-earning assets
    
    $
    95,927
    
    
    $
    47,626
    
    
    $
    334,985
    
    
    $
    48,161
    
    
    $
    526,699Interest-bearing liabilities:DepositsInterest-bearing demand and
money market accounts
    
    $
    46,808
    
    
    $
    89,574
    
    
    $
    84,751
    
    
    $
    
    
    
    $
    221,133Savings
    
    
    8,253
    
    
    
    12,380
    
    
    
    20,634
    
    
    
    
    
    
    
    41,267Time, $100,000 and over
    
    
    39,160
    
    
    
    22,560
    
    
    
    7,593
    
    
    
    
    
    
    
    69,313Time, under $100,000
    
    
    36,718
    
    
    
    60,283
    
    
    
    34,439
    
    
    
    
    
    
    
    131,440Short-term borrowings
    
    
    4,748
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,748Federal Home Loan Bank advances
    
    
    
    
    
    
    
    
    
    
    1,000
    
    
    
    
    
    
    
    1,000Notes payable
    
    
    5,434
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,434Junior subordinated debentures
    
    
    10,309
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    10,309Total interest-bearing liabilities
    
    $
    151,430
    
    
    $
    184,797
    
    
    $
    148,417
    
    
    $
    
    
    
    $
    484,644Periodic gap
    
    $
    (55,503
    )
    
    $
    (137,171
    )
    
    $
    186,568
    
    
    $
    48,161Cumulative period gap
    
    
    (55,503
    )
    
    
    (192,674
    )
    
    
    (6,106
    )
    
    
    42,055Cumulative period gap to total assets
    
    
    (9.6
    %)
    
    
    (33.3
    %)
    
    
    (1.1
    %)
    
    
    7.3
    %
 - 40 -




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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
  Report of Independent Registered Public Accounting Firm on the
Financial Statements
    
    
    F-1Consolidated Balance Sheets as of October 31, 2005 and 2004
    
    
    F-2Consolidated Statements of Income for the years ended
October 31, 2005, 2004 and 2003
    
    
    F-3Consolidated Statements of Changes in Stockholders Equity for the
years ended October 31, 2005, 2004 and 2003
    
    
    F-4Consolidated Statements of Cash Flows for the years ended
October 31, 2005, 2004 and 2003
    
    
    F-6Notes to Consolidated Financial Statements
    
    
    F-8
 
 ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
  
 ITEM 9A. CONTROLS AND PROCEDURES
   
 ITEM 9B. OTHER INFORMATION
  
 PART III
 
 ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
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Name
    
    Age
    
    Current PositionsGary D. Andersen
    
    
    58
    
    
    Director and President of Metrocorp
and Metrobank; member of Metrocorp Executive Committee and Salary CommitteeNancy R. Hamilton
    
    
    55
    
    
    Director of Metrocorp and Metrobank; Senior Vice President, Trust
Officer of Metrobank; Vice President of MetrocorpMarcus V. Hobert
    
    
    50
    
    
    General Counsel and Compliance Officer of MetrobankJohn T. Kustes
    
    
    55
    
    
    Senior Vice President, Operations and Cashier of MetrobankJohn R. McEvoy, Jr.
    
    
    52
    
    
    Senior Vice President, Controller of MetrobankKirk A. Metzger
    
    
    38
    
    
    Senior Vice President, Trust OfficerBart D. Ottens
    
    
    40
    
    
    Senior Vice President, Lending of MetrobankRoland D. Petersen
    
    
    69
    
    
    Director of Metrocorp and Metrobank; member of Metrocorp Audit
CommitteeBen H. Ryan, Jr.
    
    
    80
    
    
    Chairman of Metrocorp and Metrobank; member of Metrocorp
Executive Committee, Salary Committee and Audit CommitteeDavid A. Skinner
    
    
    55
    
    
    Director of Metrocorp and Metrobank; member of Metrocorp Salary
Committee and Chairman of Audit CommitteeJulius J. Van Paemel
    
    
    62
    
    
    Director and Secretary of Metrocorp and Metrobank; Senior Vice
President of Metrobank; Vice President of Metrocorp; member of
Metrocorp Executive Committee
  Gary Andersen
 Nancy Hamilton
 Marcus Hobert
 John Kustes
 John McEvoy
 Kirk A. Metzger
 Bart Ottens
 Roland Petersen
 - 43 -




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Ben Ryan
 David Skinner
 Julius Van Paemel
 Board of Directors and Board Committees
      - 44 -




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##### Table of Contents



Code of Ethics and Code of Business Conduct
  Indemnification, Insurance and Limitation of Liability
   Section 16(a) Beneficial Ownership Reporting Compliance
  
 ITEM 11. EXECUTIVE COMPENSATION
  - 45 -




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##### Table of Contents



Annual CompensationYear ended
    
    
    
    
    
    
    
    
    
    All OtherName and Title
    
    October 31,
    
    Salary
    
    Bonus
    
    Compensation(1)(2)Gary D. Andersen
    
    
    2005
    
    
    $
    208,000
    
    
    $
    0
    
    
    $
    8,610President
    
    
    2004
    
    
    
    208,000
    
    
    
    0
    
    
    
    42,7632003
    
    
    
    202,667
    
    
    
    0
    
    
    
    36,467Julius J. Van Paemel
    
    
    2005
    
    
    
    111,100
    
    
    
    0
    
    
    
    6,451Senior Vice President,
    
    
    2004
    
    
    
    111,101
    
    
    
    0
    
    
    
    25,449Consumer Lending
    
    
    2003
    
    
    
    111,101
    
    
    
    0
    
    
    
    22,427Nancy R. Hamilton
    
    
    2005
    
    
    $
    107,456
    
    
    
    0
    
    
    
    3,952Senior Vice President/Trust Officer
    
    
    2004
    
    
    
    105,845
    
    
    
    0
    
    
    
    22,2112003
    
    
    
    102,347
    
    
    
    0
    
    
    
    18,762Marcus V. Hobert
    
    
    2005
    
    
    $
    106,703
    
    
    
    0
    
    
    
    6,109General Counsel and
    
    
    2004
    
    
    
    105,104
    
    
    
    0
    
    
    
    24,004Compliance Officer
    
    
    2003
    
    
    
    101,629
    
    
    
    0
    
    
    
    20,640
 
 (1)
    
    Includes payments for premiums for health insurance and term life insurance for all years
shown.(2)
    
    Includes Metrocorp contributions to the Employee Stock Ownership Plan for the years of 2004
and 2003. The ESOP was terminated in 2004. Salary Committee Interlocks and Insider Participation
  Change of Control Severance Plan
  Stay Bonus Plan
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Executive Agreements
  Indemnification Agreement.
 Incentive Bonus Agreement.
 Director Compensation
  401(k) Plan
  
 ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER
MATTERS
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Common Stock Ownership
 Number of shares
    
    Percentage of commonBeneficial Owners
    
    beneficially owned
    
    stock outstanding(1)5% HoldersCede & Co.
P.O. Box 20 Bowling Green Station
New York, NY 10004
    
    
    207,099
    
    
    
    17.46
    %Directors and Executive OfficersGary D. Andersen
    
    
    13,816
    (2)
    
    
    1.16
    %Nancy R. Hamilton
    
    
    10,140
    (3)
    
    
    
    *Marcus V. Hobert
    
    
    22,020
    (4)
    
    
    1.86
    %John T. Kustes
    
    
    2,300
    (5)
    
    
    
    *John R. McEvoy, Jr.
    
    
    5,781
    
    
    
    
    *Kirk A. Metzger
    
    
    0
    
    
    
    
    *Bart D. Ottens
    
    
    1,991
    (6)
    
    
    
    *Roland D. Petersen
    
    
    5,250
    
    
    
    
    *Ben H. Ryan, Jr.
    
