UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                                    FORM 10-K

        [X]         ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
                    OF THE SECURITIES EXCHANGE ACT OF 1934

                   For the fiscal year ended December 31, 2005

                                       OR

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

                        Commission file number 000-21671

                  THE NATIONAL BANK OF INDIANAPOLIS CORPORATION
             (Exact name of Registrant as Specified in its Charter)

                Indiana                                  35-1887991
    (State or Other Jurisdiction of         (I.R.S. Employer Identification No.)
    Incorporation or Organization)

     107 North Pennsylvania Street                         46204
         Indianapolis, Indiana                           (Zip Code)
(Address of Principal Executive Offices)

                                 (317) 261-9000
              (Registrant's Telephone Number, Including Area Code)

        Securities registered pursuant to Section 12(b) of the Act: None

    Securities registered Pursuant to Section 12(g) of the Act: Common Stock

     Indicate by check mark if the registrant is a well-known seasoned issuer,
as defined in Rule 405 of the Securities Act. Yes [ ] No [X]

     Indicate by check mark if the registrant is not required to file reports
pursuant to Section 13 or Section 15(d) of the Exchange Act. Yes [ ] No [X]

     Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ]

     Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [X]

     Indicate by check mark whether the registrant is a large accelerated filer,
an accelerated filer, or a non-accelerated filer. See definition of "accelerated
filer and large accelerated filer" in Rule 12b-2 of the Exchange Act.
Large accelerated filer [ ]   Accelerated filer [ ]   Non-accelerated filer [X]

Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act). Yes [ ] No [X]


<PAGE>

     The aggregate market value of the common stock held by non-affiliates of
the registrant as of June 30, 2005 was approximately $58,578,318. The number of
shares of the registrant's Common Stock outstanding March 24, 2006 was
2,299,649.

                       DOCUMENTS INCORPORATED BY REFERENCE


The information required by Part III of this Report on Form 10-K, to the extent
not set forth herein, is incorporated herein by reference to the Registrant's
definitive proxy statement to be filed in connection with the annual meeting of
shareholders to be held on June 15, 2006.


<PAGE>

                                    Form 10-K Cross Reference Index

<TABLE>
<CAPTION>
                                                                                          Page
PART I
<S>                                                                                       <C>
Item 1.           Business                                                                   1

Item 1A.          Risk Factors                                                              13

Item 1B.          Unresolved Staff Comments                                                 16

Item 2.           Properties                                                                16

Item 3.           Legal Proceedings                                                         17

Item 4.           Submission of Matters to a Vote of Security Holders                       17

PART II

Item 5.           Market for Registrant's Common Equity,
                  Related Stockholder Matters and Issuer Purchases of Equity Securities     18

Item 6.           Selected Financial Data                                                   20

Item 7.           Management's Discussion and Analysis of Financial Condition               21
                  and Results of Operations

Item 7A.          Quantitative and Qualitative Disclosures about Market Risk                46

Item 8.           Financial Statements and Supplementary Data                               47

Item 9.           Changes In and Disagreements With Accountants on Accounting               88
                  and Financial Disclosure

Item 9A.          Controls and Procedures                                                   88

Item 9B.          Other Information                                                         89

PART III

Item 10.          Directors and Executive Officers of the Registrant                        90

Item 11.          Executive Compensation                                                    90

Item 12.          Security Ownership of Certain Beneficial Owners and Management
                  and Related Stockholder Matters                                           90

Item 13.          Certain Relationships and Related Transactions                            90

Item 14.          Principal Accounting Fees and Services                                    90

PART IV

Item 15.          Exhibits and Financial Statement Schedules                                91

Signatures                                                                                  94
</TABLE>

<PAGE>

PART I

Item 1.  Business
-----------------

         The Corporation. The National Bank of Indianapolis Corporation (the
"Corporation") was formed as an Indiana corporation on January 29, 1993, for the
purpose of forming a banking institution in the Indianapolis, Indiana
metropolitan area and holding all of the shares of common stock of such banking
institution. The Corporation formed a national banking association named "The
National Bank of Indianapolis" (the "Bank") as a wholly-owned subsidiary.

         The Bank was officially chartered by the OCC on December 8, 1993 and
opened for business to the public on December 21, 1993. The Bank's deposits are
insured by the FDIC. The Bank currently conducts its business through nine
offices, including its downtown headquarters located at 107 North Pennsylvania
Street in Indianapolis, and its neighborhood bank offices located at 84th Street
and Ditch Road in northwestern Marion County; 82nd Street and Bash Road in
northeastern Marion County; the Chamber of Commerce Building and AUL Office
Complex in downtown Indianapolis; 49th Street and North Pennsylvania Street in
northern Marion County; Keystone Avenue and East Carmel Drive in Hamilton
County; 106th Street and Michigan Road in Hamilton County; and Smith Valley Road
and S.R. 135 in Johnson County.

         The Bank provides a full range of deposit, credit, and money management
services to its targeted market, which is small to medium size businesses,
affluent executive and professional individuals, and not-for-profit
organizations and has full trust powers.

         Management initially sought to position the Bank to capitalize on the
customer disruption, dissatisfaction, and turn-over which it believed has
resulted from the acquisition of the three largest commercial banks located in
Indianapolis by out-of-state holding companies. Management is now focused on
serving the local markets with an organization which is not owned by an
out-of-state company whose decisions are made locally. On December 31, 2005, the
Corporation had consolidated total assets of $928 million and total deposits of
$774 million.

         Management believes that the key ingredients in the growth of the Bank
have been a well-executed business plan, an experienced Board of Directors and
management team and a seasoned group of bank employees. The basic strategy of
the Bank continues to emphasize the delivery of highly personalized services to
the target client base with an emphasis on quick response and financial
expertise.

         Business Plan Overview. The business plan of the Bank is based on being
a strong, locally owned bank providing superior service to a defined group of
customers, which are primarily corporations with annual sales under $50 million,
executives, professionals, and not-for-profit organizations. The Bank provides
highly personalized banking services with an emphasis on knowledge of the
particular financial needs and objectives of its clients and quick response to
customer requests. Because the management of the Bank is located in
Indianapolis, all credit and related decisions are made locally, thereby
facilitating prompt response. The Bank emphasizes both highly personalized
service at the customer's convenience and non-traditional delivery services that
do not require customers to frequent the Bank. This personal contact has become
a trademark of the Bank and a key means of differentiating the Bank from other
financial service providers.

                                       1
<PAGE>

         The Bank offers a broad range of deposit services typically available
from most banks and savings associations, including interest and non-interest
bearing checking accounts, savings and other kinds of deposits of various types
(ranging from daily money market accounts to longer term certificates of
deposit). The Bank also offers a full range of credit services, including
commercial loans (such as lines of credit, term loans, refinancings, etc.),
personal lines of credit, direct installment consumer loans, credit card loans,
residential mortgage loans, construction loans, and letters of credit. In
addition, the Bank offers full Wealth Management services.

