##### 



F I V
E - Y E A R  C O N S O L I D A T E D  F I N A N C I A L  H I G H L I G H T S
 Selected Operations Data:
 Year Ended December 31,(Dollars in thousands, except per share data)
    
    2006
    
    
    2005
    
    
    2004
    
    
    2003
    
    
    2002Total interest income
    
    $
    67,527
    
    
    
    60,281
    
    
    
    51,617
    
    
    
    44,937
    
    
    
    42,868Total interest expense
    
    
    28,841
    
    
    
    24,511
    
    
    
    20,993
    
    
    
    20,289
    
    
    
    21,295Net interest income
    
    
    38,686
    
    
    
    35,770
    
    
    
    30,624
    
    
    
    24,648
    
    
    
    21,573Provision for loan losses
    
    
    8,878
    
    
    
    2,674
    
    
    
    2,755
    
    
    
    2,610
    
    
    
    2,376Net interest income after provision for loan losses
    
    
    29,808
    
    
    
    33,096
    
    
    
    27,869
    
    
    
    22,038
    
    
    
    19,197Fees and service charges
    
    
    3,111
    
    
    
    2,719
    
    
    
    2,776
    
    
    
    2,304
    
    
    
    1,723Loan servicing fees
    
    
    1,172
    
    
    
    1,210
    
    
    
    1,169
    
    
    
    998
    
    
    
    715Securities gains (losses), net
    
    
    48
    
    
    
    (21
    )
    
    
    (535
    )
    
    
    1,275
    
    
    
    422Gain on sales of loans
    
    
    1,255
    
    
    
    1,853
    
    
    
    1,703
    
    
    
    5,240
    
    
    
    3,077Other non-interest income
    
    
    855
    
    
    
    748
    
    
    
    854
    
    
    
    438
    
    
    
    (62
    )Total non-interest income
    
    
    6,441
    
    
    
    6,509
    
    
    
    5,967
    
    
    
    10,255
    
    
    
    5,875Total non-interest expense
    
    
    22,596
    
    
    
    21,801
    
    
    
    20,162
    
    
    
    19,653
    
    
    
    17,849Income tax expense
    
    
    5,225
    
    
    
    6,736
    
    
    
    4,387
    
    
    
    4,038
    
    
    
    2,099Income before minority interest
    
    
    8,428
    
    
    
    11,068
    
    
    
    9,287
    
    
    
    8,602
    
    
    
    5,124Minority interest
    
    
    0
    
    
    
    0
    
    
    
    (3
    )
    
    
    (3
    )
    
    
    (142
    )Net income
    
    $
    8,428
    
    
    
    11,068
    
    
    
    9,290
    
    
    
    8,605
    
    
    
    5,266Per common share and common share equivalents:Basic
    
    $
    2.20
    
    
    
    2.89
    
    
    
    2.40
    
    
    
    2.26
    
    
    
    1.40Diluted
    
    
    2.10
    
    
    
    2.77
    
    
    
    2.31
    
    
    
    2.16
    
    
    
    1.32
 Selected Financial Condition Data:
 December 31,(Dollars in thousands, except per share data)
    
    2006
    
    2005
    
    2004
    
    2003
    
    2002Total assets
    
    $
    977,789
    
    
    
    991,237
    
    
    
    960,673
    
    
    
    866,726
    
    
    
    737,523Securities available for sale
    
    
    126,140
    
    
    
    119,659
    
    
    
    103,672
    
    
    
    104,664
    
    
    
    121,397Loans held for sale
    
    
    1,493
    
    
    
    1,435
    
    
    
    2,712
    
    
    
    6,543
    
    
    
    15,127Loans receivable, net
    
    
    768,232
    
    
    
    785,678
    
    
    
    783,213
    
    
    
    688,951
    
    
    
    533,906Deposits
    
    
    725,959
    
    
    
    731,537
    
    
    
    698,902
    
    
    
    551,688
    
    
    
    432,951Federal Home Loan Bank advances
    
    
    150,900
    
    
    
    160,900
    
    
    
    170,900
    
    
    
    203,900
    
    
    
    218,300Stockholders equity
    
    
    93,142
    
    
    
    90,728
    
    
    
    83,771
    
    
    
    80,931
    
    
    
    76,065Book value per share
    
    
    21.58
    
    
    
    20.59
    
    
    
    18.95
    
    
    
    17.93
    
    
    
    17.28Number of full service offices
    
    
    15
    
    
    
    13
    
    
    
    13
    
    
    
    12
    
    
    
    13Number of loan origination offices
    
    
    2
    
    
    
    3
    
    
    
    2
    
    
    
    6
    
    
    
    2Key Ratios(1)Stockholders equity to total assets at year end
    
    
    9.53
    %
    
    
    9.15
    %
    
    
    8.72
    %
    
    
    9.34
    %
    
    
    10.31
    %Average stockholders equity to average assets
    
    
    9.70
    
    
    
    9.05
    
    
    
    9.17
    
    
    
    10.15
    
    
    
    10.66Return on stockholders equity
(ratio of net income to average equity)
    
    
    8.85
    
    
    
    12.42
    
    
    
    11.03
    
    
    
    10.85
    
    
    
    6.94Return on assets
(ratio of net income to average assets)
    
    
    0.86
    
    
    
    1.12
    
    
    
    1.01
    
    
    
    1.10
    
    
    
    0.74Dividend payout ratio
(ratio of dividends paid to net income)
    
    
    42.61
    
    
    
    38.02
    
    
    
    36.36
    
    
    
    39.58
    
    
    
    57.63
 
 (1)
    
    Average balances were calculated based upon amortized cost without the market value impact of SFAS No. 115. 5




---



##### 



M A N A G E M E N T  S  D I S C U S S I O N  A N D  A N A L Y S I S
 This Annual Report, other reports filed by the Company with the Securities and Exchange
Commission, and the Companys proxy statement may contain forward-looking statements that deal
with future results, plans or performance. In addition, the Companys management may make such
statements orally to the media, or to securities analysts, investors or others. Forward-looking
statements deal with matters that do not relate strictly to historical facts. Words such as
anticipate, believe, expect, intend, would, could and similar expressions, as they
relate to us, are intended to identify such forward-looking statements. The Companys future
results may differ materially from historical performance and forward-looking statements about the
Companys expected financial results or other plans are subject to a number of risks and
uncertainties. These include but are not limited to possible legislative changes and adverse
economic, business and competitive developments such as shrinking interest margins; deposit
outflows; reduced demand for financial services and loan products; changes in accounting policies
and guidelines, or monetary and fiscal policies of the federal government; changes in credit and
other risks posed by the Companys loan and investment portfolios; changes in loan repayment and
prepayment patterns; changes in loan terms and conditions; technological, computer-related or
operational difficulties; adverse changes in securities markets; results of litigation or other
significant uncertainties.
 OVERVIEW
   Critical Accounting Policies
  Allowance for Loan Losses and Related Provision
  6




---



##### 



Mortgage Servicing Rights
  Income Taxes
  Accounting for Uncertainty in Income Taxes 
an interpretation of FASB Statement No. 109
 7




---



##### 



M A N A G E M E N T  S  D I S C U S S I O N  A N D  A N A L Y S I S
 Results of Operations
   Net Interest Income
   8




---



##### 



Year Ended December 31,2006
    
    
    2005
    
    
    2004Average
    
    
    Interest
    
    
    Average
    
    
    Average
    
    
    Interest
    
    
    Average
    
    
    Average
    
    
    Interest
    
    
    AverageOutstanding
    
    
    Earned/
    
    
    Yield/
    
    
    Outstanding
    
    
    Earned/
    
    
    Yield/
    
    
    Outstanding
    
    
    Earned/
    
    
    Yield/(Dollars in thousands)
    
    Balance
    
    
    Paid
    
    
    Rate
    
    
    Balance
    
    
    Paid
    
    
    Rate
    
    
    Balance
    
    
    Paid
    
    
    RateInterest-earning assets:Securities available for sale:Mortgage-backed and
related securities
    
    $
    7,045
    
    
    
    271
    
    
    
    3.85
    %
    
    $
    8,509
    
    
    
    326
    
    
    
    3.83
    %
    
    $
    11,225
    
    
    
    385
    
    
    
    3.43
    %Other marketable securities
    
    
    124,684
    
    
    
    5,195
    
    
    
    4.17
    
    
    
    95,193
    
    
    
    2,744
    
    
    
    2.88
    
    
    
    97,508
    
    
    
    2,898
    
    
    
    2.97Loans held for sale
    
    
    3,383
    
    
    
    216
    
    
    
    6.40
    
    
    
    3,308
    
    
    
    189
    
    
    
    5.71
    
    
    
    4,349
    
    
    
    249
    
    
    
    5.73Loans receivable, net(1)(2)
    
    
    760,990
    
    
    
    59,965
    
    
    
    7.88
    
    
    
    802,637
    
    
    
    56,189
    
    
    
    7.00
    
    
    
    732,638
    
    
    
    47,714
    
    
    
    6.51Federal Home Loan Bank stock
    
    
    8,235
    
    
    
    325
    
    
    
    3.95
    
    
    
    8,960
    
    
    
    253
    
    
    
    2.82
    
    
    
    9,889
    
    
    
    207
    
    
    
    2.10Other, including
cash equivalents
    
    
    32,867
    
    
    
    1,555
    
    
    
    4.73
    
    
    
    21,714
    
    
    
    580
    
    
    
    2.67
    
    
    
    18,954
    
    
    
    164
    
    
    
    0.87Total interest-earning assets
    
    $
    937,204
    
    
    
    67,527
    
    
    
    7.21
    
    
    $
    940,321
    
    
    
    60,281
    
    
    
    6.41
    
    
    $
    874,563
    
    
    
    51,617
    
    
    
    5.90Interest-bearing liabilities:Noninterest checking
    
    $
    51,017
    
    
    
    0
    
    
    
    0.00
    %
    
    $
    45,263
    
    
    
    0
    
    
    
    0.00
    %
    
    $
    38,862
    
    
    
    0
    
    
    
    0.00
    %NOW accounts
    
    
    97,753
    
    
    
    2,635
    
    
    
    2.70
    
    
    
    104,271
    
    
    
    1,770
    
    
    
    1.70
    
    
    
    88,559
    
    
    
    638
    
    
    
    0.72Passbooks
    
    
    60,577
    
    
    
    1,084
    
    
    
    1.79
    
    
    
    48,297
    
    
    
    435
    
    
    
    0.90
    
    
    
    43,186
    
    
    
    77
    
    
    
    0.18Money market accounts
    
    
    153,889
    
    
    
    5,119
    
    
    
    3.33
    
    
    
    106,819
    
    
    
    2,273
    
    
    
    2.13
    
    
    
    106,943
    
    
    
    1,519
    
    
    
    1.42Certificate accounts
    
    
    233,074
    
    
    
    8,652
    
    
    
    3.71
    
    
    
    243,853
    
    
    
    7,093
    
    
    
    2.91
    
    
    
    257,911
    
    
    
    7,254
    
    
    
    2.81Brokered deposits
    
    
    125,055
    
    
    
    4,553
    
    
    
    3.64
    
    
    
    167,181
    
    
    
    5,660
    
    
    
    3.39
    
    
    
    96,900
    
    
    
    2,909
    
    
    
    3.00Federal Home Loan
Bank advances
    
    
    156,399
    
    
    
    6,795
    
    
    
    4.34
    
    
    
    170,914
    
    
    
    7,278
    
    
    
    4.26
    
    
    
    196,662
    
    
    
    8,595
    
    
    
    4.37Other interest-bearing liabilities
    
    
    834
    
    
    
    3
    
    
    
    0.00
    
    
    
    866
    
    
    
    2
    
    
    
    0.00
    
    
    
    905
    
    
    
    1
    
    
    
    0.00Total interest-bearing liabilities
    
    $
    878,598
    
    
    
    28,841
    
    
    
    3.28
    
    
    $
    887,464
    
    
    
    24,511
    
    
    
    2.76
    
    
    $
    829,928
    
    
    
    20,993
    
    
    
    2.53Net interest income
    
    
    
    
    
    
    38,686
    
    
    
    
    
    
    
    
    
    
    
    35,770
    
    
    
    
    
    
    
    
    
    
    
    30,624Net interest rate spread
    
    
    
    
    
    
    
    
    
    
    3.93
    %
    
    
    
    
    
    
    
    
    
    
    3.65
    %
    
    
    
    
    
    
    
    
    
    
    3.37
    %Net earning assets
    
    $
    58,606
    
    
    
    
    
    
    
    
    
    
    $
    52,857
    
    
    
    
    
    
    
    
    
    
    $
    44,635Net interest margin
    
    
    
    
    
    
    
    
    
    
    4.13
    %
    
    
    
    
    
    
    
    
    
    
    3.80
    %
    
    
    
    
    
    
    
    
    
    
    3.50
    %Average interest-earning assets to
average interest-bearing
liabilities
    
    
    
    
    
    
    106.67
    %
    
    
    
    
    
    
    
    
    
    
    105.96
    %
    
    
    
    
    
    
    
    
    
    
    105.38
    %
 
 (1)
    
    Tax exempt income was not significant; therefore, the yield was not presented on
a tax equivalent basis for any of the years presented. The tax-exempt income was $1.1 million for
2006 and 2005, and $1.0 million for 2004.(2)
    
    Calculated net of deferred loan fees, loan discounts, loans in process and loss
reserve.   9




---



##### 



M A N A G E M E N T  S  D I S C U S S I O N  A N D  A N A L Y S I S
 Year Ended December 31,2006 vs. 2005
    
    
    
    
    
    
    2005 vs. 2004Increase (Decrease)
    
    
    
    
    
    
    Increase (Decrease)Due to
    
    
    
    
    
    
    Due toTotal
    
    
    
    
    
    
    
    
    
    
    TotalIncrease
    
    
    
    
    
    
    
    
    
    
    Increase(Dollars in thousands)
    
    Volume(1)
    
    
    Rate(1)
    
    
    (Decrease)
    
    
    Volume(1)
    
    
    Rate(1)
    
    
    (Decrease)Interest-earning assets:Securities available for sale:Mortgage-backed and related securities
    
    $
    (56
    )
    
    
    1
    
    
    
    (55
    )
    
    $
    (100
    )
    
    
    41
    
    
    
    (59
    )Other marketable securities
    
    
    850
    
    
    
    1,601
    
    
    
    2,451
    
    
    
    (69
    )
    
    
    (85
    )
    
    
    (154
    )Loans held for sale
    
    
    4
    
    
    
    23
    
    
    
    27
    
    
    
    (60
    )
    
    
    0
    
    
    
    (60
    )Loans receivable, net
    
    
    (2,832
    )
    
    
    6,608
    
    
    
    3,776
    
    
    
    5,099
    
    
    
    3,376
    
    
    
    8,475Cash equivalents
    
    
    298
    
    
    
    677
    
    
    
    975
    
    
    
    27
    
    
    
    389
    
    
    
    416Other
    
    
    (21
    )
    
    
    92
    
    
    
    71
    
    
    
    (20
    )
    
    
    67
    
    
    
    47Total interest-earning assets
    
    $
    (1,757
    )
    
    
    9,002
    
    
    
    7,245
    
    
    $
    4,877
    
    
    
    3,788
    
    
    
    8,665Interest-bearing liabilities:NOW accounts
    
    $
    (81
    )
    
    
    947
    
    
    
    866
    
    
    $
    241
    
    
    
    891
    
    
    
    1,132Passbooks
    
    
    111
    
    
    
    538
    
    
    
    649
    
    
    
    10
    
    
    
    348
    
    
    
    358Money market accounts
    
    
    1,292
    
    
    
    1,552
    
    
    
    2,844
    
    
    
    93
    
    
    
    662
    
    
    
    755Certificates
    
    
    (313
    )
    
    
    1,873
    
    
    
    1,560
    
    
    
    (403
    )
    