    
    8,130
    
    
    
    
    *David A. Skinner
    
    
    300
    
    
    
    
    *Julius J. Van Paemel
    
    
    11,223
    
    
    
    
    *Directors and executive officers as a group
(11 persons)
    
    
    80,951
    
    
    
    6.83
    %
 
 *
    
    Indicates ownership which does not exceed 1.0%.(1)
    
    The percentage beneficially owned was calculated based on 1,186,068 shares of common stock
outstanding, with the 1,298,962 shares of treasury stock not included.(2)
    
    Includes 336 shares owned jointly with his spouse.(3)
    
    Includes 9,215 shares held by Primevest Financial for the benefit of Ms. Hamilton.(4)
    
    Includes 6,920 shares owned by Mr. Hoberts spouse and 10,100 shares held by Primevest
Financial for the benefit of Mr. Hobert.(5)
    
    Includes 2,000 shares held by Citigroup Global Markets, Inc. for the benefit of Mr. Kustes.(6)
    
    Includes 300 shares owned jointly with his spouse, 1,124 shares held by Primevest Financial
for the benefit of Mr. Ottens, and 567 shares held by Primevest Financial for the benefit of
his spouse. 
 ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
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ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
  Audit Fees, Audit Related Fees, Tax Fees and All Other Fees
  Year Ended October 31,2005
    
    
    2004Audit fees(1)
    
    $
    62,000
    
    
    $
    52,200Audit-related fees (2)
    
    
    12,722
    
    
    
    10,800Tax fees(3)
    
    
    11,356
    
    
    
    12,871All other fees(4)
    
    
    3,415
    
    
    
    Total
    
    $
    89,493
    
    
    $
    75,871
 
 (1)
    
    Audit fees represent fees for professional services provided for the audit of Metrocorps
annual financial statements.(2)
    
    Fees in connection with benefit plans.(3)
    
    Tax fees consist of fees for tax compliance services for Metrocorp and its subsidiaries.(4)
    
    All other fees consist primarily of accounting research assistance.  Independence
  Reporting
  - 49 -




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##### Table of Contents



PART IV
 
 ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
 (a)
    
    Documents filed as part of this report:
 1.
    
    Financial Statements.The consolidated financial statements of the Registrant
are included beginning at page F-1 of this report and are incorporated herein by
reference.2.
    
    Financial Statement Schedules.Schedules have been omitted because they are
not applicable or are not required under the instructions contained in Regulation S-X
or because the information required to be set forth therein is included in the
consolidated financial statements or notes thereto contained in this report.3.
    
    Exhibits.The following documents are included or incorporated by reference in
this annual report on Form 10-K and this list includes the Exhibit Index.
 ExhibitNumber
    
    Description3.1
    
    Articles of Incorporation of Metrocorp, as amended to date3.2
    
    Bylaws of Metrocorp4.1
    
    Amended and Restated Trust Agreement among Metrocorp, Inc., Wilmington
Trust Company and the Administrators named therein dated November 1,
20014.2
    
    Subordinated Loan Agreement between Metrocorp, Inc. and Metrocorp
Capital Trust I dated November 1, 20014.3
    
    Guarantee Agreement by Metrocorp, Inc. dated November 1, 20014.4
    
    Form of Trust Preferred Certificate of Metrocorp Capital Trust I4.5
    
    Certificate of Trust of Metrocorp Capital Trust I (Exhibit A to Exhibit 4.1
hereto)10.1
    
    Form of Indemnification Agreement between Metrocorp and each director of
Metrocorp10.2
    
    Form of Incentive Bonus Agreement between Metrocorp and each of Gary
Andersen, Nancy Hamilton, Julius Van Paemel, Bart Ottens and other
employees10.3
    
    Change of Control Severance Plan dated September 22, 200510.4
    
    Stay Bonus Plan dated November 11, 200510.5
    
    Renewal of Lease Agreement between Wal-Mart Stores, Inc. and
Metrobank, NA dated July 11, 200010.6
    
    Replacement Revolving Note payable by Metrocorp to La Salle Bank, N.A.
dated August 5, 2002, due July 24, 200810.7
    
    Loan Agreement between Metrobank and La Salle Bank, NA dated
November 1, 2001, as amended by the First Amendment to Loan Agreement
dated November 30, 2001, and the Second Amendment to Loan Agreement
dated August 5, 200214.1
    
    Code of Ethics for Principal Executive Officers and Senior Financial Officers14.2
    
    Code of Business Conduct21.1
    
    Metrobank, NA, Community Insurance, Inc. and Metrocorp Capital Trust I
are the only subsidiaries of the Registrant24.1
    
    Power of Attorney (included on the signature page)31.1
    
    Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer
 - 50 -




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##### Table of Contents



ExhibitNumber
    
    Description31.2
    
    Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer32.1
    
    Section 1350 Certification of Chief Executive Officer32.2
    
    Section 1350 Certification of Chief Financial Officer99.1
    
    Charter of the Audit Committee of Metrocorp, Inc.
 (b)
    
    Exhibits filed:See Exhibit Index under Item 15(a)(3) above for the list of exhibits required to be filed by
Item 601 of Regulation S-K with this report.(c)
    
    Financial Statement Schedules filed:See Item 15(a)(2) above.
 - 51 -




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##### Table of Contents



SIGNATURES
  METROCORP, INC.(Registrant)By:
    
    /s/ Gary D. Andersen
    
    
    
    February 27, 2006Gary D. Andersen, President
    
    
    
    (Date)(principal executive officer)By:
    
    /s/ John R. McEvoy, Jr.
    
    
    
    February 27, 2006John R. McEvoy, Jr., Senior Vice President/Controller
    
    
    
    (Date)(principal financial officer)
  - 52 -




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##### Table of Contents



METROCORP, INC.(Registrant)By:
    
    /s/ Gary D. Andersen
    
    February 27, 2006Gary D. Andersen, DirectorBy:
    
    /s/ Nancy R. Hamilton
    
    February 27, 2006Nancy R. Hamilton, DirectorBy:
    
    /s/ Roland D. Petersen
    
    February 27, 2006Roland D. Petersen, DirectorBy:
    
    /s/ Ben H. Ryan, Jr.
    
    February 27, 2006Ben H. Ryan, Jr., DirectorBy:
    
    /s/ David A. Skinner
    
    February 27, 2006David A. Skinner, DirectorBy:
    
    /s/ Julius J. Van Paemel
    
    February 27, 2006Julius J. Van Paemel, Director
 - 53 -




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##### Table of Contents



McGladrey & Pullen
 Certified Public Accounts
 R E P
O R T    O F    I N D E P E N D E N T    R E G I S T E
R E D P U B L I C     A C C O U N T I N G    F I R M
 To the Board of Directors and Stockholders
Metrocorp, Inc.
East Moline, Illinois
    
      F - 1




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##### Table of Contents



C O N S O L I D A T E D  
 B A L A N C E      S H E E T S
 October
31, 2005 and 2004
 2005
    
    2004AssetsCash and due from banks (Note 2)
    
    $
    20,242,642
    
    
    $
    24,419,553Federal funds sold
    
    
    8,650,000
    
    
    
    5,250,000Securities available for sale (Note 4)
    
    
    294,125,263
    
    
    
    285,441,610Loans held for sale (Note 5)
    
    
    14,160,176
    
    
    
    13,409,164Loans (Notes 6 and 18)
    
    
    209,220,001
    
    
    
    219,757,787Allowance for loan losses
    
    
    (2,519,213
    )
    
    
    (3,471,118
    )Loans, net
    
    
    206,700,788
    
    
    
    216,286,669Accrued interest receivable
    
    
    7,385,857
    
    
    
    7,232,699Premises and equipment, net (Note 7)
    
    
    9,045,775
    
    
    
    8,668,876Intangible assets, net (Note 8)
    
    
    10,763,201
    
    
    
    10,962,444Other assets
    
    
    7,903,000
    
    
    
    4,018,315Total assets
    
    $
    578,976,702
    
    
    $
    575,689,330Liabilities
and Stockholders EquityLiabilities:Deposits (Note 9):Demand deposits, noninterest-bearing
    
    $
    48,257,954
    
    
    $
    47,425,625Interest-bearing demand and money market accounts
    
    
    221,133,113
    
    
    
    209,789,737Savings
    
    
    41,267,265
    
    
    
    41,337,897Time, $100,000 and over
    
    
    69,312,844
    
    
    
    80,102,480Time, other
    
    
    131,440,187
    
    
    
    121,359,364Total deposits
    
    
    511,411,363
    
    
    
    500,015,103Short-term borrowings (Note 10)
    
    
    4,747,578
    
    
    
    4,733,657Federal Home Loan Bank advances (Note 11)
    
    
    1,000,000
    
    
    
    1,000,000Notes payable (Note 13)
    
    
    5,433,970
    
    
    
    6,164,841Junior subordinated debentures (Note 14)
    
    
    10,309,278
    
    
    
    10,309,278Accrued interest payable and other liabilities
    
    
    2,534,003
    
    
    
    2,522,912Total liabilities
    
    
    535,436,192
    
    
    
    524,745,791Commitments and Contingencies (Note 16)Redeemable common stock held byEmployee Stock Ownership Plan Participants (Note 12)
(2005  144,421 shares; 2004  328,676 shares)
    
    
    6,491,724
    
    
    
    11,766,601Stockholders Equity (Note 17):Common stock, $.20 par value; shares authorized 3,000,000;
shares issued and outstanding 2005  2,340,609 and
1,041,647; 2004  2,156,354 and 1,038,337, respectively
    
    
    468,122
    
    
    
    431,271Additional paid-in capital
    
    
    4,406,006
    
    
    
    4,059,606Retained earnings
    
    
    50,506,859
    
    
    