         The Bank's growth in deposits is attributable in part to the efforts of
its staff who provide personal banking services to the Bank's customers. In
addition, the Bank has emphasized paying competitive interest rates on deposit
products. Finally, the Bank has offered savings and certificate of deposit
products with competitive rates to larger depositors in an effort to minimize
the operating costs of obtaining these deposits. Lending strategies focus
primarily on commercial loans to small and medium size businesses as well as
personal loans to executives and professionals.

         The residential mortgage lending area of the Bank offers conforming,
jumbo, portfolio, and CRA mortgage products. The Bank utilizes secondary market
channels it has developed for sale of those mortgage products described above.
Secondary market channels include FNMA, as well as private investors identified
through wholesale entities. Consumer lending is directed to executive and
professional clients through residential mortgages, credit cards, and personal
lines of credit to include home equity loans.

         The Market. The Bank derives a substantial proportion of its business
from the Indianapolis Metropolitan Statistical Area ("MSA"), Indiana area.
Indianapolis has been ranked by a number of national publications as a "top"
Midwestern city.

         Competition. The Bank's service area is highly competitive. There are
numerous financial institutions operating in the Indianapolis MSA marketplace,
which provide strong competition to the Bank. In addition to the challenge of
attracting and retaining customers for traditional banking services offered by
commercial bank competitors, significant competition also comes from savings and
loans associations, credit unions, finance companies, insurance companies,
mortgage companies, securities and brokerage firms, money market mutual funds,
loan production offices, and other providers of financial services in the area.
These competitors, with focused products targeted at highly profitable customer
segments, compete across geographic boundaries and provide customers increasing
access to meaningful alternatives to banking services in nearly all significant
products. The increasingly competitive environment is a result primarily of
changes in regulations, changes in technology, product delivery systems and the
accelerating pace of consolidation among financial service providers. These
competitive trends are likely to continue. The Bank's ability to maintain its
history of strong financial performance will depend in part on the Bank's
ability over time to expand its scope of available financial services as needed
to meet the needs and demands of its customers. The Bank competes in this
marketplace primarily on the basis of highly personalized service, responsive
decision making, and competitive pricing.


                                        2
<PAGE>

         Employees. The Corporation and the Bank has 211 employees, of which 201
are full-time equivalent employees. The Bank has employed persons with
substantial experience in the Indianapolis MSA banking market. The average
banking experience level for all Bank employees is in excess of 13 years.

         Lending Activity. The Bank's lending strategy emphasizes a high
quality, well-diversified loan portfolio. The Bank's principal lending
categories are commercial, commercial mortgage, residential mortgage, private
banking/personal, and home equity. Commercial loans include loans for working
capital, machinery and equipment purchases, premises and equipment acquisitions
and other corporate needs. Residential mortgage lending includes loans on first
mortgage residential properties. Private banking loans include secured and
unsecured personal lines of credit as well as home equity loans.

         Commercial loans typically entail a thorough analysis of the borrower,
its industry, current and projected economic conditions and other factors.
Credit analysis involves collateral, the type of loan, loan maturity, terms and
conditions, and various loan to value ratios as they relate to loan policy. The
Bank typically requires commercial borrowers to have annual financial statements
prepared by independent accountants and may require such financial statements to
be audited or reviewed by accountants. The Bank generally requires appraisals or
evaluations in connection with loans secured by real estate. Such appraisals or
evaluations are usually obtained prior to the time funds are advanced. The Bank
also often requires personal guarantees from principals involved with
closely-held corporate borrowers.

         The Bank requires loan applications and personal financial statements
from its personal borrowers on loans that the Bank originates. Loan officers
complete a debt to income analysis that should meet established standards of
lending policy.

         The Bank maintains a comprehensive loan policy that establishes
guidelines with respect to all categories of lending. In addition, loan policy
sets forth lending authority for each loan officer. The Loan Committee of the
Bank reviews all loans in excess of $350,000. Any loan in excess of a lending
officer's lending authority, up to $1,500,000, must receive the approval of the
Chief Executive Officer ("CEO"), Chief Lending Officer ("CLO"), or Senior Vice
President - Corporate Banking ("SVP"). Loans in excess of $1,500,000 but less
than $5,000,000 must be approved by the Loan Committee prior to the Bank making
such loan. The Board of Directors Loan Policy Committee is not required to
approve loans unless they are above $5,000,000 or are loans to directors or
executive officers. All loans are assigned a numerical rating based on
creditworthiness and are monitored for improvement or deterioration.

         Loans are made primarily in the Bank's designated market area.




                                       3
<PAGE>

Regulation And Supervision

         Both the Corporation and the Bank operate in highly regulated
environments and are subject to supervision and regulation by several
governmental regulatory agencies, including the Board of Governors of the
Federal Reserve System (the "Federal Reserve"), the Office of the Comptroller of
the Currency (the "OCC"), and the Federal Deposit Insurance Corporation (the
"FDIC"). The laws and regulations established by these agencies are generally
intended to protect depositors, not shareholders. Changes in applicable laws,
regulations, governmental policies, income tax laws and accounting principles
may have a material effect on our business and prospects. The following summary
is qualified by reference to the statutory and regulatory provisions discussed.

         The Corporation

         The Bank Holding Company Act. Because the Corporation owns all of the
outstanding capital stock of the Bank, it is registered as a bank holding
company under the federal Bank Holding Company Act of 1956 and is subject to
periodic examination by the Federal Reserve and required to file periodic
reports of its operations and any additional information that the Federal
Reserve may require.

         Investments, Control, and Activities. With some limited exceptions, the
Bank Holding Company Act requires every bank holding company to obtain the prior
approval of the Federal Reserve before acquiring another bank holding company or
acquiring more than five percent of the voting shares of a bank (unless it
already owns or controls the majority of such shares).

         Bank holding companies are prohibited, with certain limited exceptions,
from engaging in activities other than those of banking or of managing or
controlling banks. They are also prohibited from acquiring or retaining direct
or indirect ownership or control of voting shares or assets of any company which
is not a bank or bank holding company, other than subsidiary companies
furnishing services to or performing services for their subsidiaries, and other
subsidiaries engaged in activities which the Federal Reserve Board determines to
be so closely related to banking or managing or controlling banks as to be
incidental to these operations. The Bank Holding Company Act does not place
territorial restrictions on the activities of such nonbanking-related
activities.

         Bank holding companies which meet certain management, capital, and CRA
standards may elect to become a financial holding company, which would allow
them to engage in a substantially broader range of nonbanking activities than is
permitted for a bank holding company, including insurance underwriting and
making merchant banking investments in commercial and financial companies.

         The Corporation does not currently plan to engage in any activity other
than owning the stock of the Bank.