    
    241
    
    
    
    (162
    )Brokered deposits
    
    
    (1,426
    )
    
    
    319
    
    
    
    (1,107
    )
    
    
    2,339
    
    
    
    412
    
    
    
    2,751Federal Home Loan Bank advances
    
    
    (618
    )
    
    
    135
    
    
    
    (483
    )
    
    
    (1,148
    )
    
    
    (169
    )
    
    
    (1,317
    )Other interest-bearing liabilities
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    2
    
    
    
    2Total interest-bearing liabilities
    
    $
    (1,035
    )
    
    
    5,364
    
    
    
    4,329
    
    
    $
    1,132
    
    
    
    2,387
    
    
    
    3,519Net interest income
    
    
    
    
    
    
    
    
    
    $
    38,686
    
    
    
    
    
    
    
    
    
    
    $
    35,770
 
 (1)
    
    For purposes of this table, changes attributable to both rate and volume which cannot be segregated have been allocated proportionately to the change due to volume and the change due to rate.  At December 31, 2006
 Weighted average yield on:Securities available for sale:Mortgage-backed and related securities
    
    
    3.79
    %Other marketable securities
    
    
    4.96Loans held for sale
    
    
    6.45Loans receivable, net
    
    
    8.12Federal Home Loan Bank stock
    
    
    4.25Other interest-earnings assets
    
    
    5.20Combined weighted average yield on
interest-earning assets
    
    
    7.12Weighted average rate on:NOW accounts
    
    
    2.54
    %Passbooks
    
    
    1.37Money market accounts
    
    
    3.31Certificates
    
    
    4.23Federal Home Loan Bank advances
    
    
    4.27Combined weighted average rate on
interest-bearing liabilities
    
    
    3.41Interest rate spread
    
    
    3.71
 Provision For Loan Losses
  10




---



##### 



Non-Interest Income
  PercentageYear Ended December 31,
    
    Increase (Decrease)(Dollars in thousands)
    
    2006
    
    2005
    
    2004
    
    2006/2005
    
    2005/2004Fees and service charges
    
    
    $   3,111
    
    
    
    2,719
    
    
    
    2,776
    
    
    
    14.4
    %
    
    
    (2.1
    )%Loan servicing fees
    
    
    1,172
    
    
    
    1,210
    
    
    
    1,169
    
    
    
    (3.1
    )
    
    
    3.5Securities gains (losses), net
    
    
    48
    
    
    
    (21
    )
    
    
    (535
    )
    
    
    328.6
    
    
    
    96.1Gain on sales of loans
    
    
    1,255
    
    
    
    1,853
    
    
    
    1,703
    
    
    
    (32.3
    )
    
    
    8.8Other non-interest income
    
    
    855
    
    
    
    748
    
    
    
    854
    
    
    
    14.3
    
    
    
    (12.4
    )Total non-interest income
    
    
    $   6,441
    
    
    
    6,509
    
    
    
    5,967
    
    
    
    (1.0
    )
    
    
    9.1
      11




---



##### 



M A N
A G E M E N T  S  D I S C U S S I O N  A N D   A
N A L Y S I S
 Non-Interest Expense
  PercentageYear Ended December 31,
    
    Increase (Decrease)(Dollars in thousands)
    
    2006
    
    2005
    
    2004
    
    2006/2005
    
    2005/2004Compensation and benefits
    
    
    $   11,869
    
    
    
    11,140
    
    
    
    10,187
    
    
    
    6.5
    %
    
    
    9.4
    %Occupancy
    
    
    4,435
    
    
    
    4,081
    
    
    
    3,630
    
    
    
    8.7
    
    
    
    12.4Deposit insurance premiums
    
    
    102
    
    
    
    130
    
    
    
    96
    
    
    
    (21.5
    )
    
    
    35.4Advertising
    
    
    475
    
    
    
    384
    
    
    
    430
    
    
    
    23.7
    
    
    
    (10.7
    )Data processing
    
    
    1,183
    
    
    
    1,032
    
    
    
    930
    
    
    
    14.6
    
    
    
    11.0Amortization of mortgage servicing rights, net
    
    
    848
    
    
    
    1,020
    
    
    
    1,061
    
    
    
    (16.9
    )
    
    
    (3.9
    )Other
    
    
    3,684
    
    
    
    4,014
    
    
    
    3,828
    
    
    
    (8.2
    )
    
    
    4.9Total non-interest expense
    
    
    $   22,596
    
    
    
    21,801
    
    
    
    20,162
    
    
    
    3.6
    
    
    
    8.1
  Income Taxes
  Accounting for Uncertainty in Income
Taxes  an interpretation of FASB Statement No. 109
  COMPARISON OF 2005 WITH 2004
  12




---



##### 



13




---



##### 



M A N
A G E M E N T  S  D I S C U S S I O N  A N D   A
N A L Y S I S
    14




---



##### 



Financial Condition
 Loans Receivable, Net
  December 31,2006
    
    
    2005
    
    
    2004
    
    
    2003
    
    
    2002(Dollars in thousands)
    
    Amount
    
    
    Percent
    
    
    Amount
    
    
    Percent
    
    
    Amount
    
    
    Percent
    
    
    Amount
    
    
    Percent
    
    
    Amount
    
    
    PercentReal Estate Loans:One-to-four family
    
    $
    134,269
    
    
    
    17.10
    %
    
    $
    127,075
    
    
    
    15.82
    %
    
    $
    139,008
    
    
    
    17.34
    %
    
    $
    144,315
    
    
    
    20.37
    %
    
    $
    151,566
    
    
    
    27.72
    %Multi-family
    
    
    29,863
    
    
    
    3.80
    
    
    
    40,753
    
    
    
    5.07
    
    
    
    41,922
    
    
    
    5.23
    
    
    
    31,540
    
    
    
    4.45
    
    
    
    15,766
    
    
    
    2.88Commercial
    
    
    294,490
    
    
    
    37.49
    
    
    
    260,268
    
    
    
    32.40
    
    
    
    224,945
    
    
    
    28.06
    
    
    
    199,124
    
    
    
    28.10
    
    
    
    130,417
    
    
    
    23.85Construction or
development
    
    
    60,178
    
    
    
    7.66
    
    
    
    80,342
    
    
    
    10.00
    
    
    
    98,397
    
    
    
    12.28
    
    
    
    95,346
    
    
    
    13.45
    
    
    
    61,336
    
    
    
    11.22Total real estate
loans
    
    
    518,800
    
    
    
    66.05
    
    
    
    508,438
    
    
    
    63.29
    
    
    
    504,272
    
    
    
    62.91
    
    
    
    470,325
    
    
    
    66.37
    
    
    
    359,085
    
    
    
    65.67Other Loans:Consumer Loans:Automobile
    
    
    3,093
    
    
    
    0.39
    
    
    
    5,461
    
    
    
    0.68
    
    
    
    9,496
    
    
    
    1.18
    
    
    
    14,754
    
    
    
    2.08
    
    
    
    11,062
    
    
    
    2.02Home equity line
    
    
    54,247
    
    
    
    6.91
    
    
    
    61,011
    
    
    
    7.60
    
    
    
    67,140
    
    
    
    8.38
    
    
    
    54,193
    
    
    
    7.64
    
    
    
    52,106
    
    
    
    9.53Home equity
    
    
    21,263
    
    
    
    2.71
    
    
    
    19,076
    
    
    
    2.37
    
    
    
    20,033
    
    
    
    2.50
    
    
    
    18,974
    
    
    
    2.68
    
    
    
    21,075
    
    
    
    3.85Mobile home
    
    
    2,052
    
    
    
    0.26
    
    
    
    2,299
    
    
    
    0.29
    
    
    
    2,896
    
    
    
    0.36
    
    
    
    3,665
    
    
    
    0.52
    
    
    
    4,534
    
    
    
    0.83Land/lot loans
    
    
    5,501
    
    
    
    0.70
    
    
    
    9,487
    
    
    
    1.18
    
    
    
    11,572
    
    
    
    1.44
    
    
    
    10,486
    
    
    
    1.48
    
    
    
    3,590
    
    
    
    0.66Other
    
    
    3,692
    
    
    
    0.47
    
    
    
    3,564
    
    
    
    0.44
    
    
    
    3,836
    
    
    
    0.48
    
    
    
    3,833
    
    
    
    0.54
    
    
    
    4,054
    
    
    
    0.75Total consumer
loans
    
    
    89,848
    
    
    
    11.44
    
    
    
    100,898
    
    
    
    12.56
    
    
    
    114,973
    
    
    
    14.34
    
    
    
    105,905
    
    
    
    14.94
    
    
    
    96,421
    
    
    
    17.64Commercial business
loans
    
    
    176,770
    
    
    
    22.51
    
    
    
    193,962
    
    
    
    24.15
    
    
    
    182,369
    
    
    
    22.75
    
    
    
    132,459
    
    
    
    18.69
    
    
    
    91,260
    
    
    
    16.69Total other loans
    
    
    266,618
    
    
    
    33.95
    
    
    
    294,860
    
    
    
    36.71
    
    
    
    297,342
    
    
    
    37.09
    
    
    
    238,364
    
    
    
    33.63
    
    
    
    187,681
    
    
    
    34.33Total loans
    
    
    785,418
    
    
    
    100.00
    %
    
    
    803,298
    
    
    
    100.00
    %
    
    
    801,614
    
    
    
    100.00
    %
    
    
    708,689
    
    
    
    100.00
    %
    
    
    546,766
    
    
    
    100.00
    %Less:Loans in process
    
    
    5,252
    
    
    
    
    
    
    
    7,008
    
    
    
    
    
    
    
    7,561
    
    
    
    
    
    
    
    11,298
    
    
    
    
    
    
    
    6,826Unamortized
discounts
    
    
    40
    
    
    
    
    
    
    
    190
    
    
    
    
    
    
    
    63
    
    
    
    
    
    
    
    166
    
    
    
    
    
    
    
    142Net deferred
loan fees
    
    
    2,021
    
    
    
    
    
    
    
    1,644
    
    
    
    
    
    
    
    1,781
    
    
    
    
    
    
    
    1,334
    
    
    
    
    
    
    
    1,068Allowance for losses
    
    
    9,873
    
    
    
    
    
    
    
    8,778
    
    
    
    
    
    
    
    8,996
    
    
    
    
    
    
    
    6,940
    
    
    
    
    
    
    
    4,824Total loans
receivable, net
    
    $
    768,232
    
    
    
    
    
    
    $
    785,678
    
    
    
    
    
    
    $
    783,213
    
    
    
    
    
    
    $
    688,951
    
    
    
    
    
    
    $
    533,906
    15




---



##### 



M A N
A G E M E N T  S  D I S C U S S I O N  A N D   A
N A L Y S I S
   Allowance for Loan Losses
    December 31,(Dollars in thousands)
    
    2006
    
    2005
    
    2004
    
    2003
    
    2002Balance at beginning of year
    
    
    $   8,778
    
    
    
    8,996
    
    
    
    6,940
    
    
    
    4,824
    
    
    
    3,783Provision for losses
    
    
    8,878
    
    
    
    2,674
    
    
    
    2,755
    
    
    
    2,610
    
    
    
    2,376Charge-offs:One-to-four family
    
    
    (150
    )
    
    
    (234
    )
    
    
    (331
    )
    
    
    (69
    )
    
    
    (44
    )Consumer
    
    
    (269
    )
    
    
    (228
    )
    
    
    (407
    )
    
    
    (226
    )
    
    
    (310
    )Commercial business and real estate
    
    
    (7,430
    )
    
    
    (2,615
    )
    
    
    0
    
    
    
    (255
    )
    
    
    (1,015
    )Recoveries
    
    
    66
    
    
    
    185
    
    
    
    39
    
    
    
    56
    
    
    
    34Net charge-offs
    
    
    (7,783
    )
    
    
    (2,892
    )
    
    
    (699
    )
    
    
    (494
    )
    
    
    (1,335
    )Balance at end of year
    
    
    $   9,873
    
    
    
    8,778
    
    
    
    8,996
    
    
    
    6,940
    
    
    
    4,824Year end allowance for loan losses as a percent of year end
gross loan balance
    
    
    1.26
    %
    
    
    1.09
    %
    
    
    1.12
    %
    
    
    0.98
    %
    
    
    0.88
    %Ratio of net loan charge-offs to average loans outstanding
    
    
    0.98
    
    
    
    0.36
    
    
    
    0.09
    
    
    
    0.08
    
    
    
    0.20
 16




---



##### 



December 31,2006
    
    2005
    
    2004
    
    2003
    
    2002Percent
    
    
    
    
    
    Percent
    
    
    
    
    
    Percent
    
    
    
    
    
    Percent
    
    
    
    
    
    PercentAllocated
    
    of loans
    
    Allocated
    
    of loans
    
    Allocated
    
    of loans
    
    Allocated
    
    of loans
    
    Allocated
    
    of loansallowance
    
    in each
    
    allowance
    
    in each
    
    allowance
    
    in each
    
    allowance
    
    in each
    
    allowance
    
    in eachas a %
    
    category
    
    as a %
    
    category
    
    as a %
    
    category
    
    as a %
    
    category
    
    as a %
    
    categoryof loan
    
    to total
    
    of loan
    
    to total
    
    of loan
    
    to total
    
    of loan
    
    to total
    
    of loan
    
    to totalcategory
    
    loans
    
    category
    
    loans
    
    category
    
    loans
    
    category
    
    loans
    
    category
    
    loansReal estate loans:One-to-four family
    
    
    0.22
    %
    
    
    17.10
    %
    
    
    0.21
    %
    
    
    15.82
    %
    
    
    0.17
    %
    
    
    17.34
    %
    
    
    0.12
    %
    
    
    20.36
    %
    
    
    0.06
    %
    
    
    27.72
    %Multi-family
    
    
    1.49
    
    
    
    3.80
    
    
    
    1.56
    
    
    
    5.07
    
    
    
    1.67
    
    
    
    5.23
    
    
    
    1.34
    
    
    
    4.45
    
    
    
    1.30
    
    
    
    2.88Commercial real estate
    
    
    1.67
    
    
    
    37.49
    
    
    
    1.32
    
    
    
    32.40
    
    
    
    1.60
    
    
    
    28.06
    
    
    
    1.42
    
    
    
    28.10
    
    
    
    1.55
    
    
    
    23.88Construction or development
    
    
    1.16
    
    
    
    7.66
    
    
    
    1.14
    
    
    
    10.00
    
    
    
    1.07
    
    
    
    12.28
    
    
    
    0.92
    
    
    
    13.45
    
    
    
    0.97
    
    
    
    11.22Consumer loans
    
    
    1.59
    
    
    
    11.44
    
    
    
    0.88
    
    
    
    12.56
    
    
    
    0.81
    
    
    
    14.34
    
    
    
    0.98
    
    
    
    14.95
    
    
    
    0.56
    
    
    
    17.63Commercial business loans
    
    
    1.18
    
    
    
    22.51
    
    
    
    1.36
    
    
    
    24.15
    
    
    
    1.36
    
    
    
    22.75
    
    
    
    1.20
    
    
    
    18.69
    
    
    
    1.48
    
    
    
    16.67Total
    
    
    1.26
    
    
    
    100.00
    %
    
    
    1.09
    
    
    
    100.00
    %
    
    
    1.12
    
    
    
    100.00
    %
    
    
    0.98
    
    
    
    100.00
    %
    
    
    0.88
    
    
    
    100.00
    %
  Allowance for Real Estate Losses
  Non-performing Assets
   17




---



##### 



M A N
A G E M E N T  S  D I S C U S S I O N  A N D   A
N A L Y S I S
  December 31,(Dollars in thousands)
    
    2006
    
    
    2005
    
    
    2004
    
    
    2003
    
    
    2002Non-accruing loans:Real estate:One-to-four family
    
    $
    1,364
    
    
    
    626
    
    
    
    1,864
    
    
    
