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CENTRUE FINANCIAL CORPORATION








2005 ANNUAL REPORT







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|                                                                                          |  |  |    | 
|----------------------------------------------------------------------------------------- |  |  | -- | 
|Letter to Stockholders                                                                    |  |  | 2  | 
|Financial Highlights                                                                      |  |  | 4  | 
|Managements Discussion and Analysis
    of Financial Condition and Results of Operations |  |  | 5  | 
|Report of Independent Registered Public
    Accounting Firm                               |  |  | 30 | 
|Consolidated Financial Statements                                                         |  |  | 31 | 
|Notes to Consolidated Financial
    Statements                                            |  |  | 37 | 
|Corporate Information                                                                     |  |  | 63 | 
|Directors and Officers                                                                    |  |  | 65 | 
|Office Locations/ Map                                                                     |  |  | 66 | 





10-K






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The mission of Centrue Financial Corporation is to be the
premier bank holding company serving communities between Chicago
Illinois and St. Louis Missouri with a return on equity
within the upper quartile of our peer group. Our regional
banking philosophy is to support and empower our employees to
provide superior customer service.




















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|                                              |  |                                       
|--------------------------------------------- |  | --------------------------------------
|-s- Michael A. Griffith                       |  | -s- Thomas A. Daiber                  
|Michael A. Griffith
    Chairman of the Board |  | Thomas A. Daiber
    President and CEO





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|                                           |                                                     |                                               |           |        |      |   |           |        |  |   |           |        |  |      |           |        |  |   |           |        | 
|------------------------------------------ | --------------------------------------------------- | --------------------------------------------- | --------- | ------ | ---- | - | --------- | ------ |  | - | --------- | ------ |  | ---- | --------- | ------ |  | - | --------- | ------ | 
|                                           |                                                     | Years Ended December 31,                      |          
|                                           |                                                     |                                               |          
|                                           |                                                     | 2005                                          |           |        | 2004 |   |           | 2003   |  |   | 2002      |        |  | 2001 |          
|                                           |                                                     |                                               |           |        |      |   |           |        |  |   |           |        |  |      |          
|                                           |                                                     | (Dollars in thousands, except per share data) |          
|Selected Financial Condition Data:         |                                                     |                                               |           |        |      |   |           |        |  |   |           |        |  |      |           |        |  |   |           |       
|Total assets                               |                                                     | $                                             | 641,341   |        |      | $ | 611,853   |        |  | $ | 609,411   |        |  | $    | 546,404   |        |  | $ | 490,280   |       
|Loans, net, including loans held for sale  |                                                     |                                               | 436,841   |        |      |   | 419,379   |        |  |   | 426,043   |        |  |      | 384,517   |        |  |   | 394,744   |       
|Investment securities held-to-maturity (1) |                                                     |                                               | 50        |        |      |   | 149       |        |  |   | 942       |        |  |      | 1,143     |        |  |   | 1,554     |       
|Investment securities available-for-sale   |                                                     |                                               | 125,190   |        |      |   | 124,763   |        |  |   | 87,712    |        |  |      | 82,638    |        |  |   | 46,391    |       
|Deposits                                   |                                                     |                                               | 507,916   |        |      |   | 495,777   |        |  |   | 496,257   |        |  |      | 431,964   |        |  |   | 415,279   |       
|Total borrowings                           |                                                     |                                               | 65,737    |        |      |   | 49,661    |        |  |   | 54,396    |        |  |      | 59,700    |        |  |   | 30,000    |       
|Trust preferred securities                 |                                                     |                                               | 20,000    |        |      |   | 20,000    |        |  |   | 10,000    |        |  |      | 10,000    |        |  |   |          |       
|Stockholders equity                       |                                                     |                                               | 42,921    |        |      |   | 43,176    |        |  |   | 45,643    |        |  |      | 41,107    |        |  |   | 41,191    |       
|Shares outstanding (3)                     |                                                     |                                               | 2,262,939 |        |      |   | 2,380,666 |        |  |   | 2,606,022 |        |  |      | 2,331,762 |        |  |   | 2,432,716 |       
|For the period:                            |                                                     |                                               |           |        |      |   |           |        |  |   |           |        |  |      |           |        |  |   |           |       
|                                           | Net interest income after provision for loan losses |                                               | $         | 18,382 |      |   | $         | 17,548 |  |   | $         | 11,358 |  |      | $         | 12,037 |  |   | $         | 13,528 | 
|                                           | Net income                                          |                                               |           | 4,380  |      |   |           | 4,889  |  |   |           | 1,363  |  |      |           | 2,233  |  |   |           | 3,261  | 
|Per common share (3):                      |                                                     |                                               |           |        |      |   |           |        |  |   |           |        |  |      |           |        |  |   |           |       
|                                           | Book value per share outstanding                    |                                               | $         | 18.97  |      |   | $         | 18.14  |  |   | $         | 17.51  |  |      | $         | 17.63  |  |   | $         | 16.93  | 
|                                           | Tangible book value per share outstanding (2)       |                                               |           | 11.77  |      |   |           | 12.16  |  |   |           | 12.66  |  |      |           | 15.81  |  |   |           | 15.11  | 
|                                           | Basic earnings per share                            |                                               |           | 1.87   |      |   |           | 1.96   |  |   |           | 0.65   |  |      |           | 0.94   |  |   |           | 1.34   | 
|                                           | Diluted earnings per share                          |                                               |           | 1.86   |      |   |           | 1.95   |  |   |           | 0.65   |  |      |           | 0.93   |  |   |           | 1.31   | 
|Financial ratios:                          |                                                     |                                               |           |        |      |   |           |        |  |   |           |        |  |      |           |        |  |   |           |       
|                                           | Stockholders equity to total assets                |                                               |           | 6.69%  |      |   |           | 7.06%  |  |   |           | 7.49%  |  |      |           | 7.52%  |  |   |           | 8.40%  | 
|                                           | Non-performing assets to total assets               |                                               |           | 0.87%  |      |   |           | 1.64%  |  |   |           | 1.00%  |  |      |           | 2.03%  |  |   |           | 0.45%  | 
|                                           | Net charge-offs to average loans                    |                                               |           | 0.44%  |      |   |           | 0.77%  |  |   |           | 1.53%  |  |      |           | 0.01%  |  |   |           | 0.02%  | 
|                                           | Net interest margin                                 |                                               |           | 3.41%  |      |   |           | 3.42%  |  |   |           | 3.16%  |  |      |           | 3.22%  |  |   |           | 3.16%  | 
|                                           | Efficiency ratio (5)                                |                                               |           | 73.44% |      |   |           | 67.04% |  |   |           | 72.40% |  |      |           | 65.40% |  |   |           | 70.97% | 
|                                           | Return on average assets                            |                                               |           | 0.69%  |      |   |           | 0.80%  |  |   |           | 0.25%  |  |      |           | 0.42%  |  |   |           | 0.69%  | 
|                                           | Return on average stockholders equity              |                                               |           | 9.95%  |      |   |           | 10.96% |  |   |           | 4.00%  |  |      |           | 5.42%  |  |   |           | 8.20%  | 
|                                           | Average equity to average assets                    |                                               |           | 6.96%  |      |   |           | 7.31%  |  |   |           | 6.33%  |  |      |           | 7.70%  |  |   |           | 8.41%  | 
|                                           | Dividend payout Ratio (4)                           |                                               |           |       |      |   |           | 3.83%  |  |   |           | 46.15% |  |      |           | 30.32% |  |   |           | 18.32% | 






|    |                                                                                                                                                  
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Includes certificates of deposit.                                                                                                                
|   
|(2) | Calculated by subtracting goodwill and other intangible assets
    from stockholders equity.                                                    
|   
|(3) | All share and per share information for years prior to 2003 has
    been restated for the 2 for 1 stock split in October 2003.                   
|   
|(4) | Calculated by dividing dividends per share by earnings per share.                                                                                
|   
|(5) | Calculated as noninterest expense divided by fully tax
    equivalent net interest income plus noninterest income excluding
    securities gains.





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| |   |                                                                                                                                  
| | - | ---------------------------------------------------------------------------------------------------------------------------------
| |  | increase return on equity and increase stockholders value;                                                                      
|
| |  | maintain the Banks capital at a level that exceeds
    regulatory requirements;                                                 
|
| |  | attain a high level of asset quality;                                                                                            
|
| |  | manage the Companys exposure to changes in market interest
    rates;                                                           
|
| |  | maximize the Companys net interest margin; and                                                                                  
|
| |  | to the extent available, take advantage of loan and deposit
    growth opportunities in the Companys principal market
    areas.





| |   |                                                                                                                                                     
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------
| |  | management of the Companys capital to enhance
    stockholders value;                                                                             
|
| |  | employment of experienced and dedicated officers and employees;                                                                                     
|
| |  | enhancement of controls over asset quality by employment of a
    chief credit officer and credit administration staff;                             
|
| |  | installation of an incentive compensation program for every
    employee based upon attainment of Company and individual
    objectives;            
|
| |  | implementation of a sales management process to deepen existing
    customer relationships and to attract new customers from within
    our markets;
|
| |  | investment in new technology and item processing services to
    improve delivery of services to customers;                                         
|
| |  | establishment of regional banking centers with a local regional
    president;                                                                      
|
| |  | expansion of the Companys geographic presence through
    strategic acquisitions and de novo branches;                                             
|
| |  | the origination of commercial real estate, consumer, commercial
    business, and, multi-family and construction loans;                             





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| |   |                                                                                                                                                                                                      
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | forming strategic alliances for ancillary banking services such
    as trust, brokerage and credit card services designed to enhance
    product offerings for customers while increasing efficiency;
|
| |  | providing high quality service to enhance customer loyalty; and                                                                                                                                      
|
| |  | offering a variety of financial products and services to serve
    as comprehensively as practicable the financial needs of
    families and community businesses in its market areas.               





Allowance for Loan Losses


Goodwill


Real Estate Held for Sale






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Mortgage Servicing Rights


Deferred Income Taxes
















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|                                                                            |                                  |                              |         |         |                              |   |        |                              |  |         |             |      |          |         |         |         |        |         |        |             |          |  |         |      |   |        |         |         |  |   |        |        |  |  |      |      |  
|--------------------------------------------------------------------------- | -------------------------------- | ---------------------------- | ------- | ------- | ---------------------------- | - | ------ | ---------------------------- |  | ------- | ----------- | ---- | -------- | ------- | ------- | ------- | ------ | ------- | ------ | ----------- | -------- |  | ------- | ---- | - | ------ | ------- | ------- |  | - | ------ | ------ |  |  | ---- | ---- | -
|                                                                            |                                  | Year Ended December 31, 2005 |         |         | Year Ended December 31, 2004 |   |        | Year Ended December 31, 2003 | 
|                                                                            |                                  |                              |         |         |                              |   |        |                              | 
|                                                                            |                                  | Average                      |         |         | Interest                     |   |        |                              |  | Average |             |      | Interest |         |         |         |        | Average |        |             | Interest |  |         |     
|                                                                            |                                  | Outstanding                  |         |         | Earned/                      |   |        | Yield/                       |  |         | Outstanding |      |          | Earned/ |         |         | Yield/ |         |        | Outstanding |          |  | Earned/ |      |   | Yield/ |        
|                                                                            |                                  | Balance                      |         |         | Paid                         |   |        | Rate                         |  |         | Balance     |      |          | Paid    |         |         | Rate   |         |        | Balance     |          |  | Paid    |      |   | Rate   |        
|                                                                            |                                  |                              |         |         |                              |   |        |                              |  |         |             |      |          |         |         |         |        |         |        |             |          |  |         |      |   |        |        
|                                                                            |                                  | (Dollars in thousands)       |        
|Interest-earning assets:                                                    |                                  |                              |         |         |                              |   |        |                              |  |         |             |      |          |         |         |         |        |         |        |             |          |  |         |      |   |        |         |         |  |   |        |        |  |  |      |     
|                                                                            | Loans receivable (1)             |                              | $       | 434,367 |                              |   | $      | 26,857                       |  |         |             | 6.18 | %        |         | $       | 433,406 |        |         | $      | 24,955      |          |  |         | 5.76 | % |        | $       | 366,305 |  |   | $      | 23,523 |  |  |      | 6.42 | %
|                                                                            | Investment securities (2)        |                              |         | 123,863 |                              |   |        | 5,240                        |  |         |             | 4.23 | %        |         |         | 108,825 |        |         |        | 4,424       |          |  |         | 4.07 | % |        |         | 75,088  |  |   |        | 3,554  |  |  |      | 4.73 | %
|                                                                            | Other interest-earning assets    |                              |         | 7,340   |                              |   |        | 198                          |  |         |             | 2.70 | %        |         |         | 12,037  |        |         |        | 119         |          |  |         | 0.99 | % |        |         | 49,296  |  |   |        | 313    |  |  |      | 0.63 | %
|                                                                            | FHLB stock                       |                              |         | 4,181   |                              |   |        | 177                          |  |         |             | 4.23 | %        |         |         | 3,462   |        |         |        | 214         |          |  |         | 6.18 | % |        |         | 2,929   |  |   |        | 195    |  |  |      | 6.66 | %
|                                                                            |                                  |                              |         |         |                              |   |        |                              |  |         |             |      |          |         |         |         |        |         |        |             |          |  |         |      |   |        |        
|Total interest-earning assets                                               |                                  |                              | 569,751 |         |                              |   | 32,472 |                              |  |         | 5.70        | %    |          |         | 557,730 |         |        |         | 29,712 |             |          |  | 5.33    | %    |   |        | 493,618 |         |  |   | 27,585 |        |  |  | 5.59 | %   
|                                                                            |                                  |                              |         |         |                              |   |        |                              |  |         |             |      |          |         |         |         |        |         |        |             |          |  |         |      |   |        |        
|Other assets                                                                |                                  |                              | 62,318  |         |                              |   |        |                              |  |         |             |      |          |         | 52,308  |         |        |         |        |             |          |  |         |      |   |        | 45,080  |         |  |   |        |        |  |  |      |     
|                                                                            |                                  |                              |         |         |                              |   |        |                              |  |         |             |      |          |         |         |         |        |         |        |             |          |  |         |      |   |        |        
|Total assets                                                                |                                  | $                            | 632,069 |         |                              |   |        |                              |  |         |             |      |          | $       | 610,038 |         |        |         |        |             |          |  |         |      |   | $      | 538,698 |         |  |   |        |        |  |  |      |     
|                                                                            |                                  |                              |         |         |                              |   |        |                              |  |         |             |      |          |         |         |         |        |         |        |             |          |  |         |      |   |        |        
|Interest-bearing liabilities:                                               |                                  |                              |         |         |                              |   |        |                              |  |         |             |      |          |         |         |         |        |         |        |             |          |  |         |      |   |        |         |         |  |   |        |        |  |  |      |     
|                                                                            | Time deposits                    |                              | $       | 253,847 |                              |   |        | 7,499                        |  |         |             | 2.95 | %        |         | $       | 261,473 |        |         |        | 6,467       |          |  |         | 2.47 | % |        | $       | 243,629 |  |   |        | 7,564  |  |  |      | 3.10 | %
|                                                                            | Savings deposits                 |                              |         | 94,206  |                              |   |        | 644                          |  |         |             | 0.68 | %        |         |         | 90,580  |        |         |        | 560         |          |  |         | 0.62 | % |        |         | 78,450  |  |   |        | 860    |  |  |      | 1.10 | %
|                                                                            | Interest Bearing Demand deposits |                              |         | 93,934  |                              |   |        | 1,321                        |  |         |             | 1.41 | %        |         |         | 92,698  |        |         |        | 780         |          |  |         | 0.84 | % |        |         | 83,001  |  |   |        | 792    |  |  |      | 0.95 | %
|                                                                            |                                  |                              |         |         |                              |   |        |                              |  |         |             |      |          |         |         |         |        |         |        |             |          |  |         |      |   |        |        
|                                                                            | Total interest bearing deposits  |                              |         | 441,987 |                              |   |        | 9,464                        |  |         |             | 2.14 | %        |         |         | 444,751 |        |         |        | 7,807       |          |  |         | 1.76 | % |        |         | 405,080 |  |   |        | 9,216  |  |  |      | 2.28 | %
|                                                                            | Borrowings                       |                              |         | 79,820  |                              |   |        | 3,600                        |  |         |             | 4.51 | %        |         |         | 63,991  |        |         |        | 2,843       |          |  |         | 4.44 | % |        |         | 62,115  |  |   |        | 2,780  |  |  |      | 4.48 | %
|                                                                            |                                  |                              |         |         |                              |   |        |                              |  |         |             |      |          |         |         |         |        |         |        |             |          |  |         |      |   |        |        
|Total interest-bearing liabilities                                          |                                  |                              | 521,807 |         |                              |   | 13,064 |                              |  |         | 2.50        | %    |          |         | 508,742 |         |        |         | 10,650 |             |          |  | 2.09    | %    |   |        | 467,194 |         |  |   | 11,996 |        |  |  | 2.57 | %   
|                                                                            |                                  |                              |         |         |                              |   |        |                              |  |         |             |      |          |         |         |         |        |         |        |             |          |  |         |      |   |        |        
|Non-interest bearing demand deposits                                        |                                  |                              | 62,785  |         |                              |   |        |                              |  |         |             |      |          |         | 52,654  |         |        |         |        |             |          |  |         |      |   |        | 33,719  |         |  |   |        |        |  |  |      |     
|Other liabilities                                                           |                                  |                              | 3,448   |         |                              |   |        |                              |  |         |             |      |          |         | 4,039   |         |        |         |        |             |          |  |         |      |   |        | 3,700   |         |  |   |        |        |  |  |      |     
|                                                                            |                                  |                              |         |         |                              |   |        |                              |  |         |             |      |          |         |         |         |        |         |        |             |          |  |         |      |   |        |        
|Total liabilities                                                           |                                  |                              | 588,040 |         |                              |   |        |                              |  |         |             |      |          |         | 565,435 |         |        |         |        |             |          |  |         |      |   |        | 504,614 |         |  |   |        |        |  |  |      |     
|                                                                            |                                  |                              |         |         |                              |   |        |                              |  |         |             |      |          |         |         |         |        |         |        |             |          |  |         |      |   |        |        
|Stockholders equity                                                        |                                  |                              | 44,029  |         |                              |   |        |                              |  |         |             |      |          |         | 44,603  |         |        |         |        |             |          |  |         |      |   |        | 34,084  |         |  |   |        |        |  |  |      |     
|                                                                            |                                  |                              |         |         |                              |   |        |                              |  |         |             |      |          |         |         |         |        |         |        |             |          |  |         |      |   |        |        
|Total liabilities and stockholders equity                                  |                                  | $                            | 632,069 |         |                              |   |        |                              |  |         |             |      |          | $       | 610,038 |         |        |         |        |             |          |  |         |      |   | $      | 538,698 |         |  |   |        |        |  |  |      |     
|                                                                            |                                  |                              |         |         |                              |   |        |                              |  |         |             |      |          |         |         |         |        |         |        |             |          |  |         |      |   |        |        
|Net interest income                                                         |                                  |                              |         |         |                              | $ | 19,408 |                              |  |         |             |      |          |         |         |         |        | $       | 19,062 |             |          |  |         |      |   |        |         |         |  | $ | 15,589 |        |  |  |      |     
|                                                                            |                                  |                              |         |         |                              |   |        |                              |  |         |             |      |          |         |         |         |        |         |        |             |          |  |         |      |   |        |        
|Net interest rate spread                                                    |                                  |                              |         |         |                              |   |        |                              |  |         | 3.20        | %    |          |         |         |         |        |         |        |             |          |  | 3.24    | %    |   |        |         |         |  |   |        |        |  |  | 3.02 | %   
|Net earning assets                                                          |                                  | $                            | 47,944  |         |                              |   |        |                              |  |         |             |      |          | $       | 48,988  |         |        |         |        |             |          |  |         |      |   | $      | 26,424  |         |  |   |        |        |  |  |      |     
|                                                                            |                                  |                              |         |         |                              |   |        |                              |  |         |             |      |          |         |         |         |        |         |        |             |          |  |         |      |   |        |        
|Net yield on average interest-earning assets (net interest
    margin)      |                                  |                              |         |         |                              |   |        |                              |  |         | 3.41        | %    |          |         |         |         |        |         |        |             |          |  | 3.42    | %    |   |        |         |         |  |   |        |        |  |  | 3.16 | %   
|Average interest-earning assets to average interest-bearing
    liabilities |                                  |                              |         |         |                              |   | 109.19 | %                            |  |         |             |      |          |         |         |         |        |         | 109.63 | %           |          |  |         |      |   |        |         |         |  |   | 105.66 | %      |  |  |      |     
|                                                                            |                                  |                              |         |         |                              |   |        |                              |  |         |             |      |          |         |         |         |        |         |        |             |          |  |         |      |   |        |        






|    |                                                                                                                                                                                                                                                                                                       
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Calculated on a tax-equivalent basis assuming a 35% tax rate,
    including loans held for sale, and net of deferred loan fees,
    loan discounts, loans in process and the allowance for loan
    losses. Includes net loan fees of $447, $276, and $142 for 2005,
    2004, and 2003, respectively.
|   
|(2) | Calculated on a tax-equivalent basis assuming a 35% tax rate.                                                                                                                                                                                                                                         