    40,988,823Accumulated other comprehensive income (loss)
    
    
    (1,708,849
    )
    
    
    3,462,268Unearned ESOP shares
    
    
    
    
    
    
    (53,777
    )Treasury
stock, at cost (2005  1,298,962 shares;
2004  1,118,017 shares)
    
    
    (16,623,352
    )
    
    
    (9,711,253
    )Total
stockholders equity
    
    
    37,048,786
    
    
    
    39,176,938Total
liabilities and stockholders equity
    
    $
    578,976,702
    
    
    $
    575,689,330
  F - 2




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##### Table of Contents



C
O N S O L I D A T E D  
 S T A T E M E N T S     O F     I N  C O M E
 Years
Ended October 31, 2005, 2004, and 2003
 2005
    
    2004
    
    2003Interest income:Loans
    
    $
    13,311,049
    
    
    $
    12,857,018
    
    
    $
    15,766,382Securities:Taxable
    
    
    8,372,062
    
    
    
    8,411,899
    
    
    
    8,159,476Exempt from federal income tax
    
    
    2,711,725
    
    
    
    2,569,788
    
    
    
    2,077,857Federal funds sold
    
    
    52,664
    
    
    
    9,442
    
    
    
    69,392Other
    
    
    256,061
    
    
    
    173,704
    
    
    
    156,312Total interest income
    
    
    24,703,561
    
    
    
    24,021,851
    
    
    
    26,229,419Interest expense:Interest-bearing demand and money market accounts
    
    
    2,972,640
    
    
    
    2,453,249
    
    
    
    2,547,565Savings deposits
    
    
    212,688
    
    
    
    199,964
    
    
    
    212,230Time deposits
    
    
    5,097,237
    
    
    
    3,562,693
    
    
    
    5,465,681Short-term borrowings
    
    
    292,357
    
    
    
    157,877
    
    
    
    49,877Federal Home Loan Bank advances
    
    
    137,831
    
    
    
    108,842
    
    
    
    87,959Notes payable
    
    
    290,592
    
    
    
    216,581
    
    
    
    246,834Junior subordinated debentures
    
    
    670,103
    
    
    
    504,725
    
    
    
    Trust preferred securities
    
    
    
    
    
    
    
    
    
    
    495,973Total interest expense
    
    
    9,673,448
    
    
    
    7,203,931
    
    
    
    9,106,119Net interest income
    
    
    15,030,113
    
    
    
    16,817,920
    
    
    
    17,123,300Provision for loan losses (Note 6)
    
    
    (1,150,000
    )
    
    
    
    
    
    
    1,766,000Net interest income after
provision for loan losses
    
    
    16,180,113
    
    
    
    16,817,920
    
    
    
    15,357,300Noninterest income:Service charges on deposit accounts
    
    
    1,324,598
    
    
    
    1,410,077
    
    
    
    1,667,304Gains on sales of loans
    
    
    648,074
    
    
    
    753,385
    
    
    
    1,516,534Securities gains, net
    
    
    62,268
    
    
    
    19,931
    
    
    
    206,337Trust fees
    
    
    475,502
    
    
    
    550,881
    
    
    
    517,342ATM foreign transaction fees
    
    
    628,880
    
    
    
    671,513
    
    
    
    712,944Merchant, debit/credit card fees
    
    
    863,929
    
    
    
    776,430
    
    
    
    741,479Other income
    
    
    889,850
    
    
    
    931,491
    
    
    
    1,173,877Total noninterest income
    
    
    4,893,101
    
    
    
    5,113,708
    
    
    
    6,535,817Noninterest expense:Salaries and employee benefits
    
    
    8,460,437
    
    
    
    9,577,323
    
    
    
    9,816,080Occupancy and equipment expense
    
    
    1,712,883
    
    
    
    1,614,570
    
    
    
    1,616,949Data processing expenses
    
    
    416,984
    
    
    
    349,686
    
    
    
    344,953Merchant, debit/credit card expenses
    
    
    658,172
    
    
    
    581,515
    
    
    
    523,139Other expenses
    
    
    3,238,706
    
    
    
    3,364,314
    
    
    
    3,295,199Total noninterest expense
    
    
    14,487,182
    
    
    
    15,487,408
    
    
    
    15,596,320Income before income taxes
    
    
    6,586,032
    
    
    
    6,444,220
    
    
    
    6,296,797Income tax expense (Note 15)
    
    
    1,499,397
    
    
    
    1,407,290
    
    
    
    1,541,983Net income
    
    $
    5,086,635
    
    
    $
    5,036,930
    
    
    $
    4,754,814Earnings per share, basic and diluted
    
    $
    3.98
    
    
    $
    3.71
    
    
    $
    3.51Weighted average common shares outstanding
    
    
    1,278,472
    
    
    
    1,358,887
    
    
    
    1,354,752
  F - 3




---



##### Table of Contents



Years
 ended October 31, 2005, 2004, and 2003
 AdditionalCommon
    
    Paid-In
    
    RetainedStock
    
    Capital
    
    EarningsBalance, October 31, 2002
    
    $
    439,798
    
    
    $
    4,139,762
    
    
    $
    34,676,812Cash dividends, $0.344 per share
    
    
    
    
    
    
    
    
    
    
    (482,697
    )Purchase of 44,750 shares of treasury stock
    
    
    
    
    
    
    
    
    
    
    Payment for unearned ESOP shares by ESOP
    
    
    
    
    
    
    
    
    
    
    Tax benefit for dividends paid to ESOP
    
    
    
    
    
    
    
    
    
    
    8,616Release of ESOP shares, net of expiring
puts and repurchases
    
    
    (5,356
    )
    
    
    (50,347
    )
    
    
    (801,257
    )Appreciation in redeemable ESOP shares
    
    
    
    
    
    
    
    
    
    
    (782,050
    )Comprehensive income:Net income
    
    
    
    
    
    
    
    
    
    
    4,754,814Other comprehensive income, net of tax (Note 4)
    
    
    
    
    
    
    
    
    
    
    Total comprehensive incomeBalance, October 31, 2003
    
    
    434,442
    
    
    
    4,089,415
    
    
    
    37,374,238Cash dividends, $0.352 per share
    
    
    
    
    
    
    
    
    
    
    (485,609
    )Purchase of 22,177 shares of treasury stock
    
    
    
    
    
    
    
    
    
    
    Payment for unearned ESOP shares by ESOP
    
    
    
    
    
    
    
    
    
    
    Tax benefit for dividends paid to ESOP
    
    
    
    
    
    
    
    
    
    
    4,595Release of ESOP shares, net of expiring
puts and repurchases
    
    
    (3,171
    )
    
    
    (29,809
    )
    
    
    (514,052
    )Appreciation in redeemable ESOP shares
    
    
    
    
    
    
    
    
    
    
    (427,279
    )Comprehensive income:Net income
    
    
    
    
    
    
    
    
    
    
    5,036,930Other comprehensive (loss), net of tax (Note 4)
    
    
    
    
    
    
    
    
    
    
    Total comprehensive incomeBalance, October 31, 2004
    
    
    431,271
    
    
    
    4,059,606
    
    
    
    40,988,823Cash dividends, $0.360 per share
    
    
    
    
    
    
    
    
    
    
    (460,225
    )Purchase of 180,945 shares of treasury stock
    
    
    
    
    
    
    
    
    
    
    Payment for unearned ESOP shares by ESOP
    
    
    
    
    
    
    
    
    
    
    Repurchase of shares and expiring puts
in excess of ESOP shares released
    
    
    36,851
    
    
    
    346,400
    
    
    
    6,213,078Appreciation in redeemable ESOP shares
    
    
    
    
    
    
    
    
    
    
    (1,321,452
    )Comprehensive income (loss):Net income
    
    
    
    
    
    
    
    
    
    
    5,086,635Other comprehensive (loss), net of tax (Note 4)
    
    
    
    
    
    
    
    
    
    
    Total comprehensive (loss)Balance, October 31, 2005
    
    $
    468,122
    
    
    $
    4,406,006
    
    
    $
    50,506,859
  F - 4




---



##### Table of Contents



Accumulated Other
    
   
    UnearnedComprehensive
    
    
    ESOP
    
    
    
    TreasuryIncome (Loss)
    
    
    Shares
    
    
    
    Stock
    
    
    

Total$
    4,507,219
    
    $
    (1,289,407
    )
    
    $
    (7,464,923
    )
    
    $
    35,009,261
    
    
    
    
    
    
    
    
    
    
    (482,697
    )
    
    
    
    
    
    
    (1,453,225
    )
    
    
    (1,453,225
    )
    
    
    604,598
    
    
    
    
    
    
    
    604,598
    
    
    
    
    
    
    
    
    
    
    8,616
    
    
    
    
    
    
    
    
    
    
    (856,960
    )
    