    1,177
    
    
    
    695Commercial real estate
    
    
    5,296
    
    
    
    948
    
    
    
    1,114
    
    
    
    2,162
    
    
    
    1,719Consumer
    
    
    1,254
    
    
    
    496
    
    
    
    472
    
    
    
    1,050
    
    
    
    495Commercial business
    
    
    394
    
    
    
    259
    
    
    
    261
    
    
    
    186
    
    
    
    427Total
    
    
    8,308
    
    
    
    2,329
    
    
    
    3,711
    
    
    
    4,575
    
    
    
    3,336Accruing loans delinquent 90 days or more:One-to-four family
    
    
    0
    
    
    
    0
    
    
    
    628
    
    
    
    114
    
    
    
    171Other assets
    
    
    44
    
    
    
    178
    
    
    
    201
    
    
    
    211
    
    
    
    866Foreclosed and repossessed assets:Real estate:One-to-four family
    
    
    1,422
    
    
    
    565
    
    
    
    141
    
    
    
    73
    
    
    
    300Commercial real estate
    
    
    650
    
    
    
    750
    
    
    
    0
    
    
    
    0
    
    
    
    127Consumer
    
    
    0
    
    
    
    61
    
    
    
    201
    
    
    
    62
    
    
    
    107Total
    
    
    2,072
    
    
    
    1,376
    
    
    
    342
    
    
    
    135
    
    
    
    534Total non-performing assets
    
    $
    10,424
    
    
    $
    3,883
    
    
    $
    4,882
    
    
    $
    5,035
    
    
    $
    4,907Total as a percentage of total assets
    
    
    1.07
    %
    
    
    0.39
    %
    
    
    0.51
    %
    
    
    0.58
    %
    
    
    0.67
    %Total non-performing loans
    
    $
    8,308
    
    
    $
    2,329
    
    
    $
    4,339
    
    
    $
    4,689
    
    
    $
    3,507Total as a percentage of total loans receivable, net
    
    
    1.08
    %
    
    
    0.30
    %
    
    
    0.55
    %
    
    
    0.68
    %
    
    
    0.66
    %Allowance for loan losses to non-performing loans
    
    
    118.94
    %
    
    
    376.88
    %
    
    
    207.30
    %
    
    
    147.99
    %
    
    
    134.60
    %
   Liquidity and Capital Resources
       18




---



##### 



Contractual Obligations and Commercial Commitments
  Payments Due by PeriodLess than 1
    
    
    
    
    
    
    
    
    
    
    After 5(Dollars in thousands)
    
    Total
    
    
    Year
    
    
    1-3 Years
    
    
    4-5 Years
    
    
    YearsContractual Obligations:Total borrowings
    
    $
    150,900
    
    
    
    40,000
    
    
    
    20,000
    
    
    
    20,900
    
    
    
    70,000Annual rental commitments under
non-cancelable operating leases
    
    
    3,204
    
    
    
    772
    
    
    
    1,412
    
    
    
    1,020
    
    
    
    0$
    154,104
    
    
    
    40,772
    
    
    
    21,412
    
    
    
    21,920
    
    
    
    70,000Amount of Commitments  Expiring by PeriodOther Commercial Commitments:Commercial lines of credit
    
    $
    72,151
    
    
    
    59,191
    
    
    
    4,104
    
    
    
    1,826
    
    
    
    7,030Commitments to lend
    
    
    93,098
    
    
    
    42,485
    
    
    
    10,721
    
    
    
    8,941
    
    
    
    30,951Standby letters of credit
    
    
    13,263
    
    
    
    12,383
    
    
    
    880
    
    
    
    0
    
    
    
    0$
    178,512
    
    
    
    114,059
    
    
    
    15,705
    
    
    
    10,767
    
    
    
    37,981
 19




---



##### 



M A N
A G E M E N T  S  D I S C U S S I O N  A N D   A
N A L Y S I S
 Regulatory Capital Requirements
  Dividends
  Impact of Inflation and Changing Prices
  New Accounting Pronouncements
 Share-Based Payment
  Accounting Accounting for Servicing of Financial Assets  an amendment of
FASB Statement No. 140.
 Accounting for Uncertainty in Income
Taxes  an interpretation of FASB Statement No. 109
 20




---



##### 



Fair Value Measurements.
 Employers Accounting for Defined Benefit Pension and Other
Postretirement Plans  an amendment of FASB Statements No. 87,
88, 106, and 132(R).
 Considering the Effects of Prior Year Misstatements
when Quantifying Misstatements in Current Year Financial
Statements
 Market Risks
  Rate Shock Table
   Market Value(Dollars in thousands)Basis point change in interest rates
    
    200
    
    
    100
    
    
    0
    
    
    +100
    
    
    +200Total market risk sensitive assets
    
    $
    993,956
    
    
    
    986,046
    
    
    
    975,951
    
    
    
    963,308
    
    
    
    949,778Total market risk sensitive liabilities
    
    
    870,067
    
    
    
    858,342
    
    
    
    848,570
    
    
    
    841,062
    
    
    
    834,877Off-balance sheet financial instruments
    
    
    (30
    )
    
    
    (12
    )
    
    
    0
    
    
    
    72
    
    
    
    137Net market risk
    
    $
    123,919
    
    
    
    127,716
    
    
    
    127,381
    
    
    
    122,174
    
    
    
    114,764Percentage change from current market value
    
    
    (2.72
    )%
    
    
    0.26
    %
    
    
    0.00
    %
    
    
    (4.09
    )%
    
    
    (9.90
    )%
 21




---



##### 



M A N A G E M E N T  S   D I S C U S S I O N   A N D   A N A L Y S I S
   Asset/Liability Management
  (Dollars in thousands)Rate Shock
    
    Net Interest
    
    Percentagein Basis Points
    
    Change
    
    Change+200
    
    $
    (1,529
    )
    
    
    (3.93
    )%+100
    
    $
    (640
    )
    
    
    (1.65
    )%0
    
    
    0
    
    
    
    0.00
    %-100
    
    $
    (130
    )
    
    
    (0.33
    )%-200
    
    $
    (916
    )
    
    
    (2.36
    )%
 22




---



##### 



23




---



##### 



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
 December 31, 2006 and 2005
    
    2006
    
    
    2005A S S E T SCash and cash equivalents
    
    $
    43,775,988
    
    
    
    47,268,795Securities available for sale:Mortgage-backed and related securities
(amortized cost $6,671,042 and $7,428,504)
    
    
    6,177,829
    
    
    
    6,879,756Other marketable securities
(amortized cost $119,940,282 and $113,749,841)
    
    
    119,962,274
    
    
    
    112,778,813126,140,103
    
    
    
    119,658,569Loans held for sale
    
    
    1,493,011
    
    
    
    1,435,141Loans receivable, net
    
    
    768,231,579
    
    
    
    785,678,461Accrued interest receivable
    
    
    5,060,839
    
    
    
    4,460,014Real estate, net
    
    
    2,072,032
    
    
    
    1,214,621Federal Home Loan Bank stock, at cost
    
    
    7,956,300
    
    
    
    8,364,600Mortgage servicing rights, net
    
    
    1,957,699
    
    
    
    2,653,635Premises and equipment, net
    
    
    11,372,103
    
    
    
    11,941,863Goodwill
    
    
    3,800,938
    
    
    
    3,800,938Core deposit intangible, net
    
    
    105,903
    
    
    
    219,760Prepaid expenses and other assets
    
    
    2,943,037
    
    
    
    1,995,996Deferred tax assets, net
    
    
    2,879,000
    
    
    
    2,544,400Total assets
    
    $
    977,788,532
    
    
    
    991,236,793LIABILITIES AND STOCKHOLDERS EQUITYDeposits
    
    $
    725,958,830
    
    
    
    731,536,560Federal Home Loan Bank advances
    
    
    150,900,000
    
    
    
    160,900,000Accrued interest payable
    
    
    1,176,024
    
    
    
    2,085,573Customer escrows
    
    
    720,732
    
    
    
    1,038,575Accrued expenses and other liabilities
    
    
    5,890,605
    
    
    
    4,947,816Total liabilities
    
    
    884,646,191
    
    
    
    900,508,524Commitments and contingenciesStockholders equity:Serial preferred stock: ($.01 par value)Authorized 500,000 shares; issued and outstanding shares none
    
    
    0
    
    
    
    0Common stock ($.01 par value):Authorized 11,000,000; issued shares 9,128,662
    
    
    91,287
    
    
    
    91,287Additional paid-in capital.
    
    
    57,913,743
    
    
    
    58,011,099Retained earnings, subject to certain restrictions
    
    
    103,642,975
    
    
    
    98,951,777Accumulated other comprehensive loss
    
    
    (284,421
    )
    
    
    (917,577
    )Unearned employee stock ownership plan shares
    
    
    (4,157,698
    )
    
    
    (4,350,999
    )Unearned compensation restricted stock awards
    
    
    0
    
    
    
    (182,521
    )Treasury stock, at cost 4,813,232 and 4,721,402
    
    
    (64,063,545
    )
    
    
    (60,874,797
    )Total stockholders equity
    
    
    93,142,341
    
    
    
    90,728,269Total liabilities and stockholders equity
    
    $
    977,788,532
    
    
    
    991,236,793
 See accompanying notes to consolidated financial statements.
 24




---



##### 



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 December 31, 2006, 2005 and 2004
    
    2006
    
    
    2005
    
    
    2004Interest income:Loans receivable
    
    $
    60,180,932
    
    
    
    56,376,920
    
    
    
    47,962,485Securities available for sale:Mortgage-backed and related
    
    
    271,060
    
    
    
    325,940
    
    
    
    385,067Other marketable
    
    
    5,194,856
    
    
    
    2,744,202
    
    
    
    2,897,834Cash equivalents
    
    
    1,554,937
    
    
    
    580,500
    
    
    
    164,061Other
    
    
    325,036
    
    
    
    253,611
    
    
    
    207,240Total interest income
    
    
    67,526,821
    
    
    
    60,281,173
    
    
    
    51,616,687Interest expense:Deposits
    
    
    22,045,858
    
    
    
    17,233,400
    
    
    
    12,398,505Federal Home Loan Bank advances
    
    
    6,794,964
    
    
    
    7,278,050
    
    
    
    8,594,790Total interest expense
    
    
    28,840,822
    
    
    
    24,511,450
    
    
    
    20,993,295Net interest income
    
    
    38,685,999
    
    
    
    35,769,723
    
    
    
    30,623,392Provision for loan losses.
    
    
    8,878,000
    
    
    
    2,674,000
    
    
    
    2,755,000Net interest income after provision for loan losses
    
    
    29,807,999
    
    
    
    33,095,723
    
    
    
    27,868,392Non-interest income:Fees and service charges
    
    
    3,110,863
    
    
    
    2,719,004
    
    
    
    2,776,553Loan servicing fees
    
    
    1,172,166
    
    
    
    1,210,192
    
    
    
    1,168,760Securities gains (losses), net
    
    
    48,122
    
    
    
    (21,000
    )
    
    
    (535,188
    )Gain on sales of loans
    
    
    1,254,707
    
    
    
    1,852,940
    
    
    
    1,702,979Other
    
    
    855,578
    
    
    
    748,084
    
    
    
    854,115Total non-interest income
    
    
    6,441,436
    
    
    
    6,509,220
    
    
    
    5,967,219Non-interest expense:Compensation and benefits
    
    
    11,868,879
    
    
    
    11,140,329
    
    
    
    10,186,538Occupancy
    
    
    4,435,468
    
    
    
    4,080,880
    
    
    
    3,629,766Deposit insurance premiums
    
    
    102,145
    
    
    
    129,683
    
    
    
    95,465Advertising
    
    
    475,257
    
    
    
    384,184
    
    
    
    430,417Data processing
    
    
    1,182,538
    
    
    
    1,031,630
    
    
    
    930,144Amortization of mortgage servicing rights, net
    
    
    848,347
    
    
    
    1,019,766
    
    
    
    1,061,407Other
    
    
    3,683,750
    
    
    
    4,014,482
    
    
    
    3,828,086Total noninterest expense
    
    
    22,596,384
    
    
    
    21,800,954
    
    
    
    20,161,823Income before income tax expense
    
    
    13,653,051
    
    
    
    17,803,989
    
    
    
    13,673,788Income tax expense
    
    
    5,225,500
    
    
    
    6,736,100
    
    
    
    4,387,100Income before minority interest
    
    
    8,427,551
    
    
    
    11,067,889
    
    
    
    9,286,688Minority interest
    
    
    0
    
    
    
    0
    
    
    
    (3,109
    )Net income
    
    $
    8,427,551
    
    
    
    11,067,889
    
    
    
    9,289,797Basic earnings per share
    
    $
    2.20
    
    
    
    2.89
    
    
    
    2.40Diluted earnings per share
    
    $
    2.10
    
    
    
    2.77
    
    
    
    2.31
 See accompanying notes to consolidated financial statements.
 25




---



##### 



C O N S O L I D A T E D   S T A T E M E N T S   O F   S T O C K   H O L D E R S    E Q U I T Y   A N D  
C O M P R E H E N S I V E   I N C O M E
 UnearnedEmployeeAccumulated
    
    
    Stock
    
    
    UnearnedAdditional
    
    
    
    
    
    
    Other
    
    
    Ownership
    
    
    Compensation
    
    
    
    
    
    
    TotalCommon
    
    
    Paid-In
    
    
    Retained
    
    
    Comprehensive
    
    
    Plan
    
    
    Restricted
    
    
    Treasury
    
    
    StockholdersStock
    
    
    Capital
    
    
    Earnings
    
    
    Income (Loss)
    
    
    Shares
    
    
    Stock Awards
    
    
    Stock
    
    
    EquityBalance, December 31, 2003
    
    $
    91,287
    
    
    
    57,863,726
    
    
    
    85,364,657
    
    
    
    (50,725
    )
    
    
    (4,738,084
    )
    
    
    0
    
    
    
    (57,599,804
    )
    
    
    80,931,057Net income
    
    
    
    
    
    
    
    
    
    
    9,289,797
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    9,289,797Other comprehensive loss, net of tax:Net unrealized losses on
securities available for sale
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (553,721
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (553,721
    )Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8,736,076Treasury stock purchases
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3,316,550
    )
    
    
    (3,316,550
    )Employee stock options exercised
    
    
    
    
    
    
    (394,392
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    461,026
    
    
    
    66,634Tax benefits of exercised stock options
    
    
    
    
    
    
    98,096
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    98,096Earned employee stock ownership
plan shares
    
    
    
    
    
    
    308,165
    
    
    
    
    
    
    
    
    
    
    
    193,784
    
    
    
    
    
    
    
    
    
    
    
    501,949Dividends paid
    
    
    
    
    
    
    
    
    
    
    (3,246,426
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3,246,426
    )Balance, December 31, 2004
    
    $
    91,287
    
    
    
    57,875,595
    
    
    
    91,408,028
    
    
    
    (604,446
    )
    
    
    (4,544,300
    )
    
    
    0
    
    
    
    (60,455,328
    )
    
    
    83,770,836Net income
    
    
    
    
    
    
    
    
    
    
    11,067,889
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    11,067,889Other comprehensive loss, net of tax:Net unrealized losses on
securities available for sale
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (313,131
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (313,131
    )Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    10,754,758Treasury stock purchases
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (972,000
    )
    
    
    (972,000
    )Employee stock options exercised
    
    
    
    
    
    
    (247,613
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    285,500
    
    
    
    37,887Tax benefits of exercised stock options
    
    
    
    
    
    
    29,907
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    29,907Unearned compensation restricted
stock awards
    
    
    
    
    
    
    15,616
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (326,528
    )
    
    
    310,912
    
    
    
    0Restricted stock awards forfeited
    
    
    
    
    
    
    (2,204
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    46,085
    
    
    
    (43,881
    )
    
    
    0Amortization of restricted
stock awards
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    97,922
    
    
    