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|                              |                               |                                    |   |      |                         |  |                     |            |       |   |          |       |       |      |   |       |            |  |   |        |        |   |       |        |        |  
|----------------------------- | ----------------------------- | ---------------------------------- | - | ---- | ----------------------- |  | ------------------- | ---------- | ----- | - | -------- | ----- | ----- | ---- | - | ----- | ---------- |  | - | ------ | ------ | - | ----- | ------ | ------ | -
|                              |                               | Year Ended December 31,            |   |      | Year Ended December 31, | 
|                              |                               | 2005 vs. 2004                      |   |      | 2004 vs. 2003           | 
|                              |                               |                                    |   |      |                         | 
|                              |                               | Increase (Decrease)                |   |      |                         |  | Increase (Decrease) |            |       |  
|                              |                               | Due to                             |   |      | Total                   |  |                     | Due to     |       |   | Total    |      
|                              |                               |                                    |   |      | Increase                |  |                     |            |       |   | Increase |      
|                              |                               | Volume                             |   |      | Rate                    |  |                     | (Decrease) |       |   | Volume   |       |       | Rate |   |       | (Decrease) | 
|                              |                               |                                    |   |      |                         |  |                     |            |       |   |          |       |       |      |   |       |            | 
|                              |                               | (Dollars in thousands)             |  
|Interest earning assets:      |                               |                                    |   |      |                         |  |                     |            |       |   |          |       |       |      |   |       |            |  |   |        |        |   |       |       
|                              | Loans receivable              |                                    | $ | 30   |                         |  | $                   | 1,872      |       |   | $        | 1,902 |       |      | $ | 4,024 |            |  | $ | (2,595 | )      |   | $     | 1,429  |       
|                              | Investment securities         |                                    |   | 631  |                         |  |                     | 185        |       |   |          | 816   |       |      |   | 1,425 |            |  |   | (555   | )      |   |       | 870    |       
|                              | Other interest-earning assets |                                    |   | (38  | )                       |  |                     | 117        |       |   |          | 79    |       |      |   | (315  | )          |  |   | 124    |        |   |       | (191   | )     
|                              | Federal Home Loan Bank stock  |                                    |   | 39   |                         |  |                     | (76        | )     |   |          | (37   | )     |      |   | 33    |            |  |   | (14    | )      |   |       | 19     |       
|                              |                               |                                    |   |      |                         |  |                     |            |       |   |          |       |       |      |   |       |            | 
|                              |                               | Total interest-earning assets      |   | $    | 662                     |  |                     | $          | 2,098 |   |          | $     | 2,760 |      |   | $     | 5,167      |  |   | $      | (3,040 | ) |       | $      | 2,127  |  
|                              |                               |                                    |   |      |                         |  |                     |            |       |   |          |       |       |      |   |       |            | 
|Interest bearing liabilities: |                               |                                    |   |      |                         |  |                     |            |       |   |          |       |       |      |   |       |            |  |   |        |        |   |       |       
|                              | Certificate accounts          |                                    | $ | (194 | )                       |  | $                   | 1,226      |       |   | $        | 1,032 |       |      | $ | 530   |            |  | $ | (1,627 | )      |   | $     | (1,097 | )     
|                              | Savings deposits              |                                    |   | 23   |                         |  |                     | 61         |       |   |          | 84    |       |      |   | 118   |            |  |   | (418   | )      |   |       | (300   | )     
|                              | Interest Bearing Deposits     |                                    |   | 9    |                         |  |                     | 532        |       |   |          | 541   |       |      |   | 87    |            |  |   | (99    | )      |   |       | (12    | )     
|                              | Borrowings                    |                                    |   | 678  |                         |  |                     | 79         |       |   |          | 757   |       |      |   | 83    |            |  |   | (20    | )      |   |       | 63     |       
|                              |                               |                                    |   |      |                         |  |                     |            |       |   |          |       |       |      |   |       |            | 
|                              |                               | Total interest-bearing liabilities |   | $    | 516                     |  |                     | $          | 1,898 |   |          | $     | 2,414 |      |   | $     | 818        |  |   | $      | (2,164 | ) |       | $      | (1,346 | )
|                              |                               |                                    |   |      |                         |  |                     |            |       |   |          |       |       |      |   |       |            | 
|Net interest income           |                               |                                    |   |      |                         |  |                     |            |       | $ | 346      |       |       |      |   |       |            |  |   |        |        | $ | 3,473 |       
|                              |                               |                                    |   |      |                         |  |                     |            |       |   |          |       |       |      |   |       |            | 















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|                                                      |  |                        |         |   |      |   |         |  
|----------------------------------------------------- |  | ---------------------- | ------- | - | ---- | - | ------- | -
|                                                      |  | December 31,           |        
|                                                      |  |                        |        
|                                                      |  | 2005                   |         |   | 2004 |  
|                                                      |  |                        |         |   |      |  
|                                                      |  | (Dollars in thousands) |        
|Total loans                                           |  | $                      | 441,327 |   |      | $ | 424,854 |  
|Total assets                                          |  |                        | 641,341 |   |      |   | 611,853 |  
|Allowance for loan losses                             |  |                        | 4,486   |   |      |   | 5,475   |  
|Net loan charge-offs                                  |  |                        | 1,895   |   |      |   | 3,352   |  
|Nonperforming loans                                   |  |                        | 3,823   |   |      |   | 6,991   |  
|Nonperforming assets                                  |  |                        | 5,532   |   |      |   | 10,035  |  
|Net loan charge-offs as a percentage of average loans |  |                        | 0.44    | % |      |   | 0.77    | %
|Nonperforming assets to total assets                  |  |                        | 0.87    | % |      |   | 1.64    | %
|Allowance for loan losses to gross loans              |  |                        | 1.02    | % |      |   | 1.29    | %
|Allowance for loan losses to nonperforming loans      |  |                        | 117.34  | % |      |   | 78.31   | %



















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General.








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Loan Composition. one-to


|                   |                              |                        |   |         |         |  |  |        |   |  |         |         |         |        |  |        |         |  |   |         |         |  |         |        |   |        |   |         |         |  |  |        |   |  |   |         |         |  |  |        |   | 
|------------------ | ---------------------------- | ---------------------- | - | ------- | ------- |  |  | ------ | - |  | ------- | ------- | ------- | ------ |  | ------ | ------- |  | - | ------- | ------- |  | ------- | ------ | - | ------ | - | ------- | ------- |  |  | ------ | - |  | - | ------- | ------- |  |  | ------ | - | 
|                   |                              | December 31,           |  
|                   |                              |                        |  
|                   |                              | 2005                   |   |         | 2004    |  |  | 2003   |   |  | 2002    |         |         | 2001   | 
|                   |                              |                        |   |         |         |  |  |        |   |  |         |         |         |        | 
|                   |                              | Amount                 |   |         | Percent |  |  | Amount |   |  | Percent |         |         | Amount |  |        | Percent |  |   | Amount  |         |  | Percent |        |   | Amount |   |         | Percent | 
|                   |                              |                        |   |         |         |  |  |        |   |  |         |         |         |        |  |        |         |  |   |         |         |  |         |        |   |        |   |         |         | 
|                   |                              | (Dollars in thousands) |  
|Real Estate Loans: |                              |                        |   |         |         |  |  |        |   |  |         |         |         |        |  |        |         |  |   |         |         |  |         |        |   |        |   |         |         |  |  |        |   |  |   |         |         |  |  |       
|                   | One-to-four family           |                        | $ | 170,803 |         |  |  | 38.68  | % |  | $       | 175,640 |         |        |  | 41.32  | %       |  | $ | 212,578 |         |  |         | 48.97  | % |        | $ | 228,623 |         |  |  | 58.39  | % |  | $ | 247,435 |         |  |  | 62.20  | %
|                   | Multi-family                 |                        |   | 8,274   |         |  |  | 1.88   |   |  |         | 15,655  |         |        |  | 3.68   |         |  |   | 16,461  |         |  |         | 3.79   |   |        |   | 13,672  |         |  |  | 3.49   |   |  |   | 11,983  |         |  |  | 3.01   |  
|                   | Commercial                   |                        |   | 131,365 |         |  |  | 29.75  |   |  |         | 101,516 |         |        |  | 23.88  |         |  |   | 77,142  |         |  |         | 17.77  |   |        |   | 56,589  |         |  |  | 14.45  |   |  |   | 48,543  |         |  |  | 12.20  |  
|                   | Construction and Development |                        |   | 34,274  |         |  |  | 7.76   |   |  |         | 28,731  |         |        |  | 6.76   |         |  |   | 26,173  |         |  |         | 6.03   |   |        |   | 20,243  |         |  |  | 5.17   |   |  |   | 19,884  |         |  |  | 5.00   |  
|                   |                              |                        |   |         |         |  |  |        |   |  |         |         |         |        |  |        |         |  |   |         |         |  |         |        |   |        |   |         |         | 
|                   | Total real estate loans      |                        |   | 344,716 |         |  |  | 78.07  |   |  |         | 321,542 |         |        |  | 75.64  |         |  |   | 332,354 |         |  |         | 76.56  |   |        |   | 319,127 |         |  |  | 81.50  |   |  |   | 327,845 |         |  |  | 82.41  |  
|                   |                              |                        |   |         |         |  |  |        |   |  |         |         |         |        |  |        |         |  |   |         |         |  |         |        |   |        |   |         |         | 
|                   | Commercial loans             |                        |   | 57,864  |         |  |  | 13.10  |   |  |         | 61,090  |         |        |  | 14.37  |         |  |   | 58,235  |         |  |         | 13.42  |   |        |   | 33,301  |         |  |  | 8.51   |   |  |   | 31,255  |         |  |  | 7.86   |  
|                   |                              |                        |   |         |         |  |  |        |   |  |         |         |         |        |  |        |         |  |   |         |         |  |         |        |   |        |   |         |         | 
|Consumer Loans:    |                              |                        |   |         |         |  |  |        |   |  |         |         |         |        |  |        |         |  |   |         |         |  |         |        |   |        |   |         |         |  |  |        |   |  |   |         |         |  |  |       
|                   | Home equity                  |                        |   | 30,138  |         |  |  | 6.83   |   |  |         | 28,188  |         |        |  | 6.63   |         |  |   | 24,305  |         |  |         | 5.60   |   |        |   | 22,560  |         |  |  | 5.76   |   |  |   | 18,407  |         |  |  | 4.63   |  
|                   | All other consumer           |                        |   | 8,853   |         |  |  | 2.00   |   |  |         | 14,303  |         |        |  | 3.36   |         |  |   | 19,185  |         |  |         | 4.42   |   |        |   | 16,558  |         |  |  | 4.23   |   |  |   | 20,288  |         |  |  | 5.10   |  
|                   |                              |                        |   |         |         |  |  |        |   |  |         |         |         |        |  |        |         |  |   |         |         |  |         |        |   |        |   |         |         | 
|                   | Total consumer loans         |                        |   | 38,991  |         |  |  | 8.83   |   |  |         | 42,491  |         |        |  | 9.99   |         |  |   | 43,490  |         |  |         | 10.02  |   |        |   | 39,118  |         |  |  | 9.99   |   |  |   | 38,695  |         |  |  | 9.73   |  
|                   |                              |                        |   |         |         |  |  |        |   |  |         |         |         |        |  |        |         |  |   |         |         |  |         |        |   |        |   |         |         | 
|                   | Total loans                  |                        |   | 441,571 |         |  |  | 100.00 | % |  |         | 425,123 |         |        |  | 100.00 | %       |  |   | 434,079 |         |  |         | 100.00 | % |        |   | 391,546 |         |  |  | 100.00 | % |  |   | 397,795 |         |  |  | 100.00 | %
|                   |                              |                        |   |         |         |  |  |        |   |  |         |         |         |        |  |        |         |  |   |         |         |  |         |        |   |        |   |         |         | 
|Less:              |                              |                        |   |         |         |  |  |        |   |  |         |         |         |        |  |        |         |  |   |         |         |  |         |        |   |        |   |         |         |  |  |        |   |  |   |         |         |  |  |       
|                   | Deferred fees and discounts  |                        |   | 244     |         |  |  |        |   |  |         | 269     |         |        |  |        |         |  |   | 565     |         |  |         |        |   |        |   | 505     |         |  |  |        |   |  |   | 470     |         |  |  |        |  
|                   | Allowance for loan losses    |                        |   | 4,486   |         |  |  |        |   |  |         | 5,475   |         |        |  |        |         |  |   | 7,471   |         |  |         |        |   |        |   | 6,524   |         |  |  |        |   |  |   | 2,582   |         |  |  |        |  
|                   |                              |                        |   |         |         |  |  |        |   |  |         |         |         |        |  |        |         |  |   |         |         |  |         |        |   |        |   |         |         | 
|                   |                              | Total loans, net       |   | $       | 436,841 |  |  |        |   |  |         | $       | 419,379 |        |  |        |         |  |   | $       | 426,043 |  |         |        |   |        |   | $       | 384,517 |  |  |        |   |  |   | $       | 394,743 |  |  |        |   | 
|                   |                              |                        |   |         |         |  |  |        |   |  |         |         |         |        |  |        |         |  |   |         |         |  |         |        |   |        |   |         |         | 



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|                                               |       |                        |       |       |       |  |         |        |   |   |        |          |  |        |      |      |          |   |        |        |  |       |       |      |   |        |        |        |       |  |      |      |   |   |        |         |  |  |      |      |  
|---------------------------------------------- | ----- | ---------------------- | ----- | ----- | ----- |  | ------- | ------ | - | - | ------ | -------- |  | ------ | ---- | ---- | -------- | - | ------ | ------ |  | ----- | ----- | ---- | - | ------ | ------ | ------ | ----- |  | ---- | ---- | - | - | ------ | ------- |  |  | ---- | ---- | -
|                                               |       | At December 31, 2005   |      
|                                               |       |                        |      
|                                               |       | Less Than              |       |       |       |  | 1 to    |        |   |   |        | 5 to     |  |        |      |      | Over     |   |        |       
|                                               |       | 1 Year                 |       |       |       |  | 5 Years |        |   |   |        | 10 Years |  |        |      |      | 10 Years |   |        |        |  | Total |       |      |  
|                                               |       | Amount                 |       |       | Yield |  |         | Amount |   |   | Yield  |          |  | Amount |      |      | Yield    |   |        | Amount |  |       | Yield |      |   | Amount |        |        | Yield | 
|                                               |       |                        |       |       |       |  |         |        |   |   |        |          |  |        |      |      |          |   |        |        |  |       |       |      |   |        |        |        |       | 
|                                               |       | (Dollars in thousands) |      
|Securities available for sale                  |       |                        |       |       |       |  |         |        |   |   |        |          |  |        |      |      |          |   |        |        |  |       |       |      |   |        |        |        |       |  |      |      |   |   |        |         |  |  |      |     
|U.S. Treasury and government agency securities |       | $                      | 2,563 |       |       |  | 4.17    | %      |   | $ | 75,362 |          |  |        | 4.17 | %    |          | $ |       |        |  |       |      | %    |   | $      |       |        |       |  |     | %    |   | $ | 77,925 |         |  |  | 4.17 | %   
|Municipal bonds                                |       |                        | 1,015 |       |       |  | 3.63    |        |   |   | 6,079  |          |  |        | 3.30 |      |          |   | 16,399 |        |  |       | 3.17  |      |   |        |       |        |       |  |     |      |   |   | 23,493 |         |  |  | 3.18 |     
|Corporate bonds                                |       |                        |      |       |       |  |        |        |   |   | 2,060  |          |  |        | 4.26 |      |          |   |       |        |  |       |      |      |   |        |       |        |       |  |     |      |   |   | 2,060  |         |  |  | 4.26 |     
|Mortgage backed securities                     |       |                        | 63    |       |       |  | 8.00    |        |   |   | 3,147  |          |  |        | 4.21 |      |          |   | 1,349  |        |  |       | 4.96  |      |   |        | 14,653 |        |       |  | 5.42 |      |   |   | 19,212 |         |  |  | 5.15 |     
|Mutual funds and equity securities             |       |                        | 779   |       |       |  | 4.62    |        |   |   |       |          |  |        |     |      |          |   |       |        |  |       |      |      |   |        |       |        |       |  |     |      |   |   | 779    |         |  |  | 4.62 |     
|Other securities                               |       |                        |      |       |       |  |        |        |   |   |       |          |  |        |     |      |          |   |       |        |  |       |      |      |   |        | 4,250  |        |       |  | 5.34 |      |   |   | 4,250  |         |  |  | 5.34 |     
|                                               |       |                        |       |       |       |  |         |        |   |   |        |          |  |        |      |      |          |   |        |        |  |       |       |      |   |        |        |        |       | 
|                                               | Total |                        | $     | 4,420 |       |  |         | 3.77   | % |   | $      | 86,648   |  |        |      | 4.11 | %        |   | $      | 17,748 |  |       |       | 3.17 | % |        | $      | 18,903 |       |  |      | 5.19 | % |   | $      | 127,719 |  |  |      | 4.18 | %
|                                               |       |                        |       |       |       |  |         |        |   |   |        |          |  |        |      |      |          |   |        |        |  |       |       |      |   |        |        |        |       | 















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|                                    |                |                        |         |         |                   |  |       |        |   |   |         |         |  |  |       |        |  
|----------------------------------- | -------------- | ---------------------- | ------- | ------- | ----------------- |  | ----- | ------ | - | - | ------- | ------- |  |  | ----- | ------ | -
|                                    |                | December 31, 2005      |         |         | December 31, 2004 | 
|                                    |                |                        |         |         |                   | 
|                                    |                | Amount                 |         |         | Percent           |  |       | Amount |   |   | Percent |        
|                                    |                |                        |         |         |                   |  |       |        |   |   |         |        
|                                    |                | (Dollars in thousands) |        
|Noninterest bearing demand deposits |                | $                      | 67,982  |         |                   |  | 13.38 | %      |   | $ | 53,919  |         |  |  | 10.88 | %     
|Interest bearing demand deposits    |                |                        | 41,081  |         |                   |  | 8.09  |        |   |   | 48,495  |         |  |  | 9.78  |       
|Savings and money market deposits   |                |                        | 143,922 |         |                   |  | 28.34 |        |   |   | 134,876 |         |  |  | 27.20 |       
|Time deposits $100,000 or more      |                |                        | 73,017  |         |                   |  | 14.37 |        |   |   | 61,274  |         |  |  | 12.36 |       
|Time deposits less than $100,000    |                |                        | 181,914 |         |                   |  | 35.82 |        |   |   | 197,213 |         |  |  | 39.78 |       
|                                    |                |                        |         |         |                   |  |       |        |   |   |         |        
|                                    | Total deposits |                        | $       | 507,916 |                   |  |       | 100.00 | % |   | $       | 495,777 |  |  |       | 100.00 | %
|                                    |                |                        |         |         |                   |  |       |        |   |   |         |        



















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small-to






|                                                                                     |  |                        |       |  |      |   |        |      |  |   |       |  |  |      |        |  |  |   |       | 
|------------------------------------------------------------------------------------ |  | ---------------------- | ----- |  | ---- | - | ------ | ---- |  | - | ----- |  |  | ---- | ------ |  |  | - | ----- | 
|                                                                                     |  | December 31,           |      
|                                                                                     |  |                        |      
|                                                                                     |  | 2005                   |       |  | 2004 |   |        | 2003 |  |   | 2002  |  |  | 2001 |       
|                                                                                     |  |                        |       |  |      |   |        |      |  |   |       |  |  |      |       
|                                                                                     |  | (Dollars in thousands) |      
|Non-accrual loans                                                                    |  | $                      | 3,823 |  |      | $ | 6,769  |      |  | $ | 3,248 |  |  | $    | 6,834  |  |  | $ | 730   | 
|Loans past due 90 days and still accruing                                            |  |                        |      |  |      |   | 222    |      |  |   | 2,232 |  |  |      | 3,439  |  |  |   | 391   | 
|Real estate held for sale                                                            |  |                        | 1,709 |  |      |   | 3,002  |      |  |   | 319   |  |  |      | 316    |  |  |   | 469   | 
|Troubled debt restructurings                                                         |  |                        | 35    |  |      |   | 42     |      |  |   | 281   |  |  |      | 480    |  |  |   | 611   | 
|                                                                                     |  |                        |       |  |      |   |        |      |  |   |       |  |  |      |       
|Total nonperforming                                                                  |  | $                      | 5,567 |  |      | $ | 10,035 |      |  | $ | 6,080 |  |  | $    | 11,069 |  |  | $ | 2,201 | 
|                                                                                     |  |                        |       |  |      |   |        |      |  |   |       |  |  |      |       
|Interest income recognized on non-accrual loans and troubled
    debt restructurings |  |                        |      |  |      |   |       |      |  | $ | 199   |  |  | $    | 70     |  |  |   |      | 
|Foregone interest on non-accrual loans                                               |  | $                      | 341   |  |      | $ | 520    |      |  | $ | 525   |  |  | $    | 387    |  |  | $ | 33    | 









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Analysis of Allowance for Loan Losses.