    
    
    
    
    
    
    
    
    
    (782,050
    )
    
    
    
    
    
    
    
    
    
    
    4,754,814219,740
    
    
    
    
    
    
    
    
    
    
    219,7404,974,5544,726,959
    
    
    (684,809
    )
    
    
    (8,918,148
    )
    
    
    37,022,097
    
    
    
    
    
    
    
    
    
    
    (485,609
    )
    
    
    
    
    
    
    (793,105
    )
    
    
    (793,105
    )
    
    
    631,032
    
    
    
    
    
    
    
    631,032
    
    
    
    
    
    
    
    
    
    
    4,595
    
    
    
    
    
    
    
    
    
    
    (547,032
    )
    
    
    
    
    
    
    
    
    
    
    (427,279
    )
    
    
    
    
    
    
    
    
    
    
    5,036,930(1,264,691)
    
    
    
    
    
    
    
    
    
    
    (1,264,691
    )3,772,2393,462,268
    
    
    (53,777
    )
    
    
    (9,711,253
    )
    
    
    39,176,938
    
    
    
    
    
    
    
    
    
    
    (460,225
    )
    
    
    
    
    
    
    (6,912,099
    )
    
    
    (6,912,099
    )
    
    
    53,777
    
    
    
    
    
    
    
    53,777
    
    
    
    
    
    
    
    
    
    
    6,596,329
    
    
    
    
    
    
    
    
    
    
    (1,321,452
    )
    
    
    
    
    
    
    
    
    
    
    5,086,635(5,171,117)
    
    
    
    
    
    
    
    
    
    
    (5,171,117
    )(84,482
    )$
    (1,708,849)
    
    $
    0
    
    
    $
    (16,623,352
    )
    
    $
    37,048,786
  F-5




---



##### Table of Contents



Years ended October 31, 2005, 2004, and 2003
 2005
    
    
    2004
    
    
    2003Cash Flows from Operating Activities:Net income
    
    $
    5,086,635
    
    
    $
    5,036,930
    
    
    $
    4,754,814Adjustments to reconcile net income to net cash
provided by operating activities:Depreciation
    
    
    774,009
    
    
    
    833,865
    
    
    
    840,243Provision for loan losses
    
    
    (1,150,000
    )
    
    
    
    
    
    
    1,766,000Deferred income tax expense (benefit)
    
    
    613,831
    
    
    
    271,195
    
    
    
    (179,519
    )Amortization of premium and accretion
of discount on securities, net
    
    
    1,990,552
    
    
    
    1,939,599
    
    
    
    1,610,854Amortization of intangible assets
    
    
    199,243
    
    
    
    199,243
    
    
    
    199,243Securities gains, net
    
    
    (62,268
    )
    
    
    (19,931
    )
    
    
    (206,337
    )Gains on sales of real estate loans
    
    
    (180,999
    )
    
    
    (250,292
    )
    
    
    (1,169,293
    )Gains on sales of student loans
    
    
    (467,075
    )
    
    
    (503,093
    )
    
    
    (347,241
    )Real estate loans originated for sale
    
    
    (17,711,380
    )
    
    
    (19,499,596
    )
    
    
    (95,102,639
    )Student loans originated for sale
    
    
    (30,620,914
    )
    
    
    (27,527,177
    )
    
    
    (23,564,974
    )Proceeds from sales of real estate loans
    
    
    17,628,430
    
    
    
    21,135,925
    
    
    
    96,132,766Proceeds from sales of student loans
    
    
    30,600,926
    
    
    
    30,426,592
    
    
    
    22,641,774(Increase) decrease in accrued interest
receivable and other assets
    
    
    (2,072,769
    )
    
    
    (36,883
    )
    
    
    892,937Increase in accrued interest
payable and other liabilities
    
    
    696,822
    
    
    
    173,602
    
    
    
    164,165Net cash provided by operating activities
    
    
    5,325,043
    
    
    
    12,179,979
    
    
    
    8,432,793Cash Flows from Investing Activities:Net (increase) decrease in federal funds sold
    
    
    (3,400,000
    )
    
    
    (5,250,000
    )
    
    
    7,400,000Proceeds from sales of securities available for sale
    
    
    1,535,030
    
    
    
    5,019,844
    
    
    
    20,042,974Proceeds from maturities and calls of securities
available for sale
    
    
    30,073,000
    
    
    
    22,084,403
    
    
    
    40,732,265Proceeds from principal paydowns on securities
available for sale
    
    
    2,640,524
    
    
    
    4,824,417
    
    
    
    22,019,785Purchase of securities available for sale
    
    
    (53,296,244
    )
    
    
    (66,039,937
    )
    
    
    (119,652,833
    )Net decrease in loans
    
    
    10,735,881
    
    
    
    13,006,721
    
    
    
    25,576,387Purchases of premises and equipment, net
    
    
    (1,150,908
    )
    
    
    (220,995
    )
    
    
    (907,927
    )Net cash (used in)
investing activities
    
    
    (12,862,717
    )
    
    
    (26,575,547
    )
    
    
    (4,789,349
    )Cash Flows from Financing Activities:Net increase in deposits
    
    
    11,396,260
    
    
    
    13,069,093
    
    
    
    844,133Net increase (decrease) in short-term borrowings
    
    
    13,921
    
    
    
    2,596,880
    
    
    
    (136,500
    )Repayment of term Federal Home Loan Bank advances
    
    
    
    
    
    
    
    
    
    
    (3,000,000
    )Repayment of notes payable
    
    
    (677,094
    )
    
    
    (731,770
    )
    
    
    (729,267
    )Cash dividends paid
    
    
    (460,225
    )
    
    
    (485,609
    )
    
    
    (482,697
    )Purchase of treasury stock
    
    
    (6,912,099
    )
    
    
    (793,105
    )
    
    
    (1,453,225
    )Net cash provided by
(used in) financing activities
    
    
    3,360,763
    
    
    
    13,655,489
    
    
    
    (4,957,556
    )
  F-6




---



##### Table of Contents



(c o n t i n u e d)
Years ended October 31, 2005, 2004, and 2003
 2005
    
    
    2004
    
    
    2003(Decrease) in cash and due from banks
    
    $
    (4,176,911
    )
    
    $
    (740,079
    )
    
    $
    (1,314,112
    )Cash and due from banks:Beginning of year
    
    
    24,419,553
    
    
    
    25,159,632
    
    
    
    26,473,744End of year
    
    $
    20,242,642
    
    
    $
    24,419,553
    
    
    $
    25,159,632Supplemental Disclosures of Cash Flow Information,
cash paid during the year for:Interest
    
    $
    9,013,246
    
    
    $
    7,267,094
    
    
    $
    9,646,990Income taxes
    
    
    897,484
    
    
    
    729,468
    
    
    
    1,253,503Supplemental Disclosures of Noncash Investing and
Financing Activities:Payment on ESOP note payable by ESOP
    
    
    53,777
    
    
    
    631,032
    
    
    
    604,598Tax benefit for dividends paid to ESOP
    
    
    
    
    
    
    4,595
    
    
    
    8,616Change in accumulated other comprehensive
income, unrealized gains (losses) on securities
available for sale, net
    
    
    (5,171,117
    )
    
    
    (1,264,691
    )
    
    
    219,740Change in redeemable common stock
held by ESOP participants
    
    
    (5,274,877
    )
    
    
    974,311
    
    
    
    1,639,010Transfer of student loans from held for investment
to held for sale portfolio
    
    
    
    
    
    
    4,134,629
    
    
    
    
  F-7




---



##### Table of Contents



Note 1. Nature of Business and Significant Accounting Policies
 Nature of Business:
  Accounting estimates:
 Principles of consolidation:
 Industry Segment Information:
 Presentation of cash flows:
 Securities available-for-sale:
 F-8
    Table of Contents   
 Note 1. Nature of Business and Significant Accounting Policies(Continued)
   Loans held for sale:
 Loans:
 Allowance for loan losses:
  Credit related financial instruments:
 F-9
    Table of Contents \  
 Note 1. Nature of Business and
Significant Accounting Policies (Continued)
 Transfers of financial assets:
 Premises and equipment:
 Other
revenue recognition:
 Goodwill:
 Income taxes:
  Trust assets:
 Earnings per share:
 F-10
    Table of Contents   
 Note 1. Nature of Business and
Significant Accounting Policies (Continued)
 Current accounting development:
 Stock Split:
 Reclassifications:
 Note 2. Restrictions on Cash and Due from Banks
  F-11
    Table of Contents   
 Note 3. Comprehensive Income
   Before
    
    Tax Expense
    
    NetTax
    
    (Benefit)
    
    of TaxYear ended October 31, 2005:Unrealized gains (losses) on securities available
for sale:Unrealized holding (losses) arising during
the year
    