    
    
    
    
    97,922Earned employee stock ownership
plan shares
    
    
    
    
    
    
    339,798
    
    
    
    
    
    
    
    
    
    
    
    193,301
    
    
    
    
    
    
    
    
    
    
    
    533,099Dividends paid
    
    
    
    
    
    
    
    
    
    
    (3,524,140
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3,524,140
    )Balance, December 31, 2005
    
    $
    91,287
    
    
    
    58,011,099
    
    
    
    98,951,777
    
    
    
    (917,577
    )
    
    
    (4,350,999
    )
    
    
    (182,521
    )
    
    
    (60,874,797
    )
    
    
    90,728,269Net income
    
    
    
    
    
    
    
    
    
    
    8,427,551
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8,427,551Other comprehensive gain, net of tax:Net unrealized gains on
securities available for sale
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    633,156
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    633,156Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    9,060,707Treasury stock purchases
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3,960,350
    )
    
    
    (3,960,350
    )Employee stock options exercised
    
    
    
    
    
    
    (268,125
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    434,409
    
    
    
    166,284Tax benefits of exercised stock options
    
    
    
    
    
    
    55,820
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    55,820Unearned compensation restricted
stock awards
    
    
    
    
    
    
    (337,193
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    337,193
    
    
    
    0Stock compensation benefits
    
    
    
    
    
    
    64,423
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    64,423Reclassification for FAS 123R adoption
    
    
    
    
    
    
    (182,521
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    182,521
    
    
    
    
    
    
    
    0Amortization
of restricted stock awards
    
    
    
    
    
    
    190,711
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    190,711Earned employee stock ownership
plan shares
    
    
    
    
    
    
    379,529
    
    
    
    
    
    
    
    
    
    
    
    193,301
    
    
    
    
    
    
    
    
    
    
    
    572,830Dividends paid
    
    
    
    
    
    
    
    
    
    
    (3,736,353
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3,736,353
    )Balance, December 31, 2006
    
    $
    91,287
    
    
    
    57,913,743
    
    
    
    103,642,975
    
    
    
    (284,421
    )
    
    
    (4,157,698
    )
    
    
    0
    
    
    
    (64,063,545
    )
    
    
    93,142,341
 See accompanying notes to consolidated financial statements.
 26




---



##### 



C O N
S O L I D A T E D  S T A T E M E N T S  O F  C A S H  F L O W S
 Years ended December 31, 2006, 2005 and 2004
    
    2006
    
    
    2005
    
    
    2004Cash flows from operating activities:Net income
    
    $
    8,427,551
    
    
    
    11,067,889
    
    
    
    9,289,797Adjustments to reconcile net income to cash provided
by operating activities:Provision for loan losses
    
    
    8,878,000
    
    
    
    2,674,000
    
    
    
    2,755,000Depreciation
    
    
    1,918,719
    
    
    
    1,750,953
    
    
    
    1,596,252Amortization of discounts, net
    
    
    (1,657,626
    )
    
    
    (849,539
    )
    
    
    (353,598
    )Amortization of deferred loan fees
    
    
    (1,587,093
    )
    
    
    (1,071,078
    )
    
    
    (1,166,855
    )Amortization of core deposit intangible
    
    
    113,857
    
    
    
    113,857
    
    
    
    113,857Amortization of mortgage servicing rights, net
    
    
    848,348
    
    
    
    1,019,766
    
    
    
    1,061,407Capitalized mortgage servicing rights
    
    
    (152,412
    )
    
    
    (442,159
    )
    
    
    (844,806
    )Deferred income tax benefit
    
    
    (750,000
    )
    
    
    (1,259,100
    )
    
    
    (737,200
    )Securities (gains) losses, net
    
    
    (48,122
    )
    
    
    21,000
    
    
    
    535,188Loss on sales of real estate
    
    
    25,410
    
    
    
    17,575
    
    
    
    21,775Proceeds from sales of real estate
    
    
    357,057
    
    
    
    605,072
    
    
    
    825,461Gain on sales of loans
    
    
    (1,254,707
    )
    
    
    (1,852,940
    )
    
    
    (1,702,979
    )Proceeds from sales of loans held for sale
    
    
    71,982,371
    
    
    
    97,015,434
    
    
    
    90,118,839Disbursements on loans held for sale
    
    
    (66,818,657
    )
    
    
    (85,200,488
    )
    
    
    (84,592,187
    )Amortization of restricted stock awards
    
    
    190,711
    
    
    
    97,922
    
    
    
    0Amortization of unearned ESOP Shares
    
    
    193,301
    
    
    
    193,301
    
    
    
    193,784Earned employee stock ownership shares priced
above original cost
    
    
    379,529
    
    
    
    339,798
    
    
    
    308,165Stock option compensation
    
    
    64,423
    
    
    
    0
    
    
    
    0Increase in accrued interest receivable
    
    
    (600,825
    )
    
    
    (765,881
    )
    
    
    (231,912
    )Increase (decrease) in accrued interest payable
    
    
    (909,549
    )
    
    
    771,217
    
    
    
    547,519Equity losses of limited partnerships
    
    
    28,559
    
    
    
    27,210
    
    
    
    26,118Decrease (increase) in other assets
    
    
    (978,910
    )
    
    
    776,290
    
    
    
    (533,660
    )Increase (decrease) in other liabilities
    
    
    947,591
    
    
    
    (90,880
    )
    
    
    (1,918,729
    )Other, net
    
    
    106,944
    
    
    
    82,596
    
    
    
    (22,542
    )Net cash provided by operating activities
    
    
    19,704,470
    
    
    
    25,041,815
    
    
    
    15,288,694Cash flows from investing activities:Proceeds from sales of securities available for sale
    
    
    2,988,122
    
    
    
    0
    
    
    
    15,129,325Principal collected on securities available for sale
    
    
    752,159
    
    
    
    2,138,735
    
    
    
    4,354,497Proceeds collected on maturity of securities available
for sale
    
    
    150,500,000
    
    
    
    21,000,000
    
    
    
    15,000,000Purchases of securities available for sale
    
    
    (157,527,725
    )
    
    
    (39,463,634
    )
    
    
    (34,877,137
    )Redemption of interest in limited partnership
    
    
    0
    
    
    
    0
    
    
    
    422,474Purchase of Federal Home Loan Bank stock
    
    
    (902,300
    )
    
    
    (2,427,300
    )
    
    
    (1,793,200
    )Redemption of Federal Home Loan Bank stock
    
    
    1,310,600
    
    
    
    3,355,500
    
    
    
    2,504,800Net decrease (increase) in loans receivable
    
    
    4,852,819
    
    
    
    (14,532,425
    )
    
    
    (96,761,454
    )Proceeds from sale of premises
    
    
    0
    
    
    
    0
    
    
    
    266,972Purchases of premises and equipment
    
    
    (1,370,409
    )
    
    
    (1,208,518
    )
    
    
    (2,220,610
    )Net cash provided (used) by investing activities
    
    
    603,266
    
    
    
    (31,137,642
    )
    
    
    (97,974,333
    )Cash flows from financing activities:Increase (decrease) in deposits
    
    
    (6,008,101
    )
    
    
    33,218,736
    
    
    
    147,580,390Purchase of treasury stock
    
    
    (3,960,350
    )
    
    
    (972,000
    )
    
    
    (3,316,550
    )Stock options exercised
    
    
    166,284
    
    
    
    37,887
    
    
    
    66,634Excess tax benefit from options exercised
    
    
    55,820
    
    
    
    29,907
    
    
    
    98,096Dividends to stockholders
    
    
    (3,736,353
    )
    
    
    (3,524,140
    )
    
    
    (3,246,426
    )Proceeds from Federal Home Loan Bank advances
    
    
    33,500,000
    
    
    
    78,000,000
    
    
    
    54,900,000Repayment of Federal Home Loan Bank advances
    
    
    (43,500,000
    )
    
    
    (88,000,000
    )
    
    
    (87,900,000
    )Proceeds from Federal Reserve Bank advances
    
    
    1,000,000
    
    
    
    0
    
    
    
    0Repayment of Federal Reserve Bank advances
    
    
    (1,000,000
    )
    
    
    0
    
    
    
    0(Decrease) increase in customer escrows
    
    
    (317,843
    )
    
    
    275,838
    
    
    
    (21,694,934
    )Net cash (used) provided by financing activities
    
    
    (23,800,543
    )
    
    
    19,066,228
    
    
    
    86,487,210(Decrease) increase in cash and cash equivalents
    
    
    (3,492,807
    )
    
    
    12,970,401
    
    
    
    3,801,571Cash and cash equivalents, beginning of year
    
    
    47,268,795
    
    
    
    34,298,394
    
    
    
    30,496,823Cash and cash equivalents, end of year
    
    $
    43,775,988
    
    
    
    47,268,795
    
    
    
    34,298,394Supplemental cash flow disclosures:Cash paid for interest
    
    $
    29,750,371
    
    
    
    23,740,233
    
    
    
    20,445,776Cash paid for income taxes
    
    
    6,972,238
    
    
    
    6,601,281
    
    
    
    6,548,500Supplemental noncash flow disclosures:Loans transferred to loans held for sale
    
    
    3,968,368
    
    
    
    8,662,175
    
    
    
    0Transfer of loans to real estate
    
    
    1,325,264
    
    
    
    15,994,671
    
    
    
    892,802Transfer of real estate to loans
    
    
    0
    
    
    
    14,195,361
    
    
    
    0
 See accompanying notes to consolidated financial statements.
 27




---



##### 



N O T
E S  T O  C O N S O L I D A T E D  F I N A N C I A L  STATEMENTS
 December 31, 2006, 2005 and 2004
 NOTE 1
Description of the Business and Summary of Significant Accounting Policies
   Use of Estimates
    Cash and Cash Equivalents
 Securities
 Trading Securities
 Securities Held to Maturity
 Securities Available for Sale
 Loans Held for Sale
 Loans Receivable, Net
   28




---



##### 



Mortgage Servicing Rights
 Real Estate, Net
 Premises and Equipment
  Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of
 Investment in Limited Partnerships
 Intangible Assets Goodwill and Other Intangible Assets.
 Stock-Based Compensation Share-Based Payment
 Year ended December 31,2005
    
    
    2004Net income:As reported
    
    $
    11,067,889
    
    
    
    9,289,797Deduct: Total stock-based
employee compensation
expense determined under
fair value based method
for all awards, net of
related tax effects
    
    
    54,619
    
    
    
    37,822Pro forma
    
    $
    11,013,270
    
    
    
    9,251,975Earnings per common share:As reported:Basic
    
    $
    2.89
    
    
    
    2.40Diluted
    
    
    2.77
    
    
    
    2.31Pro forma:Basic
    
    
    2.88
    
    
    
    2.39Diluted
    
    
    2.77
    
    
    
    2.30
 Income Taxes
 Earnings per Share
 29




---



##### 



N O T
E S  T O  C O N S O L I D A T E D  F I N A N C I A
L  S T A T E M E N T S
  Comprehensive Income
 Segment Information
 New Accounting Pronouncements Share-Based Payment
 Accounting for Servicing of Financial Assets  an amendment of
FASB Statement No. 140.
 Accounting for Uncertainty in Income
Taxes  an interpretation of FASB Statement No. 109
 Fair Value Measurements.
 Employers Accounting for Defined Benefit
Pension and Other Postretirement Plans an amendment of FASB Statements No. 87, 88, 106, and
132(R).
 Considering the Effects
of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements
 30




---



##### 



Derivative Financial Instruments
 Reclassifications
 NOTE 2 Other Comprehensive Income
  For the years ended December 31,2006
    
    
    2005(Dollars in thousands)
    
    Before tax
    
    
    Tax effect
    
    
    Net of tax
    
    
    Before tax
    
    
    Tax effect
    
    
    Net of taxSecurities available for sale:Gross unrealized gains (losses) arising during the period .
    
    $
    1,097
    
    
    
    433
    
    
    
    664
    
    
    
    (607
    )
    
    
    (279
    )
    
    
    (328
    )Less reclassification of net gains (losses)
included in net income
    
    
    48
    
    
    
    17
    
    
    
    31
    
    
    
    (21
    )
    
    
    (6
    )
    
    
    (15
    )Net unrealized gains (losses) arising during the period
    
    
    1,049
    
    
    
    416
    
    
    
    633
    
    
    
    (586
    )
    
    
    (273
    )
    
    
    (313
    )Other comprehensive income(loss)
    
    $
    1,049
    
    
    
    416
    
    
    
    633
    
    
    
    (586
    )
    
    
    (273
    )
    
    
    (313
    )
 NOTE 3 Securities Available for Sale
  Gross
    
    
    GrossAmortized
    
    
    unrealized
    
    
    unrealized
    
    
    Faircost
    
    
    gains
    
    
    losses
    
    
    valueDecember
31, 2006:Mortgage-backed securities:FHLMC
    
    $
    162,606
    
    
    
    3,457
    
    
    
    0
    
    
    
    166,063GNMA
    
    
    9,876
    
    
    
    67
    
    
    
    0
    
    
    
    9,943Collateralized mortgage obligations:FHLMC
    
    
    2,932,395
    
    
    
    0
    
    
    
    (263,048
    )
    
    
    2,669,347FNMA
    
    
    3,566,165
    
    
    
    566
    
    
    
    (234,255
    )
    
    
    3,332,4766,671,042
    
    
    
    4,090
    
    
    
    (497,303
    )
    
    
    6,177,829Other market able securities:U.S. Government and agency
obligations
    
    
    119,240,282
    
    
    
    118,943
    
    
    
    (96,951
    )
    
    
    119,262,274Corporate and agency preferred
stock
    
    
    700,000
    
    
    
    0
    
    
    
    0
    
    
    
    700,000119,940,282
    
    
    
    118,943
    
    
    
    (96,951
    )
    
    
    119,962,274$
    126,611,324
    
    
    
    123,033
    
    
    
    (594,254
    )
    
    
    126,140,103December
31, 2005:Mortgage-backed securities:FHLMC
    
    $
    196,085
    
    
    
    5,590
    
    
    
    0
    
    
    
    201,675GNMA
    
    
    14,229
    
    
    
    276
    
    
    
    0
    
    
    
    14,505Collateralized mortgage obligations:FHLMC
    
    
    3,117,121
    
    
    
    0
    
    
    
    (302,494
    )
    
    
    2,814,627FNMA
    
    
    4,101,069
    
    
    
    2,027
    
    
    
    (254,147
    )
    
    
    3,848,9497,428,504
    
    
    
    7,893
    
    
    
    (556,641
    )
    
    
    6,879,756Other market able securities:U.S. Government and agency
obligations
    
    
    110,109,841
    
    
    
    0
    
    
    
    (971,028
    )
    
    
    109,138,813Corporate and agency preferred
stock
    
    
    3,640,000
    
    
    
    0
    
    
    
    0
    
    
    
    3,640,000113,749,841
    
    
    
    0
    
    
    
    (971,028
    )
    
    
    112,778,813$
    121,178,345
    
    
    
    7,893
    
    
    
    (1,527,669
    )
    
    
    119,658,569
 31




---



##### 



N O T
E S  T O  C O N S O L I D A T E D  F I N A N C I A L  S T A T E M E N T S
   Amortized
    
    
    Faircost
    
    
    valueDue less than one year
    
    $
    65,350,978
    
    
    
    65,270,623Due after one year through five years
    
    
    57,022,384
    
    
    
    56,905,483Due after five years through ten years
    
    
    1,445,971
    
    
    
    1,336,421Due after ten years
    
    
    2,091,991
    
    
    
    1,927,576No stated maturity
    
    
    700,000
    
    
    
    700,000Total
    
    $
    126,611,324
    
    
    
    126,140,103
   Less than twelve months
    
    
    Twelve months or more
    
    
    TotalDecember 31, 2006
    
    # of
    
    
    Fair
    
    
    Unrealized
    
    
    # of
    
    
    Fair
    
    
    Unrealized
    
    
    Fair
    
    
    Unrealized(Dollars in thousands)
    