                                       4
<PAGE>

         Capital Adequacy Guidelines for Bank Holding Companies. The Federal
Reserve, as the regulatory authority for bank holding companies, has adopted
capital adequacy guidelines for bank holding companies. Bank holding companies
with assets in excess of $150 million must comply with the Federal Reserve's
risk-based capital guidelines which require a minimum ratio of total capital to
risk-weighted assets (including certain off-balance sheet activities such as
standby letters of credit) of 8%. At least half of the total required capital
must be "Tier 1 capital," consisting principally of common stockholders' equity,
noncumulative perpetual preferred stock, a limited amount of cumulative
perpetual preferred stock and minority interest in the equity accounts of
consolidated subsidiaries, less certain goodwill items. The remainder ("Tier 2
capital") may consist of a limited amount of subordinated debt and
intermediate-term preferred stock, certain hybrid capital instruments and other
debt securities, cumulative perpetual preferred stock, and a limited amount of
the general loan loss allowance. In addition to the risk-based capital
guidelines, the Federal Reserve has adopted a Tier 1 (leverage) capital ratio
under which the bank holding company must maintain a minimum level of Tier 1
capital to average total consolidated assets of 3% in the case of bank holding
companies which have the highest regulatory examination ratings and are not
contemplating significant growth or expansion. All other bank holding companies
are expected to maintain a ratio of at least 1% to 2% above the stated minimum.

         Certain regulatory capital ratios for the Corporation as of December
31, 2005 are shown below:

              Tier 1 Capital to Risk-Weighted Assets                    9.3%
              Total Risk Based Capital to Risk-Weighted Assets         11.2%
              Tier 1 Leverage Ratio                                     6.8%

         Dividends. The Federal Reserve's policy is that a bank holding company
experiencing earnings weakness should not pay cash dividends exceeding its net
income or which could only be funded in ways that weaken the bank holding
company's financial health, such as by borrowing. Additionally, the Federal
Reserve possesses enforcement powers over bank holding companies and their
non-bank subsidiaries to prevent or remedy actions that represent unsafe or
unsound practices or violations of applicable statutes and regulations. Among
these powers is the ability to proscribe the payment of dividends by banks and
bank holding companies.

         Source of Strength. In accordance with Federal Reserve Board policy,
the Corporation is expected to act as a source of financial strength to the Bank
and to commit resources to support the Bank in circumstances in which the
Corporation might not otherwise do so.


                                       5
<PAGE>

         The Bank

         General Regulatory Supervision. The Bank is a national bank organized
under the laws of the United States of America and is subject to the supervision
of the OCC, whose examiners conduct periodic examinations of national banks. The
Bank must undergo regular on-site examinations by the OCC and must submit
quarterly and annual reports to the OCC concerning its activities and financial
condition.
         The deposits of the Bank are insured by the Bank Insurance Fund ("BIF")
administered by the FDIC and are subject to the FDIC's rules and regulations
respecting the insurance of deposits. See "--Deposit Insurance."

         Lending Limits. Under federal law, the total loans and extensions of
credit by a national bank to a borrower outstanding at one time and not fully
secured may not exceed 15 percent of the bank's capital and unimpaired surplus.
In addition, the total amount of outstanding loans and extensions of credit to
any borrower outstanding at one time and fully secured by readily marketable
collateral may not exceed ten percent of the unimpaired capital and unimpaired
surplus of the bank (this limitation is separate from and in addition to the
above limitation). If a loan is secured by United States obligations, such as
treasury bills, it is not subject to the bank's legal lending limit.

         Deposit Insurance. Deposits in the Bank are insured by the FDIC up to a
maximum amount, which is generally $100,000 per depositor subject to aggregation
rules. The Bank is subject to deposit insurance assessment by the FDIC pursuant
to its regulations establishing a risk-related deposit insurance assessment
system, based upon the institution's capital levels and risk profile. The Bank
is also subject to assessment for the Financial Corporation ("FICO") to service
the interest on its bond obligations. The amount assessed on individual
institutions, including the Bank, by FICO is in addition to the amount paid for
deposit insurance according to the risk-related assessment rate schedule.
Increases in deposit insurance premiums or changes in risk classification will
increase the Bank's cost of funds, and it may not be able to pass these costs on
to its customers. The Bank is not currently paying deposit insurance premiums to
the FDIC, but was required to pay $24,315 for the FICO assessment for the first
quarter in 2006.

         Transactions with Affiliates and Insiders. The Bank is subject to
limitations on the amount of loans or extensions of credit to, or investments
in, or certain other transactions with, affiliates and insiders on the amount of
advances to third parties collateralized by the securities or obligations of
affiliates. Furthermore, within the foregoing limitations as to amount, each
covered transaction must meet specified collateral requirements. Compliance is
also required with certain provisions designed to avoid the taking of low
quality assets. The Bank is also prohibited from engaging in certain
transactions with certain affiliates and insiders unless the transactions are on
terms substantially the same, or at least as favorable to such institution or
its subsidiaries, as those prevailing at the time for comparable transactions
with nonaffiliated companies.


                                       6
<PAGE>

         Extensions of credit by the Bank to its executive officers, directors,
certain principal shareholders, and their related interests must:

         o        be made on substantially the same terms, including interest
                  rates and collateral, as those prevailing at the time for
                  comparable transactions with third parties; and

         o        not involve more than the normal risk of repayment or present
                  other unfavorable features.

         Dividends. Under federal law, the Bank may pay dividends from its
undivided profits in an amount declared by its Board of Directors, subject to
prior approval of the OCC if the proposed dividend, when added to all prior
dividends declared during the current calendar year, would be greater than the
current year's net income and retained earnings for the previous two calendar
years.
         Federal law generally prohibits the Bank from paying a dividend to the
Corporation if the depository institution would thereafter be undercapitalized.
The FDIC may prevent an insured bank from paying dividends if the bank is in
default of payment of any assessment due to the FDIC. In addition, payment of
dividends by a bank may be prevented by the applicable federal regulatory
authority if such payment is determined, by reason of the financial condition of
such bank, to be an unsafe and unsound banking practice. In addition, the Bank
is subject to certain restrictions imposed by the Federal Reserve on extensions
of credit to the Corporation, on investments in the stock or other securities of
the Corporation, and in taking such stock or securities as collateral for loans.

         Branching and Acquisitions. Under federal and Indiana law, the Bank may
establish an additional banking location anywhere in Indiana. Federal law also
allows bank holding companies to acquire banks anywhere in the United States
subject to certain state restrictions, and permits an insured bank to merge with
an insured bank in another state without regard to whether such merger is
prohibited by state law. Additionally, an out-of-state bank may acquire the
branches of an insured bank in another state without acquiring the entire bank
if the law of the state where the branch is located permits such an acquisition.
Bank holding companies may merge existing bank subsidiaries located in different
states into one bank.