|                                                                                              |                        |                         |        |       |      |   |        |       |  |   |        |       |  |      |       |    |  |   |       |    | 
|--------------------------------------------------------------------------------------------- | ---------------------- | ----------------------- | ------ | ----- | ---- | - | ------ | ----- |  | - | ------ | ----- |  | ---- | ----- | -- |  | - | ----- | -- | 
|                                                                                              |                        | Year Ended December 31, |       
|                                                                                              |                        |                         |       
|                                                                                              |                        | 2005                    |        |       | 2004 |   |        | 2003  |  |   | 2002   |       |  | 2001 |      
|                                                                                              |                        |                         |        |       |      |   |        |       |  |   |        |       |  |      |      
|                                                                                              |                        | (Dollars in thousands)  |       
|Balance at beginning of period                                                                |                        | $                       | 5,475  |       |      | $ | 7,471  |       |  | $ | 6,524  |       |  | $    | 2,582 |    |  | $ | 2,156 |   
|Charge-offs:                                                                                  |                        |                         |        |       |      |   |        |       |  |   |        |       |  |      |       |    |  |   |       |   
|                                                                                              | One-to-four family     |                         |        | 158   |      |   |        |      |  |   |        |      |  |      |       | 2  |  |   |       |   | 
|                                                                                              | Commercial real estate |                         |        | 143   |      |   |        | 1,333 |  |   |        | 1,134 |  |      |       |   |  |   |       | 28 | 
|                                                                                              | Consumer               |                         |        | 1,028 |      |   |        | 235   |  |   |        | 144   |  |      |       | 79 |  |   |       | 61 | 
|                                                                                              | Commercial business    |                         |        | 1,388 |      |   |        | 2,079 |  |   |        | 4,964 |  |      |       |   |  |   |       | 14 | 
|                                                                                              |                        |                         |        |       |      |   |        |       |  |   |        |       |  |      |      
|                                                                                              |                        |                         | 2,717  |       |      |   | 3,647  |       |  |   | 6,242  |       |  |      | 81    |    |  |   | 103   |   
|                                                                                              |                        |                         |        |       |      |   |        |       |  |   |        |       |  |      |      
|Recoveries:                                                                                   |                        |                         |        |       |      |   |        |       |  |   |        |       |  |      |       |    |  |   |       |   
|                                                                                              | One-to-four family     |                         |        | 8     |      |   |        | 14    |  |   |        |       |  |      |       |    |  |   |       |    | 
|                                                                                              | Commercial real estate |                         |        | 451   |      |   |        | 110   |  |   |        | 583   |  |      |       |   |  |   |       | 1  | 
|                                                                                              | Consumer               |                         |        | 97    |      |   |        | 16    |  |   |        | 46    |  |      |       | 22 |  |   |       | 24 | 
|                                                                                              | Commercial business    |                         |        | 266   |      |   |        | 155   |  |   |        | 3     |  |      |       | 11 |  |   |       | 1  | 
|                                                                                              |                        |                         |        |       |      |   |        |       |  |   |        |       |  |      |      
|                                                                                              |                        |                         | 822    |       |      |   | 295    |       |  |   | 632    |       |  |      | 33    |    |  |   | 26    |   
|                                                                                              |                        |                         |        |       |      |   |        |       |  |   |        |       |  |      |      
|Net charge-offs                                                                               |                        |                         | (1,899 | )     |      |   | (3,352 | )     |  |   | (5,610 | )     |  |      | (48   | )  |  |   | (77   | ) 
|Additions charged to operations                                                               |                        |                         | 651    |       |      |   | 1,200  |       |  |   | 4,122  |       |  |      | 3,990 |    |  |   | 503   |   
|Additions through acquisitions                                                                |                        |                         | 255    |       |      |   | 156    |       |  |   | 2,435  |       |  |      |      |    |  |   |      |   
|                                                                                              |                        |                         |        |       |      |   |        |       |  |   |        |       |  |      |      
|Balance at end of period                                                                      |                        | $                       | 4,486  |       |      | $ | 5,475  |       |  | $ | 7,471  |       |  | $    | 6,524 |    |  | $ | 2,582 |   
|                                                                                              |                        |                         |        |       |      |   |        |       |  |   |        |       |  |      |      
|Ratio of net charge-offs during the period to average loans
    outstanding during the period |                        |                         | 0.44   | %     |      |   | 0.77   | %     |  |   | 1.53   | %     |  |      | 0.01  | %  |  |   | 0.02  | % 
|                                                                                              |                        |                         |        |       |      |   |        |       |  |   |        |       |  |      |      
|Ratio of net charge-offs during the period to average
    non-performing assets               |                        |                         | 41.52  | %     |      |   | 31.63  | %     |  |   | 110.06 | %     |  |      | 0.75  | %  |  |   | 3.07  | % 
|                                                                                              |                        |                         |        |       |      |   |        |       |  |   |        |       |  |      |      









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|                             |  |                        |       |             |             |  |        |        |             |   |             |  |  |             |        |   |             |   |             |        |  |  |             |             |  |        |       |  |             |  |        |   |  |   |       |  |  |  |        |  
|---------------------------- |  | ---------------------- | ----- | ----------- | ----------- |  | ------ | ------ | ----------- | - | ----------- |  |  | ----------- | ------ | - | ----------- | - | ----------- | ------ |  |  | ----------- | ----------- |  | ------ | ----- |  | ----------- |  | ------ | - |  | - | ----- |  |  |  | ------ | -
|                             |  | December 31,           |      
|                             |  |                        |      
|                             |  | 2005                   |       |             | 2004        |  |        | 2003   |             |   | 2002        |  |  | 2001        |       
|                             |  |                        |       |             |             |  |        |        |             |   |             |  |  |             |       
|                             |  |                        |       | Percent of  |             |  |        |        | Percent of  |   |             |  |  | Percent of  |        |   |             |   | Percent of  |        |  |  |             | Percent of  | 
|                             |  |                        |       | Each        |             |  |        |        | Each        |   |             |  |  | Each        |        |   |             |   | Each        |        |  |  |             | Each        | 
|                             |  |                        |       | Category to |             |  |        |        | Category to |   |             |  |  | Category to |        |   |             |   | Category to |        |  |  |             | Category to | 
|                             |  | Amount                 |       |             | Total Loans |  |        | Amount |             |   | Total Loans |  |  | Amount      |        |   | Total Loans |   |             | Amount |  |  | Total Loans |             |  | Amount |       |  | Total Loans | 
|                             |  |                        |       |             |             |  |        |        |             |   |             |  |  |             |        |   |             |   |             |        |  |  |             |             |  |        |       |  |             | 
|                             |  | (Dollars in thousands) |      
|One-to-four family           |  | $                      | 711   |             |             |  | 38.68  | %      |             | $ | 581         |  |  |             | 41.32  | % |             | $ | 1,012       |        |  |  | 48.97       | %           |  | $      | 224   |  |             |  | 58.39  | % |  | $ | 157   |  |  |  | 62.20  | %
|Multi-family                 |  |                        | 220   |             |             |  | 1.88   |        |             |   | 76          |  |  |             | 3.68   |   |             |   | 197         |        |  |  | 3.79        |             |  |        | 7     |  |             |  | 3.49   |   |  |   | 6     |  |  |  | 3.01   |  
|Commercial real estate       |  |                        | 1,139 |             |             |  | 29.75  |        |             |   | 1,877       |  |  |             | 23.88  |   |             |   | 2,455       |        |  |  | 17.77       |             |  |        | 3,212 |  |             |  | 14.45  |   |  |   | 933   |  |  |  | 12.20  |  
|Construction and development |  |                        | 728   |             |             |  | 7.76   |        |             |   | 284         |  |  |             | 6.76   |   |             |   | 1,673       |        |  |  | 6.03        |             |  |        | 1,403 |  |             |  | 5.17   |   |  |   | 532   |  |  |  | 5.00   |  
|Commercial                   |  |                        | 1,269 |             |             |  | 13.10  |        |             |   | 2,194       |  |  |             | 14.37  |   |             |   | 1,454       |        |  |  | 13.42       |             |  |        | 1,434 |  |             |  | 8.51   |   |  |   | 729   |  |  |  | 7.86   |  
|Consumer                     |  |                        | 310   |             |             |  | 8.83   |        |             |   | 348         |  |  |             | 9.99   |   |             |   | 336         |        |  |  | 10.02       |             |  |        | 244   |  |             |  | 9.99   |   |  |   | 225   |  |  |  | 9.73   |  
|Unallocated                  |  |                        | 109   |             |             |  |       |        |             |   | 114         |  |  |             |       |   |             |   | 344         |        |  |  |            |             |  |        |      |  |             |  |       |   |  |   |      |  |  |  |       |  
|                             |  |                        |       |             |             |  |        |        |             |   |             |  |  |             |        |   |             |   |             |        |  |  |             |             |  |        |       |  |             | 
|Total                        |  | $                      | 4,486 |             |             |  | 100.00 | %      |             | $ | 5,474       |  |  |             | 100.00 | % |             | $ | 7,471       |        |  |  | 100.00      | %           |  | $      | 6,524 |  |             |  | 100.00 | % |  | $ | 2,582 |  |  |  | 100.00 | %
|                             |  |                        |       |             |             |  |        |        |             |   |             |  |  |             |        |   |             |   |             |        |  |  |             |             |  |        |       |  |             | 













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|                                                                                                         |                                    |                       |         |          |        |   |          |          |  |   |          |         |  |        |         |         |        |   |         |         |  |   |         |         | 
|-------------------------------------------------------------------------------------------------------- | ---------------------------------- | --------------------- | ------- | -------- | ------ | - | -------- | -------- |  | - | -------- | ------- |  | ------ | ------- | ------- | ------ | - | ------- | ------- |  | - | ------- | ------- | 
|                                                                                                         |                                    | Maturing or Repricing |        
|                                                                                                         |                                    |                       |        
|                                                                                                         |                                    |                       |         | 4 Months |        |   |         
|                                                                                                         |                                    | 1-3                   |         |          | to One |   |          | Over 1-3 |  |   | Over 3-5 |         |  | Over 5 |         |         |       
|                                                                                                         |                                    | Months                |         |          | Year   |   |          | Years    |  |   | Years    |         |  | Years  |         |         | Total  |  
|                                                                                                         |                                    |                       |         |          |        |   |          |          |  |   |          |         |  |        |         |         |        |  
|                                                                                                         |                                    | Amount                |         |          | Amount |   |          | Amount   |  |   | Amount   |         |  | Amount |         |         | Amount |  
|                                                                                                         |                                    |                       |         |          |        |   |          |          |  |   |          |         |  |        |         |         |        |  
|Fixed rate one-to-four family (including commercial real estate
    and construction loans)              |                                    | $                     | 7,911   |          |        | $ | 9,750    |          |  | $ | 29,055   |         |  | $      | 39,915  |         |        | $ | 122,192 |         |  | $ | 208,823 |        
|Adjustable rate one-to-four family (including commercial real
    estate and construction loans)         |                                    |                       | 34,020  |          |        |   | 24,074   |          |  |   | 28,756   |         |  |        | 8,893   |         |        |   | 5,876   |         |  |   | 101,619 |        
|Construction & Development                                                                               |                                    |                       | 28,269  |          |        |   | 1,079    |          |  |   | 1,107    |         |  |        | 1,590   |         |        |   | 2,229   |         |  |   | 34,274  |        
|Commercial business loans                                                                                |                                    |                       | 20,194  |          |        |   | 8,898    |          |  |   | 12,135   |         |  |        | 8,801   |         |        |   | 7,836   |         |  |   | 57,864  |        
|Consumer loans                                                                                           |                                    |                       | 24,510  |          |        |   | 2,080    |          |  |   | 4,557    |         |  |        | 7,268   |         |        |   | 576     |         |  |   | 38,991  |        
|Investment securities and other                                                                          |                                    |                       | 14,427  |          |        |   | 3,829    |          |  |   | 37,218   |         |  |        | 44,703  |         |        |   | 25,013  |         |  |   | 125,190 |        
|Federal Funds Sold, interest bearing due from banks, money
    market funds, and certificates of deposit |                                    |                       | 4,692   |          |        |   | 50       |          |  |   |         |         |  |        |        |         |        |   |        |         |  |   | 4,742   |        
|                                                                                                         |                                    |                       |         |          |        |   |          |          |  |   |          |         |  |        |         |         |        |  
|                                                                                                         | Total interest-earning assets      |                       |         | 134,023  |        |   |          | 49,760   |  |   |          | 112,828 |  |        |         | 111,170 |        |   |         | 163,722 |  |   |         | 571,503 | 
|                                                                                                         |                                    |                       |         |          |        |   |          |          |  |   |          |         |  |        |         |         |        |  
|Savings deposits                                                                                         |                                    |                       | 17,627  |          |        |   | 17,627   |          |  |   | 17,627   |         |  |        | 17,627  |         |        |   | 17,626  |         |  |   | 88,134  |        
|Now and money market                                                                                     |                                    |                       | 8,216   |          |        |   | 36,110   |          |  |   | 36,110   |         |  |        | 8,216   |         |        |   | 8,217   |         |  |   | 96,869  |        
|Certificates under $100,000                                                                              |                                    |                       | 39,485  |          |        |   | 69,290   |          |  |   | 64,180   |         |  |        | 8,959   |         |        |   |        |         |  |   | 181,914 |        
|Certificates of $100,000 or more                                                                         |                                    |                       | 34,533  |          |        |   | 24,834   |          |  |   | 11,779   |         |  |        | 1,871   |         |        |   |        |         |  |   | 73,017  |        
|Borrowings                                                                                               |                                    |                       | 47,314  |          |        |   | 17,000   |          |  |   | 7,500    |         |  |        |        |         |        |   | 3,223   |         |  |   | 75,037  |        
|                                                                                                         |                                    |                       |         |          |        |   |          |          |  |   |          |         |  |        |         |         |        |  
|                                                                                                         | Total interest-bearing liabilities |                       |         | 147,175  |        |   |          | 164,861  |  |   |          | 137,196 |  |        |         | 36,673  |        |   |         | 29,066  |  |   |         | 514,971 | 
|                                                                                                         |                                    |                       |         |          |        |   |          |          |  |   |          |         |  |        |         |         |        |  
|Interest-earning assets less interest-bearing liabilities                                                |                                    | $                     | (13,152 | )        |        | $ | (115,101 | )        |  | $ | (24,368  | )       |  | $      | 74,497  |         |        | $ | 134,656 |         |  | $ | 56,532  |        
|                                                                                                         |                                    |                       |         |          |        |   |          |          |  |   |          |         |  |        |         |         |        |  
|Cumulative interest-rate sensitivity gap                                                                 |                                    | $                     | (13,152 | )        |        | $ | (128,253 | )        |  | $ | (152,621 | )       |  | $      | (78,124 | )       |        | $ | 56,532  |         |  |   |         |        
|                                                                                                         |                                    |                       |         |          |        |   |          |          |  |   |          |         |  |        |         |         |        |  
|Cumulative interest-rate gap as a percentage of assets                                                   |                                    |                       | (2.05   | )%       |        |   | (20.00   | )%       |  |   | (23.80   | )%      |  |        | (12.18  | )%      |        |   | 8.81    | %       |  |   |         |        
|                                                                                                         |                                    |                       |         |          |        |   |          |          |  |   |          |         |  |        |         |         |        |  









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|                          |  |            |       |  |      |  |       | 
|------------------------- |  | ---------- | ----- |  | ---- |  | ----- | 
|                          |  | EVE Ratios |      
|                          |  |            |      
|Changes in Interest Rates |  | 2005       |       |  | 2004 | 
|                          |  |            |       |  |      | 
|300 basis point rise      |  |            | 7.60% |  |      |  | 7.54% | 
|200 basis point rise      |  |            | 7.43% |  |      |  | 7.88% | 
|100 basis point rise      |  |            | 7.33% |  |      |  | 8.06% | 
|Base rate scenario        |  |            | 6.86% |  |      |  | 7.91% | 
|100 basis point decline   |  |            | 5.24% |  |      |  | 6.60% | 













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|                                                                        |  |          |         |  |                |   |        |       |  |   |         | 
|----------------------------------------------------------------------- |  | -------- | ------- |  | -------------- | - | ------ | ----- |  | - | ------- | 
|                                                                        |  | Time     |         |  | Long-term      |   |        |      
|Years Ended December 31,                                                |  | Deposits |         |  | Borrowings (1) |   |        | Total | 
|                                                                        |  |          |         |  |                |   |        |       | 
|2006                                                                    |  | $        | 167,991 |  |                | $ | 16,341 |       |  | $ | 184,332 | 
|2007                                                                    |  |          | 61,937  |  |                |   | 31,449 |       |  |   | 93,386  | 
|2008                                                                    |  |          | 14,172  |  |                |   | 156    |       |  |   | 14,328  | 
|2009                                                                    |  |          | 5,101   |  |                |   | 10,165 |       |  |   | 15,266  | 
|2010                                                                    |  |          | 5,730   |  |                |   | 174    |       |  |   | 5,904   | 
|thereafter                                                              |  |          |        |  |                |   | 438    |       |  |   | 438     | 
|                                                                        |  |          |         |  |                |   |        |       | 
|Total                                                                   |  | $        | 254,931 |  |                | $ | 58,723 |       |  | $ | 313,654 | 
|                                                                        |  |          |         |  |                |   |        |       | 
|Financial instruments whose contract amounts represent credit
    risk: |  |          |         |  |                |   |        |       |  |   |         | 
|Commitment to originate loans                                           |  |          |         |  |                |   |        |       |  | $ | 3,787   | 
|Commitments to extend credit                                            |  |          |         |  |                |   |        |       |  |   | 56,873  | 
|Standby letters of credit                                               |  |          |         |  |                |   |        |       |  |   | 4,508   | 
|                                                                        |  |          |         |  |                |   |        |       | 
|Total                                                                   |  |          |         |  |                |   |        |       |  | $ | 378,822 | 
|                                                                        |  |          |         |  |                |   |        |       | 






|    |                                                                                                                                                                                                                                                                                                                                                                                                            
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Fixed rate callable borrowings are included in the period of
    their modified duration rather than in the period in which they
    are due. Borrowings include fixed rate callable advances of
    $5 million and $2 million maturing in 2008 and 2011
    which are callable in 2006. Trust preferred debentures of
    $10 million mature in both 2032 and 2034, but are callable
    in 2007 and 2009.













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| |   |                                                                                                                                                                                                                                                                                                                    
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | The strength of the United States economy in general and the
    strength of the local economies in which the Company conducts
    its operations which may be less favorable than expected and may
    result in, among other things, a deterioration in the credit
    quality and value of the Companys assets.
|
| |  | The economic impact of past and any future terrorist threats and
    attacks, acts of war or threats thereof, and the response of the
    United States to any such threats and attacks.                                                                                                                           
|
| |  | The effects of, and changes in, federal, state and local laws,
    regulations and policies affecting banking, securities,
    insurance and monetary and financial matters.                                                                                                                                       
|
| |  | The effects of changes in interest rates (including the effects
    of changes in the rate of prepayments of the Companys
    assets) and the policies of the Board of Governors of the
    Federal Reserve System.                                                                                               





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| |   |                                                                                                                                                                                                                                                             
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | The ability of the Company to compete with other financial
    institutions as effectively as the Company currently intends due
    to increases in competitive pressures in the financial services
    sector.                                             
|
| |  | The inability of the Company to obtain new customers and to
    retain existing customers.                                                                                                                                                                  
|
| |  | The timely development and acceptance of products and services,
    including products and services offered through alternative
    delivery channels such as the Internet.                                                                                 
|
| |  | Technological changes implemented by the Company and by other
    parties, including third party vendors, which may be more
    difficult or more expensive than anticipated or which may have
    unforeseen consequences to the Company and its customers.
|
| |  | The ability of the Company to develop and maintain secure and
    reliable electronic systems.                                                                                                                                                              
|
| |  | The ability of the Company to retain key executives and
    employees and the difficulty that the Company may experience in
    replacing key executives and employees in an effective manner.                                                              
|
| |  | Consumer spending and saving habits which may change in a manner
    that affects the Companys business adversely.                                                                                                                                         
|
| |  | Business combinations and the integration of acquired businesses
    which may be more difficult or expensive than expected.                                                                                                                                
|
| |  | The costs, effects and outcomes of existing or future litigation.                                                                                                                                                                                           
|
| |  | Changes in accounting policies and practices, as may be adopted
    by state and federal regulatory agencies and the Financial
    Accounting Standards Board.                                                                                              
|
| |  | The ability of the Company to manage the risks associated with
    the foregoing as well as anticipated.                                                                                                                                                    







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| |                              
| | -----------------------------
| | (-s- McGladrey & Pullen, LLP)