    Investments
    
    
    Value
    
    
    Losses
    
    
    Investments
    
    
    Value
    
    
    Losses
    
    
    Value
    
    
    LossesMortgage backed securities:FHLMC
    
    
    
    
    
    $
    0
    
    
    
    0
    
    
    
    2
    
    
    $
    2,670
    
    
    
    (263
    )
    
    $
    2,670
    
    
    
    (263
    )FNMA
    
    
    
    
    
    
    0
    
    
    
    0
    
    
    
    3
    
    
    
    3,177
    
    
    
    (234
    )
    
    
    3,177
    
    
    
    (234
    )Other marketable debt securities:FNMA
    
    
    3
    
    
    
    14,925
    
    
    
    (3
    )
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    14,925
    
    
    
    (3
    )FHLMC
    
    
    2
    
    
    
    9,792
    
    
    
    (2
    )
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    9,792
    
    
    
    (2
    )FFCB
    
    
    1
    
    
    
    4,878
    
    
    
    (3
    )
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    4,878
    
    
    
    (3
    )FHLB
    
    
    4
    
    
    
    19,878
    
    
    
    (69
    )
    
    
    2
    
    
    
    9,980
    
    
    
    (20
    )
    
    
    29,858
    
    
    
    (89
    )Total temporarily impaired
securities
    
    
    10
    
    
    $
    49,473
    
    
    
    (77
    )
    
    
    7
    
    
    $
    15,827
    
    
    
    (517
    )
    
    $
    65,300
    
    
    
    (594
    )
 Less than twelve months
    
    
    Twelve months or more
    
    
    TotalDecember 31, 2005
    
    # of
    
    
    Fair
    
    
    Unrealized
    
    
    # of
    
    
    Fair
    
    
    Unrealized
    
    
    Fair
    
    
    Unrealized(Dollars in thousands)
    
    Investments
    
    
    Value
    
    
    Losses
    
    
    Investments
    
    
    Value
    
    
    Losses
    
    
    Value
    
    
    LossesMortgage backed securities:FHLMC
    
    
    
    
    
    $
    0
    
    
    
    0
    
    
    
    2
    
    
    $
    2,814
    
    
    
    (303
    )
    
    $
    2,814
    
    
    
    (303
    )FNMA
    
    
    1
    
    
    
    384
    
    
    
    (11
    )
    
    
    2
    
    
    
    3,304
    
    
    
    (243
    )
    
    
    3,688
    
    
    
    (254
    )Other marketable debt securities:FNMA
    
    
    1
    
    
    
    4,958
    
    
    
    (6
    )
    
    
    3
    
    
    
    14,836
    
    
    
    (147
    )
    
    
    19,794
    
    
    
    (153
    )FHLMC
    
    
    5
    
    
    
    24,700
    
    
    
    (13
    )
    
    
    4
    
    
    
    19,725
    
    
    
    (257
    )
    
    
    44,425
    
    
    
    (270
    )FHLB
    
    
    2
    
    
    
    9,906
    
    
    
    (62
    )
    
    
    7
    
    
    
    35,014
    
    
    
    (486
    )
    
    
    44,920
    
    
    
    (548
    )Total temporarily impaired securities
    
    
    9
    
    
    $
    39,948
    
    
    
    (92
    )
    
    
    18
    
    
    $
    75,693
    
    
    
    (1,436
    )
    
    $
    115,641
    
    
    
    (1,528
    )
  32




---



##### 



NOTE 4 Loans Receivable, Net
  2006
    
    
    2005Residential real estate loans:1-4 family conventional
    
    $
    133,960,403
    
    
    
    126,397,5131-4 family conventional-construction
    
    
    36,112,745
    
    
    
    38,558,1991-4 family FHA
    
    
    87,527
    
    
    
    450,0871-4 family VA
    
    
    221,486
    
    
    
    227,055170,382,161
    
    
    
    165,632,8545 or more family
    
    
    29,862,527
    
    
    
    40,752,8095 or more family-construction
    
    
    4,474,361
    
    
    
    11,210,771204,719,049
    
    
    
    217,596,434Commercial real estate:Lodging
    
    
    46,952,699
    
    
    
    47,247,644Retail/office
    
    
    63,538,480
    
    
    
    51,062,980Nursing
home/health care
    
    
    14,827,079
    
    
    
    6,868,065Land developments
    
    
    108,748,666
    
    
    
    101,069,732Golf courses
    
    
    19,108,878
    
    
    
    26,905,139Restaurant/bar/café
    
    
    3,310,212
    
    
    
    4,402,806Ethanol plants
    
    
    8,121,891
    
    
    
    8,898,424Warehouse
    
    
    7,842,840
    
    
    
    8,092,314Manufacturing
    
    
    15,580,836
    
    
    
    2,998,990Churches/community service
    
    
    3,975,566
    
    
    
    3,364,752Other
    
    
    22,073,368
    
    
    
    29,930,294314,080,515
    
    
    
    290,841,140Other loans:Autos
    
    
    3,092,931
    
    
    
    5,461,586Home equity line
    
    
    54,246,929
    
    
    
    61,011,142Home equity
    
    
    21,262,535
    
    
    
    19,075,822Consumer-secured
    
    
    658,647
    
    
    
    979,349Commercial business
    
    
    176,769,830
    
    
    
    193,962,012Land/lot loans
    
    
    5,501,352
    
    
    
    9,486,634Savings
    
    
    813,823
    
    
    
    605,383Mobile home
    
    
    2,052,496
    
    
    
    2,298,816Consumer-unsecured
    
    
    2,219,587
    
    
    
    1,979,533266,618,130
    
    
    
    294,860,277Total loans
    
    
    785,417,694
    
    
    
    803,297,851Less:Unamortized discounts
    
    
    40,077
    
    
    
    190,388Net deferred loan fees
    
    
    2,020,773
    
    
    
    1,643,629Allowance for losses
    
    
    9,873,145
    
    
    
    8,777,655Loans in process
    
    
    5,252,120
    
    
    
    7,007,718$
    768,231,579
    
    
    
    785,678,461Commitments to originate or
purchase loans
    
    $
    42,506,639
    
    
    
    44,927,627Commitments to deliver loans to
secondary market
    
    $
    2,284,894
    
    
    
    4,690,823Weighted average contractual rate of
loans in portfolio
    
    
    7.69
    %
    
    
    6.32
    %
       2006
    
    
    2005Percent
    
    
    
    
    
    
    PercentAmount
    
    
    of Total
    
    
    Amount
    
    
    of TotalAlabama
    
    $
    269,169
    
    
    
    0.1
    %
    
    $
    1,114,760
    
    
    
    0.5
    %Arizona
    
    
    2,735,791
    
    
    
    1.3
    
    
    
    2,497,464
    
    
    
    1.1Georgia
    
    
    2,564,331
    
    
    
    1.3
    
    
    
    3,071,349
    
    
    
    1.4Iowa
    
    
    11,792,485
    
    
    
    5.8
    
    
    
    13,059,087
    
    
    
    6.0Minnesota
    
    
    178,121,661
    
    
    
    87.0
    
    
    
    187,307,513
    
    
    
    86.1North Carolina
    
    
    746,734
    
    
    
    0.4
    
    
    
    1,316,680
    
    
    
    0.6Wisconsin
    
    
    4,317,283
    
    
    
    2.1
    
    
    
    4,567,778
    
    
    
    2.1Other states
    
    
    4,171,595
    
    
    
    2.0
    
    
    
    4,661,803
    
    
    
    2.2Total
    
    $
    204,719,049
    
    
    
    100.0
    %
    
    $
    217,596,434
    
    
    
    100.0
    %
  33




---



##### 



N O T
E S  T O  C O N S O L I D A T E D  F I N A N C I A
L  S T A T E M E N T S
  2006
    
    
    2005Percent
    
    
    
    
    
    
    PercentAmount
    
    
    of Total
    
    
    Amount
    
    
    of TotalArizona
    
    $
    2,885,220
    
    
    
    0.9
    %
    
    $
    3,159,523
    
    
    
    1.1
    %California
    
    
    1,185,060
    
    
    
    0.4
    
    
    
    1,000,000
    
    
    
    0.3Idaho
    
    
    5,389,064
    
    
    
    1.7
    
    
    
    0
    
    
    
    0.0Iowa
    
    
    13,398,633
    
    
    
    4.3
    
    
    
    15,757,914
    
    
    
    5.4Kansas
    
    
    3,519,660
    
    
    
    1.1
    
    
    
    8,303,539
    
    
    
    2.9Minnesota
    
    
    280,371,174
    
    
    
    89.3
    
    
    
    251,087,445
    
    
    
    86.3Missouri
    
    
    4,225,581
    
    
    
    1.3
    
    
    
    4,298,961
    
    
    
    1.5Montana
    
    
    0
    
    
    
    0.0
    
    
    
    2,026,126
    
    
    
    0.7Utah
    
    
    2,030,452
    
    
    
    0.7
    
    
    
    1,840,143
    
    
    
    0.6Other states
    
    
    1,075,671
    
    
    
    0.3
    
    
    
    3,367,489
    
    
    
    1.2Total
    
    $
    314,080,515
    
    
    
    100.0
    %
    
    $
    290,841,140
    
    
    
    100.0
    %
  NOTE 5 Allowance for Loan Losses
  Balance,
December 31,2003
    
    $
    6,939,602Provision for losses
    
    
    2,755,000Charge-offs
    
    
    (737,917
    )Recoveries
    
    
    39,207Balance,
December 31,2004
    
    
    8,995,892Provision for losses
    
    
    2,674,000Charge-offs
    
    
    (3,076,815
    )Recoveries
    
    
    184,578Balance,
December 31,2005
    
    
    8,777,655Provision for losses
    
    
    8,878,000Charge-offs
    
    
    (7,848,744
    )Recoveries
    
    
    66,234Balance,
December 31,2006
    
    $
    9,873,145
 NOTE 6 Accrued Interest Receivable
  2006
    
    
    2005Securities available for sale
    
    $
    930,889
    
    
    
    578,068Loans receivable
    
    
    4,129,950
    
    
    
    3,881,946$
    5,060,839
    
    
    
    4,460,014
 NOTE 7 Investment in Mortgage Servicing Rights
  2006
    
    
    2005Mortgage servicing rightsBalance, beginning of year
    
    $
    2,653,635
    
    
    
    3,231,242Originations
    
    
    152,412
    
    
    
    442,159Amortization
    
    
    (848,348
    )
    
    
    (1,019,766
    )Balance, end of year
    
    
    1,957,699
    
    
    
    2,653,635Valuation reserve
    
    
    0
    
    
    
    0Mortgage servicing rights, net
    
    $
    1,957,699
    
    
    
    2,653,635
  WeightedWeighted
    
    AverageLoan
    
    Average
    
    Remaining
    
    NumberPrincipal
    
    Interest
    
    Term
    
    ofBalance
    
    Rate
    
    (months)
    
    LoansOriginal
term 30 year fixed rate
    
    $
    201,432,065
    
    
    
    5.93
    %
    
    
    324
    
    
    
    1,779Original
term 15 year fixed rate
    
    
    176,433,952
    
    
    
    5.27
    
    
    
    141
    
    
    
    2,386Adjustable rate
    
    
    4,323,275
    
    
    
    5.62
    
    
    
    314
    
    
    
    40
 NOTE 8 Real Estate
  2006
    
    
    2005Real estate in judgment
subject to redemption
    
    $
    943,452
    
    
    
    43,052Real estate acquired through foreclosure
    
    
    503,580
    
    
    
    521,569Real estate acquired through deed
in lieu of foreclosure
    
    
    750,000
    
    
    
    750,0002,197,032
    
    
    
    1,314,621Allowance for losses
    
    
    (125,000
    )
    
    
    (100,000
    )$
    2,072,032
    
    
    
    1,214,621
 34




---



##### 



NOTE 9 Intangible Assets
  Gross
    
    
    
    
    
    
    UnamortizedCarrying
    
    
    Accumulated
    
    
    IntangibleAmount
    
    
    Amortization
    
    
    AssetsDecember 31, 2006Amortized intangible assets:Mortgage servicing rights
    
    $
    4,148,292
    
    
    
    (2,190,593
    )
    
    
    1,957,699Core deposit intangible
    
    
    1,567,000
    
    
    
    (1,461,097
    )
    
    
    105,903Total
    
    $
    5,715,292
    
    
    
    (3,651,690
    )
    
    
    2,063,602December 31, 2005Amortized intangible assets:Mortgage servicing rights
    
    $
    4,410,439
    
    
    
    (1,756,804
    )
    
    
    2,653,635Core deposit intangible
    
    
    1,567,000
    
    
    
    (1,347,240
    )
    
    
    219,760Total
    
    $
    5,977,439
    
    
    
    (3,104,044
    )
    
    
    2,873,395
  Mortgage
    
    CoreServicing
    
    DepositRights
    
    Intangible
    
    TotalYear ended December 31,2007
    
    $
    320,919
    
    
    
    105,903
    
    
    
    426,8222008
    
    
    273,948
    
    
    
    0
    
    
    
    273,9482009
    
    
    233,515
    
    
    
    0
    
    
    
    233,5152010
    
    
    198,732
    
    
    
    0
    
    
    
    198,7322011
    
    
    168,832
    
    
    
    0
    
    
    
    168,832
  NOTE 10 Premises and Equipment
  2006
    
    
    2005Land
    
    $
    1,300,819
    
    
    
    1,309,519Office buildings and improvements
    
    
    9,794,819
    
    
    
    9,428,917Furniture and equipment
    
    
    11,956,882
    
    
    
    10,997,70523,052,520
    
    
    
    21,736,141Less accumulated depreciation
    
    
    (11,680,417
    )
    
    
    (9,794,278
    )$
    11,372,103
    
    
    
    11,941,863
 35




---



##### 



N O T E S   T O   C O N S O L I D A T E D   F I N A N C I A L   S T A T E M E N T S
 NOTE 11 Deposits
  2006
    
    
    2005Weighted
    
    
    
    
    
    
    Percent of
    
    
    Weighted
    
    
    
    
    
    
    Percent ofaverage rate
    
    
    Amount
    
    
    total
    
    
    average rate
    
    
    Amount
    
    
    totalNoninterest checking
    
    
    0.00
    %
    
    $
    68,990,483
    
    
    
    9.5
    %
    
    
    0.00
    %
    
    $
    58,429,385
    
    
    
    8.0
    %NOW accounts
    
    
    2.54
    
    
    
    87,073,869
    
    
    
    12.0
    
    
    
    2.08
    
    
    
    101,942,029
    
    
    
    13.9Savings accounts
    
    
    1.37
    
    
    
    40,445,255
    
    
    
    5.6
    
    
    
    2.04
    
    
    
    84,858,265
    
    
    
    11.6Money market accounts
    
    
    3.31
    
    
    
    178,693,804
    
    
    
    24.6
    
    
    
    2.59
    
    
    
    96,947,209
    
    
    
    13.3375,203,411
    
    
    
    51.7
    
    
    
    
    
    
    
    342,176,888
    
    
    
    46.8Certificates:0-0.99%
    
    
    
    
    
    
    531,367
    
    
    
    0.1
    
    
    
    
    
    
    
    650,578
    
    
    
    0.11-1.99%
    
    
    
    
    
    
    157,434
    
    
    
    0.1
    
    
    
    
    
    
    
    5,846,533
    
    
    
    0.82-2.99%
    
    
    
    
    
    
    25,699,769
    
    
    
    3.5
    
    
    
    
    
    
    
    118,722,782
    
    
    
    16.23-3.99%
    
    
    
    
    
    
    126,408,633
    
    
    
    17.4
    
    
    
    
    
    
    
    211,018,548
    
    
    
    28.84-4.99%
    
    
    
    
    
    
    119,376,256
    
    
    