         Community Reinvestment Act. The Community Reinvestment Act requires
that the OCC evaluate the records of the Bank in meeting the credit needs of its
local community, including low and moderate income neighborhoods. These factors
are also considered in evaluating mergers, acquisitions, and applications to
open a branch or facility. Failure to adequately meet these criteria could
result in the imposition of additional requirements and limitations on the Bank.


                                       7
<PAGE>

         Capital Regulations. The OCC has adopted risk-based capital ratio
guidelines to which the Bank is subject. The guidelines establish a systematic
analytical framework that makes regulatory capital requirements more sensitive
to differences in risk profiles among banking organizations. Risk-based capital
ratios are determined by allocating assets and specified off-balance sheet
commitments to four risk weighted categories, with higher levels of capital
being required for the categories perceived as representing greater risk.

         These guidelines divide a bank's capital into two tiers. The first tier
(Tier 1) includes common equity, certain non-cumulative perpetual preferred
stock (excluding auction rate issues) and minority interests in equity accounts
of consolidated subsidiaries, less goodwill and certain other intangible assets
(except mortgage servicing rights and purchased credit card relationships,
subject to certain limitations). Supplementary (Tier 2) capital includes, among
other items, cumulative perpetual and long-term limited-life preferred stock,
mandatory convertible securities, certain hybrid capital instruments, term
subordinated debt and the allowance for loan and lease losses, subject to
certain limitations, less required deductions. Banks are required to maintain a
total risk-based capital ratio of 8%, of which 4% must be Tier 1 capital. The
OCC may, however, set higher capital requirements when a bank's particular
circumstances warrant. Banks experiencing or anticipating significant growth are
expected to maintain capital ratios, including tangible capital positions, well
above the minimum levels.

         In addition, the OCC established guidelines prescribing a minimum Tier
1 leverage ratio (Tier 1 capital to adjusted total assets as specified in the
guidelines). These guidelines provide for a minimum Tier 1 leverage ratio of 3%
for banks that meet certain specified criteria, including that they have the
highest regulatory rating and are not experiencing or anticipating significant
growth. All other banks are required to maintain a Tier 1 leverage ratio of 3%
plus an additional cushion of at least 100 to 200 basis points.

         Certain regulatory capital ratios under the OCC's risk-based capital
guidelines for the Bank at December 31, 2005 are shown below:


         Tier 1 Capital to Risk-Weighted Assets......................  9.0%

         Total Risk-Based Capital to Risk-Weighted Assets............ 10.9%

         Tier 1 Leverage Ratio.......................................  6.8%


         The federal bank regulators, including the OCC, also have issued a
joint policy statement to provide guidance on sound practices for managing
interest rate risk. The statement sets forth the factors the federal regulatory
examiners will use to determine the adequacy of a bank's capital for interest
rate risk. These qualitative factors include the adequacy and effectiveness of
the bank's internal interest rate risk management process and the level of
interest rate exposure. Other qualitative factors that will be considered
include the size of the bank, the nature and complexity of its activities, the
adequacy of its capital and earnings in relation to the bank's overall risk
profile, and its earning exposure to interest rate movements. The interagency
supervisory policy statement describes the responsibilities of a bank's board of
directors in implementing a risk management process and the requirements of the
bank's senior management in ensuring the effective


                                       8
<PAGE>

management of interest rate risk. Further, the statement specifies the elements
that a risk management process must contain.

         The OCC has also issued final regulations further revising its
risk-based capital standards to include a supervisory framework for measuring
market risk. The effect of these regulations is that any bank holding company or
bank which has significant exposure to market risk must measure such risk using
its own internal model, subject to the requirements contained in the
regulations, and must maintain adequate capital to support that exposure. These
regulations apply to any bank holding company or bank whose trading activity
equals 10% or more of its total assets, or whose trading activity equals $1
billion or more. Examiners may require a bank holding company or bank that does
not meet the applicability criteria to comply with the capital requirements if
necessary for safety and soundness purposes. These regulations contain
supplemental rules to determine qualifying and excess capital, calculate
risk-weighted assets, calculate market risk equivalent assets and calculate
risk-based capital ratios adjusted for market risk.

         The Bank is also subject to the "prompt corrective action" regulations,
which implement a capital-based regulatory scheme designed to promote early
intervention for troubled banks. This framework contains five categories of
compliance with regulatory capital requirements, including "well capitalized,"
"adequately capitalized," "undercapitalized," "significantly undercapitalized,"
and "critically undercapitalized." As of December 31, 2005, the Bank was
qualified as "well capitalized." It should be noted that a bank's capital
category is determined solely for the purpose of applying the "prompt corrective
action" regulations and that the capital category may not constitute an accurate
representation of the bank's overall financial condition or prospects. The
degree of regulatory scrutiny of a financial institution increases, and the
permissible activities of the institution decrease, as it moves downward through
the capital categories. Bank holding companies controlling financial
institutions can be required to boost the institutions' capital and to partially
guarantee the institutions' performance.

         Check Clearing for the 21st Century Act. The Federal Reserve adopted
final amendments to Regulation CC and its commentary to implement the Check
Clearing for the 21st Century Act (the "Check 21 Act"). To facilitate check
truncation and electronic check exchange, the Check 21 Act authorizes a new
negotiable instrument called a "substitute check" and provides that a properly
prepared substitute check is the legal equivalent of the original check for all
purposes. A substitute check is a paper reproduction of the original check that
can be processed just like the original check. The Check 21 Act does not require
any bank to create substitute checks or to accept checks electronically. The
Federal Reserve's amendments: (i) set forth the requirements of the Check 21 Act
that apply to all banks, including those that choose not to create substitute
checks; (ii) provide a model disclosure and model notices relating to substitute
checks; and (iii) set forth bank endorsement and identification requirements for
substitute checks. The amendments also clarify some existing provisions of the
rule and commentary.



                                       9
<PAGE>

         USA Patriot Act. The Uniting and Strengthening America by Providing
Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (the
"USA Patriot Act") is intended to strengthen the ability of U. S. Law
Enforcement to combat terrorism on a variety of fronts. The potential impact of
the USA Patriot Act on financial institutions is significant and wide-ranging.
The USA Patriot Act contains sweeping anti-money laundering and financial
transparency laws and requires financial institutions to implement additional
policies and procedures with respect to, or additional measures designed to
address, any or all of the following matters, among others: money laundering and
currency crimes, customer identification verification, cooperation among
financial institutions, suspicious activities and currency transaction
reporting.

         Sarbanes-Oxley Act of 2002. The Sarbanes-Oxley Act of 2002 (the
"Sarbanes-Oxley Act") represents a comprehensive revision of laws affecting
corporate governance, accounting obligations and corporate reporting. Among
other requirements, the Sarbanes-Oxley Act established: (i) new requirements for
audit committees of public companies, including independence, expertise, and
responsibilities; (ii) additional responsibilities regarding financial
statements for the chief executive officers and chief financial officers of
reporting companies; (iii) new standards for auditors and regulation of audits;
(iv) increased disclosure and reporting obligations for reporting companies
regarding various matters relating to corporate governance, and (v) new and
increased civil and criminal penalties for violation of the securities laws.