    $
    (8,373,485
    )
    
    $
    (3,240,538
    )
    
    $
    (5,132,947
    )Less reclassification adjustment for
gains included in net income
    
    
    62,268
    
    
    
    24,098
    
    
    
    38,170Other comprehensive (loss)
    
    $
    (8,435,753
    )
    
    $
    (3,264,636
    )
    
    $
    (5,171,117
    )Year ended October 31, 2004:Unrealized gains (losses) on securities
available for sale:Unrealized holding (losses) arising during
the year
    
    $
    (2,043,188
    )
    
    $
    (790,715
    )
    
    $
    (1,252,473
    )Less reclassification adjustment for
gains included in net income
    
    
    19,931
    
    
    
    7,713
    
    
    
    12,218Other comprehensive (loss)
    
    $
    (2,063,119
    )
    
    $
    (798,428
    )
    
    $
    (1,264,691
    )Year ended October 31, 2003:Unrealized gains on securities available
for sale:Unrealized holding gains arising during
the year
    
    $
    564,804
    
    
    $
    218,579
    
    
    $
    346,225Less reclassification adjustment for
gains included in net income
    
    
    206,337
    
    
    
    79,852
    
    
    
    126,485Other comprehensive income
    
    $
    358,467
    
    
    $
    138,727
    
    
    $
    219,740
 F-12




---



##### Table of Contents



Note 4. Securities Available for Sale
  Gross
    
    GrossAmortized
    
    Unrealized
    
    Unrealized
    
    FairCost
    
    Gains
    
    (Losses)
    
    Value2005U.S. Treasury
    
    $
    35,171,549
    
    
    $
    44,572
    
    
    $
    (541,903
    )
    
    $
    34,674,218U.S. government agencies
    
    
    67,611,208
    
    
    
    237,648
    
    
    
    (1,197,393
    )
    
    
    66,651,463States and political subdivisions
    
    
    142,524,711
    
    
    
    771,210
    
    
    
    (2,639,560
    )
    
    
    140,656,361Corporate
    
    
    46,537,992
    
    
    
    1,058,437
    
    
    
    (674,319
    )
    
    
    46,922,110Trust preferred securities
    
    
    927,331
    
    
    
    138,839
    
    
    
    
    
    
    
    1,066,170Mortgage-backed
    
    
    4,140,154
    
    
    
    32,121
    
    
    
    (17,334
    )
    
    
    4,154,941$
    296,912,945
    
    
    $
    2,282,827
    
    
    $
    (5,070,509
    )
    
    $
    294,125,2632004U.S. Treasury
    
    $
    32,542,116
    
    
    $
    498,946
    
    
    $
    (12,582
    )
    
    $
    33,028,480U.S. government agencies
    
    
    62,242,253
    
    
    
    1,115,845
    
    
    
    (246,946
    )
    
    
    63,111,152States and political subdivisions
    
    
    131,516,860
    
    
    
    2,507,280
    
    
    
    (721,422
    )
    
    
    133,302,718Corporate
    
    
    45,740,977
    
    
    
    2,444,184
    
    
    
    (168,209
    )
    
    
    48,016,952Trust preferred securities
    
    
    926,120
    
    
    
    165,920
    
    
    
    
    
    
    
    1,092,040Mortgage-backed
    
    
    6,825,213
    
    
    
    80,280
    
    
    
    (15,225
    )
    
    
    6,890,268$
    279,793,539
    
    
    $
    6,812,455
    
    
    $
    (1,164,384
    )
    
    $
    285,441,610
  Less than 12 Months
    
    12 Months or More
    
    TotalGross
    
    
    
    
    
    Gross
    
    
    
    
    
    GrossFair
    
    Unrealized
    
    Fair
    
    Unrealized
    
    Fair
    
    UnrealizedValue
    
    (Losses)
    
    Value
    
    (Losses)
    
    Value
    
    (Losses)2005Securities available
for sale:U.S. Treasury
    
    $
    23,649,375
    
    
    $
    (465,611
    )
    
    $
    4,988,906
    
    
    $
    (76,292
    )
    
    $
    28,638,281
    
    
    $
    (541,903
    )U.S.
Government agencies
    
    
    29,713,384
    
    
    
    (503,578
    )
    
    
    21,959,921
    
    
    
    (693,791
    )
    
    
    51,673,305
    
    
    
    (1,197,369
    )States and political subdivisions
    
    
    47,048,078
    
    
    
    (921,690
    )
    
    
    53,398,321
    
    
    
    (1,717,870
    )
    
    
    100,446,399
    
    
    
    (2,639,560
    )Corporate
    
    
    10,540,653
    
    
    
    (246,337
    )
    
    
    14,882,815
    
    
    
    (427,982
    )
    
    
    25,423,468
    
    
    
    (674,319
    )Mortgage-backed
    
    
    2,220,098
    
    
    
    (12,224
    )
    
    
    562,858
    
    
    
    (5,134
    )
    
    
    2,782,956
    
    
    
    (17,358
    )$
    113,171,588
    
    
    $
    (2,149,440
    )
    
    $
    95,792,821
    
    
    $
    (2,921,069
    )
    
    $
    208,964,409
    
    
    $
    (5,070,509
    )
 F-13




---



##### Table of Contents



Securities Available For Sale (Continued)
 Less than 12 Months
    
    12 Months or More
    
    TotalGross
    
    
    
    
    
    Gross
    
    
    
    
    
    GrossFair
    
    Unrealized
    
    Fair
    
    Unrealized
    
    Fair
    
    UnrealizedValue
    
    Losses)
    
    Value
    
    (Losses)
    
    Value
    
    (Losses)2004Securities available
for sale:U.S. Treasury
    
    $
    5,178,600
    
    
    $
    (12,582
    )
    
    $
    
    
    
    $
    
    
    
    $
    5,178,600
    
    
    $
    (12,582
    )U.S. Government agencies
    
    
    12,299,303
    
    
    
    (60,539
    )
    
    
    11,319,956
    
    
    
    (186,407
    )
    
    
    23,619,259
    
    
    
    (246,946
    )States and political
subdivisions
    
    
    26,102,513
    
    
    
    (297,146
    )
    
    
    34,282,660
    
    
    
    (424,276
    )
    
    
    60,385,173
    
    
    
    (721,422
    )Corporate
    
    
    5,632,560
    
    
    
    (27,474
    )
    
    
    10,281,855
    
    
    
    (140,735
    )
    
    
    15,914,415
    
    
    
    (168,209
    )Mortgage-backed
    
    
    1,402,034
    
    
    
    (5,737
    )
    
    
    1,542,773
    
    
    
    (9,488
    )
    
    
    2,944,807
    
    
    
    (15,225
    )$
    50,615,010
    
    
    $
    (403,478
    )
    
    $
    57,427,244
    
    
    $
    (760,906
    )
    
    $
    108,042,254
    
    
    $
    (1,164,384
    )
   Amortized
    
    FairCost
    
    ValueDue in one year or less
    
    $
    53,851,029
    
    
    $
    53,623,394Due after one year through five years
    
    
    201,120,779
    
    
    
    198,921,030Due after five years through ten years
    
    
    30,743,205
    
    
    
    30,365,743Due after ten years
    
    
    7,057,778
    
    
    
    7,060,155292,772,791
    
    
    
    289,970,322Mortgage-backed
    
    
    4,140,154
    
    
    
    4,154,941$
    296,912,945
    
    
    $
    294,125,263
   2005
    
    
    2004
    
    
    2003Proceeds from sales of securities
available for sale
    
    $
    1,535,030
    
    
    $
    5,019,844
    
    
    $
    20,042,974Gross realized gains
    
    
    62,268
    
    
    
    19,931
    
    
    
    208,648Gross realized (losses)
    
    
    
    
    
    
    
    
    
    
    (2,311
    )
 F-14




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##### Table of Contents



Note 5. Loans Held For Sale
  Note
6. Loans
   2005
    
    2004Commercial
    
    $
    23,084,454
    
    
    $
    26,599,719Agricultural production
    
    
    32,077,481
    
    
    
    30,805,048Real estate:Construction
    
    
    1,244,334
    
    
    
    1,476,757Residential
    
    
    41,996,174
    
    
    
    40,933,961Commercial
    
    
    38,136,664
    
    
    
    39,679,155Farmland
    
    
    41,052,340
    
    
    
    38,518,681Installment
    
    
    16,206,796
    
    
    
    20,189,753Student
    
    
    11,818,866
    
    
    
    18,386,205Other
    
    
    3,602,892
    
    
    
    3,168,508Total loans
    
    
    209,220,001
    
    
    
    219,757,787Less allowance for loan losses
    
    
    2,519,213
    
    
    