    16.4
    
    
    
    
    
    
    
    52,319,449
    
    
    
    7.25-5.99%
    
    
    
    
    
    
    78,581,959
    
    
    
    10.8
    
    
    
    
    
    
    
    796,604
    
    
    
    0.16-6.99%
    
    
    
    
    
    
    0
    
    
    
    0.0
    
    
    
    
    
    
    
    5,157
    
    
    
    0.0Total certificates
    
    
    4.23
    
    
    
    350,755,419
    
    
    
    48.3
    
    
    
    3.39
    
    
    
    389,359,672
    
    
    
    53.2Total deposits
    
    
    3.24
    
    
    $
    725,958,830
    
    
    
    100.0
    %
    
    
    2.67
    
    
    $
    731,536,560
    
    
    
    100.0
    %
   2006
    
    
    2005Weighted
    
    
    
    
    
    
    WeightedAmount
    
    
    average
    
    
    Amount
    
    
    averageRemaining term to maturity
    
    (in thousands)
    
    
    rate
    
    
    (in thousands)
    
    
    rate1-6 months
    
    $
    132,231
    
    
    
    3.92
    %
    
    $
    102,326
    
    
    
    3.06
    %7-12 months
    
    
    151,962
    
    
    
    4.56
    
    
    
    96,919
    
    
    
    3.2513-36 months
    
    
    57,106
    
    
    
    4.08
    
    
    
    172,362
    
    
    
    3.65Over 36 months
    
    
    9,456
    
    
    
    4.08
    
    
    
    17,753
    
    
    
    3.59$
    350,755
    
    
    
    4.23
    
    
    $
    389,360
    
    
    
    3.39
   2006
    
    
    2005
    
    
    2004NOW accounts
    
    $
    2,635,488
    
    
    
    1,770,001
    
    
    
    702,102Savings accounts
    
    
    1,083,709
    
    
    
    435,164
    
    
    
    77,293Money market accounts
    
    
    5,119,314
    
    
    
    1,328,344
    
    
    
    645,153Certificates
    
    
    13,207,347
    
    
    
    13,699,891
    
    
    
    10,973,957$
    22,045,858
    
    
    
    17,233,400
    
    
    
    12,398,505
 36




---



##### 



NOTE 12 Federal Home Loan Bank Advances
  2006
    
    
    2005Year of Maturity
    
    Amount
    
    
    Rate
    
    
    Amount
    
    
    Rate2007
    
    $
    40,000,000
    
    
    
    2.91
    %
    
    $
    40,000,000
    
    
    
    2.91
    %2008
    
    
    20,000,000
    
    
    
    3.83
    
    
    
    20,000,000
    
    
    
    3.832010
    
    
    10,000,000
    
    
    
    6.48
    
    
    
    10,000,000
    
    
    
    6.482011
    
    
    10,900,000
    
    
    
    4.81
    
    
    
    10,900,000
    
    
    
    4.812013
    
    
    70,000,000
    
    
    
    4.77
    
    
    
    80,000,000
    
    
    
    4.75150,900,000
    
    
    
    4.27
    
    
    
    160,900,000
    
    
    
    4.29Lines of Credit
    
    
    0
    
    
    
    
    
    
    
    0$
    150,900,000
    
    
    
    4.27
    
    
    $
    160,900,000
    
    
    
    4.29
  Callable QuarterlyYear of Maturity
    
    in 20072008
    
    $
    10,000,0002010
    
    
    10,000,0002011
    
    
    10,900,0002013
    
    
    70,000,000$
    100,900,000
  NOTE 13 Other Borrowed Money
  NOTE 14 Income Taxes
  2006
    
    
    2005
    
    
    2004Current:Federal
    
    $
    4,546,800
    
    
    
    6,251,100
    
    
    
    4,688,700State
    
    
    1,428,700
    
    
    
    1,744,100
    
    
    
    435,600Total current
    
    
    5,975,500
    
    
    
    7,995,200
    
    
    
    5,124,300Deferred:Federal
    
    
    (612,200
    )
    
    
    (843,400
    )
    
    
    (683,200
    )State
    
    
    (137,800
    )
    
    
    (415,700
    )
    
    
    (54,000
    )Total deferred
    
    
    (750,000
    )
    
    
    (1,259,100
    )
    
    
    (737,200
    )$
    5,225,500
    
    
    
    6,736,100
    
    
    
    4,387,100
 37




---



##### 



N O T E S   T O   C O N S O L I D A T E D   F I N A N C I A L   S T A T E M E N T S
  2006
    
    
    2005
    
    
    2004Expected federal income tax expense
    
    $
    4,642,000
    
    
    
    6,053,400
    
    
    
    4,651,300Items affecting federal income tax:Dividend received deduction
    
    
    (23,000
    )
    
    
    (25,700
    )
    
    
    (16,200
    )State income taxes, net of federal income tax benefit
    
    
    880,400
    
    
    
    974,900
    
    
    
    247,900Reduction of tax rate due to employee stock ownership plan dividends
    
    
    0
    
    
    
    0
    
    
    
    (170,200
    )Low income housing credits
    
    
    (9,700
    )
    
    
    (42,000
    )
    
    
    (84,000
    )Tax exempt interest
    
    
    (377,200
    )
    
    
    (378,000
    )
    
    
    (340,300
    )Other, net
    
    
    113,000
    
    
    
    153,500
    
    
    
    98,600$
    5,225,500
    
    
    
    6,736,100
    
    
    
    4,387,100
  2006
    
    
    2005Deferred tax assets:Allowances for loan and real estate losses
    
    $
    3,905,800
    
    
    
    3,479,700Allowance for other assets
    
    
    51,500
    
    
    
    81,200Discounts on assets and liabilities acquired from Marshalltown Financial Corporation
    
    
    100
    
    
    
    100Deferred compensation costs
    
    
    172,300
    
    
    
    195,800Impairment losses on securities available for sale
    
    
    0
    
    
    
    221,900Net unrealized loss on market value adjustments to securities available for sale
    
    
    186,800
    
    
    
    602,200Deferred ESOP loan asset
    
    
    544,500
    
    
    
    506,900Restricted stock expense
    
    
    77,300
    
    
    
    0Nonqualified stock options
    
    
    12,100
    
    
    
    0Deferred tax assets
    
    
    4,950,400
    
    
    
    5,087,800Valuation allowance
    
    
    0
    
    
    
    0Total gross deferred tax assets
    
    
    4,950,400
    
    
    
    5,087,800Deferred tax liabilities:Premium on assets acquired from Marshalltown Financial Corporation
    
    
    42,000
    
    
    
    87,300Deferred loan fees and costs
    
    
    494,400
    
    
    
    475,200Premises and equipment basis difference
    
    
    646,800
    
    
    
    835,500Originated mortgage servicing rights
    
    
    775,700
    
    
    
    1,051,400Other
    
    
    112,500
    
    
    
    94,000Total gross deferred tax liabilities
    
    
    2,071,400
    
    
    
    2,543,400Net deferred tax assets
    
    $
    2,879,000
    
    
    
    2,544,400
   38




---



##### 



NOTE 15 Employee Benefits
      2006
    
    
    2005
    
    
    2004Shares allocated to participants
beginning of the year
    
    
    286,018
    
    
    
    270,884
    
    
    
    275,588Shares allocated to participants
    
    
    24,317
    
    
    
    24,317
    
    
    
    24,380Shares purchased with dividends
from allocated shares
    
    
    9,223
    
    
    
    8,311
    
    
    
    7,368Shares distributed to participants
    
    
    (24,927
    )
    
    
    (17,494
    )
    
    
    (36,452
    )Shares allocated to participants
end of year
    
    
    294,631
    
    
    
    286,018
    
    
    
    270,884Unreleased shares beginning
of the year
    
    
    547,416
    
    
    
    571,733
    
    
    
    596,113Shares released during year
    
    
    (24,317
    )
    
    
    (24,317
    )
    
    
    (24,380
    )Unreleased shares end of year
    
    
    523,099
    
    
    
    547,416
    
    
    
    571,733Total ESOP shares end of year
    
    
    817,730
    
    
    
    833,434
    
    
    
    842,617Fair value of unreleased shares
at December 31
    
    $
    18,052,146
    
    
    
    16,148,772
    
    
    
    18,861,472
   39




---



##### 



N O T E S   T O   C O N S O L I D A T E D   F I N A N C I A L   S T A T E M E N T S
  Unvested optionsShares
    
    Restricted
    
    
    
    
    
    Award value/
    
    
    
    
    
    Weighted averageavailable for
    
    shares
    
    Options
    
    weighted average
    
    
    
    
    
    granted date
    
    Vestinggrant
    
    outstanding
    
    outstanding
    
    exercise price
    
    Number
    
    fair value
    
    period1995 Stock Option and Incentive PlanDecember 31, 2003
    
    
    9,397
    
    
    
    
    
    
    
    178,755
    
    
    $
    11.36
    
    
    
    37,000
    
    
    $
    2.88Options exercised
    
    
    
    
    
    
    
    
    
    
    (43,814
    )
    
    
    9.47Vested
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (22,000
    )
    
    
    3.39December 31, 2004
    
    
    9,397
    
    
    
    
    
    
    
    134,941
    
    
    
    11.97
    
    
    
    15,000
    
    
    
    2.15Options exercised
    
    
    
    
    
    
    
    
    
    
    (10,941
    )
    
    
    9.56Expired
    
    
    (9,397
    )
    
    
    
    
    
    
    
    
    
    
    N/AVested
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (9,000
    )
    
    
    2.34December 31, 2005
    
    
    0
    
    
    
    
    
    
    
    124,000
    
    
    
    12.18
    
    
    
    6,000
    
    
    
    1.85Options exercised
    
    
    
    
    
    
    
    
    
    
    (7,226
    )
    
    
    13.00Vested
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3,000
    )
    
    
    1.85December 31, 2006
    
    
    0
    
    
    
    
    
    
    
    116,774
    
    
    
    12.13
    
    
    
    3,000
    
    
    
    1.852001 Omnibus Stock PlanDecember 31, 2003
    
    
    204,037
    
    
    
    
    
    
    
    195,963
    
    
    $
    16.13
    
    
    
    195,963
    
    
    $
    1.43Granted February 13, 2004
    
    
    (5,000
    )
    
    
    
    
    
    
    5,000
    
    
    
    27.64
    
    
    
    5,000
    
    
    
    2.10
    
    
    4 yearsGranted March 3, 2004
    
    
    (20,000
    )
    
    
    
    
    
    
    20,000
    
    
    
    27.66
    
    
    
    20,000
    
    
    
    2.10
    
    
    3 yearsGranted July 27, 2004
    
    
    (15,000
    )
    
    
    
    
    
    
    15,000
    
    
    
    26.98
    
    
    
    15,000
    
    
    
    2.62
    
    
    5 yearsOptions forfeited
    
    
    17,618
    
    
    
    
    
    
    
    (17,618
    )
    
    
    19.05
    
    
    
    (17,618
    )
    
    
    1.60Options vested
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0December 31, 2004
    
    
    181,655
    
    
    
    
    
    
    
    218,345
    
    
    
    17.96
    
    
    
    218,345
    
    
    
    1.57Granted January 25, 2005
    
    
    (10,047
    )
    
    
    10,047
    
    
    
    0
    
    
    
    N/A
    
    
    
    N/A
    
    
    
    N/A
    
    
    3 yearsGranted May 24, 2005
    
    
    (15,000
    )
    
    
    
    
    
    
    15,000
    
    
    
    30.00
    
    
    
    15,000
    
    
    
    3.59
    
    
    5 yearsForfeited
    
    
    7,997
    
    
    
    (1,418
    )
    
    
    (6,579
    )
    
    
    16.13
    
    
    
    (6,579
    )
    
    
    1.43Vested
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (15,895
    )
    
    
    1.93December 31, 2005
    
    
    164,605
    
    
    
    8,629
    
    
    
    226,766
    
    
    
    18.81
    
    
    
    210,871
    
    
    
    1.70Granted January 24, 2006
    
    
    (7,895
    )
    
    
    7,895
    
    
    
    0
    
    
    
    N/A
    
    
    
    
    
    
    
    
    
    
    3 yearsGranted January 26, 2006
    
    
    (2,583
    )
    
    
    2,583
    
    
    
    0
    
    
    
    N/A
    
    
    
    
    
    
    
    
    
    
    3 yearsOptions exercised
    
    
    
    
    
    
    
    
    
    
    (6,466
    )
    
    
    16.13Vested
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (12,429
    )
    
    
    2.59December 31, 2006
    
    
    154,127
    
    
    
    19,107
    
    
    
    220,300
    
    
    
    18.89
    
    
    
    198,442
    
    
    
    1.64Total both plans
    
    
    154,127
    
    
    
    19,107
    
    
    
    337,074
    
    
    
    16.55
    
    
    
    201,442
    
    
    
    1.64
 40




---



##### 



Weighted averageyears overWeighted average
    
    
    
    
    
    
    
    
    
    
    Unrecognized
    
    
    which unrecognizedExercise
    
    Number
    
    
    remaining contractual
    
    
    Number
    
    
    Number
    
    
    compensation
    
    
    compensation willprice
    
    outstanding
    
    
    life in years
    
    
    exercisable
    
    
    unexercisable
    
    
    expense
    
    
    be recognized$ 13.00
    
    
    6,774
    
    
    
    0.3
    
    
    
    6,774
    
    
    
    0
    
    
    $
    011.50
    
    
    65,000
    
    
    
    2.3
    
    
    
    65,000
    
    
    
    0
    
    
    
    011.25
    
    
    30,000
    
    
    
    3.4
    
    
    
    30,000
    
    
    
    0
    
    
    
    016.13
    
    
    169,760
    
    
    
    5.4
    
    
    
    0
    
    
    
    169,760
    
    
    
    105,789
    
    
    
    5.016.25
    
    
    15,000
    
    
    
    5.4
    
    
    
    12,000
    
    
    
    3,000
    
    
    
    404
    
    
    
    0.427.64
    
    
    5,000
    
    
    
    7.2
    
    
    
    2,500
    
    
    
    2,500
    
    
    
    962
    
    
    
    0.227.66
    
    
    15,540
    
    
    
    7.2
    
    
    
    10,358
    
    
    
    5,182
    
    
    
    928
    
    
    
    0.226.98
    
    
    15,000
    
    
    
    7.6
    
    
    
    6,000
    
    
    
    9,000
    
    
    
    12,689
    
    
    
    2.630.00
    
    
    15,000
    
    
    
    8.4
    
    
    
    3,000
    
    
    
    12,000
    
    
    
    20,884
    
    
    
    3.4337,074
    
    
    
    
    
    
    
    135,632
    
    
    
    201,442
    
    
    $
    141,656
    2005
    
    2004Risk-free interest rate
    
    
    4.03
    %
    
    
    4.13
    %Expected life
    
    9 years
    
    9 yearsExpected volatility
    
    
    8.75
    %
    
    
    10.63
    %Expected dividends
    
    
    2.9
    %
    
    
    3.9
    %
 NOTE 16 Earnings per Share
  Year ended December 31,2006
    
    
    2005
    
    
    2004Weighted average number of
common shares outstanding
used in basic earnings per
common share calculation
    
    
    3,822,189
    
    
    
    3,824,555
    
    
    
    3,868,223Net dilutive effect of:Options
    
    
    174,883
    
    
    
    166,207
    
    
    
    159,442Restricted stock awards
    
    
    12,770
    
    
    
    7,683
    
    
    
    0Weighted average number of
shares outstanding
adjusted for effect of
dilutive securities
    
    
    4,009,842
    
    
    
    3,998,445
    
    
    
    4,027,665Net income available to
common shareholders
    
    $
    8,427,551
    
    
    
    11,067,889
    
    
    
    9,289,797Basic earnings per
common share
    
    $
    2.20
    
    
    
    2.89
    
    
    