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|                                                                                 |                                                                                             |                     |                                            |         |         |         |         |         |         |         | 
|-------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------- | ------------------- | ------------------------------------------ | ------- | ------- | ------- | ------- | ------- | ------- | ------- | 
|                                                                                 |                                                                                             | 2005                |                                            |         | 2004    |        
|                                                                                 |                                                                                             |                     |                                            |         |         |        
|                                                                                 |                                                                                             | (in thousands,      |                                           
|                                                                                 |                                                                                             | except share and    |                                           
|                                                                                 |                                                                                             | per share data)     |                                           
|Assets                                                                           |                                                                                             |                     |                                            |         |         |         |         |        
|Cash and due from banks                                                          |                                                                                             | $                   | 13,566                                     |         |         | $       | 10,760  |        
|Interest bearing due from banks and other                                        |                                                                                             |                     | 4,692                                      |         |         |         | 2,526   |        
|                                                                                 |                                                                                             |                     |                                            |         |         |        
|                                                                                 |                                                                                             |                     | Cash and cash equivalents                  |         |         | 18,258  |         |         |         | 13,286  | 
|                                                                                 |                                                                                             |                     |                                            |         |         |        
|Certificates of deposit                                                          |                                                                                             |                     | 50                                         |         |         |         | 149     |        
|Investment securities available-for-sale, at fair value                          |                                                                                             |                     | 125,190                                    |         |         |         | 124,763 |        
|Loans, net of allowance for loan losses of $4,486 in 2005 and
    $5,475 in 2004 |                                                                                             |                     | 428,468                                    |         |         |         | 418,963 |        
|Loans held for sale                                                              |                                                                                             |                     | 8,373                                      |         |         |         | 416     |        
|Office properties and equipment                                                  |                                                                                             |                     | 22,579                                     |         |         |         | 18,267  |        
|Goodwill                                                                         |                                                                                             |                     | 14,362                                     |         |         |         | 12,446  |        
|Life insurance contracts                                                         |                                                                                             |                     | 9,465                                      |         |         |         | 9,110   |        
|Non-marketable equity securities                                                 |                                                                                             |                     | 5,059                                      |         |         |         | 4,211   |        
|Accrued interest receivable                                                      |                                                                                             |                     | 3,248                                      |         |         |         | 2,570   |        
|Intangible assets                                                                |                                                                                             |                     | 1,922                                      |         |         |         | 1,774   |        
|Real estate held for sale                                                        |                                                                                             |                     | 1,709                                      |         |         |         | 3,002   |        
|Other assets                                                                     |                                                                                             |                     | 2,658                                      |         |         |         | 2,896   |        
|                                                                                 |                                                                                             |                     |                                            |         |         |        
|                                                                                 |                                                                                             |                     | Total assets                               |         | $       | 641,341 |         |         | $       | 611,853 | 
|                                                                                 |                                                                                             |                     |                                            |         |         |        
|Liabilities and Stockholders Equity                                             |                                                                                             |                     |                                            |         |         |         |         |        
|Liabilities                                                                      |                                                                                             |                     |                                            |         |         |         |         |        
|                                                                                 | Deposits                                                                                    |                     |                                            |         |         |         |         |         |        
|                                                                                 |                                                                                             | Noninterest bearing |                                            | $       | 67,982  |         |         | $       | 53,919  |        
|                                                                                 |                                                                                             | Interest bearing    |                                            |         | 439,934 |         |         |         | 441,858 |        
|                                                                                 |                                                                                             |                     |                                            |         |         |        
|                                                                                 |                                                                                             |                     | Total deposits                             |         |         | 507,916 |         |         |         | 495,777 | 
|                                                                                 | Short-term borrowings                                                                       |                     |                                            | 27,014  |         |         |         | 14,188  |        
|                                                                                 | Long-term borrowings                                                                        |                     |                                            | 58,723  |         |         |         | 55,473  |        
|                                                                                 | Other liabilities                                                                           |                     |                                            | 4,767   |         |         |         | 3,239   |        
|                                                                                 |                                                                                             |                     |                                            |         |         |        
|                                                                                 |                                                                                             |                     | Total liabilities                          |         |         | 598,420 |         |         |         | 568,677 | 
|                                                                                 |                                                                                             |                     |                                            |         |         |        
|Commitments and Contingencies (Notes 14 and 15)                                  |                                                                                             |                     |                                            |         |         |         |         |        
|Stockholders Equity                                                             |                                                                                             |                     |                                            |         |         |         |         |        
|                                                                                 | Preferred stock, $.01 par value; authorized and unissued,
    500,000 shares                |                     |                                            |        |         |         |         |        |        
|                                                                                 | Common stock, $.01 par value; 5,500,000 shares
    authorized; 4,200,300 shares issued      |                     |                                            | 42      |         |         |         | 42      |        
|                                                                                 | Additional paid-in capital                                                                  |                     |                                            | 29,722  |         |         |         | 28,998  |        
|                                                                                 | Retained income, partially restricted                                                       |                     |                                            | 48,305  |         |         |         | 43,925  |        
|                                                                                 | Accumulated other comprehensive income (loss)                                               |                     |                                            | (1,657  | )       |         |         | 27      |        
|                                                                                 | Unearned restricted stock (14,750 and 19,750 shares in 2005
    and 2004, respectively)     |                     |                                            | (346    | )       |         |         | (512    | )      
|                                                                                 | Treasury stock (1,937,361 and 1,819,634 shares in 2005 and
    2004, respectively), at cost |                     |                                            | (33,145 | )       |         |         | (29,304 | )      
|                                                                                 |                                                                                             |                     |                                            |         |         |        
|                                                                                 |                                                                                             |                     | Total stockholders equity                 |         |         | 42,921  |         |         |         | 43,176  | 
|                                                                                 |                                                                                             |                     |                                            |         |         |        
|                                                                                 |                                                                                             |                     | Total liabilities and stockholders equity |         | $       | 641,341 |         |         | $       | 611,853 | 
|                                                                                 |                                                                                             |                     |                                            |         |         |        







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##### Table of Contents















|                              |                                                              |                        |                                                     |        |       |        |       |        |       |        |       |        |       |        | 
|----------------------------- | ------------------------------------------------------------ | ---------------------- | --------------------------------------------------- | ------ | ----- | ------ | ----- | ------ | ----- | ------ | ----- | ------ | ----- | ------ | 
|                              |                                                              | 2005                   |                                                     |        | 2004  |        |       | 2003   |      
|                              |                                                              |                        |                                                     |        |       |        |       |        |      
|                              |                                                              | (in thousands,         |                                                    
|                              |                                                              | except per share data) |                                                    
|Interest and dividend income: |                                                              |                        |                                                     |        |       |        |       |        |       |        |       |       
|                              | Loans                                                        |                        | $                                                   | 26,759 |       |        | $     | 24,884 |       |        | $     | 23,442 |      
|                              | Investment securities:                                       |                        |                                                     |        |       |        |       |        |       |        |       |        |      
|                              |                                                              | Taxable                |                                                     |        | 4,266 |        |       |        | 3,584 |        |       |        | 3,466 |       
|                              |                                                              | Tax exempt             |                                                     |        | 696   |        |       |        | 597   |        |       |        | 60    |       
|                              | Deposits with banks and other                                |                        |                                                     | 198    |       |        |       | 119    |       |        |       | 313    |      
|                              | FHLB dividends                                               |                        |                                                     | 177    |       |        |       | 214    |       |        |       | 195    |      
|                              |                                                              |                        |                                                     |        |       |        |       |        |      
|                              |                                                              |                        | Total interest and dividend income                  |        |       | 32,096 |       |        |       | 29,398 |       |        |       | 27,476 | 
|                              |                                                              |                        |                                                     |        |       |        |       |        |      
|Interest expense:             |                                                              |                        |                                                     |        |       |        |       |        |       |        |       |       
|                              | Deposits                                                     |                        |                                                     | 9,463  |       |        |       | 7,807  |       |        |       | 9,216  |      
|                              | Short-term borrowings                                        |                        |                                                     | 654    |       |        |       | 115    |       |        |       | 47     |      
|                              | Long-term borrowings                                         |                        |                                                     | 2,946  |       |        |       | 2,728  |       |        |       | 2,733  |      
|                              |                                                              |                        |                                                     |        |       |        |       |        |      
|                              |                                                              |                        | Total interest expense                              |        |       | 13,063 |       |        |       | 10,650 |       |        |       | 11,996 | 
|                              |                                                              |                        |                                                     |        |       |        |       |        |      
|                              |                                                              |                        | Net interest income                                 |        |       | 19,033 |       |        |       | 18,748 |       |        |       | 15,480 | 
|Provision for loan losses     |                                                              |                        | 651                                                 |        |       |        | 1,200 |        |       |        | 4,122 |       
|                              |                                                              |                        |                                                     |        |       |        |       |        |      
|                              |                                                              |                        | Net interest income after provision for loan losses |        |       | 18,382 |       |        |       | 17,548 |       |        |       | 11,358 | 
|                              |                                                              |                        |                                                     |        |       |        |       |        |      
|Noninterest income:           |                                                              |                        |                                                     |        |       |        |       |        |       |        |       |       
|                              | Fee income                                                   |                        |                                                     | 5,808  |       |        |       | 4,357  |       |        |       | 2,874  |      
|                              | Net gain on sales of securities                              |                        |                                                     | 183    |       |        |       | 85     |       |        |       | 8      |      
|                              | Net gain (loss) on sales of real estate held for sale        |                        |                                                     | (23    | )     |        |       | 104    |       |        |       | 253    |      
|                              | Net gain on sales of loans held for sale                     |                        |                                                     | 603    |       |        |       | 886    |       |        |       | 1,271  |      
|                              | Gain on sale of branch                                       |                        |                                                     |       |       |        |       |       |       |        |       | 478    |      
|                              | Increase in cash surrender value of life insurance contracts |                        |                                                     | 355    |       |        |       | 358    |       |        |       | 403    |      
|                              | Other                                                        |                        |                                                     | 299    |       |        |       | 217    |       |        |       | 419    |      
|                              |                                                              |                        |                                                     |        |       |        |       |        |      
|                              |                                                              |                        | Total noninterest income                            |        |       | 7,225  |       |        |       | 6,007  |       |        |       | 5,706  | 
|                              |                                                              |                        |                                                     |        |       |        |       |        |      
|Noninterest expenses:         |                                                              |                        |                                                     |        |       |        |       |        |       |        |       |       
|                              | Compensation and benefits                                    |                        |                                                     | 10,490 |       |        |       | 8,587  |       |        |       | 7,786  |      
|                              | Occupancy                                                    |                        |                                                     | 1,638  |       |        |       | 1,435  |       |        |       | 1,398  |      
|                              | Furniture and equipment                                      |                        |                                                     | 1,751  |       |        |       | 1,370  |       |        |       | 945    |      
|                              | Legal and professional fees                                  |                        |                                                     | 854    |       |        |       | 670    |       |        |       | 894    |      
|                              | Telephone and postage                                        |                        |                                                     | 624    |       |        |       | 611    |       |        |       | 534    |      
|                              | Data processing services                                     |                        |                                                     | 492    |       |        |       | 615    |       |        |       | 514    |      
|                              | Advertising                                                  |                        |                                                     | 391    |       |        |       | 279    |       |        |       | 440    |      
|                              | Amortization of intangibles                                  |                        |                                                     | 276    |       |        |       | 229    |       |        |       | 147    |      
|                              | Other                                                        |                        |                                                     | 3,173  |       |        |       | 2,954  |       |        |       | 2,753  |      
|                              |                                                              |                        |                                                     |        |       |        |       |        |      
|                              |                                                              |                        | Total noninterest expenses                          |        |       | 19,689 |       |        |       | 16,750 |       |        |       | 15,411 | 
|                              |                                                              |                        |                                                     |        |       |        |       |        |      
|                              |                                                              |                        | Income before income taxes                          |        |       | 5,918  |       |        |       | 6,805  |       |        |       | 1,653  | 
|Income taxes                  |                                                              |                        | 1,538                                               |        |       |        | 1,916 |        |       |        | 290   |       
|                              |                                                              |                        |                                                     |        |       |        |       |        |      
|                              |                                                              |                        | Net income                                          |        | $     | 4,380  |       |        | $     | 4,889  |       |        | $     | 1,363  | 
|                              |                                                              |                        |                                                     |        |       |        |       |        |      
|Basic Earnings Per Share      |                                                              | $                      | 1.87                                                |        |       | $      | 1.96  |        |       | $      | 0.65  |       
|                              |                                                              |                        |                                                     |        |       |        |       |        |      
|Diluted Earnings Per Share    |                                                              | $                      | 1.86                                                |        |       | $      | 1.95  |        |       | $      | 0.65  |       
|                              |                                                              |                        |                                                     |        |       |        |       |        |      
|Dividends Per Share           |                                                              | $                      |                                                    |        |       | $      | 0.075 |        |       | $      | 0.30  |       
|                              |                                                              |                        |                                                     |        |       |        |       |        |      







---



##### Table of Contents















|                                                 |                                                                                                             |                                                 |    |            |         |   |        |             |       |   |               |          |  |            |        |        |          |   |      |               |  |   |         |   |  |   |        |        |       | 
|------------------------------------------------ | ----------------------------------------------------------------------------------------------------------- | ----------------------------------------------- | -- | ---------- | ------- | - | ------ | ----------- | ----- | - | ------------- | -------- |  | ---------- | ------ | ------ | -------- | - | ---- | ------------- |  | - | ------- | - |  | - | ------ | ------ | ----- | 
|                                                 |                                                                                                             |                                                 |    |            |         |   |        | Accumulated |       |   |               |          |  |            |       
|                                                 |                                                                                                             |                                                 |    | Additional |         |   |        |             | Other |   |               | Unearned |  |            |        |        | Total    |  
|                                                 |                                                                                                             | Common                                          |    |            | Paid-In |   |        | Retained    |       |   | Comprehensive |          |  | Restricted |        |        | Treasury |   |      | Stockholders | 
|                                                 |                                                                                                             | Stock                                           |    |            | Capital |   |        | Income      |       |   | Income (Loss) |          |  | Stock      |        |        | Stock    |   |      | Equity        | 
|                                                 |                                                                                                             |                                                 |    |            |         |   |        |             |       |   |               |          |  |            |        |        |          |   |      |               | 
|                                                 |                                                                                                             | (in thousands, except share and per share data) |   
|Balance, December 31, 2002                       |                                                                                                             | $                                               | 36 |            |         | $ | 15,022 |             |       | $ | 38,517        |          |  | $          | 1,631  |        |          | $ |     |               |  | $ | (14,099 | ) |  | $ | 41,107 |       
|Comprehensive income:                            |                                                                                                             |                                                 |    |            |         |   |        |             |       |   |               |          |  |            |        |        |          |   |      |               |  |   |         |   |  |   |        |       
|                                                 | Net income                                                                                                  |                                                 |    |           |         |   |        |            |       |   |               | 1,363    |  |            |        |       |          |   |      |              |  |   |         |  |  |   |        | 1,363  |      
|                                                 | Unrealized gain (loss) on securities available-for-sale arising
    during the period, net of tax of $(326) |                                                 |    |           |         |   |        |            |       |   |               |         |  |            |        | (548   | )        |   |      |              |  |   |         |  |  |   |        | (548   | )    
|                                                 | Less: Reclassifications adjustment for gains included in net
    income, net of tax of $3                   |                                                 |    |           |         |   |        |            |       |   |               |         |  |            |        | 5      |          |   |      |              |  |   |         |  |  |   |        | 5      |      
|                                                 |                                                                                                             |                                                 |    |            |         |   |        |             |       |   |               |          |  |            |        |        |          |   |      |               | 
|                                                 |                                                                                                             |                                                 |    |            |         |   |        |             |       |   |               |          |  |            |        |        |          |   |      |               |  |   |         |   |  |   | (553   | )     
|                                                 |                                                                                                             |                                                 |    |            |         |   |        |             |       |   |               |          |  |            |        |        |          |   |      |               | 
|                                                 |                                                                                                             | Comprehensive income                            |    |            |         |   |        |             |       |   |               |          |  |            |        |        |          |   |      |               |  |   |         |   |  |   |        |        | 810   | 
|Purchase of 466,540 shares of treasury stock     |                                                                                                             |                                                 |   |            |         |   |       |             |       |   |              |          |  |            |       |        |          |   |     |               |  |   | (9,308  | ) |  |   | (9,308 | )     
|Exercise of stock options                        |                                                                                                             |                                                 |   |            |         |   | 20     |             |       |   |              |          |  |            |       |        |          |   |     |               |  |   | 182     |   |  |   | 202    |       
|Restricted stock awards                          |                                                                                                             |                                                 |   |            |         |   | 422    |             |       |   |              |          |  |            |       |        |          |   | (820 | )             |  |   | 398     |   |  |   |       |       
|Stock issued in acquisition (700,300 shares)     |                                                                                                             |                                                 | 6  |            |         |   | 13,465 |             |       |   |              |          |  |            |       |        |          |   |     |               |  |   |        |   |  |   | 13,471 |       
|Dividends paid on common stock  $.30 per share  |                                                                                                             |                                                 |   |            |         |   |       |             |       |   | (649          | )        |  |            |       |        |          |   |     |               |  |   |        |   |  |   | (649   | )     
|                                                 |                                                                                                             |                                                 |    |            |         |   |        |             |       |   |               |          |  |            |        |        |          |   |      |               | 
|Balance, December 31, 2003                       |                                                                                                             |                                                 | 42 |            |         |   | 28,929 |             |       |   | 39,231        |          |  |            | 1,088  |        |          |   | (820 | )             |  |   | (22,827 | ) |  |   | 45,643 |       
|Comprehensive income:                            |                                                                                                             |                                                 |    |            |         |   |        |             |       |   |               |          |  |            |        |        |          |   |      |               |  |   |         |   |  |   |        |       
|                                                 | Net income                                                                                                  |                                                 |    |           |         |   |        |            |       |   |               | 4,889    |  |            |        |       |          |   |      |              |  |   |         |  |  |   |        | 4,889  |      
|                                                 | Unrealized gain (loss) on securities available-for-sale arising
    during the period, net of tax of $(530) |                                                 |    |           |         |   |        |            |       |   |               |         |  |            |        | (1,114 | )        |   |      |              |  |   |         |  |  |   |        | (1,114 | )    
|                                                 | Less: Reclassifications adjustment for gains included in net
    income, net of tax of $32                  |                                                 |    |           |         |   |        |            |       |   |               |         |  |            |        | 53     |          |   |      |              |  |   |         |  |  |   |        | 53     |      
|                                                 |                                                                                                             |                                                 |    |            |         |   |        |             |       |   |               |          |  |            |        |        |          |   |      |               | 
|                                                 |                                                                                                             |                                                 |    |            |         |   |        |             |       |   |               |          |  |            |        |        |          |   |      |               |  |   |         |   |  |   | (1,061 | )     
|                                                 |                                                                                                             |                                                 |    |            |         |   |        |             |       |   |               |          |  |            |        |        |          |   |      |               | 
|                                                 |                                                                                                             | Comprehensive income                            |    |            |         |   |        |             |       |   |               |          |  |            |        |        |          |   |      |               |  |   |         |   |  |   |        |        | 3,828 | 
|Purchase of 232,706 shares of treasury stock     |                                                                                                             |                                                 |   |            |         |   |       |             |       |   |              |          |  |            |       |        |          |   |     |               |  |   | (6,514  | ) |  |   | (6,514 | )     
|Exercise of stock options                        |                                                                                                             |                                                 |   |            |         |   | 41     |             |       |   |              |          |  |            |       |        |          |   |     |               |  |   | 148     |   |  |   | 189    |       
|Restricted stock awards                          |                                                                                                             |                                                 |   |            |         |   | 28     |             |       |   |              |          |  |            |       |        |          |   | (66  | )             |  |   | 38      |   |  |   |       |       
|Forfeit of restricted stock                      |                                                                                                             |                                                 |   |            |         |   |       |             |       |   |              |          |  |            |       |        |          |   | 149  |               |  |   | (149    | ) |  |   |       |       
|Amortization of restricted stock awards          |                                                                                                             |                                                 |   |            |         |   |       |             |       |   |              |          |  |            |       |        |          |   | 225  |               |  |   |        |   |  |   | 225    |       
|Dividends paid on common stock  $.075 per share |                                                                                                             |                                                 |   |            |         |   |       |             |       |   | (195          | )        |  |            |       |        |          |   |     |               |  |   |        |   |  |   | (195   | )     
|                                                 |                                                                                                             |                                                 |    |            |         |   |        |             |       |   |               |          |  |            |        |        |          |   |      |               | 
|Balance, December 31, 2004                       |                                                                                                             |                                                 | 42 |            |         |   | 28,998 |             |       |   | 43,925        |          |  |            | 27     |        |          |   | (512 | )             |  |   | (29,304 | ) |  |   | 43,176 |       
|Comprehensive income:                            |                                                                                                             |                                                 |    |            |         |   |        |             |       |   |               |          |  |            |        |        |          |   |      |               |  |   |         |   |  |   |        |       
|                                                 | Net income                                                                                                  |                                                 |    |           |         |   |        |            |       |   |               | 4,380    |  |            |        |       |          |   |      |              |  |   |         |  |  |   |        | 4,380  |      
|                                                 | Unrealized (loss) on securities available-for-sale arising
    during the period, net of tax of $(919)      |                                                 |    |           |         |   |        |            |       |   |               |         |  |            |        | (1,815 | )        |   |      |              |  |   |         |  |  |   |        | (1,815 | )    
|                                                 | Less: Reclassifications adjustment for gains included in net
    income, net of tax of $52                  |                                                 |    |            |         |   |        |             |       |   |               |          |  |            |        | 131    |          |   |      |               |  |   |         |   |  |   |        | 131    |      
|                                                 |                                                                                                             |                                                 |    |            |         |   |        |             |       |   |               |          |  |            |        |        |          |   |      |               | 
|                                                 |                                                                                                             |                                                 |    |            |         |   |        |             |       |   |               |          |  |            |        |        |          |   |      |               |  |   |         |   |  |   | (1,684 | )     
|                                                 |                                                                                                             |                                                 |    |            |         |   |        |             |       |   |               |          |  |            |        |        |          |   |      |               | 
|                                                 |                                                                                                             | Comprehensive income                            |    |            |         |   |        |             |       |   |               |          |  |            |        |        |          |   |      |               |  |   |         |   |  |   |        |        | 2,696 | 
|Purchase of 178,865 shares of treasury stock     |                                                                                                             |                                                 |   |            |         |   |       |             |       |   |              |          |  |            |       |        |          |   |     |               |  |   | (4,817  | ) |  |   | (4,817 | )     
|Stock issued in acquisition (59,638 shares)      |                                                                                                             |                                                 |   |            |         |   | 697    |             |       |   |              |          |  |            |       |        |          |   |     |               |  |   | 960     |   |  |   | 1,657  |       
|Issuance of restricted stock                     |                                                                                                             |                                                 |   |            |         |   | 27     |             |       |   |              |          |  |            |       |        |          |   | (62  | )             |  |   | 35      |   |  |   |       |       
|Forfeit of restricted stock                      |                                                                                                             |                                                 |   |            |         |   |       |             |       |   |              |          |  |            |       |        |          |   | 19   |               |  |   | (19     | ) |  |   |       |       
|Amortization of restricted stock awards          |                                                                                                             |                                                 |   |            |         |   |       |             |       |   |              |          |  |            |       |        |          |   | 209  |               |  |   |        |   |  |   | 209    |       
|                                                 |                                                                                                             |                                                 |    |            |         |   |        |             |       |   |               |          |  |            |        |        |          |   |      |               | 
|Balance, December 31, 2005                       |                                                                                                             | $                                               | 42 |            |         | $ | 29,722 |             |       | $ | 48,305        |          |  | $          | (1,657 | )      |          | $ | (346 | )             |  | $ | (33,145 | ) |  | $ | 42,921 |       
|                                                 |                                                                                                             |                                                 |    |            |         |   |        |             |       |   |               |          |  |            |        |        |          |   |      |               | 