         Other Regulations.

         Federal law extensively regulates other various aspects of the banking
business such as reserve requirements. Current federal law also requires banks,
among other things to make deposited funds available within specified time
periods. In addition, with certain exceptions, a bank and a subsidiary may not
extend credit, lease or sell property or furnish any services or fix or vary the
consideration for the foregoing on the condition that (i) the customer must
obtain or provide some additional credit, property or services from, or to, any
of them, or (ii) the customer may not obtain some other credit, property or
service from a competitor, except to the extent reasonable conditions are
imposed to assure the soundness of credit extended.

         An insured bank subsidiary may act as an agent for an affiliated bank
or thrift in offering limited banking services (receive deposits, renew time
deposits, close loans, service loans and receive payments on loan obligations)
both within the same state and across state lines.

         Interest and other charges collected or contracted by the Bank are
subject to state usury laws and federal laws concerning interest rates. The
Bank's loan operations are also subject to federal and state laws applicable to
credit transactions, such as the:

         o        Truth-In-Lending Act and state consumer protection laws
                  governing disclosures of credit terms and prohibiting certain
                  practices with regard to consumer borrowers;


                                       10
<PAGE>

         o        Home Mortgage Disclosure Act of 1975, requiring financial
                  institutions to provide information to enable the public and
                  public officials to determine whether a financial institution
                  is fulfilling its obligation to help meet the housing needs of
                  the community it serves;

         o        Equal Credit Opportunity Act and other fair lending laws,
                  prohibiting discrimination on the basis of race, creed or
                  other prohibited factors in extending credit;

         o        Fair Credit Reporting Act of 1978 and Fair and Accurate Credit
                  Transactions Act of 2003, governing the use and provision of
                  information to credit reporting agencies;

         o        Fair Debt Collection Practices Act, governing the manner in
                  which consumer debts may be collected by collection agencies;
                  and rules and regulations of the various federal agencies
                  charged with the responsibility of implementing such federal
                  laws.

         The deposit operations of the Bank also are subject to the:

         o        Customer Information Security Guidelines. The federal bank
                  regulatory agencies have adopted final guidelines (the
                  "Guidelines") for safeguarding confidential customer
                  information. The Guidelines require each financial
                  institution, under the supervision and ongoing oversight of
                  its Board of Directors, to create a comprehensive written
                  information security program designed to ensure the security
                  and confidentiality of customer information, protect against
                  any anticipated threats or hazards to the security or
                  integrity of such information; protect against unauthorized
                  access to or use of such information that could result in
                  substantial harm or inconvenience to any customer; and
                  implement response programs for security breaches.

         o        Electronic Funds Transfer Act, and Regulation E. The
                  Electronic Funds Transfer Act, which is implemented by
                  Regulation E, governs automatic deposits to and withdrawals
                  from deposit accounts and customers' rights and liabilities
                  arising from the use of automated teller machines and other
                  electronic banking service.

         o        Gramm-Leach-Bliley Act, Fair and Accurate Credit Transactions
                  Act. The Gramm-Leach-Bliley Act and the Fair and Accurate
                  Credit Transactions Act and the implementing regulations
                  govern consumer financial privacy, provide disclosure
                  requirements and restrict the sharing of certain consumer
                  financial information with other parties.

         The federal banking agencies have established guidelines which
prescribe standards for depository institutions relating to internal controls,
information systems, internal audit systems, loan documentation, credit
underwriting, interest rate exposure, asset growth, asset quality, earnings,
compensation fees and benefits, and management compensation. The agencies may
require an institution which fails to meet the standards set forth in the
guidelines to submit a compliance plan. Failure to submit an acceptable plan or
adhere to an accepted plan may be grounds for further enforcement action.

         Enforcement Powers. Federal regulatory agencies may assess civil and
criminal penalties against depository institutions and certain
"institution-affiliated parties," including management, employees, and agents of
a financial institution, as well as independent contractors and consultants such
as attorneys and accountants and others who


                                       11
<PAGE>

participate in the conduct of the financial institution's affairs. In addition,
regulators may commence enforcement actions against institutions and
institution-affiliated parties. Possible enforcement actions include the
termination of deposit insurance. Furthermore, regulators may issue
cease-and-desist orders to, among other things, require affirmative action to
correct any harm resulting from a violation or practice, including restitution,
reimbursement, indemnifications or guarantees against loss. A financial
institution may also be ordered to restrict its growth, dispose of certain
assets, rescind agreements or contracts, or take other actions as determined by
the regulator to be appropriate.

         Effect of Governmental Monetary Policies. The Corporation's earnings
are affected by domestic economic conditions and the monetary and fiscal
policies of the United States government and its agencies. The Federal Reserve
Bank's monetary policies have had, and are likely to continue to have, an
important impact on the operating results of commercial banks through its power
to implement national monetary policy in order, among other things, to curb
inflation or combat a recession. The monetary policies of the Federal Reserve
Board have major effects upon the levels of bank loans, investments and deposits
through its open market operations in United States government securities and
through its regulation of the discount rate on borrowings of member banks and
the reserve requirements against member bank deposits. It is not possible to
predict the nature or impact of future changes in monetary and fiscal policies.

Available Information
---------------------

         The Corporation files annual reports on Form 10-K, quarterly reports on
Form 10-Q, proxy statements and other information with the Securities and
Exchange Commission. Such reports, proxy statements and other information can be
read and copied at the public reference facilities maintained by the Securities
and Exchange Commission at the Public Reference Room, 100 F Street, NE,
Washington, D.C. 20549. Information regarding the operation of the Public
Reference Room may be obtained by calling the Securities and Exchange Commission
at 1-800-SEC-0330. The Securities and Exchange Commission maintains a web site
(http://www.sec.gov) that contains reports, proxy and information. The
Corporation's filings are also accessible at no cost on the Corporation's
website at www.nbofi.com.








                                       12
<PAGE>

Item 1A. Risk Factors
---------------------

The Corporation Is Subject To Interest Rate Risk
------------------------------------------------

         Interest and fees on loans and securities, net of interest paid on
deposits and borrowings, are a large part of the Corporation's net income.
Interest rates are key drivers of the Corporation's net interest margin and
subject to many factors beyond the control of management. As interest rates
change, net interest income is affected. Rapid increases in interest rates in
the future could result in interest expense increasing faster than interest
income because of mismatches in financial instrument maturities. Further,
substantially higher interest rates generally reduce loan demand and may result
in slower loan growth. Decreases or increases in interest rates could have a
negative effect on the spreads between the interest rates earned on assets and
the rates of interest paid on liabilities, and therefore decrease net interest
income.