    2.40Diluted earnings per
common share
    
    $
    2.10
    
    
    
    2.77
    
    
    
    2.31
 41




---



##### 



N O T E S   T O   C O N S O L I D A T E D   F I N A N C I A L   S T A T E M E N T S
 NOTE 17 Stockholders Equity
   QuarterlyDividend
    
    DividendRecord date
    
    Payable date
    
    per share
    
    Payout RatioFebruary 20, 2004
    
    March 8, 2004
    
    $
    0.20
    
    
    
    37.74
    %May 21, 2004
    
    June 8, 2004
    
    $
    0.20
    
    
    
    38.46
    %August 27, 2004
    
    September 10, 2004
    
    $
    0.22
    
    
    
    35.48
    %November 26, 2004
    
    December 15, 2004
    
    $
    0.22
    
    
    
    34.38
    %February 18, 2005
    
    March 7, 2005
    
    $
    0.22
    
    
    
    41.51
    %May 20, 2005
    
    June 8, 2005
    
    $
    0.22
    
    
    
    31.43
    %August 26, 2005
    
    September 9, 2005
    
    $
    0.24
    
    
    
    38.71
    %November 25, 2005
    
    December 14, 2005
    
    $
    0.24
    
    
    
    42.11
    %February 17, 2006
    
    March 7, 2006
    
    $
    0.24
    
    
    
    27.59
    %May 19, 2006
    
    June 7, 2006
    
    $
    0.24
    
    
    
    35.29
    %August 25, 2006
    
    September 8, 2006
    
    $
    0.25
    
    
    
    34.25
    %November 24, 2006
    
    December 13, 2006
    
    $
    0.25
    
    
    
    1,250.00
    %
     NOTE 18 Federal Home Loan Bank Investment and
Regulatory Capital Requirements
     42




---



##### 



To Be Well CapitalizedRequired to
    
    
    
    
    
    
    
    
    
    Under Promptbe Adequately
    
    
    
    
    
    
    
    
    
    Corrective ActionsActual
    
    Capitalized
    
    Excess Capital
    
    ProvisionsPercent of
    
    
    
    
    
    Percent of
    
    
    
    
    
    Percent of
    
    
    
    
    
    Percent of(Dollars in thousands)
    
    Amount
    
    Assets (1)
    
    Amount
    
    Assets (1)
    
    Amount
    
    Assets (1)
    
    Amount
    
    Assets (1)December 31, 2006Tier I or core capital
    
    $
    80,586
    
    
    
    8.34
    %
    
    $
    38,650
    
    
    
    4.00
    %
    
    $
    41,936
    
    
    
    4.34
    %
    
    $
    48,312
    
    
    
    5.00
    %Tier I risk based
capital
    
    
    80,586
    
    
    
    10.19
    
    
    
    31,630
    
    
    
    4.00
    
    
    
    48,956
    
    
    
    6.19
    
    
    
    47,445
    
    
    
    6.00Risk-based capital
to
risk-weighted
assets
    
    
    89,611
    
    
    
    11.33
    
    
    
    63,261
    
    
    
    8.00
    
    
    
    26,350
    
    
    
    3.33
    
    
    
    79,076
    
    
    
    10.00December 31, 2005Tier I or core capital
    
    $
    80,401
    
    
    
    8.18
    %
    
    $
    39,330
    
    
    
    4.00
    %
    
    $
    41,071
    
    
    
    4.18
    %
    
    $
    49,163
    
    
    
    5.00
    %Tier I risk based
capital
    
    
    80,401
    
    
    
    10.02
    
    
    
    32,102
    
    
    
    4.00
    
    
    
    48,299
    
    
    
    6.02
    
    
    
    48,153
    
    
    
    6.00Risk-based capital
to
risk-weighted
assets
    
    
    89,007
    
    
    
    11.09
    
    
    
    64,204
    
    
    
    8.00
    
    
    
    24,803
    
    
    
    3.09
    
    
    
    80,254
    
    
    
    10.00
 
 (1)
    
    Based upon the Banks adjusted total assets for the purpose of the Tier I or
core capital ratios and risk-weighted assets for the purpose of the risk-based capital ratio. NOTE 19 Financial Instruments with Off-Balance Sheet Risk
   December 31,Contract amount(Dollars in thousands)
    
    2006
    
    
    2005Financial instruments whose contract amount
represents credit risk:Commitments to originate, fund or purchase loans:1-4 family mortgages
    
    $
    786
    
    
    
    3,850Commercial real estate mortgages
    
    
    38,996
    
    
    
    19,835Non-mortgage loans
    
    
    2,725
    
    
    
    21,243Undisbursed balance of loans closed
    
    
    96,843
    
    
    
    75,465Unused lines of credit
    
    
    129,728
    
    
    
    97,445Letters of credit
    
    
    13,263
    
    
    
    10,158Total commitments to extend credit
    
    $
    282,341
    
    
    
    227,996Forward commitments
    
    $
    2,285
    
    
    
    4,691
    43




---



##### 



N O T
E S  T O  C O N S O L I D A T E D  F I N A N C I A
L  S T A T E M E N T S
 NOTE 20 Derivative Instruments and Hedging Activities
 Accounting for Derivative Instruments and
Hedging Activities.
   NOTE 21 Fair Value of Financial Instruments
 Disclosures about Fair Values of
Financial Instruments,
   December 31,2006
    
    2005Carrying
    
    Estimated
    
    Contract
    
    Carrying
    
    Estimated
    
    Contract(Dollars in thousands)
    
    amount
    
    fair value
    
    amount
    
    amount
    
    fair value
    
    amountFinancial assets:Cash and cash equivalents
    
    $
    43,776
    
    
    
    43,776
    
    
    
    
    
    
    
    47,269
    
    
    
    47,269Securities available
for sale
    
    
    126,140
    
    
    
    126,140
    
    
    
    
    
    
    
    119,659
    
    
    
    119,659Loans held for sale
    
    
    1,493
    
    
    
    1,493
    
    
    
    
    
    
    
    1,435
    
    
    
    1,435Loans receivable, net
    
    
    768,232
    
    
    
    776,895
    
    
    
    
    
    
    
    785,678
    
    
    
    785,189Federal Home Loan Bank stock
    
    
    7,956
    
    
    
    7,956
    
    
    
    
    
    
    
    8,365
    
    
    
    8,365Accrued interest
receivable
    
    
    5,061
    
    
    
    5,061
    
    
    
    
    
    
    
    4,460
    
    
    
    4,460Financial liabilities:Deposits
    
    
    725,959
    
    
    
    697,370
    
    
    
    
    
    
    
    731,536
    
    
    
    684,586Federal Home Loan Bank advances
    
    
    150,900
    
    
    
    151,200
    
    
    
    
    
    
    
    160,900
    
    
    
    161,929Accrued interest payable
    
    
    1,176
    
    
    
    1,176
    
    
    
    
    
    
    
    2,086
    
    
    
    2,086Off-balance sheet financial instruments:Commitments to extend credit
    
    
    2
    
    
    
    2
    
    
    
    282,341
    
    
    
    5
    
    
    
    5
    
    
    
    227,996Commitments to sell loans
    
    
    (14
    )
    
    
    (14
    )
    
    
    2,285
    
    
    
    (19
    )
    
    
    (19
    )
    
    
    4,691
 44




---



##### 



Cash and Cash Equivalents
 Securities Available for Sale
 Loans Held for Sale
 Loans Receivable
 Federal Home Loan Bank Stock
 Accrued Interest Receivable
 Deposits
  Federal Home Loan Bank Advances
 Accrued Interest Payable
 Commitments to
Extend Credit
 Commitments to Sell Loans
 45




---



##### 



N O T
E S  T O  C O N S O L I D A T E D  F I N A N C I A L
 S T A T E M E N T S
 NOTE 22 HMN Financial, Inc. Financial Information (Parent Company Only)
  2006
    
    
    2005
    
    
    2004Condensed Balance SheetsAssets:Cash and cash equivalents
    
    $
    5,742,163
    
    
    
    4,885,596Investment in subsidiaries
    
    
    86,770,255
    
    
    
    85,298,915Real estate, net
    
    
    650,000
    
    
    
    750,000Prepaid expenses and other assets
    
    
    450,938
    
    
    
    231,433Deferred tax asset
    
    
    173,200
    
    
    
    195,400Total assets
    
    $
    93,786,556
    
    
    
    91,361,344Liabilities and Stockholders Equity:Accrued expenses and other
liabilities
    
    $
    644,215
    
    
    
    633,075Total liabilities
    
    
    644,215
    
    
    
    633,075Common stock
    
    
    91,287
    
    
    
    91,287Additional paid-in capital
    
    
    57,913,743
    
    
    
    58,011,099Retained earnings
    
    
    103,642,975
    
    
    
    98,951,777Net unrealized loss on securities
available for sale
    
    
    (284,421
    )
    
    
    (917,577
    )Unearned employee stock ownership
plan shares
    
    
    (4,157,698
    )
    
    
    (4,350,999
    )Unearned compensation stock
awards
    
    
    0
    
    
    
    (182,521
    )Treasury stock, at cost,
4,813,232 and 4,721,402 shares
    
    
    (64,063,545
    )
    
    
    (60,874,797
    )Total stockholders equity
    
    
    93,142,341
    
    
    
    90,728,269Total liabilities and
stockholders equity
    
    $
    93,786,556
    
    
    
    91,361,344Condensed Statements of IncomeInterest income
    
    $
    121,125
    
    
    
    107,574
    
    
    
    69,936Interest expense
    
    
    (3,460
    )
    
    
    0
    
    
    
    0Equity earnings of subsidiaries
    
    
    8,838,184
    
    
    
    11,375,240
    
    
    
    9,453,280Equity earnings of limited
partnerships
    
    
    0
    
    
    
    0
    
    
    
    803Other income
    
    
    808
    
    
    
    0
    
    
    
    0Compensation and benefits
    
    
    (236,000
    )
    
    
    (247,300
    )
    
    
    (207,300
    )Occupancy
    
    
    (21,300
    )
    
    
    (20,400
    )
    
    
    (14,400
    )Data processing
    
    
    (4,200
    )
    
    
    (3,600
    )
    
    
    (2,600
    )Mortgage servicing
    
    
    0
    
    
    
    0
    
    
    
    (145
    )Other
    
    
    (502,706
    )
    
    
    (375,525
    )
    
    
    (409,377
    )Income before income tax
benefit
    
    
    8,192,451
    
    
    
    10,835,989
    
    
    
    8,890,197Income tax benefit
    
    
    (235,100
    )
    
    
    (231,900
    )
    
    
    (399,600
    )Net income
    
    $
    8,427,551
    
    
    
    11,067,889
    
    
    
    9,289,797
 46




---



##### 



2006
    
    
    2005
    
    
    2004Condensed Statements of Cash FlowsCash flows from operating activities:Net income
    
    $
    8,427,551
    
    
    
    11,067,889
    
    
    
    9,289,797Adjustments to reconcile net income
to cash provided by operating
activities:Equity earnings of subsidiaries
    
    
    (8,838,184
    )
    
    
    (11,375,240
    )
    
    
    (9,453,280
    )Provision for loan losses
    
    
    100,000
    
    
    
    0
    
    
    
    0Equity earnings in limited
partnership
    
    
    0
    
    
    
    0
    
    
    
    (803
    )Deferred income taxes
    
    
    22,200
    
    
    
    (33,400
    )
    
    
    (128,400
    )Earned employee stock ownership
shares priced above original
cost
    
    
    379,529
    
    
    
    339,798
    
    
    
    308,165Stock option compensation
    
    
    64,423
    
    
    
    0
    
    
    
    0Amortization of restricted stock
awards
    
    
    190,711
    
    
    
    97,922
    
    
    
    0Decrease in unearned ESOP shares
    
    
    193,301
    
    
    
    193,301
    
    
    
    193,784Decrease (increase) in accrued
interest receivable
    
    
    0
    
    
    
    8,462
    
    
    
    (2,842
    )Increase in accrued expenses and
other liabilities
    
    
    11,140
    
    
    
    67,129
    
    
    
    340,696Decrease (increase) in other
assets
    
    
    (219,505
    )
    
    
    89,354
    
    
    
    997,526Other, net
    
    
    0
    
    
    
    0
    
    
    
    (2
    )Net cash provided by
operating activities
    
    
    331,166
    
    
    
    455,215
    
    
    
    1,544,641Cash flows from investing activities:Purchase of real estate owned from
subsidiary
    
    
    0
    
    
    
    (750,000
    )
    
    
    0Decrease in loans receivable, net
    
    
    0
    
    
    
    0
    
    
    
    110,000Redemption of investment in limited
partnership
    
    
    0
    
    
    
    0
    
    
    
    422,474Net cash (used) provided by
investing activities
    
    
    0
    
    
    
    (750,000
    )
    
    
    532,474Cash flows from financing activities:Purchase of treasury stock
    
    
    (3,960,350
    )
    
    
    (972,000
    )
    
    
    (3,316,550
    )Stock options exercised
    
    
    166,284
    
    
    
    37,887
    
    
    
    66,634Excess tax benefit from options
exercised
    
    
    55,820
    
    
    
    29,907
    
    
    
    98,096Dividends to stockholders
    
    
    (3,736,353
    )
    
    
    (3,524,140
    )
    
    
    (3,246,426
    )Proceeds from dividends on Bank
stock
    
    
    8,000,000
    
    
    
    4,000,000
    
    
    
    4,000,000Net cash provided (used) by
financing activities
    
    
    525,401
    
    
    
    (428,346
    )
    
    
    (2,398,246
    )Increase (decrease) in cash and
cash equivalents
    
    
    856,567
    
    
    
    (723,131
    )
    
    
    (321,131
    )Cash and cash equivalents, beginning of
year
    
    
    4,885,596
    
    
    
    5,608,727
    
    
    
    5,929,858Cash and cash equivalents, end of year
    
    $
    5,742,163
    
    
    
    4,885,596
    
    
    
    5,608,727
 47




---



##### 



N O
T E S  T O  C O N S O L I D A T E D  F I N A N C I A L
 S T A T E M E N T S
 NOTE 23 Business Segments
    Home Federal
    
    
    
    
    
    
    
    
    
    Consolidated(Dollars in thousands)
    
    Savings Bank
    
    Other
    
    Eliminations
    
    TotalAt or for the year ended December 31, 2006:Interest income  external customers
    
    $
    67,418
    
    
    
    109
    
    
    
    0
    
    
    
    67,527Non-interest income  external customers
    
    
    6,469
    
    
    
    1
    
    
    
    0
    
    
    
    6,470Losses in limited partnerships
    
    
    (29
    )
    
    
    0
    
    
    
    0
    
    
    
    (29
    )Intersegment interest income
    
    
    4
    
    
    
    12
    
    
    
    (16
    )
    
    
    0Intersegment non-interest income
    
    
    144
    
    
    
    8,838
    
    
    
    (8,982
    )
    
    
    0Interest expense
    
    
    28,853
    
    
    
    4
    
    
    
    (16
    )
    
    
    28,841Amortization of mortgage servicing rights,
net
    
    
    848
    
    
    
    0
    
    
    
    0
    
    
    
    848Other non-interest expense
    
    
    21,120
    
    
    
    772
    
    
    
    (144
    )
    
    
    21,748Income tax expense (benefit)
    
    
    5,463
    
    
    
    (238
    )
    
    
    0
    
    
    
    5,225Net income
    
    
    8,844
    
    
    
    8,422
    
    
    
    (8,838
    )
    
    
    8,428Goodwill
    
    
    3,801
    
    
    
    0
    
    
    
    0
    
    
    
    3,801Total assets
    
    
    970,941
    
    
    
    93,831
    
    
    
    (86,983
    )
    
    
    977,789At or for the year ended December 31, 2005:Interest income  external customers
    
    $
    60,201
    
    
    
    80
    
    
    
    0
    
    
    