---



##### Table of Contents















|                                     |                                                                                |                                                              |                                   |                                           |         |       |       |         |         |       |         |         |         |        |        | 
|------------------------------------ | ------------------------------------------------------------------------------ | ------------------------------------------------------------ | --------------------------------- | ----------------------------------------- | ------- | ----- | ----- | ------- | ------- | ----- | ------- | ------- | ------- | ------ | ------ | 
|                                     |                                                                                | 2005                                                         |                                   |                                           | 2004    |       |       | 2003    |        
|                                     |                                                                                |                                                              |                                   |                                           |         |       |       |         |        
|                                     |                                                                                | (in thousands)                                               |                                  
|Cash Flows from Operating Activities |                                                                                |                                                              |                                   |                                           |         |       |       |         |         |       |         |        
|                                     | Net income                                                                     |                                                              | $                                 | 4,380                                     |         |       | $     | 4,889   |         |       | $       | 1,363   |        
|                                     | Adjustments to reconcile net income to net cash from operating
    activities: |                                                              |                                   |                                           |         |       |       |         |         |       |         |         |        
|                                     |                                                                                | Provision for loan losses                                    |                                   |                                           | 651     |       |       |         | 1,200   |       |         |         | 4,122   |       
|                                     |                                                                                | Depreciation                                                 |                                   |                                           | 2,054   |       |       |         | 1,722   |       |         |         | 1,293   |       
|                                     |                                                                                | Amortization of investments, net                             |                                   |                                           | 195     |       |       |         | 103     |       |         |         | 179     |       
|                                     |                                                                                | Amortization of intangibles                                  |                                   |                                           | 276     |       |       |         | 229     |       |         |         | 147     |       
|                                     |                                                                                | Amortization of restricted stock                             |                                   |                                           | 209     |       |       |         | 225     |       |         |         |        |       
|                                     |                                                                                | Deferred income taxes                                        |                                   |                                           | 1,330   |       |       |         | 1,284   |       |         |         | 551     |       
|                                     |                                                                                | Origination of loans held for sale                           |                                   |                                           | (28,751 | )     |       |         | (31,008 | )     |         |         | (56,224 | )     
|                                     |                                                                                | Proceeds from sales of loans held for sale                   |                                   |                                           | 26,444  |       |       |         | 51,651  |       |         |         | 57,623  |       
|                                     |                                                                                | Net gain on sales of loans held for sale                     |                                   |                                           | (603    | )     |       |         | (886    | )     |         |         | (1,271  | )     
|                                     |                                                                                | Net gain on sales of securities                              |                                   |                                           | (183    | )     |       |         | (85     | )     |         |         | (8      | )     
|                                     |                                                                                | Net (gain) loss on sales of real estate held for sale        |                                   |                                           | 23      |       |       |         | (104    | )     |         |         | (253    | )     
|                                     |                                                                                | Gain on sale of branch                                       |                                   |                                           |        |       |       |         |        |       |         |         | (478    | )     
|                                     |                                                                                | Increase in cash surrender value of life insurance contracts |                                   |                                           | (355    | )     |       |         | (358    | )     |         |         | (403    | )     
|                                     |                                                                                | Federal Home Loan Bank stock dividend                        |                                   |                                           | (209    | )     |       |         | (213    | )     |         |         | (229    | )     
|                                     |                                                                                | Changes in:                                                  |                                   |                                           |         |       |       |         |         |       |         |         |         |       
|                                     |                                                                                |                                                              | Accrued interest receivable       |                                           |         | (569  | )     |         |         | 86    |         |         |         | 559    |       
|                                     |                                                                                |                                                              | Other assets and liabilities, net |                                           |         | 1,056 |       |         |         | 1,584 |         |         |         | (2,760 | )     
|                                     |                                                                                |                                                              |                                   |                                           |         |       |       |         |        
|                                     |                                                                                |                                                              |                                   | Net cash provided by operating activities |         |       | 5,948 |         |         |       | 30,319  |         |         |        | 4,211  | 
|                                     |                                                                                |                                                              |                                   |                                           |         |       |       |         |        
|Cash Flow from Investing Activities  |                                                                                |                                                              |                                   |                                           |         |       |       |         |         |       |         |        
|                                     | Purchases of available for sale securities                                     |                                                              |                                   | (21,332                                   | )       |       |       | (88,785 | )       |       |         | (37,784 | )      
|                                     | Proceeds from sales of available for sale securities                           |                                                              |                                   | 13,698                                    |         |       |       | 5,943   |         |       |         | 96      |        
|                                     | Proceeds from maturities of available for sale securities                      |                                                              |                                   | 11,207                                    |         |       |       | 52,148  |         |       |         | 47,226  |        
|                                     | Proceeds from maturities of held-to-maturity securities                        |                                                              |                                   |                                          |         |       |       | 242     |         |       |         | 201     |        
|                                     | Proceeds from maturities of certificates of deposit                            |                                                              |                                   | 99                                        |         |       |       | 199     |         |       |         |        |        
|                                     | Proceeds from sales of real estate held for sale                               |                                                              |                                   | 2,581                                     |         |       |       | 648     |         |       |         | 678     |        
|                                     | Proceeds from sales of office properties and equipment                         |                                                              |                                   | 15                                        |         |       |       |        |         |       |         |        |        
|                                     | Cash paid for branch sale                                                      |                                                              |                                   |                                          |         |       |       |        |         |       |         | (12,315 | )      
|                                     | Cash acquired, net of cash (paid) for acquisitions                             |                                                              |                                   | (228                                      | )       |       |       | 38      |         |       |         | 2,984   |        
|                                     | Net (increase) decrease in loans                                               |                                                              |                                   | 1,296                                     |         |       |       | (10,205 | )       |       |         | 19,547  |        
|                                     | Purchases of office properties and equipment, net                              |                                                              |                                   | (3,953                                    | )       |       |       | (2,607  | )       |       |         | (6,767  | )      
|                                     |                                                                                |                                                              |                                   |                                           |         |       |       |         |        
|                                     |                                                                                |                                                              |                                   | Net cash from investing activities        |         |       | 3,383 |         |         |       | (42,379 | )       |         |        | 13,866 | 
|                                     |                                                                                |                                                              |                                   |                                           |         |       |       |         |        

(Continued)






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|                                                          |                                             |                             |                                                  |         |        |        |   |         |        |         |        |         |        |         |  
|--------------------------------------------------------- | ------------------------------------------- | --------------------------- | ------------------------------------------------ | ------- | ------ | ------ | - | ------- | ------ | ------- | ------ | ------- | ------ | ------- | -
|                                                          |                                             | 2005                        |                                                  |         | 2004   |        |   | 2003    |       
|                                                          |                                             |                             |                                                  |         |        |        |   |         |       
|                                                          |                                             | (in thousands)              |                                                 
|Cash Flows from Financing Activities                      |                                             |                             |                                                  |         |        |        |   |         |        |         |        |        
|                                                          | Net increase (decrease) in deposit accounts |                             |                                                  | (15,618 | )      |        |   | (19,004 | )      |         |        | 1,355   |       
|                                                          | Proceeds from long-term borrowings          |                             |                                                  | 44,360  |        |        |   | 14,000  |        |         |        | 104     |       
|                                                          | Repayments of long-term borrowings          |                             |                                                  | (41,110 | )      |        |   | (21,475 | )      |         |        | (12,400 | )     
|                                                          | Change in short-term borrowings             |                             |                                                  | 12,826  |        |        |   | 12,740  |        |         |        | 798     |       
|                                                          | Proceeds from exercise of stock options     |                             |                                                  |        |        |        |   | 189     |        |         |        | 202     |       
|                                                          | Dividends paid                              |                             |                                                  |        |        |        |   | (195    | )      |         |        | (649    | )     
|                                                          | Purchase of treasury stock                  |                             |                                                  | (4,817  | )      |        |   | (6,514  | )      |         |        | (9,308  | )     
|                                                          |                                             |                             |                                                  |         |        |        |   |         |       
|                                                          |                                             |                             | Net cash from financing activities               |         |        | (4,359 | ) |         |        | (20,259 | )      |         |        | (19,898 | )
|                                                          |                                             |                             |                                                  |         |        |        |   |         |       
|                                                          |                                             |                             | Increase (decrease) in cash and cash equivalents |         |        | 4,972  |   |         |        | (32,319 | )      |         |        | (1,821  | )
|Cash and cash equivalents:                                |                                             |                             |                                                  |         |        |        |   |         |        |         |        |        
|                                                          | Beginning of year                           |                             |                                                  | 13,286  |        |        |   | 45,605  |        |         |        | 47,426  |       
|                                                          |                                             |                             |                                                  |         |        |        |   |         |       
|                                                          | End of year                                 |                             | $                                                | 18,258  |        |        | $ | 13,286  |        |         | $      | 45,605  |       
|                                                          |                                             |                             |                                                  |         |        |        |   |         |       
|Supplemental Disclosures of Cash Flow Information         |                                             |                             |                                                  |         |        |        |   |         |        |         |        |        
|                                                          | Cash paid during the year for:              |                             |                                                  |         |        |        |   |         |        |         |        |         |       
|                                                          |                                             | Interest                    |                                                  | $       | 11,616 |        |   | $       | 10,651 |         |        | $       | 12,017 |        
|                                                          |                                             |                             |                                                  |         |        |        |   |         |       
|                                                          |                                             | Income taxes                |                                                  | $       | 1,160  |        |   | $       | 1,478  |         |        | $       | 1,104  |        
|                                                          |                                             |                             |                                                  |         |        |        |   |         |       
|Supplemental Disclosures of Noncash Investing Activities: |                                             |                             |                                                  |         |        |        |   |         |        |         |        |        
|                                                          | Real estate acquired through foreclosure    |                             | $                                                | 1,156   |        |        | $ | 3,254   |        |         | $      | 428     |       
|                                                          |                                             |                             |                                                  |         |        |        |   |         |       
|Sale of Hoopeston Branch:                                 |                                             |                             |                                                  |         |        |        |   |         |        |         |        |        
|                                                          | Assets disposed:                            |                             |                                                  |         |        |        |   |         |        |         |        |         |       
|                                                          |                                             | Loans                       |                                                  | $       |       |        |   | $       |       |         |        | $       | (6,370 | )      
|                                                          |                                             | Accrued interest receivable |                                                  |         |       |        |   |         |       |         |        |         | (24    | )      
|                                                          |                                             | Premises and equipment      |                                                  |         |       |        |   |         |       |         |        |         | (165   | )      
|                                                          |                                             | Other assets                |                                                  |         |       |        |   |         |       |         |        |         | (197   | )      
|                                                          | Liabilities assumed by buyer:               |                             |                                                  |         |        |        |   |         |        |         |        |         |       
|                                                          |                                             | Demand deposits             |                                                  |         |       |        |   |         |       |         |        |         | 2,162  |        
|                                                          |                                             | Certificates of deposit     |                                                  |         |       |        |   |         |       |         |        |         | 17,243 |        
|                                                          |                                             | Other liabilities           |                                                  |         |       |        |   |         |       |         |        |         | 144    |        
|                                                          | Gain on sale of branch                      |                             |                                                  |        |        |        |   |        |        |         |        | (478    | )     
|                                                          |                                             |                             |                                                  |         |        |        |   |         |       
|Cash paid                                                 |                                             | $                           |                                                 |         |        | $      |  |         |        | $       | 12,315 |        
|                                                          |                                             |                             |                                                  |         |        |        |   |         |       

(Continued)






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|              |                      |                                        |                                   |       |         |       |   |       |         |       |   |        |         |        | 
|------------- | -------------------- | -------------------------------------- | --------------------------------- | ----- | ------- | ----- | - | ----- | ------- | ----- | - | ------ | ------- | ------ | 
|              |                      | 2005                                   |                                   |       | 2004    |       |   | 2003  |        
|              |                      |                                        |                                   |       |         |       |   |       |        
|              |                      | (in thousands)                         |                                  
|Acquisitions: |                      |                                        |                                   |       |         |       |   |       |         |       |   |       
|              | Cash paid            |                                        | $                                 | 1,658 |         |       | $ | 4,400 |         |       | $ |       |        
|              | Stock issued         |                                        |                                   | 1,657 |         |       |   |      |         |       |   | 13,471 |        
|              | Cost incurred        |                                        |                                   | 744   |         |       |   | 123   |         |       |   | 601    |        
|              |                      |                                        |                                   |       |         |       |   |       |        
|              |                      |                                        | Total cost                        |       | $       | 4,059 |   |       | $       | 4,523 |   |        | $       | 14,072 | 
|              |                      |                                        |                                   |       |         |       |   |       |        
|              | Assets acquired:     |                                        |                                   |       |         |       |   |       |         |       |   |        |        
|              |                      | Cash and cash equivalents              |                                   | $     | 2,174   |       |   | $     | 4,561   |       |   | $      | 2,984   |       
|              |                      | Certificates of deposit                |                                   |       |        |       |   |       | 298     |       |   |        |        |       
|              |                      | Investments                            |                                   |       | 6,561   |       |   |       | 8,616   |       |   |        | 15,355  |       
|              |                      | Nonmarketable equity securities        |                                   |       | 639     |       |   |       | 85      |       |   |        | 329     |       
|              |                      | Loans                                  |                                   |       | 12,608  |       |   |       | 7,342   |       |   |        | 72,068  |       
|              |                      | Loans held for sale                    |                                   |       | 5,047   |       |   |       |        |       |   |        |        |       
|              |                      | Accrued interest receivable            |                                   |       | 109     |       |   |       | 104     |       |   |        | 339     |       
|              |                      | Office properties and equipment        |                                   |       | 2,428   |       |   |       | 269     |       |   |        | 1,426   |       
|              |                      | Other assets, including deferred taxes |                                   |       | (189    | )     |   |       | 72      |       |   |        |        |       
|              |                      | Real estate held for sale              |                                   |       | 155     |       |   |       |        |       |   |        |        |       
|              |                      | Goodwill                               |                                   |       | 1,916   |       |   |       | 1,013   |       |   |        | 8,367   |       
|              |                      | Intangible assets                      |                                   |       | 424     |       |   |       | 774     |       |   |        | 358     |       
|              | Liabilities assumed: |                                        |                                   |       |         |       |   |       |         |       |   |        |        
|              |                      | Deposits                               |                                   |       | (27,757 | )     |   |       | (18,524 | )     |   |        | (80,588 | )     
|              |                      | Borrowings                             |                                   |       |        |       |   |       |        |       |   |        | (6,194  | )     
|              |                      | Other liabilities                      |                                   |       | (56     | )     |   |       | (87     | )     |   |        | (372    | )     
|              |                      |                                        |                                   |       |         |       |   |       |        
|              |                      |                                        | Net assets acquired               |       | $       | 4,059 |   |       | $       | 4,523 |   |        | $       | 14,072 | 
|              |                      |                                        |                                   |       |         |       |   |       |        
|              |                      |                                        | Cash acquired, net of cash (paid) |       | $       | (228  | ) |       | $       | 38    |   |        | $       | 2,984  | 
|              |                      |                                        |                                   |       |         |       |   |       |        







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|                                            |                          |              |           |       |      |   |           |        |  |   |           |       | 
|------------------------------------------- | ------------------------ | ------------ | --------- | ----- | ---- | - | --------- | ------ |  | - | --------- | ----- | 
|                                            |                          | December 31, |          
|                                            |                          |              |          
|                                            |                          | 2005         |           |       | 2004 |   |           | 2003   | 
|                                            |                          |              |           |       |      |   |           |        | 
|Net income available to common shareholders |                          | $            | 4,380,000 |       |      | $ | 4,889,000 |        |  | $ | 1,363,000 |      
|                                            |                          |              |           |       |      |   |           |        | 
|Basic average shares outstanding            |                          |              | 2,345,971 |       |      |   | 2,490,789 |        |  |   | 2,098,386 |      
|Diluted potential common shares:            |                          |              |           |       |      |   |           |        |  |   |           |      
|                                            | Stock option equivalents |              |           | 9,413 |      |   |           | 11,847 |  |   |           | 2,891 | 
|                                            |                          |              |           |       |      |   |           |        | 
|Diluted average shares outstanding          |                          |              | 2,355,384 |       |      |   | 2,502,636 |        |  |   | 2,101,277 |      
|                                            |                          |              |           |       |      |   |           |        | 
|Basic earnings per share                    |                          | $            | 1.87      |       |      | $ | 1.96      |        |  | $ | 0.65      |      
|                                            |                          |              |           |       |      |   |           |        | 
|Diluted earnings per share                  |                          | $            | 1.86      |       |      | $ | 1.95      |        |  | $ | 0.65      |      
|                                            |                          |              |           |       |      |   |           |        | 



Accounting for Stock Issued to
Employees, Accounting for Stock-Based Compensation,


|                                                                                                                                    |          |                        |       |   |      |   |       |      |      |   |       |   |      | 
|----------------------------------------------------------------------------------------------------------------------------------- | -------- | ---------------------- | ----- | - | ---- | - | ----- | ---- | ---- | - | ----- | - | ---- | 
|                                                                                                                                    |          | 2005                   |       |   | 2004 |   |       | 2003 |     
|                                                                                                                                    |          |                        |       |   |      |   |       |      |     
|                                                                                                                                    |          | (in thousands,         |      
|                                                                                                                                    |          | except per share data) |      
|Net income, as reported                                                                                                             |          | $                      | 4,380 |   |      | $ | 4,889 |      |      | $ | 1,363 |  
|Deduct total stock-based compensation expense determined under
    the fair value method for all awards, net of related tax effects |          |                        | (296  | ) |      |   | (264  | )    |      |   | (328  | )
|                                                                                                                                    |          |                        |       |   |      |   |       |      |     
|Pro forma net income                                                                                                                |          | $                      | 4,084 |   |      | $ | 4,625 |      |      | $ | 1,035 |  
|                                                                                                                                    |          |                        |       |   |      |   |       |      |     
|Earnings per share:                                                                                                                 |          |                        |       |   |      |   |       |      |      |   |       |  
|                                                                                                                                    | Basic:   |                        |       |   |      |   |       |      |      |   |       |   |     
|                                                                                                                                    |          | As reported            |       | $ | 1.87 |   |       | $    | 1.96 |   |       | $ | 0.65 | 
|                                                                                                                                    |          | Pro forma              |       |   | 1.74 |   |       |      | 1.86 |   |       |   | 0.49 | 
|                                                                                                                                    | Diluted: |                        |       |   |      |   |       |      |      |   |       |   |     
|                                                                                                                                    |          | As reported            |       | $ | 1.86 |   |       | $    | 1.95 |   |       | $ | 0.65 | 
|                                                                                                                                    |          | Pro forma              |       |   | 1.73 |   |       |      | 1.84 |   |       |   | 0.49 | 







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|                                                 |  |      |             |  |      |  |             |      |  |  |             | 
|------------------------------------------------ |  | ---- | ----------- |  | ---- |  | ----------- | ---- |  |  | ----------- | 
|                                                 |  | 2005 |             |  | 2004 |  |             | 2003 | 
|                                                 |  |      |             |  |      |  |             |      | 
|Number of options granted                        |  |      | 78,000      |  |      |  | 65,500      |      |  |  | 107,000     | 
|Risk-free interest rate                          |  |      | 4.02%-4.38% |  |      |  | 4.04%-4.45% |      |  |  | 3.41%-4.27% | 
|Expected life, in years                          |  |      | 5           |  |      |  | 10          |      |  |  | 5-10        | 
|Expected volatility                              |  |      | 16%-17%     |  |      |  | 22%-23%     |      |  |  | 22%-25%     | 
|Expected dividend yield                          |  |      | 0.00%       |  |      |  | 0.00%-1.25% |      |  |  | 1.14%-1.29% | 
|Estimated weighted average fair value per option |  |      | $6.80       |  |      |  | $11.71      |      |  |  | $9.70       | 