The Corporation Is Subject To Lending Risk
------------------------------------------

         There are inherent risks associated with the Corporation's lending
activities. These risks include, among other things, the impact of changes in
interest rates and changes in the economic conditions in the markets where the
Corporation operates as well as those across Indiana and the United States.
Increases in interest rates and/or weakening economic conditions could adversely
impact the ability of borrowers to repay outstanding loans or the value of the
collateral securing these loans. The Corporation is also subject to various laws
and regulations that affect its lending activities. Failure to comply with
applicable laws and regulations could subject the Corporation to regulatory
enforcement action that could result in the assessment of significant civil
money penalties against the Corporation.

The Corporation's Allowance for  Loan Losses May Be Insufficient
----------------------------------------------------------------

         The Corporation maintains an allowance for possible loan losses, which
is a reserve established through a provision for possible loan losses charged to
expense, that represents management's best estimate of probable losses that have
been incurred within the existing portfolio of loans. The level of the allowance
reflects management's continuing evaluation of industry concentrations; specific
credit risks; loan loss experience; current loan portfolio quality; present
economic, political and regulatory conditions and unidentified losses inherent
in the current loan portfolio. The determination of the appropriate level of the
allowance for possible loan losses inherently involves a high degree of
subjectivity and requires the Corporation to make significant estimates of
current credit risks and future trends, all of which may undergo material
changes. Changes in economic conditions affecting borrowers, new information
regarding existing loans, identification of additional problem loans and other
factors, both within and outside of the Corporation's control, may require an
increase in the allowance for possible loan losses. In addition, bank regulatory
agencies periodically review the Corporation's allowance for loan losses and may
require an increase in the provision for possible loan losses or the recognition
of further loan charge-offs, based on judgments different than those of
management. In addition, if charge-offs in future periods exceed the allowance
for possible loan losses, the Corporation will need additional provisions to
increase the allowance for possible loan losses. Any increases in the allowance
for possible loan losses will result in a decrease in net income and, possibly,
capital, and may have a material adverse effect on the Corporation's financial
condition and results of operations.


                                       13
<PAGE>

The Corporation Operates In A Highly Competitive Industry And Market Area
-------------------------------------------------------------------------

         The Corporation faces substantial competition in all areas of its
operations from a variety of different competitors, many of which are larger and
may have more financial resources. Such competitors include banks and many other
types of financial institutions, including, without limitation, savings and
loans, credit unions, finance companies, brokerage firms, insurance companies,
factoring companies and other financial intermediaries. The financial services
industry could become even more competitive as a result of legislative,
regulatory and technological changes and continued consolidation. Banks,
securities firms and insurance companies can merge under the umbrella of a
financial holding company, which can offer virtually any type of financial
service, including banking, securities underwriting, insurance (both agency and
underwriting) and merchant banking. Also, technology has lowered barriers to
entry and made it possible for non-banks to offer products and services
traditionally provided by banks, such as automatic transfer and automatic
payment systems. Many of the Corporation's competitors have fewer regulatory
constraints and may have lower cost structures. Additionally, due to their size,
many competitors may be able to achieve economies of scale and, as a result, may
offer a broader range of products and services as well as better pricing for
those products and services than the Corporation can.

The Corporation's ability to compete successfully depends on a number of
factors, including, among other things:

         o        The ability to develop, maintain and build upon long-term
                  customer relationships based on top quality service, and safe,
                  sound assets.

         o        The ability to expand the Corporation's market position.

         o        The scope, relevance and pricing of products and services
                  offered to meet customer needs and demands.

         o        The rate at which the Corporation introduces new products and
                  services relative to its competitors.

         o        Customer satisfaction with the Corporation's level of service.

         o        Industry and general economic trends.

Failure to perform in any of these areas could significantly weaken the
Corporation's competitive position, which could adversely affect the
Corporation's growth and profitability, which, in turn, could have a material
adverse effect on the Corporation's financial condition and results of
operations.


                                       14
<PAGE>

The Corporation Is Subject To Extensive Government Regulation And Supervision
-----------------------------------------------------------------------------

         The Corporation, primarily through the Bank, is subject to extensive
federal regulation and supervision. Banking regulations are primarily intended
to protect depositors' funds, federal deposit insurance funds and the banking
system as a whole, not shareholders. These regulations affect the Corporation's
lending practices, capital structure, investment practices, and growth, among
other things. Congress and federal regulatory agencies continually review
banking laws, regulations and policies for possible changes. Changes to
statutes, regulations or regulatory policies, including changes in
interpretation or implementation of statutes, regulations or policies, could
affect the Corporation in substantial and unpredictable ways. Such changes could
subject the Corporation to additional costs, limit the types of financial
services and products the Corporation may offer and/or increase the ability of
non-banks to offer competing financial services and products, among other
things. Failure to comply with laws, regulations or policies could result in
sanctions by regulatory agencies, civil money penalties and/or reputation
damage, which could have a material adverse effect on the Corporation's
business, financial condition and results of operations. While the Corporation
has policies and procedures designed to prevent any such violations, there can
be no assurance that such violations will not occur.

The Corporation's Controls And Procedures May Fail Or Be Circumvented
---------------------------------------------------------------------

         Management regularly reviews and updates the Corporation's internal
controls, disclosure controls and procedures, and corporate governance policies
and procedures. Any system of controls, however well designed and operated, is
based in part on certain assumptions and can provide only reasonable, not
absolute, assurances that the objectives of the system are met. Any failure or
circumvention of the Corporation's controls and procedures or failure to comply
with regulations related to controls and procedures could have a material
adverse effect on the Corporation's business, results of operations and
financial condition.

The Corporation Is Dependent On Certain Key Management And Staff
----------------------------------------------------------------

         The Corporation relies on key personnel to manage and operate its
business. The loss of key staff may adversely affect our ability to maintain and
manage these portfolios effectively, which could negatively affect our revenues.
In addition, loss of key personnel could result in increased recruiting and
hiring expenses, which could cause a decrease in the Corporation's net income.

The Corporation's Information Systems May Experience An Interruption Or Breach
------------------------------------------------------------------------------
In Security
-----------

         The Corporation relies heavily on communications and information
systems to conduct its business. Any failure, interruption or breach in security
of these systems could result in failures or disruptions in the Corporation's
customer relationship management, general ledger, deposit, loan and other
systems. While the Corporation has policies and procedures designed to prevent
or limit the effect of the failure, interruption or security breach of its
information systems, there can be no assurance that any such failures,
interruptions or security breaches will not occur or, if they do occur, that
they will be adequately addressed. The occurrence of any failures, interruptions
or security breaches of the Corporation's information systems could damage the
Corporation's reputation, result in a loss of customer business, subject the


                                       15
<PAGE>

Corporation to additional regulatory scrutiny, or expose the Corporation to
civil litigation and possible financial liability, any of which could have a
material adverse effect on the Corporation's financial condition and results of
operations.