    3,471,118Loans, net
    
    $
    206,700,788
    
    
    $
    216,286,669
  2005
    
    2004
    
    2003Balance, beginning
    
    $
    3,471,118
    
    
    $
    3,544,619
    
    
    $
    4,032,546Provision for loan losses
    
    
    (1,150,000
    )
    
    
    
    
    
    
    1,766,000Recoveries on loans previously charged off
    
    
    366,495
    
    
    
    456,539
    
    
    
    62,972Loans charged off
    
    
    (168,400
    )
    
    
    (530,040
    )
    
    
    (2,316,899
    )Balance, ending
    
    $
    2,519,213
    
    
    $
    3,471,118
    
    
    $
    3,544,619
  2005
    
    
    2004Year-end impaired loans with no allowance for loan losses allocated
    
    $
    
    
    
    $
    Year-end impaired loans with allowance for loan losses allocated
    
    
    2,446,838
    
    
    
    1,985,419Amount of allowance allocated to impaired loans
    
    
    864,686
    
    
    
    49,935Average of impaired loans during the year
    
    
    2,385,308
    
    
    
    1,966,484
  F-15




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##### Table of Contents



Note 6. Loans (Continued)
   Note
7. Premises And Equipment
  2005
    
    2004Land
    
    $
    2,312,349
    
    
    $
    2,272,349Buildings and improvements
    
    
    9,073,559
    
    
    
    8,549,398Furniture and equipment
    
    
    9,115,706
    
    
    
    8,543,947Total cost
    
    
    20,501,614
    
    
    
    19,365,694Less accumulated depreciation
    
    
    11,455,839
    
    
    
    10,696,818$
    9,045,775
    
    
    $
    8,668,876
 Note
8. Intangible Assets
  2005
    
    
    2004Goodwill, net of accumulated amortization of $760,521
    
    $
    9,829,605
    
    
    $
    9,829,605Other intangible assets
    
    
    2,061,521
    
    
    
    2,061,521Less accumulated amortization on intangible assets
    
    
    1,127,925
    
    
    
    928,682Other intangible assets, net
    
    $
    933,596
    
    
    $
    1,132,839
  Year ending October 31:2006
    
    $
    199,2432007
    
    
    107,4662008
    
    
    107,4662009
    
    
    107,4662010
    
    
    107,466Thereafter
    
    
    304,489$
    933,596
 F-16




---



##### Table of Contents



Note 8. Intangible Assets
(Continued)
   Note
9. Deposits
  Year ending October 31:2006
    
    $
    158,721,4852007
    
    
    27,023,9562008
    
    
    13,059,2052009
    
    
    1,353,0982010
    
    
    549,170Thereafter
    
    
    46,117$
    200,753,031
 Note
10. Short-Term Borrowings
  2005
    
    2004Securities sold under agreements to repurchase
    
    $
    3,800,000
    
    
    $
    3,925,000Demand notes issued to U.S. Treasury
    
    
    947,578
    
    
    
    808,657$
    4,747,578
    
    
    $
    4,733,657
  2005
    
    
    2004Average balance during the year
    
    $
    3,895,315
    
    
    $
    2,307,451Average interest rate during the year
    
    
    1.79
    %
    
    
    1.36
    %Maximum month-end balance during the year
    
    
    5,535,000
    
    
    
    4,380,000Weighted average rate as of end of period
    
    
    1.75
    %
    
    
    1.75
    %Securities underlying the agreements at year-end:Carrying value
    
    $
    10,595,240
    
    
    $
    10,627,135Fair value
    
    
    10,595,240
    
    
    
    10,627,135
 F-17




---



##### Table of Contents

§§

Note 10. Short-Term Borrowings
(Continued)
   Note
11. Federal Home Loan Bank Advances
  
  Note
12. Employee Benefit Plans
    2004Allocated shares
    
    
    291,020Shares released for allocation
    
    
    29,176Unreleased shares
    
    
    2,434Total ESOP shares
    
    
    322,630Approximate fair value of unreleased shares
as of October 31
    
    $
    87,000
 F-18




---



##### Table of Contents



ote mployee enefit lans Continued
   ote otes ayable
   2006
    
    $
    672,0002007
    
    
    672,0002008
    
    
    672,0002009
    
    
    672,0002010
    
    
    672,000Thereafter
    
    
    2,073,970$
    5,433,970
 ote unior ubordinated ebentures nd rust referred ecurities
 Junior Subordinated Debentures:
  F-19




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##### Table of Contents



ote unior ubordinated ebentures and rust referred ecurities ontinued
 Trust Preferred Securities:
  ote ncome axes
  2005
    
    2004
    
    2003Currently payable
    
    $
    885,566
    
    
    $
    1,136,095
    
    
    $
    1,721,502Deferred (benefit)
    
    
    613,831
    
    
    
    271,195
    
    
    
    (179,519
    )Income tax expense
    
    $
    1,499,397
    
    
    $
    1,407,290
    
    
    $
    1,541,983
  Year Ended October 31,2005
    
    2004
    
    2003Dollar
    
    % of Pretax
    
    Dollar
    
    % of Pretax
    
    Dollar
    
    % of PretaxAmount
    
    Income
    
    Amount
    
    Income
    
    Amount
    
    IncomeComputed
expected
income tax expense
    
    $
    2,305,111
    
    
    
    35.0
    %
    
    $
    2,255,477
    
    
    
    35.0
    %
    
    $
    2,203,879
    
    
    
    35.0
    %Effect of graduated tax rate
    
    
    (65,860
    )
    
    
    (1.0
    )
    
    
    (64,442
    )
    
    
    (1.0
    )
    
    
    (62,968
    )
    
    
    (1.0
    )Tax exempt interest and
dividend income, net
    
    
    (877,366
    )
    
    
    (13.3
    )
    
    
    (861,712
    )
    
    
    (13.4
    )
    
    
    (699,334
    )
    
    
    (11.1
    )State income taxes, net
    
    
    123,228
    
    
    
    1.9
    
    
    
    77,119
    
    
    
    1.2
    
    
    
    95,921
    
    
    
    1.5Other, net
    
    
    14,284
    
    
    
    0.2
    
    
    
    848
    
    
    
    
    
    
    
    4,485
    
    
    
    0.1$
    1,499,397
    
    
    
    22.8
    %
    
    $
    1,407,290
    
    
    
    21.8
    %
    
    $
    1,541,983
    
    
    
    24.5
    %
  F-20




---



##### Table of Contents



ote ncome axes ontinued
  2005
    
    2004Deferred tax assets:Net unrealized loss on securities available-for-sale
    
    $
    1,078,833
    
    
    $
    Allowance for loan losses
    
    
    975,943
    
    
    
    1,256,740Alternative minimum tax credit carryforwards
    
    
    930,414
    
    
    
    874,567Other
    
    
    112,833
    
    
    
    209,1753,098,023
    
    
    
    2,340,482Deferred tax liabilities:Net unrealized gain on securities available-for-sale
    
    
    
    
    
    
    2,185,803Investment securities accretion
    
    
    176,168
    
    
    
    155,007Depreciation
    
    
    263,811
    
    
    
    307,728Goodwill
    
    
    927,162
    
    
    
    669,226Prepaid expenses
    
    
    116,932
    
    
    
    120,440Stock dividends
    
    
    232,169
    
    
    
    170,882Other
    
    
    1,253
    
    
    
    1,6731,717,495
    
    
    
    3,610,759Net deferred tax asset (liability)
    
    $
    1,380,528
    
    
    $
    (1,270,277
    )
  2005
    
    2004
    
    2003Provision for income taxes
    
    $
    613,831
    
    
    $
    271,195
    
    
    $
    (179,519
    )Statement of
changes in stockholders equity 
accumulated other comprehensive income,
unrealized gains (losses) on securities
available for sale, net
    
    
    (3,264,636
    )
    
    
    (798,428
    )
    
    
    138,727$
    (2,650,805
    )
    
    $
    (527,233
    )
    
    $
    (40,792
    )
 ote ommitments nd ontingencies
   2005
    
    2004Loan commitments
    
    $
    1,269,000
    
    
    $
    891,000Unused lines of credit
    
    
    42,028,000
    
    
    
    39,808,000Standby letters of credit
    
    
    497,000
    
    
    
    466,000
 F-21




---



##### Table of Contents



ote ommitments and ontingencies ontinued
     Concentrations of credit risk:
   Contingencies:
  F - 22




---



##### Table of Contents



ote apital equirements
     Minimumfor Capital
    
    Minimum to beAmount
    
    Adequacy Purposes
    
    Well CapitalizedAmount
    
    Ratio
    
    Amount
    
    Ratio
    
    Amount
    
    Ratio(Dollars in Thousands)October 31, 2005:Total capital (to risk weighted assets):Company
    
    $
    47,005
    
    
    
    15.7
    %
    
    $
    23,891
    
    
    