Share-Based Payment,


Accounting for Stock-Based
Compensation, Accounting for Stock Issued to Employees, 93-6, Employers Accounting for Employee Stock Ownership
Plans,
















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|                                |                                      |                         |   |       |              |  |   |       |  | 
|------------------------------- | ------------------------------------ | ----------------------- | - | ----- | ------------ |  | - | ----- |  | 
|                                |                                      | As of December 31, 2005 |  
|                                |                                      |                         |  
|                                |                                      | Gross Carrying          |   |       | Accumulated  | 
|                                |                                      | Amount                  |   |       | Amortization | 
|                                |                                      |                         |   |       |              | 
|                                |                                      | (in thousands)          |  
|Amortized intangible assets:    |                                      |                         |   |       |              |  |   |      
|                                | Core deposit intangible              |                         | $ | 3,414 |              |  | $ | 1,492 | 
|Aggregate amortization expense: |                                      |                         |   |       |              |  |   |      
|                                | For the year ended December 31, 2005 |                         | $ | 276   |              |  |   |       | 
|Estimated amortization expense: |                                      |                         |   |       |              |  |   |      
|                                | For the year ended:                  |                         |   |       |              |  |   |       | 
|                                |                                      | 2006                    |   | $     | 278          |  |   |       |  | 
|                                |                                      | 2007                    |   | $     | 278          |  |   |       |  | 
|                                |                                      | 2008                    |   | $     | 278          |  |   |       |  | 
|                                |                                      | 2009                    |   | $     | 278          |  |   |       |  | 
|                                |                                      | 2010                    |   | $     | 278          |  |   |       |  | 
|                                |                                      | Thereafter              |   | $     | 532          |  |   |       |  | 



|                              |  |                        |        |  |      |   |        | 
|----------------------------- |  | ---------------------- | ------ |  | ---- | - | ------ | 
|                              |  | Year ended December 31 |       
|                              |  |                        |       
|                              |  | 2005                   |        |  | 2004 |  
|                              |  |                        |        |  |      |  
|Balance, at beginning of year |  | $                      | 12,446 |  |      | $ | 11,433 | 
|Goodwill acquired             |  |                        | 1,916  |  |      |   | 1,013  | 
|                              |  |                        |        |  |      |  
|Balance, at end of year       |  | $                      | 14,362 |  |      | $ | 12,446 | 
|                              |  |                        |        |  |      |  





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|                                      |       |                |        |         |            |   |       |            |  |   |       |       |  |   |        |         | 
|------------------------------------- | ----- | -------------- | ------ | ------- | ---------- | - | ----- | ---------- |  | - | ----- | ----- |  | - | ------ | ------- | 
|                                      |       |                |        | Gross   |            |   | Gross |            |  |  
|                                      |       | Amortized      |        |         | Unrealized |   |       | Unrealized |  |   | Fair  |      
|                                      |       | Cost           |        |         | Gains      |   |       | Losses     |  |   | Value |      
|                                      |       |                |        |         |            |   |       |            |  |   |       |      
|                                      |       | (in thousands) |       
|December 31, 2005                     |       |                |        |         |            |   |       |            |  |   |       |       |  |   |        |        
|U.S. government and agency securities |       | $              | 77,924 |         |            | $ | 1     |            |  | $ | 1,562 |       |  | $ | 76,363 |        
|Municipal bonds                       |       |                | 23,492 |         |            |   | 5     |            |  |   | 756   |       |  |   | 22,741 |        
|Mortgage-backed securities            |       |                | 19,211 |         |            |   | 111   |            |  |   | 267   |       |  |   | 19,055 |        
|Corporate bonds                       |       |                | 2,060  |         |            |   |      |            |  |   | 111   |       |  |   | 1,949  |        
|Mutual funds and equity securities    |       |                | 779    |         |            |   | 29    |            |  |   |      |       |  |   | 808    |        
|Other securities                      |       |                | 4,250  |         |            |   | 24    |            |  |   |      |       |  |   | 4,274  |        
|                                      |       |                |        |         |            |   |       |            |  |   |       |      
|                                      | Total |                | $      | 127,716 |            |   | $     | 170        |  |   | $     | 2,696 |  |   | $      | 125,190 | 
|                                      |       |                |        |         |            |   |       |            |  |   |       |      
|December 31, 2004                     |       |                |        |         |            |   |       |            |  |   |       |       |  |   |        |        
|U.S. government and agency securities |       | $              | 70,944 |         |            | $ | 263   |            |  | $ | 58    |       |  | $ | 71,149 |        
|Municipal bonds                       |       |                | 23,582 |         |            |   | 47    |            |  |   | 278   |       |  |   | 23,351 |        
|Mortgage-backed securities            |       |                | 23,396 |         |            |   | 291   |            |  |   | 157   |       |  |   | 23,530 |        
|Corporate bonds                       |       |                | 2,076  |         |            |   |      |            |  |   | 76    |       |  |   | 2,000  |        
|Mutual funds                          |       |                | 400    |         |            |   |      |            |  |   | 15    |       |  |   | 385    |        
|Other securities                      |       |                | 4,320  |         |            |   | 28    |            |  |   |      |       |  |   | 4,348  |        
|                                      |       |                |        |         |            |   |       |            |  |   |       |      
|                                      | Total |                | $      | 124,718 |            |   | $     | 629        |  |   | $     | 584   |  |   | $      | 124,763 | 
|                                      |       |                |        |         |            |   |       |            |  |   |       |      



|                                         |       |                |        |         |       |   |        |         | 
|---------------------------------------- | ----- | -------------- | ------ | ------- | ----- | - | ------ | ------- | 
|                                         |       | Amortized      |        |         | Fair  |  
|                                         |       | Cost           |        |         | Value |  
|                                         |       |                |        |         |       |  
|                                         |       | (in thousands) |       
|Due within 1 year                        |       | $              | 3,579  |         |       | $ | 3,547  |        
|Due after 1 year through 5 years         |       |                | 83,498 |         |       |   | 81,713 |        
|Due after 5 through 10 years             |       |                | 16,399 |         |       |   | 15,793 |        
|Due after 10 years                       |       |                | 4,250  |         |       |   | 4,274  |        
|Mortgage-backed securities               |       |                | 19,211 |         |       |   | 19,055 |        
|Mutual fund shares and equity securities |       |                | 779    |         |       |   | 808    |        
|                                         |       |                |        |         |       |  
|                                         | Total |                | $      | 127,716 |       |   | $      | 125,190 | 
|                                         |       |                |        |         |       |  







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|                                      |  |                     |        |  |                   |   |       |       |  |   |            |  |  |       |       |  |            |   |         |  |  |   |       | 
|------------------------------------- |  | ------------------- | ------ |  | ----------------- | - | ----- | ----- |  | - | ---------- |  |  | ----- | ----- |  | ---------- | - | ------- |  |  | - | ----- | 
|                                      |  | December 31, 2005   |       
|                                      |  |                     |       
|                                      |  | Less than 12 Months |        |  | 12 Months or More |   |       | Total | 
|                                      |  |                     |        |  |                   |   |       |       | 
|                                      |  | Fair                |        |  | Unrealized        |   |       | Fair  |  |   | Unrealized |  |  | Fair  |       |  | Unrealized |  
|                                      |  | Value               |        |  | Losses            |   |       | Value |  |   | Losses     |  |  | Value |       |  | Losses     |  
|                                      |  |                     |        |  |                   |   |       |       |  |   |            |  |  |       |       |  |            |  
|                                      |  | (in thousands)      |       
|U.S. government and agency securities |  | $                   | 49,408 |  |                   | $ | 957   |       |  | $ | 26,704     |  |  | $     | 605   |  |            | $ | 76,112  |  |  | $ | 1,562 | 
|Municipal bonds                       |  |                     | 4,643  |  |                   |   | 75    |       |  |   | 17,081     |  |  |       | 681   |  |            |   | 21,724  |  |  |   | 756   | 
|Mortgage-backed securities            |  |                     | 4,478  |  |                   |   | 44    |       |  |   | 5,983      |  |  |       | 223   |  |            |   | 10,461  |  |  |   | 267   | 
|Corporate bonds                       |  |                     |       |  |                   |   |      |       |  |   | 1,949      |  |  |       | 111   |  |            |   | 1,949   |  |  |   | 111   | 
|                                      |  |                     |        |  |                   |   |       |       |  |   |            |  |  |       |       |  |            |  
|                                      |  | $                   | 58,529 |  |                   | $ | 1,076 |       |  | $ | 51,717     |  |  | $     | 1,620 |  |            | $ | 110,246 |  |  | $ | 2,696 | 
|                                      |  |                     |        |  |                   |   |       |       |  |   |            |  |  |       |       |  |            |  

|                                      |  |                     |        |  |                   |   |     |       |  |   |            |  |  |       |    |  |            |   |        |  |  |   |     | 
|------------------------------------- |  | ------------------- | ------ |  | ----------------- | - | --- | ----- |  | - | ---------- |  |  | ----- | -- |  | ---------- | - | ------ |  |  | - | --- | 
|                                      |  | December 31, 2004   |       
|                                      |  |                     |       
|                                      |  | Less than 12 Months |        |  | 12 Months or More |   |     | Total | 
|                                      |  |                     |        |  |                   |   |     |       | 
|                                      |  | Fair                |        |  | Unrealized        |   |     | Fair  |  |   | Unrealized |  |  | Fair  |    |  | Unrealized |  
|                                      |  | Value               |        |  | Losses            |   |     | Value |  |   | Losses     |  |  | Value |    |  | Losses     |  
|                                      |  |                     |        |  |                   |   |     |       |  |   |            |  |  |       |    |  |            |  
|                                      |  | (in thousands)      |       
|U.S. government and agency securities |  | $                   | 30,342 |  |                   | $ | 58  |       |  | $ |           |  |  | $     |   |  |            | $ | 30,342 |  |  | $ | 58  | 
|Municipal bonds                       |  |                     | 17,259 |  |                   |   | 277 |       |  |   | 528        |  |  |       | 1  |  |            |   | 17,787 |  |  |   | 278 | 
|Mortgage-backed securities            |  |                     | 5,312  |  |                   |   | 104 |       |  |   | 4,343      |  |  |       | 53 |  |            |   | 9,655  |  |  |   | 157 | 
|Corporate bonds                       |  |                     | 1,999  |  |                   |   | 76  |       |  |   |           |  |  |       |   |  |            |   | 1,999  |  |  |   | 76  | 
|Mutual funds                          |  |                     |       |  |                   |   |    |       |  |   | 385        |  |  |       | 15 |  |            |   | 385    |  |  |   | 15  | 
|                                      |  |                     |        |  |                   |   |     |       |  |   |            |  |  |       |    |  |            |  
|                                      |  | $                   | 54,912 |  |                   | $ | 515 |       |  | $ | 5,256      |  |  | $     | 69 |  |            | $ | 60,168 |  |  | $ | 584 | 
|                                      |  |                     |        |  |                   |   |     |       |  |   |            |  |  |       |    |  |            |  









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|                |          |                |     |     |      |   |    |      |  |   |   |   | 
|--------------- | -------- | -------------- | --- | --- | ---- | - | -- | ---- |  | - | - | - | 
|                |          | Year Ended     |    
|                |          | December 31,   |    
|                |          |                |    
|                |          | 2005           |     |     | 2004 |   |    | 2003 | 
|                |          |                |     |     |      |   |    |      | 
|                |          | (in thousands) |    
|Realized gains  |          | $              | 198 |     |      | $ | 90 |      |  | $ | 8 |  
|Realized losses |          |                | (15 | )   |      |   | (5 | )    |  |   |  |  
|                |          |                |     |     |      |   |    |      | 
|                | Net gain |                | $   | 183 |      |   | $  | 85   |  |   | $ | 8 | 
|                |          |                |     |     |      |   |    |      | 







|                            |                              |                |         |         |      |   |         |         | 
|--------------------------- | ---------------------------- | -------------- | ------- | ------- | ---- | - | ------- | ------- | 
|                            |                              | December 31,   |        
|                            |                              |                |        
|                            |                              | 2005           |         |         | 2004 |  
|                            |                              |                |         |         |      |  
|                            |                              | (in thousands) |        
|Real estate mortgage loans: |                              |                |         |         |      |   |         |        
|                            | One-to-four family           |                | $       | 162,430 |      |   | $       | 175,224 | 
|                            | Multifamily                  |                |         | 8,274   |      |   |         | 15,655  | 
|                            | Commercial                   |                |         | 131,365 |      |   |         | 101,516 | 
|                            | Construction and development |                |         | 34,274  |      |   |         | 28,731  | 
|                            |                              |                |         |         |      |  
|                            |                              |                | 336,343 |         |      |   | 321,126 |        
|                            |                              |                |         |         |      |  
|Commercial loans            |                              |                | 57,864  |         |      |   | 61,090  |        
|                            |                              |                |         |         |      |  
|Consumer loans:             |                              |                |         |         |      |   |         |        
|                            | Home equity loans            |                |         | 30,138  |      |   |         | 28,188  | 
|                            | All other consumer loans     |                |         | 8,853   |      |   |         | 14,303  | 
|                            |                              |                |         |         |      |  
|                            |                              |                | 38,991  |         |      |   | 42,491  |        
|                            |                              |                |         |         |      |  
|Gross loans                 |                              |                | 433,198 |         |      |   | 424,707 |        
|Less:                       |                              |                |         |         |      |   |         |        
|                            | Deferred loan fees, net      |                |         | 244     |      |   |         | 269     | 
|                            | Allowance for loan losses    |                |         | 4,486   |      |   |         | 5,475   | 
|                            |                              |                |         |         |      |  
|                            |                              | $              | 428,468 |         |      | $ | 418,963 |        
|                            |                              |                |         |         |      |  





|                             |                           |                         |       |        |      |   |       |        |   |   |       |        |  
|---------------------------- | ------------------------- | ----------------------- | ----- | ------ | ---- | - | ----- | ------ | - | - | ----- | ------ | -
|                             |                           | Year Ended December 31, |      
|                             |                           |                         |      
|                             |                           | 2005                    |       |        | 2004 |   |       | 2003   |  
|                             |                           |                         |       |        |      |   |       |        |  
|                             |                           | (in thousands)          |      
|Balance at beginning of year |                           | $                       | 5,475 |        |      | $ | 7,471 |        |   | $ | 6,524 |       
|                             | Provision for loan losses |                         |       | 651    |      |   |       | 1,200  |   |   |       | 4,122  |  
|                             | Purchased allowance       |                         |       | 255    |      |   |       | 156    |   |   |       | 2,435  |  
|                             | Charge-offs               |                         |       | (2,717 | )    |   |       | (3,647 | ) |   |       | (6,242 | )
|                             | Recoveries                |                         |       | 822    |      |   |       | 295    |   |   |       | 632    |  
|                             |                           |                         |       |        |      |   |       |        |  
|Balance at end of year       |                           | $                       | 4,486 |        |      | $ | 5,475 |        |   | $ | 7,471 |       
|                             |                           |                         |       |        |      |   |       |        |  





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|                                                                            |                      |                |       |       |      |   |       |       |  |   |       |       | 
|--------------------------------------------------------------------------- | -------------------- | -------------- | ----- | ----- | ---- | - | ----- | ----- |  | - | ----- | ----- | 
|                                                                            |                      | December 31,   |      
|                                                                            |                      |                |      
|                                                                            |                      | 2005           |       |       | 2004 |   |       | 2003  | 
|                                                                            |                      |                |       |       |      |   |       |       | 
|                                                                            |                      | (in thousands) |      
|Impaired loans with a valuation allowance                                   |                      | $              | 3,894 |       |      | $ | 4,934 |       |  | $ | 4,545 |      
|Impaired loans without a valuation allowance                                |                      |                | 1,096 |       |      |   | 906   |       |  |   |      |      
|                                                                            |                      |                |       |       |      |   |       |       | 
|                                                                            | Total impaired loans |                | $     | 4,990 |      |   | $     | 5,840 |  |   | $     | 4,545 | 
|                                                                            |                      |                |       |       |      |   |       |       | 
|Related valuation allowance                                                 |                      | $              | 851   |       |      | $ | 1,348 |       |  | $ | 2,524 |      
|Non-accrual loans, excluding impaired loans                                 |                      | $              | 1,676 |       |      | $ | 1,176 |       |  | $ | 1,438 |      
|Loans past due ninety days or more and still accruing interest              |                      | $              |      |       |      | $ | 222   |       |  | $ | 2,232 |      
|Average monthly balance of impaired loans (based on month-end
    balances) |                      | $              | 4,574 |       |      | $ | 6,512 |       |  | $ | 5,097 |      
|Interest income recognized on impaired loans                                |                      | $              |      |       |      | $ |      |       |  | $ | 199   |      
|Interest income recognized on a cash basis on impaired loans                |                      | $              |      |       |      | $ |      |       |  | $ | 199   |      





|                                       |             |                |         |         |      |   |         |         | 
|-------------------------------------- | ----------- | -------------- | ------- | ------- | ---- | - | ------- | ------- | 
|                                       |             | December 31,   |        
|                                       |             |                |        
|                                       |             | 2005           |         |         | 2004 |  
|                                       |             |                |         |         |      |  
|                                       |             | (in thousands) |        
|Mortgage loan portfolios serviced for: |             |                |         |         |      |   |         |        
|                                       | Freddie Mac |                | $       | 148,293 |      |   | $       | 136,433 | 
|                                       | Fannie Mae  |                |         | 933     |      |   |         | 1,383   | 
|                                       |             |                |         |         |      |  
|                                       |             | $              | 149,226 |         |      | $ | 137,816 |        
|                                       |             |                |         |         |      |  





|                                            |  |                |       |   |      |   |       |  
|------------------------------------------- |  | -------------- | ----- | - | ---- | - | ----- | -
|                                            |  | December 31,   |      
|                                            |  |                |      
|                                            |  | 2005           |       |   | 2004 |  
|                                            |  |                |       |   |      |  
|                                            |  | (in thousands) |      
|Balance, beginning                          |  | $              | 1,056 |   |      | $ | 822   |  
|Servicing assets recognized during the year |  |                | 305   |   |      |   | 372   |  
|Amortization of servicing assets            |  |                | (263  | ) |      |   | (138  | )
|                                            |  |                |       |   |      |  
|Balance, ending                             |  | $              | 1,098 |   |      | $ | 1,056 |  
|                                            |  |                |       |   |      |  



|                   |  |                |     |  |      |   |     |  
|------------------ |  | -------------- | --- |  | ---- | - | --- | -
|                   |  | December 31,   |    
|                   |  |                |    
|                   |  | 2005           |     |  | 2004 |  
|                   |  |                |     |  |      |  
|                   |  | (in thousands) |    
|Balance, beginning |  | $              | 156 |  |      | $ | 206 |  
|Additions          |  |                |    |  |      |   |    |  
|Reductions         |  |                |    |  |      |   | (50 | )
|                   |  |                |     |  |      |  
|Balance, ending    |  | $              | 156 |  |      | $ | 156 |  
|                   |  |                |     |  |      |  





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|                                                |  |                |        |  |      |   |        | 
|----------------------------------------------- |  | -------------- | ------ |  | ---- | - | ------ | 
|                                                |  | December 31,   |       
|                                                |  |                |       
|                                                |  | 2005           |        |  | 2004 |  
|                                                |  |                |        |  |      |  
|                                                |  | (in thousands) |       
|Land                                            |  | $              | 6,159  |  |      | $ | 6,110  | 
|Buildings and improvements                      |  |                | 19,181 |  |      |   | 12,445 | 
|Construction in progress                        |  |                |       |  |      |   | 2,179  | 
|Furniture and equipment                         |  |                | 5,779  |  |      |   | 9,561  | 
|                                                |  |                |        |  |      |  
|                                                |  |                | 31,119 |  |      |   | 30,295 | 
|Less: Accumulated depreciation and amortization |  |                | 8,540  |  |      |   | 12,028 | 
|                                                |  |                |        |  |      |  
|                                                |  | $              | 22,579 |  |      | $ | 18,267 | 
|                                                |  |                |        |  |      |  







|                                    |  |   |     | 
|----------------------------------- |  | - | --- | 
|During the Year Ending December 31: |  |  
|                                    |  |  
|2006                                |  | $ | 147 | 
|2007                                |  |   | 153 | 
|2008                                |  |   | 128 | 
|2009                                |  |   | 43  | 
|Thereafter                          |  |   | 23  | 
|                                    |  |   |    
|                                    |  | $ | 494 | 
|                                    |  |   |    





|                                      |                           |                |         |         |      |   |         |         | 
|------------------------------------- | ------------------------- | -------------- | ------- | ------- | ---- | - | ------- | ------- | 
|                                      |                           | December 31,   |        
|                                      |                           |                |        
|                                      |                           | 2005           |         |         | 2004 |  
|                                      |                           |                |         |         |      |  
|                                      |                           | (in thousands) |        
|Demand deposits  noninterest bearing |                           | $              | 67,982  |         |      | $ | 53,919  |        
|                                      |                           |                |         |         |      |  
|Savings                               |                           |                | 88,134  |         |      |   | 87,990  |        
|NOW                                   |                           |                | 41,081  |         |      |   | 48,495  |        
|Money market                          |                           |                | 55,788  |         |      |   | 46,886  |        
|Time deposits, $100,000 or more       |                           |                | 73,017  |         |      |   | 61,274  |        
|Other time deposits                   |                           |                | 181,914 |         |      |   | 197,213 |        
|                                      |                           |                |         |         |      |  
|                                      | Interest bearing deposits |                |         | 439,934 |      |   |         | 441,858 | 
|                                      |                           |                |         |         |      |  
|                                      | Total deposits            |                | $       | 507,916 |      |   | $       | 495,777 | 
|                                      |                           |                |         |         |      |  