The Corporation Has Opened New Offices
--------------------------------------

         The Corporation has placed a strategic emphasis on expanding the Bank's
banking office network. Executing this strategy carries risks of slower than
anticipated growth in the new offices, which require a significant investment of
both financial and personnel resources. Lower than expected loan and deposit
growth in new offices can decrease anticipated revenues and net income generated
by those offices, and opening new offices could result in more additional
expenses than anticipated and divert resources from current core operations.

The Corporation Continually Encounters Technological Change
-----------------------------------------------------------

         The financial services industry is continually undergoing rapid
technological change with frequent introductions of new technology-driven
products and services. The effective use of technology increases efficiency and
enables financial institutions to better serve customers and to reduce costs.
The Corporation's future success depends, in part, upon its ability to address
the needs of its customers by using technology to provide products and services
that will satisfy customer demands, as well as to create additional efficiencies
in the Corporation's operations. Failure to successfully keep pace with
technological change affecting the financial services industry could have a
material adverse impact on the Corporation's business and, in turn, the
Corporation's financial condition and results of operations.


Item 1B. Unresolved Staff Comments
----------------------------------

         Not Applicable.


Item 2.  Property
-----------------

         The Bank owns the downtown office building which houses its main office
as well as the Corporation's main office at 107 North Pennsylvania Street,
Indianapolis, Indiana. The Bank and the Corporation utilize seven floors of this
ten-story building, and lease the remainder to other business enterprises.

         The Bank opened its first neighborhood bank office in February 1995 at
84th and Ditch Road. The Bank also opened a neighborhood bank office at 82nd and
Bash Road on the northeast side of Indianapolis in December 1995. The Bank owns
the land and the premises for both of these offices. In March 1996, the Bank
opened an office in the Chamber of Commerce building at 320 N. Meridian Street
in the downtown Indianapolis area. The Bank leases the premises at this banking
office. In March 1998, the Bank opened an office at 4930 North Pennsylvania
Street and leases the premises at this banking office. In June 1999, the Bank
opened an office in the AUL Office Complex located at One American Square in the
downtown Indianapolis area. The Bank leases the premises at this banking office.
In September 2000, the Bank opened an office at 650 East Carmel Drive in Carmel.
This office is located in Hamilton County which is north of


                                       16
<PAGE>

Indianapolis. The Bank leases the premises at this banking office. In October
2001, the Bank opened an office at 1675 West Smith Valley Road in Greenwood,
which was leased. During 2005, the Bank upgraded the Greenwood Bank Office to a
full-size, freestanding building located at 1689 West Smith Valley Road. The
Bank owns the land and the premises for this office. In January 2005, the Bank
opened an office located at 106th and Michigan Road and the Bank owns the
premises for this office and leases the land on which the building is
constructed.

         The Bank has installed a remote ATM at the Indianapolis City Market,
Parkwood Crossing, and Meridian Mark II Office Complex. These remote ATMs
provide additional banking convenience for the customers of the Bank, and
generate an additional source of fee income for the Bank.

         The Corporation's properties are in good physical condition and are
considered by the Corporation to be adequate to meet the needs of the
Corporation and the Bank and the banking needs of the customers in the
communities served.


Item 3.  Legal Proceedings
--------------------------

         Neither the Corporation nor the Bank are involved in any material
pending legal proceedings at this time, other than routine litigation incidental
to its business.


Item 4.  Submission of Matters to a Vote of Security Holders
------------------------------------------------------------

         None.






                                       17
<PAGE>

PART II

Item 5. Market Price for Registrant's Common Equity, Related Stockholder Matters
--------------------------------------------------------------------------------
and Issuer Purchases of Equity Securities.
------------------------------------------

            Shares of the common stock of the Corporation are not traded on any
national or regional exchange or in the over-the-counter market. Accordingly,
there is no established market for the common stock. There are occasional trades
as a result of private negotiations which do not always involve a broker or a
dealer. The table below lists the high and low prices per share of which
management is aware of during 2005 and 2004.


-------------------------------------------------------------------------------
                                              Price per Share
-------------------------------------------------------------------------------
      Quarter                       High                          Low
-------------------------------------------------------------------------------
                            2005           2004           2005           2004
-------------------------------------------------------------------------------
   First Quarter           $36.55         $33.00         $34.50         $31.25
-------------------------------------------------------------------------------
   Second Quarter          $37.69         $33.00         $36.49         $32.50
-------------------------------------------------------------------------------
   Third Quarter           $38.77         $33.75         $38.06         $32.75
-------------------------------------------------------------------------------
   Fourth Quarter          $42.00         $34.50         $38.77         $33.19
-------------------------------------------------------------------------------


There may have been other trades at other prices of which management is not
aware. Management does not have knowledge of the price paid in all transactions
and has not verified the accuracy of those prices that have been reported to it.
Because of the lack of an established market for the common shares of the
Corporation, these prices would not necessarily reflect the prices which the
shares would trade in an active in an active market.

         The Corporation had 601 shareholders on record as of March 24, 2006.

         The Corporation has not declared or paid any cash dividends on its
shares of common stock since its organization in 1993. The Corporation and the
Bank anticipate that earnings will be retained to finance the Bank's growth in
the immediate future. Future dividend payments by the Corporation, if any, will
be dependent upon dividends paid by the Bank, which are subject to regulatory
limitations, earnings, general economic conditions, financial condition, capital
requirements, and other factors as may be appropriate in determining dividend
policy.

         During the fourth quarter of 2005 the Corporation sold no shares of
common stock to any director or employee of the Corporation pursuant to the
exercise of stock options. As previously reported in the Corporation's prior
filings with the Securities and Exchange Commission, the Corporation sold
pursuant to the exercise by employees and directors of stock options an
aggregate of 7,831 shares for $128,123 during the third quarter of 2005, an
aggregate of 7,200 shares for $95,970 during the second quarter of 2005, and an
aggregate of 4,500 shares for $63,000 during the first quarter of 2005. All of
these shares were sold in private placements pursuant to Section 4(2) of the
Securities Act of 1933.


                                       18
<PAGE>

     In 2003, the Board of Directors of the Corporation authorized and announced
a repurchase program entitled "Program One" and "Program Two". Program One
covers employees and directors and was initially set to expire December 2005.
During the fourth quarter of 2005, the Board authorized the extension of Program
One until December 31, 2008 unless terminated earlier by the Board of Directors.
The Board of Directors also authorized an addition $1,900,000 to be allocated to
Program One. Under Program One, the Corporation may spend up to $7,400,000 in
individually negotiated transactions to repurchase its shares from employees and
directors who wish to sell their stock, of which $2,396,187 is still available.
Program Two covers all other shareholders and was set to expire December 2005
unless terminated earlier by the Board of Directors. During the fourth quarter
of 2005, the Board authorized the extension of Program Two until December 31,
2008 unless terminated earlier by the Board of Directors. The Board of Directors
also authorized an additional $2,600,000 to be allocated to Program Two. Under
Program Two, the Corporation may spend up to $10,200,000 in individually
negotiated transactions to repurchase its shares from shareholders who wish to
sell, of which $4,706,270 is available.