    8
    %
    
    
    N/A
    
    
    
    N/ABank
    
    $
    48,116
    
    
    
    16.1
    %
    
    $
    23,885
    
    
    
    8
    %
    
    $
    29,864
    
    
    
    10
    %Tier 1 capital (to risk weighted assets)Company
    
    $
    44,486
    
    
    
    14.9
    %
    
    $
    11,946
    
    
    
    4
    %
    
    
    N/A
    
    
    
    N/ABank
    
    $
    45,597
    
    
    
    15.3
    %
    
    $
    11,943
    
    
    
    4
    %
    
    $
    17,918
    
    
    
    6
    %Tier 1 capital (to average assets)Company
    
    $
    44,486
    
    
    
    8.2
    %
    
    $
    22,149
    
    
    
    4
    %
    
    
    N/A
    
    
    
    N/ABank
    
    $
    45,597
    
    
    
    8.4
    %
    
    $
    22,146
    
    
    
    4
    %
    
    $
    27,149
    
    
    
    5
    %October 31, 2004:Total capital (to risk weighted assets):Company
    
    $
    49,990
    
    
    
    16.8
    %
    
    $
    23,748
    
    
    
    8
    %
    
    
    N/A
    
    
    
    N/ABank
    
    $
    52,689
    
    
    
    17.8
    %
    
    $
    23,741
    
    
    
    8
    %
    
    $
    29,676
    
    
    
    10
    %Tier 1 capital (to risk weighted assets)Company
    
    $
    46,519
    
    
    
    15.7
    %
    
    $
    11,874
    
    
    
    4
    %
    
    
    N/A
    
    
    
    N/ABank
    
    $
    49,218
    
    
    
    16.6
    %
    
    $
    11,870
    
    
    
    4
    %
    
    $
    17,806
    
    
    
    6
    %Tier 1 capital (to average assets)Company
    
    $
    46,519
    
    
    
    8.4
    %
    
    $
    22,501
    
    
    
    4
    %
    
    
    N/A
    
    
    
    N/ABank
    
    $
    49,218
    
    
    
    8.9
    %
    
    $
    22,498
    
    
    
    4
    %
    
    $
    28,122
    
    
    
    5
    %
 F-23




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##### Table of Contents



Note 18. Related Party Matters
   2005
    
    2004Balance, beginning
    
    $
    869,643
    
    
    $
    1,157,846Additions
    
    
    1,260,835
    
    
    
    1,095,406Repayments
    
    
    (1,303,498
    )
    
    
    (1,383,609
    )Balance, ending
    
    $
    826,980
    
    
    $
    869,643
 Note 19.
Disclosures about Fair Value of Financial Instruments
 Disclosures about Fair Value of Financial Instruments,
  Cash and due from banks and federal funds sold:
 Securities available-for-sale:
 Loans:
 Federal Home Loan Bank stock:
 F - 24




---



##### Table of Contents



Note 19. Disclosures about Fair Value of Financial Instruments (Continued)
 Deposits:
 Short-term borrowings:
 Federal
Home Loan Bank advances and junior subordinated debentures:
 Notes payable:
 Accrued interest receivable and payable:
 Commitments to extend credit and standby letters of credit:
  2005
    
    2004Carrying
    
    
    
    
    
    CarryingValue
    
    Fair Value
    
    Value
    
    Fair Value(in thousands)Financial assets:Cash and due from banks
    
    $
    20,243
    
    
    $
    20,243
    
    
    $
    24,420
    
    
    $
    24,420Federal fund sold
    
    
    8,650
    
    
    
    8,650
    
    
    
    5,250
    
    
    
    5,250Securities available for sale
    
    
    294,125
    
    
    
    294,125
    
    
    
    285,442
    
    
    
    285,442Loans held for sale
    
    
    14,160
    
    
    
    14,376
    
    
    
    13,409
    
    
    
    13,617Loans, net
    
    
    206,701
    
    
    
    205,095
    
    
    
    216,287
    
    
    
    216,420Federal Home Loan Bank stock
    
    
    4,022
    
    
    
    4,022
    
    
    
    1,864
    
    
    
    1,864Accrued interest receivable
    
    
    7,386
    
    
    
    7,386
    
    
    
    7,233
    
    
    
    7,233Financial liabilities:Demand deposits, noninterest-bearing
    
    
    48,258
    
    
    
    48,258
    
    
    
    47,426
    
    
    
    47,426Interest-bearing demand and money
market accounts
    
    
    221,133
    
    
    
    221,133
    
    
    
    209,790
    
    
    
    209,790Savings deposits
    
    
    41,267
    
    
    
    41,267
    
    
    
    41,338
    
    
    
    41,338Time deposits
    
    
    200,753
    
    
    
    201,738
    
    
    
    201,462
    
    
    
    202,170Short-term borrowings
    
    
    4,748
    
    
    
    4,748
    
    
    
    4,734
    
    
    
    4,734Federal Home Loan Bank advances
    
    
    1,000
    
    
    
    1,032
    
    
    
    1,000
    
    
    
    1,045Notes payable
    
    
    5,434
    
    
    
    5,434
    
    
    
    6,165
    
    
    
    6,165Junior subordinated debentures
    
    
    10,309
    
    
    
    10,309
    
    
    
    10,309
    
    
    
    10,309Accrued interest payable
    
    
    1,693
    
    
    
    1,693
    
    
    
    1,032
    
    
    
    1,032
 F - 25




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##### Table of Contents



Note 20. Parent Company Statements
  Condensed Balance Sheets 
October 31, 2005 and 20042005
    
    2004AssetsCash on deposit at Metrobank
    
    $
    3,354,919
    
    
    $
    2,531,781Investment in subsidiaries
    
    
    54,960,594
    
    
    
    63,952,218Other assets
    
    
    1,032,679
    
    
    
    1,108,067Total assets
    
    $
    59,348,192
    
    
    $
    67,592,066Liabilities
and Stockholders EquityNotes payable
    
    $
    15,743,248
    
    
    $
    16,474,119Other liabilities
    
    
    64,434
    
    
    
    174,408Redeemable common stock held by
Employee Stock Ownership Plan Participants
    
    
    6,491,724
    
    
    
    11,766,601Stockholders equity
    
    
    37,048,786
    
    
    
    39,176,938Total
liabilities and stockholders equity
    
    $
    59,348,192
    
    
    $
    67,592,066
 Condensed Statements of Income
Years Ended October 31, 2005, 2004, and 2003
 2005
    
    
    2004
    
    
    2003Operating income:Equity in net income of subsidiaries
    
    $
    5,948,583
    
    
    $
    5,951,113
    
    
    $
    5,681,755Operating expense:ESOP contribution expense
    
    
    53,990
    
    
    
    635,965
    
    
    
    626,922Interest expense
    
    
    960,695
    
    
    
    721,306
    
    
    
    758,146Other expenses
    
    
    305,807
    
    
    
    136,933
    
    
    
    108,7341,320,492
    
    
    
    1,494,204
    
    
    
    1,493,802Income before income tax benefit
    
    
    4,628,091
    
    
    
    4,456,909
    
    
    
    4,187,953Income tax benefit
    
    
    458,544
    
    
    
    580,021
    
    
    
    566,861Net income
    
    $
    5,086,635
    
    
    $
    5,036,930
    
    
    $
    4,754,814
 F - 26




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##### Table of Contents



Note 20. Parent Company Statements (Continued)
 Condensed Statements of cash flows
Years ended October 31, 2005, 2004, and 2003
 2005
    
    
    2004
    
    
    2003Cash Flows from Operating Activities:Net income
    
    $
    5,086,635
    
    
    $
    5,036,930
    
    
    $
    4,754,814Adjustments to reconcile net income to net
cash provided by operating activities:Distributions in excess of (less than)
net income of subsidiaries
    
    
    3,820,507
    
    
    
    (1,989,258
    )
    
    
    (1,463,494
    )Change in other assets and other liabilities
    
    
    (34,586
    )
    
    
    (207,793
    )
    
    
    199,500Net cash provided by
operating activities
    
    
    8,872,556
    
    
    
    2,839,879
    
    
    
    3,490,820Cash Flows from Financing Activities:Repayment of notes payable
    
    
    (677,094
    )
    
    
    (731,770
    )
    
    
    (729,267
    )Cash dividends paid
    
    
    (460,225
    )
    
    
    (485,609
    )
    
    
    (482,697
    )Purchase of treasury stock
    
    
    (6,912,099
    )
    
    
    (793,105
    )
    
    
    (1,453,225
    )Net cash (used in)
financing activities
    
    
    (8,049,418
    )
    
    
    (2,010,484
    )
    
    
    (2,665,189
    )Net increase in cash
    
    
    823,138
    
    
    
    829,395
    
    
    