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|                 |  |                |         | 
|---------------- |  | -------------- | ------- | 
|Year of Maturity |  | Amount         |        
|                 |  |                |        
|                 |  | (in thousands) |        
|2006             |  | $              | 167,991 | 
|2007             |  |                | 61,937  | 
|2008             |  |                | 14,172  | 
|2009             |  |                | 5,101   | 
|2010             |  |                | 5,730   | 
|                 |  |                |        
|                 |  | $              | 254,931 | 
|                 |  |                |        





|                                            |                             |                |        |        |      |   |       |        | 
|------------------------------------------- | --------------------------- | -------------- | ------ | ------ | ---- | - | ----- | ------ | 
|                                            |                             | December 31,   |       
|                                            |                             |                |       
|                                            |                             | 2005           |        |        | 2004 |  
|                                            |                             |                |        |        |      |  
|                                            |                             | (in thousands) |       
|Federal funds purchased                     |                             | $              |       |        |      | $ | 3,500 |       
|Securities sold under repurchase agreements |                             |                | 16,314 |        |      |   | 8,563 |       
|Federal Home Loan Bank line of credit       |                             |                | 10,700 |        |      |   |      |       
|Line of credit                              |                             |                |       |        |      |   | 2,125 |       
|                                            |                             |                |        |        |      |  
|                                            | Total short-term borrowings |                | $      | 27,014 |      |   | $     | 14,188 | 
|                                            |                             |                |        |        |      |  









|                                                       |                            |                |        |        |      |   |        |        | 
|------------------------------------------------------ | -------------------------- | -------------- | ------ | ------ | ---- | - | ------ | ------ | 
|                                                       |                            | December 31,   |       
|                                                       |                            |                |       
|                                                       |                            | 2005           |        |        | 2004 |  
|                                                       |                            |                |        |        |      |  
|                                                       |                            | (in thousands) |       
|Reverse repurchase agreements                          |                            | $              |       |        |      | $ | 9,200  |       
|Other borrowings                                       |                            |                | 1,157  |        |      |   | 1,318  |       
|Junior subordinated debt owed to unconsolidated trusts |                            |                | 20,000 |        |      |   | 20,000 |       
|Federal Home Loan Bank advances                        |                            |                | 37,566 |        |      |   | 24,955 |       
|                                                       |                            |                |        |        |      |  
|                                                       | Total long-term borrowings |                | $      | 58,723 |      |   | $      | 55,473 | 
|                                                       |                            |                |        |        |      |  





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|           |       |                |        |        | 
|---------- | ----- | -------------- | ------ | ------ | 
|Year Ended |       | Amount         |       
|           |       |                |       
|           |       | (in thousands) |       
|2006       |       | $              | 9,341  |       
|2007       |       |                | 31,449 |       
|2008       |       |                | 5,156  |       
|2009       |       |                | 10,165 |       
|2010       |       |                | 174    |       
|Thereafter |       |                | 2,438  |       
|           |       |                |       
|           | Total |                | $      | 58,723 | 
|           |       |                |       







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|         |  |                         |       |  |      |   |       |      |  |   |      |  
|-------- |  | ----------------------- | ----- |  | ---- | - | ----- | ---- |  | - | ---- | -
|         |  | Year Ended December 31, |      
|         |  |                         |      
|         |  | 2005                    |       |  | 2004 |   |       | 2003 | 
|         |  |                         |       |  |      |   |       |      | 
|         |  | (in thousands)          |      
|Current  |  | $                       | 208   |  |      | $ | 632   |      |  | $ | (261 | )
|Deferred |  |                         | 1,330 |  |      |   | 1,284 |      |  |   | 551  |  
|         |  |                         |       |  |      |   |       |      | 
|         |  | $                       | 1,538 |  |      | $ | 1,916 |      |  | $ | 290  |  
|         |  |                         |       |  |      |   |       |      | 



|                      |                                                     |                         |       |      |      |   |       |      |   |   |     |      |  
|--------------------- | --------------------------------------------------- | ----------------------- | ----- | ---- | ---- | - | ----- | ---- | - | - | --- | ---- | -
|                      |                                                     | Year Ended December 31, |      
|                      |                                                     |                         |      
|                      |                                                     | 2005                    |       |      | 2004 |   |       | 2003 |  
|                      |                                                     |                         |       |      |      |   |       |      |  
|                      |                                                     | (in thousands)          |      
|Expected income taxes |                                                     | $                       | 2,071 |      |      | $ | 2,382 |      |   | $ | 579 |     
|Income tax effect of: |                                                     |                         |       |      |      |   |       |      |   |   |     |     
|                      | State income tax, net of federal benefit            |                         |       | 112  |      |   |       |     |   |   |     |     |  
|                      | Income taxed at lower rate                          |                         |       | (59  | )    |   |       | (68  | ) |   |     | (16  | )
|                      | Increase in cash surrender value of life insurance  |                         |       | (124 | )    |   |       | (125 | ) |   |     | (137 | )
|                      | Tax exempt interest, net                            |                         |       | (284 | )    |   |       | (237 | ) |   |     | (80  | )
|                      | Reduction in valuation allowance for deferred taxes |                         |       |     |      |   |       | (169 | ) |   |     |     |  
|                      | Other                                               |                         |       | (178 | )    |   |       | 133  |   |   |     | (56  | )
|                      |                                                     |                         |       |      |      |   |       |      |  
|                      |                                                     | $                       | 1,538 |      |      | $ | 1,916 |      |   | $ | 290 |     
|                      |                                                     |                         |       |      |      |   |       |      |  





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|                          |                                                    |                                                       |   |       |        |   |   |       |        |  
|------------------------- | -------------------------------------------------- | ----------------------------------------------------- | - | ----- | ------ | - | - | ----- | ------ | -
|                          |                                                    | December 31,                                          |  
|                          |                                                    |                                                       |  
|                          |                                                    | 2005                                                  |   |       | 2004   |  
|                          |                                                    |                                                       |   |       |        |  
|                          |                                                    | (in thousands)                                        |  
|Deferred tax assets:      |                                                    |                                                       |   |       |        |   |   |      
|                          | Allowance for loan losses                          |                                                       | $ | 1,930 |        |   | $ | 2,075 |       
|                          | State net operating loss carryforwards             |                                                       |   | 390   |        |   |   | 245   |       
|                          | Federal net operating loss carryforwards           |                                                       |   | 963   |        |   |   | 691   |       
|                          | Accrued benefits                                   |                                                       |   | 144   |        |   |   | 204   |       
|                          | Unrealized losses on securities available for sale |                                                       |   | 852   |        |   |   |      |       
|                          | Other                                              |                                                       |   | 40    |        |   |   | 104   |       
|                          |                                                    |                                                       |   |       |        |  
|                          |                                                    | Total deferred tax assets                             |   |       | 4,319  |   |   |       | 3,319  |  
|                          | Less: Valuation allowance for deferred tax assets  |                                                       |   | 1,207 |        |   |   |      |       
|                          |                                                    |                                                       |   |       |        |  
|                          |                                                    | Total deferred tax assets, net of valuation allowance |   |       | 3,112  |   |   |       | 3,319  |  
|                          |                                                    |                                                       |   |       |        |  
|Deferred tax liabilities: |                                                    |                                                       |   |       |        |   |   |      
|                          | Unrealized gain on securities available-for-sale   |                                                       |   |      |        |   |   | (13   | )     
|                          | Deferred loan fees                                 |                                                       |   | (313  | )      |   |   | (344  | )     
|                          | FHLB stock divided                                 |                                                       |   | (531  | )      |   |   | (386  | )     
|                          | Office properties and equipment                    |                                                       |   | (759  | )      |   |   | (467  | )     
|                          | Mortgage servicing rights                          |                                                       |   | (366  | )      |   |   | (350  | )     
|                          | Intangible assets                                  |                                                       |   | (975  | )      |   |   | (501  | )     
|                          | Basis in acquired assets                           |                                                       |   | (420  | )      |   |   | (193  | )     
|                          |                                                    |                                                       |   |       |        |  
|                          |                                                    | Total deferred tax liabilities                        |   |       | (3,364 | ) |   |       | (2,254 | )
|                          |                                                    |                                                       |   |       |        |  
|                          |                                                    | Net deferred tax assets (liabilities)                 |   | $     | (252   | ) |   | $     | 1,065  |  
|                          |                                                    |                                                       |   |       |        |  













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|                                       |                   |                        |   |             |                   |  |                   |              |  |                        |       |        |  |        |  |       |       |  |   |        |  |  |  |        | 
|-------------------------------------- | ----------------- | ---------------------- | - | ----------- | ----------------- |  | ----------------- | ------------ |  | ---------------------- | ----- | ------ |  | ------ |  | ----- | ----- |  | - | ------ |  |  |  | ------ | 
|                                       |                   |                        |   |             |                   |  |                   |              |  | To be Well Capitalized |      
|                                       |                   |                        |   |             |                   |  |                   | Under Prompt | 
|                                       |                   |                        |   | For Capital |                   |  | Corrective Action |             
|                                       |                   | Actual                 |   |             | Adequacy Purposes |  |                   | Provisions   | 
|                                       |                   |                        |   |             |                   |  |                   |              | 
|                                       |                   | Amount                 |   |             | Ratio             |  |                   | Amount       |  |                        | Ratio |        |  | Amount |  |       | Ratio | 
|                                       |                   |                        |   |             |                   |  |                   |              |  |                        |       |        |  |        |  |       |       | 
|                                       |                   | (Dollars in thousands) |  
|As of December 31, 2005                |                   |                        |   |             |                   |  |                   |              |  |                        |       |        |  |        |  |       |       |  |   |        |  |  |  |       
|Tier 1 Capital to Average Assets       |                   |                        |   |             |                   |  |                   |              |  |                        |       |        |  |        |  |       |       |  |   |        |  |  |  |       
|                                       | Centrue Financial |                        | $ | 43,153      |                   |  |                   | 6.91%        |  |                        | $     | 24,967 |  |        |  | 4.00% |       |  |   | N/A    |  |  |  |        | 
|                                       | Centrue Bank      |                        |   | 43,773      |                   |  |                   | 7.08%        |  |                        |       | 24,733 |  |        |  | 4.00% |       |  | $ | 30,917 |  |  |  | 5.00%  | 
|Tier I Capital to Risk Weighted Assets |                   |                        |   |             |                   |  |                   |              |  |                        |       |        |  |        |  |       |       |  |   |        |  |  |  |       
|                                       | Centrue Financial |                        |   | 43,153      |                   |  |                   | 10.28%       |  |                        |       | 16,796 |  |        |  | 4.00% |       |  |   | N/A    |  |  |  |        | 
|                                       | Centrue Bank      |                        |   | 43,773      |                   |  |                   | 10.49%       |  |                        |       | 16,696 |  |        |  | 4.00% |       |  |   | 25,044 |  |  |  | 6.00%  | 
|Total Capital to Risk Weighted Assets  |                   |                        |   |             |                   |  |                   |              |  |                        |       |        |  |        |  |       |       |  |   |        |  |  |  |       
|                                       | Centrue Financial |                        |   | 52,780      |                   |  |                   | 12.57%       |  |                        |       | 33,593 |  |        |  | 8.00% |       |  |   | N/A    |  |  |  |        | 
|                                       | Centrue Bank      |                        |   | 48,259      |                   |  |                   | 11.56%       |  |                        |       | 33,391 |  |        |  | 8.00% |       |  |   | 41,739 |  |  |  | 10.00% | 
|As of December 31, 2004                |                   |                        |   |             |                   |  |                   |              |  |                        |       |        |  |        |  |       |       |  |   |        |  |  |  |       
|Tier 1 Capital to Average Assets       |                   |                        |   |             |                   |  |                   |              |  |                        |       |        |  |        |  |       |       |  |   |        |  |  |  |       
|                                       | Centrue Financial |                        | $ | 43,312      |                   |  |                   | 7.32%        |  |                        | $     | 23,674 |  |        |  | 4.00% |       |  |   | N/A    |  |  |  |        | 
|                                       | Centrue Bank      |                        |   | 45,656      |                   |  |                   | 7.81%        |  |                        |       | 23,382 |  |        |  | 4.00% |       |  | $ | 29,227 |  |  |  | 5.00%  | 
|Tier I Capital to Risk Weighted Assets |                   |                        |   |             |                   |  |                   |              |  |                        |       |        |  |        |  |       |       |  |   |        |  |  |  |       
|                                       | Centrue Financial |                        |   | 43,312      |                   |  |                   | 11.01%       |  |                        |       | 15,742 |  |        |  | 4.00% |       |  |   | N/A    |  |  |  |        | 
|                                       | Centrue Bank      |                        |   | 45,656      |                   |  |                   | 11.32%       |  |                        |       | 16,136 |  |        |  | 4.00% |       |  |   | 24,204 |  |  |  | 6.00%  | 
|Total Capital to Risk Weighted Assets  |                   |                        |   |             |                   |  |                   |              |  |                        |       |        |  |        |  |       |       |  |   |        |  |  |  |       
|                                       | Centrue Financial |                        |   | 53,857      |                   |  |                   | 13.69%       |  |                        |       | 31,483 |  |        |  | 8.00% |       |  |   | N/A    |  |  |  |        | 
|                                       | Centrue Bank      |                        |   | 50,703      |                   |  |                   | 12.57%       |  |                        |       | 32,272 |  |        |  | 8.00% |       |  |   | 40,340 |  |  |  | 10.00% | 









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|                                                               |  |        |         |           |       |   |        |        |           |  |         |   |  |           |        |  |       |  |         |   |  |   |        | 
|-------------------------------------------------------------- |  | ------ | ------- | --------- | ----- | - | ------ | ------ | --------- |  | ------- | - |  | --------- | ------ |  | ----- |  | ------- | - |  | - | ------ | 
|                                                               |  | 2005   |         |           | 2004  |   |        | 2003   |          
|                                                               |  |        |         |           |       |   |        |        |          
|                                                               |  |        |         | Weighted- |       |   |        |        | Weighted- |  |         |   |  | Weighted- |       
|                                                               |  |        |         | Average   |       |   |        |        | Average   |  |         |   |  | Average   |       
|                                                               |  |        |         | Exercise  |       |   |        |        | Exercise  |  |         |   |  | Exercise  |       
|                                                               |  | Shares |         |           | Price |   |        | Shares |           |  | Price   |   |  | Shares    |        |  | Price | 
|Fixed Options                                                  |  |        |         |           |       |   |        |        |           |  |         |   |  |           |        |  |       | 
|Outstanding at beginning of year                               |  |        | 147,300 |           |       | $ | 24.720 |        |           |  | 101,800 |   |  | $         | 22.690 |  |       |  | 9,500   |   |  | $ | 14.632 | 
|Granted                                                        |  |        | 78,000  |           |       |   | 27.234 |        |           |  | 65,500  |   |  |           | 27.234 |  |       |  | 107,000 |   |  |   | 22.666 | 
|Exercised                                                      |  |        |        |           |       |   |       |        |           |  | (10,000 | ) |  |           | 19.000 |  |       |  | (12,700 | ) |  |   | 15.988 | 
|Forfeited                                                      |  |        | (1,500  | )         |       |   | 26.967 |        |           |  | (10,000 | ) |  |           | 26.000 |  |       |  | (2,000  | ) |  |   | 26.250 | 
|                                                               |  |        |         |           |       |   |        |        |           |  |         |   |  |           |        |  |       | 
|Outstanding at end of year                                     |  |        | 223,800 |           |       |   | 25.405 |        |           |  | 147,300 |   |  |           | 24.720 |  |       |  | 101,800 |   |  |   | 22.690 | 
|                                                               |  |        |         |           |       |   |        |        |           |  |         |   |  |           |        |  |       | 
|Options exercisable at year-end                                |  |        | 103,800 |           |       |   |        |        |           |  | 65,800  |   |  |           |        |  |       |  | 46,800  |   |  |   |        | 
|                                                               |  |        |         |           |       |   |        |        |           |  |         |   |  |           |        |  |       | 
|Weighted-average fair value of options granted during the year |  |        |         |           |       | $ | 6.80   |        |           |  |         |   |  | $         | 11.71  |  |       |  |         |   |  | $ | 9.70   | 
|                                                               |  |        |         |           |       |   |        |        |           |  |         |   |  |           |        |  |       | 





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|               |        |                     |  |  |                     |  |  |          |     |  |              |   |        |          |  |  |         |  |  |   |        | 
|-------------- | ------ | ------------------- |  |  | ------------------- |  |  | -------- | --- |  | ------------ | - | ------ | -------- |  |  | ------- |  |  | - | ------ | 
|               |        | Options Outstanding |  |  | Options Exercisable | 
|               |        |                     |  |  |                     | 
|               |        | Outstanding         |  |  | Weighted            |  |  | Weighted |     |  | Outstanding  |   |        | Weighted | 
|               |        | as of               |  |  | Average             |  |  | Average  |     |  | as of        |   |        | Average  | 
|               |        | December 31,        |  |  | Contractual         |  |  | Exercise |     |  | December 31, |   |        | Exercise | 
|               |        | 2005                |  |  | Life (in Years)     |  |  | Price    |     |  | 2005         |   |        | Price    | 
|Exercise Price |        |                     |  |  |                     |  |  |          |     |  |              |   |        |          |  | 
|$              | 18.575 |                     |  |  | 5,000               |  |  |          | 6.9 |  |              | $ | 18.575 |          |  |  | 5,000   |  |  | $ | 18.575 | 
|               | 19.000 |                     |  |  | 11,800              |  |  |          | 7.3 |  |              |   | 19.000 |          |  |  | 11,800  |  |  |   | 19.000 | 
|               | 20.250 |                     |  |  | 20,000              |  |  |          | 7.4 |  |              |   | 20.250 |          |  |  | 20,000  |  |  |   | 20.250 | 
|               | 23.185 |                     |  |  | 15,000              |  |  |          | 7.5 |  |              |   | 23.185 |          |  |  | 6,000   |  |  |   | 23.185 | 
|               | 26.250 |                     |  |  | 30,000              |  |  |          | 7.8 |  |              |   | 26.250 |          |  |  | 12,000  |  |  |   | 26.250 | 
|               | 26.500 |                     |  |  | 20,000              |  |  |          | 8.4 |  |              |   | 26.500 |          |  |  | 20,000  |  |  |   | 26.500 | 
|               | 27.500 |                     |  |  | 39,500              |  |  |          | 8.8 |  |              |   | 27.500 |          |  |  | 7,900   |  |  |   | 27.500 | 
|               | 27.970 |                     |  |  | 5,500               |  |  |          | 8.1 |  |              |   | 27.970 |          |  |  | 1,100   |  |  |   | 27.970 | 
|               | 26.700 |                     |  |  | 4,000               |  |  |          | 6.3 |  |              |   | 26.700 |          |  |  |        |  |  |   |       | 
|               | 27.100 |                     |  |  | 20,000              |  |  |          | 6.3 |  |              |   | 27.100 |          |  |  | 20,000  |  |  |   | 27.100 | 
|               | 25.950 |                     |  |  | 14,500              |  |  |          | 6.6 |  |              |   | 25.950 |          |  |  |        |  |  |   |       | 
|               | 26.090 |                     |  |  | 7,000               |  |  |          | 6.7 |  |              |   | 26.090 |          |  |  |        |  |  |   |       | 
|               | 27.000 |                     |  |  | 31,500              |  |  |          | 7.0 |  |              |   | 27.000 |          |  |  |        |  |  |   |       | 
|               |        |                     |  |  |                     |  |  |          |     |  |              |   |        |          |  | 
|               |        |                     |  |  | 223,800             |  |  |          | 7.5 |  |              | $ | 25.405 |          |  |  | 103,800 |  |  | $ | 24.048 | 
|               |        |                     |  |  |                     |  |  |          |     |  |              |   |        |          |  | 











|                                     |  |                  |        |   |      |  |        |      |  |  |        | 
|------------------------------------ |  | ---------------- | ------ | - | ---- |  | ------ | ---- |  |  | ------ | 
|                                     |  | Number of Shares |       
|                                     |  |                  |       
|                                     |  | 2005             |        |   | 2004 |  |        | 2003 | 
|                                     |  |                  |        |   |      |  |        |      | 
|Under restriction, beginning of year |  |                  | 19,750 |   |      |  | 27,800 |      |  |  |       | 
|Granted                              |  |                  | 2,200  |   |      |  | 2,400  |      |  |  | 27,800 | 
|Restrictions released                |  |                  | (6,450 | ) |      |  | (5,400 | )    |  |  |       | 
|Forfeited and reissuable             |  |                  | (750   | ) |      |  | (5,050 | )    |  |  |       | 
|                                     |  |                  |        |   |      |  |        |      | 
|Under restriction, end of year       |  |                  | 14,750 |   |      |  | 19,750 |      |  |  | 27,800 | 
|                                     |  |                  |        |   |      |  |        |      | 