    60,281Non-interest income  external customers
    
    
    6,536
    
    
    
    0
    
    
    
    0
    
    
    
    6,536Losses in limited partnerships
    
    
    (27
    )
    
    
    0
    
    
    
    0
    
    
    
    (27
    )Intersegment interest income
    
    
    0
    
    
    
    28
    
    
    
    (28
    )
    
    
    0Intersegment non-interest income
    
    
    134
    
    
    
    11,375
    
    
    
    (11,509
    )
    
    
    0Interest expense
    
    
    24,539
    
    
    
    0
    
    
    
    (28
    )
    
    
    24,511Amortization of mortgage servicing rights,
net
    
    
    1,020
    
    
    
    0
    
    
    
    0
    
    
    
    1,020Other non-interest expense
    
    
    20,260
    
    
    
    655
    
    
    
    (134
    )
    
    
    20,781Income tax expense (benefit)
    
    
    6,971
    
    
    
    (235
    )
    
    
    0
    
    
    
    6,736Net income
    
    
    11,380
    
    
    
    11,063
    
    
    
    (11,375
    )
    
    
    11,068Goodwill
    
    
    3,801
    
    
    
    0
    
    
    
    0
    
    
    
    3,801Total assets
    
    
    985,456
    
    
    
    91,410
    
    
    
    (85,629
    )
    
    
    991,237At or for the year ended December 31, 2004:Interest income  external customers
    
    $
    51,568
    
    
    
    49
    
    
    
    0
    
    
    
    51,617Non-interest income  external customers
    
    
    5,993
    
    
    
    0
    
    
    
    0
    
    
    
    5,993Earnings (losses) on limited partnerships
    
    
    (27
    )
    
    
    1
    
    
    
    0
    
    
    
    (26
    )Intersegment interest income
    
    
    0
    
    
    
    21
    
    
    
    (21
    )
    
    
    0Intersegment non-interest income
    
    
    174
    
    
    
    9,453
    
    
    
    (9,627
    )
    
    
    0Interest expense
    
    
    21,014
    
    
    
    0
    
    
    
    (21
    )
    
    
    20,993Amortization of mortgage servicing rights,
net
    
    
    1,061
    
    
    
    0
    
    
    
    0
    
    
    
    1,061Other non-interest expense
    
    
    18,633
    
    
    
    642
    
    
    
    (174
    )
    
    
    19,101Income tax expense (benefit)
    
    
    4,790
    
    
    
    (403
    )
    
    
    0
    
    
    
    4,387Minority interest
    
    
    (3
    )
    
    
    0
    
    
    
    0
    
    
    
    (3
    )Net income
    
    
    9,458
    
    
    
    9,285
    
    
    
    (9,453
    )
    
    
    9,290Goodwill
    
    
    3,801
    
    
    
    0
    
    
    
    0
    
    
    
    3,801Total assets
    
    
    954,779
    
    
    
    84,391
    
    
    
    (78,497
    )
    
    
    960,673
 48




---



##### 



REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
 The Board of Directors and Stockholders
 HMN Financial, Inc.:
     KPMG LLP
 
 Minneapolis, MN
March 1, 2007
 49




---



##### 



S E L
E C T E D  Q U A R T E R L Y  F I N A N C I A
L  D A T A
 December 31,
    
    September 30,
    
    June 30,(Dollars in thousands, except per share data)
    
    2006
    
    2006
    
    2006Selected
Operations Data (3 months ended):Interest income
    
    $
    17,358
    
    
    
    17,175
    
    
    
    17,011Interest expense
    
    
    7,513
    
    
    
    7,473
    
    
    
    7,261Net interest income
    
    
    9,845
    
    
    
    9,702
    
    
    
    9,750Provision for loan losses
    
    
    1,357
    
    
    
    6,026
    
    
    
    980Net interest income after provision for loan
losses
    
    
    8,488
    
    
    
    3,676
    
    
    
    8,770Noninterest income:Fees and service charges
    
    
    780
    
    
    
    820
    
    
    
    796Loan servicing fees
    
    
    276
    
    
    
    291
    
    
    
    301Securities gains (losses), net
    
    
    0
    
    
    
    0
    
    
    
    48Gain on sales of loans
    
    
    225
    
    
    
    481
    
    
    
    303Other noninterest income
    
    
    173
    
    
    
    143
    
    
    
    318Total noninterest income
    
    
    1,454
    
    
    
    1,735
    
    
    
    1,766Noninterest expense:Compensation and benefits
    
    
    2,786
    
    
    
    2,706
    
    
    
    3,118Occupancy
    
    
    1,101
    
    
    
    1,131
    
    
    
    1,103Deposit insurance premiums
    
    
    23
    
    
    
    23
    
    
    
    25Advertising
    
    
    129
    
    
    
    108
    
    
    
    107Data processing
    
    
    300
    
    
    
    307
    
    
    
    287Amortization of mortgage servicing rights,
net
    
    
    187
    
    
    
    208
    
    
    
    237Other noninterest expense
    
    
    928
    
    
    
    957
    
    
    
    886Total noninterest expense
    
    
    5,454
    
    
    
    5,440
    
    
    
    5,763Income (loss) before income tax expense
    
    
    4,488
    
    
    
    (29
    )
    
    
    4,773Income tax expense (benefit)
    
    
    1,818
    
    
    
    (102
    )
    
    
    1,829Net income
    
    
    2,670
    
    
    
    73
    
    
    
    2,944Basic earnings per share
    
    $
    0.71
    
    
    
    0.02
    
    
    
    0.77Diluted earnings per share
    
    $
    0.67
    
    
    
    0.02
    
    
    
    0.73Financial Ratios:Return on average assets(1)
    
    
    1.11
    %
    
    
    0.03
    
    
    
    1.18Return on average equity(1)
    
    
    11.18
    
    
    
    0.30
    
    
    
    12.34Average equity to average assets
    
    
    9.70
    
    
    
    9.64
    
    
    
    9.60Dividend payout ratio
    
    
    1,250.00
    
    
    
    34.25
    
    
    
    35.29Net interest margin(1)(2)
    
    
    4.28
    
    
    
    4.06
    
    
    
    4.08
 (Dollars in thousands)Selected Financial Condition Data:Total assets
    
    $
    977,789
    
    
    
    991,258
    
    
    
    1,009,935Securities available for sale:Mortgage-backed and related securities
    
    
    6,178
    
    
    
    6,221
    
    
    
    6,267Other marketable securities
    
    
    119,962
    
    
    
    139,787
    
    
    
    138,953Loans held for sale
    
    
    1,493
    
    
    
    4,217
    
    
    
    7,129Loans receivable, net
    
    
    768,232
    
    
    
    729,381
    
    
    
    757,621Deposits
    
    
    725,959
    
    
    
    741,618
    
    
    
    748,355Federal Home Loan Bank advances
    
    
    150,900
    
    
    
    150,900
    
    
    
    160,900Stockholders equity
    
    
    93,142
    
    
    
    92,064
    
    
    
    93,624
 
 (1)
    
    Annualized(2)
    
    Net interest income divided by average interest-earning assets. 50




---



##### 



March 31,
    
    December 31,
    
    September 30,
    
    June 30,
    
    March 31,2006
    
    2005
    
    2005
    
    2005
    
    200515,983
    
    
    
    16,074
    
    
    
    15,238
    
    
    
    14,773
    
    
    
    14,1966,594
    
    
    
    6,667
    
    
    
    6,292
    
    
    
    6,027
    
    
    
    5,5259,389
    
    
    
    9,407
    
    
    
    8,946
    
    
    
    8,746
    
    
    
    8,671515
    
    
    
    179
    
    
    
    952
    
    
    
    907
    
    
    
    6368,874
    
    
    
    9,228
    
    
    
    7,994
    
    
    
    7,839
    
    
    
    8,035715
    
    
    
    725
    
    
    
    706
    
    
    
    685
    
    
    
    603304
    
    
    
    308
    
    
    
    305
    
    
    
    304
    
    
    
    2930
    
    
    
    (21
    )
    
    
    0
    
    
    
    0
    
    
    
    0246
    
    
    
    611
    
    
    
    625
    
    
    
    324
    
    
    
    293221
    
    
    
    164
    
    
    
    85
    
    
    
    262
    
    
    
    2371,486
    
    
    
    1,787
    
    
    
    1,721
    
    
    
    1,575
    
    
    
    1,4263,259
    
    
    
    2,800
    
    
    
    2,781
    
    
    
    2,785
    
    
    
    2,7741,100
    
    
    
    1,002
    
    
    
    1,042
    
    
    
    1,042
    
    
    
    99531
    
    
    
    33
    
    
    
    35
    
    
    
    34
    
    
    
    28131
    
    
    
    93
    
    
    
    102
    
    
    
    105
    
    
    
    84289
    
    
    
    270
    
    
    
    279
    
    
    
    245
    
    
    
    238216
    
    
    
    253
    
    
    
    257
    
    
    
    271
    
    
    
    239913
    
    
    
    989
    
    
    
    1,054
    
    
    
    1,039
    
    
    
    9325,939
    
    
    
    5,440
    
    
    
    5,550
    
    
    
    5,521
    
    
    
    5,2904,421
    
    
    
    5,575
    
    
    
    4,165
    
    
    
    3,893
    
    
    
    4,1711,680
    
    
    
    2,098
    
    
    
    1,889
    
    
    
    1,393
    
    
    
    1,3562,741
    
    
    
    3,477
    
    
    
    2,276
    
    
    
    2,500
    
    
    
    2,8150.71
    
    
    
    0.91
    
    
    
    0.59
    
    
    
    0.65
    
    
    
    0.740.68
    
    
    
    0.87
    
    
    
    0.57
    
    
    
    0.62
    
    
    
    0.701.14
    
    
    
    1.39
    
    
    
    0.92
    
    
    
    1.01
    
    
    
    1.1811.82
    
    
    
    15.03
    
    
    
    10.02
    
    
    
    11.41
    
    
    
    13.229.67
    
    
    
    9.05
    
    
    
    8.99
    
    
    
    8.90
    
    
    
    8.9227.59
    
    
    
    42.11
    
    
    
    38.71
    
    
    
    31.43
    
    
    
    41.514.10
    
    
    
    3.94
    
    
    
    3.79
    
    
    
    3.70
    
    
    
    3.79989,984
    
    
    
    991,237
    
    
    
    982,304
    
    
    
    985,662
    
    
    
    991,3266,698
    
    
    
    6,880
    
    
    
    7,481
    
    
    
    8,220
    
    
    
    8,470117,384
    
    
    
    112,779
    
    
    
    91,031
    
    
    
    91,053
    
    
    
    90,9805,011
    
    
    
    1,435
    
    
    
    4,058
    
    
    
    4,290
    
    
    
    1,510767,881
    
    
    
    785,678
    
    
    
    815,164
    
    
    
    819,940
    
    
    
    813,244727,466
    
    
    
    731,537
    
    
    
    714,711
    
    
    
    720,230
    
    
    
    727,815160,900
    
    
    
    160,900
    
    
    
    170,900
    
    
    
    170,900
    
    
    
    170,90092,646
    
    
    
    90,728
    
    
    
    88,018
    
    
    
    86,558
    
    
    
    84,488
 51




---



##### 



O T H
E R  F I N A N C I A L   D A T A
 Year Ended December 31,(Dollars in thousands)
    
    2006
    
    
    2005
    
    
    2004Maximum Balance:Federal Home Loan Bank advances
    
    $
    162,900
    
    
    
    193,900
    
    
    
    214,800Federal Home Loan Bank short-term
borrowings
    
    
    52,000
    
    
    
    33,000
    
    
    
    43,900Average Balance:Federal Home Loan Bank advances
    
    
    155,972
    
    
    
    170,919
    
    
    
    196,008Federal Home Loan Bank short-term
borrowings
    
    
    28,513
    
    
    
    10,047
    
    
    
    26,918
  December 31,2006
    
    
    2005
    
    
    2004Weighted
    
    
    
    
    
    
    Weighted
    
    
    
    
    
    
    WeightedAverage
    
    
    
    
    
    
    Average
    
    
    
    
    
    
    Average(Dollars in thousands)
    
    Amount
    
    
    Rate
    
    
    Amount
    
    
    Rate
    
    
    Amount
    
    
    RateFHLB short-term borrowings
    
    $
    40,000
    
    
    
    2.91
    %
    
    $
    0
    
    
    
    0.00
    %
    
    $
    10,000
    
    
    
    2.69
    %Other FHLB long-term advances
    
    
    110,900
    
    
    
    4.76
    
    
    
    160,900
    
    
    
    4.29
    
    
    
    160,900
    
    
    
    4.29Total
    
    $
    150,900
    
    
    
    4.27
    
    
    $
    160,900
    
    
    
    4.29
    
    
    $
    170,900
    
    
    
    4.20
 C O M
M O N  S T O C K  I N F O R M A T I O N
  Dec. 29,
    
    
    Sept. 29,
    
    
    June 30,
    
    
    March 31,
    
    
    Dec. 30,
    
    
    Sept. 30,
    
    
    June 30,
    
    
    March 31,2006
    
    
    2006
    
    
    2006
    
    
    2006
    
    
    2005
    
    
    2005
    
    
    2005
    
    
    2005HIGH
    
    $
    35.10
    
    
    
    36.10
    
    
    
    35.02
    
    
    
    34.79
    
    
    
    32.00
    
    
    
    32.39
    
    
    
    32.00
    
    
    
    33.06LOW
    
    
    32.75
    
    
    
    33.75
    
    
    
    33.14
    
    
    
    28.84
    
    
    
    28.14
    
    
    
    30.75
    
    
    
    28.55
    
    
    
    29.70CLOSE
    
    
    34.51
    
    
    
    34.76
    
    
    
    34.80
    
    
    
    34.79
    
    
    
    29.50
    
    
    
    31.92
    
    
    
    31.48
    
    
    
    31.00
 Dec. 31,
    
    
    Sept. 30,
    
    
    June 30,
    
    
    March 31,
    
    
    Dec. 31,
    
    
    Sept. 30,
    
    
    June 30,
    
    
    March 31,2004
    
    
    2004
    
    
    2004
    
    
    2004
    
    
    2003
    
    
    2003
    
    
    2003
    
    
    2003HIGH
    
    $
    33.50
    
    
    
    27.99
    
    
    
    27.65
    
    
    
    28.19
    
    
    $
    24.70
    
    
    
    21.63
    
    
    
    20.04
    
    
    
    16.82LOW
    
    
    27.35
    
    
    
    25.10
    
    
    
    24.51
    
    
    
    23.25
    
    
    
    20.00
    
    
    
    19.36
    
    
    
    15.85
    
    
    
    15.55CLOSE
    
    
    32.99
    
    
    
    27.75
    
    
    
    27.09
    
    
    
    27.48
    
    
    
    24.29
    
    
    
    21.50
    
    
    
    19.40
    
    
    
    16.05
 Dec. 31,
    
    
    Sept. 30,
    
    
    June 28,
    
    
    March 29,
    
    
    Dec. 31,
    
    
    Sept. 28,
    
    
    June 29,
    
    
    March 30,2002
    
    
    2002
    
    
    2002
    
    
    2002
    
    
    2001
    
    
    2001
    
    
    2001
    
    
    2001HIGH
    
    $
    18.14
    
    
    
    19.31
    
    
    
    20.25
    
    
    
    16.17
    
    
    
    15.85
    
    
    
    17.10
    
    
    
    17.15
    
    
    
    15.06LOW
    
    
    15.78
    
    
    
    16.50
    
    
    
    15.90
    
    
    
    15.24
    
    
    
    13.27
    
    
    
    14.35
    
    
    
    13.50
    
    
    
    13.00CLOSE
    
    
    16.82
    
    
    
    17.46
    
    
    
    19.06
    
    
    
    16.05
    
    
    
    15.49
    
    
    
    15.10
    
    
    
    17.10
    
    
    
    14.75
 52