    825,631Cash:Beginning
    
    
    2,531,781
    
    
    
    1,702,386
    
    
    
    876,755Ending
    
    $
    3,354,919
    
    
    $
    2,531,781
    
    
    $
    1,702,386




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Note 21. Recent Developments
    F-28




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##### Table of Contents



McGladrey & Pullen
 
 To the Board of Directors and Stockholders
Metrocorp, Inc.
East Moline, Illinois




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##### Table of Contents



METROBANK   October 31, 2005 and 2004
 Assets
    
    2005
    
    
    2004Cash and due from banks
    
    $
    20,242,642
    
    
    $
    24,419,553Federal funds sold
    
    
    8,650,000
    
    
    
    5,250,000Securities available for sale
    
    
    294,125,263
    
    
    
    285,441,610Loans held for sale
    
    
    14,160,176
    
    
    
    13,409,164Loans
    
    
    209,220,001
    
    
    
    219,757,787Allowance for loan losses
    
    
    (2,519,213
    )
    
    
    (3,471,118
    )Loans, net
    
    
    206,700,788
    
    
    
    216,286,669Accrued interest receivable
    
    
    7,383,924
    
    
    
    7,231,282Premises and equipment, net
    
    
    9,043,759
    
    
    
    8,667,298Intangible assets, net
    
    
    10,702,056
    
    
    
    10,901,299Other assets
    
    
    5,665,606
    
    
    
    3,712,063Total assets
    
    $
    576,674,214
    
    
    $
    575,318,938Liabilities
and Stockholders EquityLiabilities:Deposits:Demand deposits, noninterest-bearing
    
    $
    51,617,885
    
    
    $
    49,966,362Interest-bearing demand and money market accounts
    
    
    221,164,629
    
    
    
    209,820,940Savings
    
    
    41,267,265
    
    
    
    41,337,897Time, $100,000 and over
    
    
    69,312,844
    
    
    
    80,102,480Time, other
    
    
    131,440,187
    
    
    
    121,359,364Total deposits
    
    
    514,802,810
    
    
    
    502,587,043Short-term borrowings
    
    
    4,747,578
    
    
    
    4,733,657Federal Home Loan Bank advances
    
    
    1,000,000
    
    
    
    1,000,000Accrued interest payable and other liabilities
    
    
    1,472,510
    
    
    
    3,355,298Total liabilities
    
    
    522,022,898
    
    
    
    511,675,998Stockholders Equity:Common stock
    
    
    2,691,000
    
    
    
    2,691,000Additional paid-in capital
    
    
    31,734,000
    
    
    
    31,734,000Retained earnings
    
    
    21,935,165
    
    
    
    25,755,672Accumulated other comprehensive income (loss)
    
    
    (1,708,849
    )
    
    
    3,462,268Total
stockholders equity
    
    
    54,651,316
    
    
    
    63,642,940Total
liabilities and stockholders equity
    
    $
    576,674,214
    
    
    $
    575,318,938




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##### Table of Contents



METROBANK  Years Ended October 31, 2005, 2004, and 2003
 2005
    
    
    2004
    
    
    2003Interest income:Loans
    
    $
    13,311,049
    
    
    $
    12,857,018
    
    
    $
    15,766,382Securities:Taxable
    
    
    8,372,062
    
    
    
    8,411,899
    
    
    
    8,159,476Exempt from federal income tax
    
    
    2,711,725
    
    
    
    2,569,788
    
    
    
    2,077,857Federal funds sold
    
    
    52,664
    
    
    
    9,442
    
    
    
    69,392Other
    
    
    235,958
    
    
    
    158,563
    
    
    
    156,312Total interest income
    
    
    24,683,458
    
    
    
    24,006,710
    
    
    
    26,229,419Interest expense:Interest-bearing demand and money market accounts
    
    
    2,972,954
    
    
    
    2,453,426
    
    
    
    2,547,934Savings deposits
    
    
    212,688
    
    
    
    199,964
    
    
    
    212,230Time deposits
    
    
    5,097,237
    
    
    
    3,562,693
    
    
    
    5,465,681Short-term borrowings
    
    
    292,357
    
    
    
    157,877
    
    
    
    49,877Federal Home Loan Bank advances
    
    
    137,831
    
    
    
    108,842
    
    
    
    87,959Total interest expense
    
    
    8,713,067
    
    
    
    6,482,802
    
    
    
    8,363,681Net interest income
    
    
    15,970,391
    
    
    
    17,523,908
    
    
    
    17,865,738Provision for loan losses
    
    
    (1,150,000
    )
    
    
    
    
    
    
    1,766,000Net interest income after
provision for loan losses
    
    
    17,120,391
    
    
    
    17,523,908
    
    
    
    16,099,738Noninterest income:Service charges on deposit accounts
    
    
    1,324,598
    
    
    
    1,410,077
    
    
    
    1,667,064Gains on sales of loans
    
    
    648,074
    
    
    
    753,385
    
    
    
    1,516,534Securities gains, net
    
    
    62,268
    
    
    
    19,931
    
    
    
    206,337Trust fees
    
    
    475,502
    
    
    
    550,881
    
    
    
    517,342ATM foreign transaction fees
    
    
    628,880
    
    
    
    671,513
    
    
    
    712,944Merchant, debit/credit card fees
    
    
    863,929
    
    
    
    776,430
    
    
    
    741,479Other income
    
    
    795,284
    
    
    
    815,935
    
    
    
    1,066,014Total noninterest income
    
    
    4,798,535
    
    
    
    4,998,152
    
    
    
    6,427,714Noninterest expense:Salaries and employee benefits
    
    
    8,336,372
    
    
    
    8,856,720
    
    
    
    9,125,212Occupancy and equipment expense
    
    
    1,712,115
    
    
    
    1,610,238
    
    
    
    1,611,583Data processing expenses
    
    
    416,984
    
    
    
    349,686
    
    
    
    344,953Merchant, debit/credit card expenses
    
    
    658,172
    
    
    
    581,515
    
    
    
    523,139Other expenses
    
    
    2,923,035
    
    
    
    3,214,470
    
    
    
    3,155,532Total noninterest expense
    
    
    14,046,678
    
    
    
    14,612,629
    
    
    
    14,760,419Income before income taxes
    
    
    7,872,248
    
    
    
    7,909,431
    
    
    
    7,767,033Income tax expense
    
    
    1,943,768
    
    
    
    1,973,459
    
    
    
    2,100,617Net income
    
    $
    5,928,480
    
    
    $
    5,935,972
    
    
    $
    5,666,416




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##### Table of Contents



Exhibit Index
 ExhibitNumber
    
    Description3.1
    
    Articles of Incorporation of Metrocorp, as amended to date3.2
    
    Bylaws of Metrocorp4.1
    
    Amended and Restated Trust Agreement among Metrocorp, Inc., Wilmington
Trust Company and the Administrators named therein dated November 1,
20014.2
    
    Subordinated Loan Agreement between Metrocorp, Inc. and Metrocorp
Capital Trust I dated November 1, 20014.3
    
    Guarantee Agreement by Metrocorp, Inc. dated November 1, 20014.4
    
    Form of Trust Preferred Certificate of Metrocorp Capital Trust I4.5
    
    Certificate of Trust of Metrocorp Capital Trust I (Exhibit A to Exhibit 4.1
hereto)10.1
    
    Form of Indemnification Agreement between Metrocorp and each director of
Metrocorp10.2
    
    Form of Incentive Bonus Agreement between Metrocorp and each of Gary
Andersen, Nancy Hamilton, Julius Van Paemel, Bart Ottens and other
employees10.3
    
    Change of Control Severance Plan dated September 22, 200510.4
    
    Stay Bonus Plan dated November 11, 200510.5
    
    Renewal of Lease Agreement between Wal-Mart Stores, Inc. and
Metrobank, NA dated July 11, 200010.6
    
    Replacement Revolving Note payable by Metrocorp to La Salle Bank, N.A.
dated August 5, 2002, due July 24, 200810.7
    
    Loan Agreement between Metrobank and La Salle Bank, NA dated
November 1, 2001, as amended by the First Amendment to Loan Agreement
dated November 30, 2001, and the Second Amendment to Loan Agreement
dated August 5, 200214.1
    
    Code of Ethics for Principal Executive Officers and Senior Financial Officers14.2
    
    Code of Business Conduct21.1
    
    Metrobank, NA, Community Insurance, Inc. and Metrocorp Capital Trust I
are the only subsidiaries of the Registrant24.1
    
    Power of Attorney (included on the signature page)31.1
    
    Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer31.2
    
    Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer32.1
    
    Section 1350 Certification of Chief Executive Officer32.2
    
    Section 1350 Certification of Chief Financial Officer99.1
    
    Charter of the Audit Committee of Metrocorp, Inc.