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|                                   |  |                |        |  |      |   |        | 
|---------------------------------- |  | -------------- | ------ |  | ---- | - | ------ | 
|                                   |  | December 31,   |       
|                                   |  |                |       
|                                   |  | 2005           |        |  | 2004 |  
|                                   |  |                |        |  |      |  
|                                   |  | (in thousands) |       
|Commitments to originate new loans |  | $              | 3,787  |  |      | $ | 10,694 | 
|Commitments to extend credit       |  |                | 56,873 |  |      |   | 48,121 | 
|Standby letters of credit          |  |                | 4,508  |  |      |   | 2,750  | 











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|             |                                 |             |   |                |            |  |          |         |  |  |            |         |  |  |   |         | 
|------------ | ------------------------------- | ----------- | - | -------------- | ---------- |  | -------- | ------- |  |  | ---------- | ------- |  |  | - | ------- | 
|             |                                 | December 31 |  
|             |                                 |             |  
|             |                                 | 2005        |   |                | 2004       | 
|             |                                 |             |   |                |            | 
|             |                                 | Carrying    |   |                |            |  | Carrying |         |  | 
|             |                                 | Amount      |   |                | Fair Value |  |          | Amount  |  |  | Fair Value |        
|             |                                 |             |   |                |            |  |          |         |  |  |            |        
|             |                                 |             |   | (in thousands) |            |  |         
|Assets:      |                                 |             |   |                |            |  |          |         |  |  |            |         |  |  |   |        
|             | Cash and cash equivalents       |             | $ | 18,258         |            |  | $        | 18,258  |  |  | $          | 13,286  |  |  | $ | 13,286  | 
|             | Certificates of deposit         |             |   | 50             |            |  |          | 50      |  |  |            | 149     |  |  |   | 149     | 
|             | Investment securities           |             |   | 125,190        |            |  |          | 125,190 |  |  |            | 124,763 |  |  |   | 124,763 | 
|             | Loans, gross                    |             |   | 432,954        |            |  |          | 427,330 |  |  |            | 424,438 |  |  |   | 428,198 | 
|             | Loans held for sale             |             |   | 8,373          |            |  |          | 8,373   |  |  |            | 416     |  |  |   | 416     | 
|             | Nonmarketable equity securities |             |   | 5,059          |            |  |          | 5,059   |  |  |            | 4,211   |  |  |   | 4,211   | 
|             | Accrued interest receivable     |             |   | 3,248          |            |  |          | 3,248   |  |  |            | 2,570   |  |  |   | 2,570   | 
|Liabilities: |                                 |             |   |                |            |  |          |         |  |  |            |         |  |  |   |        
|             | Deposits                        |             | $ | 507,916        |            |  | $        | 508,465 |  |  | $          | 495,777 |  |  | $ | 497,657 | 
|             | Short-term borrowings           |             |   | 27,014         |            |  |          | 27,014  |  |  |            | 14,188  |  |  |   | 14,188  | 
|             | Long-term borrowings            |             |   | 58,723         |            |  |          | 58,522  |  |  |            | 55,473  |  |  |   | 55,725  | 
|             | Accrued interest payable        |             |   | 2,035          |            |  |          | 2,035   |  |  |            | 568     |  |  |   | 568     | 





Cash and cash equivalents and certificates of deposit:


Investment securities:


Nonmarketable equity securities:


Loans:


Loans held for sale:






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Off-balance-sheet instruments:


Deposits:


Short-term borrowings:


Long-term borrowings:


Accrued interest payable:








|                                      |                                               |                |        |         |      |   |        |         |  
|------------------------------------- | --------------------------------------------- | -------------- | ------ | ------- | ---- | - | ------ | ------- | -
|                                      |                                               | December 31,   |       
|                                      |                                               |                |       
|Statements of financial condition     |                                               | 2005           |        |         | 2004 |  
|                                      |                                               |                |        |         |      |  
|                                      |                                               | (in thousands) |       
|Assets:                               |                                               |                |        |         |      |   |        |        
|                                      | Cash and cash equivalents                     |                | $      | 1,514   |      |   | $      | 370     |  
|                                      | Certificate of deposit                        |                |        | 50      |      |   |        | 50      |  
|                                      | Investment securities available-for-sale      |                |        | 4,787   |      |   |        | 6,450   |  
|                                      | Equity in net assets of Centrue Bank          |                |        | 58,463  |      |   |        | 59,916  |  
|                                      | Investment in Capital Trusts                  |                |        | 620     |      |   |        | 620     |  
|                                      | Other assets                                  |                |        | 936     |      |   |        | 1,103   |  
|                                      |                                               |                |        |         |      |  
|                                      |                                               | $              | 66,370 |         |      | $ | 68,509 |        
|                                      |                                               |                |        |         |      |  
|Liabilities and stockholders equity: |                                               |                |        |         |      |   |        |        
|                                      | Long-term borrowings                          |                | $      | 21,157  |      |   | $      | 23,443  |  
|                                      | Other liabilities                             |                |        | 2,292   |      |   |        | 1,890   |  
|                                      | Common stock                                  |                |        | 42      |      |   |        | 42      |  
|                                      | Additional paid-in capital                    |                |        | 29,722  |      |   |        | 28,998  |  
|                                      | Retained income                               |                |        | 48,305  |      |   |        | 43,925  |  
|                                      | Accumulated other comprehensive income (loss) |                |        | (1,657  | )    |   |        | 27      |  
|                                      | Unearned restricted stock                     |                |        | (346    | )    |   |        | (512    | )
|                                      | Treasury stock                                |                |        | (33,145 | )    |   |        | (29,304 | )
|                                      |                                               |                |        |         |      |  
|                                      |                                               | $              | 66,370 |         |      | $ | 68,509 |        
|                                      |                                               |                |        |         |      |  





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|                     |                                       |                          |                                  |       |       |       |   |       |       |       |   |       |       |       | 
|-------------------- | ------------------------------------- | ------------------------ | -------------------------------- | ----- | ----- | ----- | - | ----- | ----- | ----- | - | ----- | ----- | ----- | 
|                     |                                       | Years Ended December 31, |                                 
|                     |                                       |                          |                                 
|Statements of income |                                       | 2005                     |                                  |       | 2004  |       |   | 2003  |      
|                     |                                       |                          |                                  |       |       |       |   |       |      
|                     |                                       | (in thousands)           |                                 
|Operating income:    |                                       |                          |                                  |       |       |       |   |       |       |       |   |      
|                     | Equity in net income of subsidiary    |                          | $                                | 5,791 |       |       | $ | 5,867 |       |       | $ | 2,309 |      
|                     | Interest income                       |                          |                                  | 249   |       |       |   | 198   |       |       |   | 41    |      
|                     | Net gain (loss) on sale of securities |                          |                                  | (15   | )     |       |   | (5    | )     |       |   | 8     |      
|                     |                                       |                          |                                  |       |       |       |   |       |      
|                     |                                       | Operating income         |                                  |       | 6,025 |       |   |       | 6,060 |       |   |       | 2,358 |      
|                     |                                       |                          |                                  |       |       |       |   |       |      
|Operating expense:   |                                       |                          |                                  |       |       |       |   |       |       |       |   |      
|                     | Interest expense                      |                          |                                  | 1,480 |       |       |   | 1,057 |       |       |   | 611   |      
|                     | Other expenses                        |                          |                                  | 1,063 |       |       |   | 739   |       |       |   | 983   |      
|                     |                                       |                          |                                  |       |       |       |   |       |      
|                     |                                       | Operating expense        |                                  |       | 2,543 |       |   |       | 1,796 |       |   |       | 1,594 |      
|                     |                                       |                          | Income before income tax benefit |       |       | 3,482 |   |       |       | 4,264 |   |       |       | 764   | 
|                     |                                       |                          |                                  |       |       |       |   |       |      
|                     | Income tax benefit                    |                          |                                  | 898   |       |       |   | 625   |       |       |   | 599   |      
|                     |                                       |                          |                                  |       |       |       |   |       |      
|                     |                                       |                          | Net income                       |       | $     | 4,380 |   |       | $     | 4,889 |   |       | $     | 1,363 | 
|                     |                                       |                          |                                  |       |       |       |   |       |      





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|                                                 |                                                                                       |                                                                 |                                                     |        |       |        |     |        |        |        |        |        |      |        |  
|------------------------------------------------ | ------------------------------------------------------------------------------------- | --------------------------------------------------------------- | --------------------------------------------------- | ------ | ----- | ------ | --- | ------ | ------ | ------ | ------ | ------ | ---- | ------ | -
|                                                 |                                                                                       | Years Ended December 31,                                        |                                                    
|                                                 |                                                                                       |                                                                 |                                                    
|                                                 |                                                                                       | 2005                                                            |                                                     |        | 2004  |        |     | 2003   |       
|Statements of cash flows                         |                                                                                       |                                                                 |                                                     |        |       |        |     |        |       
|                                                 |                                                                                       | (in thousands)                                                  |                                                    
|Operating activities:                            |                                                                                       |                                                                 |                                                     |        |       |        |     |        |        |        |        |       
|                                                 | Net income                                                                            |                                                                 | $                                                   | 4,380  |       |        | $   | 4,889  |        |        | $      | 1,363  |     
|                                                 | Adjustments to reconcile net income to net cash provided by
    operating activities: |                                                                 |                                                     |        |       |        |     |        |        |        |        |        |     
|                                                 |                                                                                       | (Gain) loss on sale of securities                               |                                                     |        | 15    |        |     |        | 5      |        |        |        | (8   | )     
|                                                 |                                                                                       | Distributions in excess of (less than) net income of subsidiary |                                                     |        | 4,566 |        |     |        | (3,271 | )      |        |        | (415 | )     
|                                                 |                                                                                       | Compensation expense for restricted stock                       |                                                     |        | 209   |        |     |        | 225    |        |        |        |     |       
|                                                 |                                                                                       | Other                                                           |                                                     |        | 579   |        |     |        | 363    |        |        |        | (772 | )     
|                                                 |                                                                                       |                                                                 |                                                     |        |       |        |     |        |       
|                                                 |                                                                                       |                                                                 | Net cash provided by operating activities           |        |       | 9,749  |     |        |        | 2,211  |        |        |      | 168    |  
|                                                 |                                                                                       |                                                                 |                                                     |        |       |        |     |        |       
|Investing activities:                            |                                                                                       |                                                                 |                                                     |        |       |        |     |        |        |        |        |       
|                                                 | Available-for-sale investment securities:                                             |                                                                 |                                                     |        |       |        |     |        |        |        |        |        |     
|                                                 |                                                                                       | Proceeds from sale of securities                                |                                                     |        | 1,984 |        |     |        | 1,996  |        |        |        | 96   |       
|                                                 |                                                                                       | Purchases                                                       |                                                     |        | (315  | )      |     |        | (8,996 | )      |        |        | (14  | )     
|                                                 |                                                                                       | Maturities of securities                                        |                                                     |        |      |        |     |        | 1,000  |        |        |        |     |       
|                                                 | Acquisitions                                                                          |                                                                 |                                                     | (3,171 | )     |        |     |       |        |        |        | 20     |     
|                                                 |                                                                                       |                                                                 |                                                     |        |       |        |     |        |       
|                                                 |                                                                                       |                                                                 | Net cash provided by (used in) investing activities |        |       | (1,502 | )   |        |        | (6,000 | )      |        |      | 102    |  
|                                                 |                                                                                       |                                                                 |                                                     |        |       |        |     |        |       
|Financing activities:                            |                                                                                       |                                                                 |                                                     |        |       |        |     |        |        |        |        |       
|                                                 | Purchase of treasury stock                                                            |                                                                 |                                                     | (4,817 | )     |        |     | (6,514 | )      |        |        | (9,308 | )   
|                                                 | Dividends paid                                                                        |                                                                 |                                                     |       |       |        |     | (195   | )      |        |        | (649   | )   
|                                                 | Proceeds from issuance of junior subordinated debentures                              |                                                                 |                                                     |       |       |        |     | 10,000 |        |        |        |       |     
|                                                 | Proceeds from borrowings                                                              |                                                                 |                                                     |       |       |        |     | 2,603  |        |        |        | 933    |     
|                                                 | Payments on borrowings                                                                |                                                                 |                                                     | (2,286 | )     |        |     | (2,000 | )      |        |        | (100   | )   
|                                                 | Proceeds from exercise of stock options                                               |                                                                 |                                                     |       |       |        |     | 189    |        |        |        | 202    |     
|                                                 |                                                                                       |                                                                 |                                                     |        |       |        |     |        |       
|                                                 |                                                                                       |                                                                 | Net cash provided by (used in) financing activities |        |       | (7,103 | )   |        |        | 4,083  |        |        |      | (8,922 | )
|                                                 |                                                                                       |                                                                 |                                                     |        |       |        |     |        |       
|Increase (decrease) in cash and cash equivalents |                                                                                       |                                                                 | 1,144                                               |        |       |        | 294 |        |        |        | (8,652 | )     
|Cash and cash equivalents:                       |                                                                                       |                                                                 |                                                     |        |       |        |     |        |        |        |        |       
|                                                 | Beginning of period                                                                   |                                                                 |                                                     | 370    |       |        |     | 76     |        |        |        | 8,728  |     
|                                                 |                                                                                       |                                                                 |                                                     |        |       |        |     |        |       
|                                                 | End of period                                                                         |                                                                 | $                                                   | 1,514  |       |        | $   | 370    |        |        | $      | 76     |     
|                                                 |                                                                                       |                                                                 |                                                     |        |       |        |     |        |       





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|                           |                                                     |                                       |       |       |              |   |       |         |  |   |          |       |  |   |       |       | 
|-------------------------- | --------------------------------------------------- | ------------------------------------- | ----- | ----- | ------------ | - | ----- | ------- |  | - | -------- | ----- |  | - | ----- | ----- | 
|                           |                                                     | Year Ended December 31, 2005          |      
|                           |                                                     |                                       |      
|                           |                                                     | Three Months Ended                    |      
|                           |                                                     | December 31                           |       |       | September 30 |   |       | June 30 |  |   | March 31 |      
|                           |                                                     |                                       |       |       |              |   |       |         |  |   |          |      
|                           |                                                     | (in thousands, except per share data) |      
|Interest income            |                                                     | $                                     | 8,430 |       |              | $ | 8,270 |         |  | $ | 7,987    |       |  | $ | 7,409 |      
|Interest expense           |                                                     |                                       | 3,716 |       |              |   | 3,533 |         |  |   | 3,090    |       |  |   | 2,724 |      
|                           |                                                     |                                       |       |       |              |   |       |         |  |   |          |      
|                           | Net interest income                                 |                                       |       | 4,714 |              |   |       | 4,737   |  |   |          | 4,897 |  |   |       | 4,685 | 
|Provision for loan losses  |                                                     |                                       | 75    |       |              |   | 75    |         |  |   | 251      |       |  |   | 250   |      
|                           |                                                     |                                       |       |       |              |   |       |         |  |   |          |      
|                           | Net interest income after provision for loan losses |                                       |       | 4,639 |              |   |       | 4,662   |  |   |          | 4,646 |  |   |       | 4,435 | 
|Other income               |                                                     |                                       | 1,935 |       |              |   | 2,018 |         |  |   | 1,707    |       |  |   | 1,565 |      
|Other expense              |                                                     |                                       | 5,159 |       |              |   | 4,982 |         |  |   | 5,272    |       |  |   | 4,276 |      
|                           |                                                     |                                       |       |       |              |   |       |         |  |   |          |      
|                           | Income before income taxes                          |                                       |       | 1,415 |              |   |       | 1,698   |  |   |          | 1,081 |  |   |       | 1,724 | 
|Income taxes               |                                                     |                                       | 342   |       |              |   | 480   |         |  |   | 228      |       |  |   | 488   |      
|                           |                                                     |                                       |       |       |              |   |       |         |  |   |          |      
|                           | Net income                                          |                                       | $     | 1,073 |              |   | $     | 1,218   |  |   | $        | 853   |  |   | $     | 1,236 | 
|                           |                                                     |                                       |       |       |              |   |       |         |  |   |          |      
|Basic earnings per share   |                                                     | $                                     | 0.46  |       |              | $ | 0.52  |         |  | $ | 0.36     |       |  | $ | 0.53  |      
|                           |                                                     |                                       |       |       |              |   |       |         |  |   |          |      
|Diluted earnings per share |                                                     | $                                     | 0.46  |       |              | $ | 0.52  |         |  | $ | 0.36     |       |  | $ | 0.52  |      
|                           |                                                     |                                       |       |       |              |   |       |         |  |   |          |      

|                           |                                                     |                                       |       |       |              |   |       |         |  |   |          |       |  |   |       |       | 
|-------------------------- | --------------------------------------------------- | ------------------------------------- | ----- | ----- | ------------ | - | ----- | ------- |  | - | -------- | ----- |  | - | ----- | ----- | 
|                           |                                                     | Year Ended December 31, 2004          |      
|                           |                                                     |                                       |      
|                           |                                                     | Three Months Ended                    |      
|                           |                                                     | December 31                           |       |       | September 30 |   |       | June 30 |  |   | March 31 |      
|                           |                                                     |                                       |       |       |              |   |       |         |  |   |          |      
|                           |                                                     | (in thousands, except per share data) |      
|Interest income            |                                                     | $                                     | 7,402 |       |              | $ | 7,358 |         |  | $ | 7,273    |       |  | $ | 7,365 |      
|Interest expense           |                                                     |                                       | 2,653 |       |              |   | 2,602 |         |  |   | 2,603    |       |  |   | 2,792 |      
|                           |                                                     |                                       |       |       |              |   |       |         |  |   |          |      
|                           | Net interest income                                 |                                       |       | 4,749 |              |   |       | 4,756   |  |   |          | 4,670 |  |   |       | 4,573 | 
|Provision for loan losses  |                                                     |                                       | 300   |       |              |   | 300   |         |  |   | 300      |       |  |   | 300   |      
|                           |                                                     |                                       |       |       |              |   |       |         |  |   |          |      
|                           | Net interest income after provision for loan losses |                                       |       | 4,449 |              |   |       | 4,456   |  |   |          | 4,370 |  |   |       | 4,273 | 
|Other income               |                                                     |                                       | 1,666 |       |              |   | 1,589 |         |  |   | 1,503    |       |  |   | 1,249 |      
|Other expense              |                                                     |                                       | 3,984 |       |              |   | 4,310 |         |  |   | 4,147    |       |  |   | 4,309 |      
|                           |                                                     |                                       |       |       |              |   |       |         |  |   |          |      
|                           | Income before income taxes                          |                                       |       | 2,131 |              |   |       | 1,735   |  |   |          | 1,726 |  |   |       | 1,213 | 
|Income taxes               |                                                     |                                       | 502   |       |              |   | 502   |         |  |   | 544      |       |  |   | 368   |      
|                           |                                                     |                                       |       |       |              |   |       |         |  |   |          |      
|                           | Net income                                          |                                       | $     | 1,629 |              |   | $     | 1,233   |  |   | $        | 1,182 |  |   | $     | 845   | 
|                           |                                                     |                                       |       |       |              |   |       |         |  |   |          |      
|Basic earnings per share   |                                                     | $                                     | 0.66  |       |              | $ | 0.50  |         |  | $ | 0.47     |       |  | $ | 0.33  |      
|                           |                                                     |                                       |       |       |              |   |       |         |  |   |          |      
|Diluted earnings per share |                                                     | $                                     | 0.66  |       |              | $ | 0.50  |         |  | $ | 0.46     |       |  | $ | 0.33  |      
|                           |                                                     |                                       |       |       |              |   |       |         |  |   |          |      





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10-K, 10-Q, 8-K,














|  |                            
|- | ---------------------------
| | Audit Committee Charter    
| | Executive Committee Charter
| | Code of Conduct            





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|                                        |  |      |       |  |      |   |       |      |  |   |       |  |  |   |       | 
|--------------------------------------- |  | ---- | ----- |  | ---- | - | ----- | ---- |  | - | ----- |  |  | - | ----- | 
|                                        |  | 2005 |       |  | 2004 |  
|                                        |  |      |       |  |      |  
|                                        |  | High |       |  | Low  |   |       | High |  |   | Low   | 
|                                        |  |      |       |  |      |   |       |      |  |   |       | 
|1st Quarter                             |  | $    | 28.78 |  |      | $ | 27.50 |      |  | $ | 28.24 |  |  | $ | 27.45 | 
|2nd Quarter                             |  |      | 27.51 |  |      |   | 25.60 |      |  |   | 28.01 |  |  |   | 25.76 | 
|3rd Quarter                             |  |      | 27.00 |  |      |   | 25.60 |      |  |   | 28.05 |  |  |   | 27.30 | 
|4th Quarter                             |  |      | 27.44 |  |      |   | 25.70 |      |  |   | 28.21 |  |  |   | 27.15 | 
|January 1, 2006, through March 10, 2006 |  |      | 27.00 |  |      |   | 25.81 |      |  |   |       |  |  |   |       | 







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Chairman of the Board, Centrue Financial Corporation and 
      Chief Executive Officer, Aptuit,
Inc.,


President and Chief Executive Officer, Centrue Financial
Corporation,


President, Gundaker Commercial Group, Inc.


President, Smith, Koelling, Dykstra & Ohm, PC,


Retired; Former Executive Director, Kankakee YMCA,




Chairman of the Board,


Directors,


Chief Executive Officer,


President and Chief Operating Officer,


Chief Credit Officer,


President, Centrue North,


President, Centrue South,


President, Centrue West,


Senior Vice President,


Senior Operations Officer,


Vice Presidents:






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