         During 2005, the Corporation repurchased in the aggregate, 45,073
shares for an aggregate cost of $1,693,222. The following table provides
information with respect to shares repurchased by the Corporation during fourth
quarter 2005:

<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------
                                                                         Maximum Number (or
                                                                         Approximate Dollar
                                                     Total Number of     Value) of Shares
              Total Number of                        Shares Purchased as that May Yet Be
              Shares Purchased                       Part of Publicly    Purchased Under the
              during 4th quarter Average Price Paid  Announced Plans or  Plans or Programs
Period        2005               per Share           Programs**
---------------------------------------------------------------------------------------------
<S>                  <C>               <C>                  <C>              <C>
10/01/05 -
10/31/05              8,600             $38.818              8,600            $2,695,302
---------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------
11/01/05 -
11/30/05              1,360              $39.32              1,360            $2,641,827
---------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------
12/01/05 -
12/31/05              1,000              $39.37              1,000            $7,102,457
---------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------
Total                 10,960                *               10,960
---------------------------------------------------------------------------------------------
</TABLE>


*        The weighted average price per share for the period October 2005
         through December 2005 was $38.93.
**       All shares repurchased by the Corporation in 2005 were completed
         pursuant to Program One and Program Two.




                                       19
<PAGE>

Item 6.  Selected Financial Data
--------------------------------

         The following table sets forth certain consolidated information
concerning the Corporation for the periods and dates indicated and should be
read in connection with, and is qualified in its entirety by, the detailed
information and consolidated financial statements and related notes set forth in
the Corporation's audited financial statements included elsewhere herein (in
000's), except per share data.

<TABLE>
<CAPTION>
                                                                                 Year Ended December 31
                                                              2005          2004          2003          2002          2001
                                                           -----------------------------------------------------------------
<S>                                                        <C>           <C>           <C>           <C>           <C>
Consolidated Operating Data:
     Interest income                                       $  50,847     $  38,524     $  34,560     $  35,095     $  38,801
     Interest expense                                         20,906        12,962        11,950        14,061        20,953
          Net interest income                                 29,941        25,561        22,610        21,034        17,848
     Provision for loan losses                                 2,085         1,320         1,200         1,500         1,440
          Net interest income after provision for
            loan losses                                       27,856        24,241        21,410        19,534        16,408
     Losses on sale of securities, (net)                          --           (84)          (37)           --            --
     Other operating income                                    7,461         7,272         7,422         6,985         5,742
     Other operating expenses                                 25,176        22,613        20,418        18,962        16,640
     Income before taxes                                      10,141         8,816         8,377         7,557         5,510
     Federal and state income tax                              3,878         3,135         3,213         3,000         2,140
     Net income                                                6,263         5,681         5,164         4,557         3,370

Consolidated Balance Sheet Data (at end of period):
     Total assets                                          $ 928,462     $ 880,914     $ 812,599     $ 726,514     $ 670,697
     Total investment securities (including stock in
       Federal Banks)                                        157,471       151,799       125,247       117,485        39,049
     Total loans                                             684,488       656,453       597,063       528,911       452,060
     Allowance for loan losses                                (8,346)       (7,796)       (8,030)       (7,227)       (5,987)
     Deposits                                                774,316       693,431       637,537       544,343       506,125
     Shareholders' equity                                     51,583        46,544        42,678        41,247        28,470
     Weighted basic average shares outstanding                 2,299         2,303         2,343         2,289         1,917

Per Share Data:
     Diluted net income per common share (1)               $    2.62     $    2.37     $    2.08     $    1.88     $    1.55
     Cash dividends declared                                       0             0             0             0             0
     Book value (2)                                            22.11         19.81         18.14         16.89         14.48

Other Statistics and Operating Data:
     Return on average assets                                    0.7%          0.7%          0.7%          0.7%          0.5%
     Return on average equity                                   12.8%         12.8%         12.1%         12.2%         12.7%
     Net interest margin (3)                                     3.3%          3.1%          3.1%          3.2%          3.0%
     Average loans to average deposits                          85.0%         89.0%         95.7%         90.8%         90.8%
     Allowance for loan losses to loans at end of period         1.2%          1.2%          1.3%          1.4%          1.3%
     Allowance for loan losses to non-performing loans         228.8%        255.1%        164.8%        223.8%        717.0%
     Non-performing loans to loans at end of period              0.5%          0.5%          0.8%          0.6%          0.2%
     Net charge-offs to average loans                            0.2%          0.3%          0.1%          0.1%          0.0%
     Number of offices                                             9             9             8             8             8
     Number of full and part-time employees                      211           196           180           176           165
     Number of Shareholders of Record                            601           632           645           647           634

Capital Ratios:
     Average shareholders' equity to average assets              5.2%          5.2%          5.6%          5.4%          4.3%
     Equity to assets                                            5.6%          5.3%          5.3%          5.7%          4.2%
     Total risk-based capital ratio (Bank only)                 10.9%         10.5%         10.2%         10.1%         10.6%
</TABLE>
(1)  Based upon weighted average shares outstanding during the period.
(2)  Based on Common Stock outstanding at the end of the period.
(3)  Net interest income as a percentage of average interest-earning assets.


                                       20
<PAGE>

Item 7.
-------

Management's Discussion and Analysis of Financial Condition and Results of
--------------------------------------------------------------------------
Operations
----------

The following discussion and analysis of the Corporation relates to the years
ended December 31, 2005, 2004 and 2003 and should be read in conjunction with
the Corporation's Consolidated Financial Statements and Notes thereto included
elsewhere herein.

Overview

         The primary source of the Bank's revenue is net interest income from
loans and deposits and fees from financial services provided to customers.
Overall economic factors including market interest rates, business spending, and
consumer confidence, as well as competitive conditions within the marketplace
tend to influence business volumes.

         The Corporation monitors the impact of changes in interest rates on its
net interest income. One of the primary goals of asset/liability management is
to maximize net interest income and the net value of future cash flows within
authorized risk limits. At December 31, 2005 the interest rate risk position of
the Corporation was liability sensitive. Maintaining a liability sensitive
interest rate risk position means that net income should decrease as rates rise
and increase as rates fall.

         Due to record low interest rates in 2003, there was an increase in
refinancing activity and mortgage loan sales by the Corporation. There was a
significant decrease in mortgage loan refinancing during 2004 and 2005 resulting
in less sales by the Corporation causing a decrease in mortgage banking income.

         Net income is affected by the provision for loan losses. Management
performs an evaluation as to the amounts required to maintain an allowance
adequate to provide for potential losses inherent in the loan portfolio. The
level of this allowance is dependent upon the total amount of past due and
non-performing loans, general economic conditions and management's assessment of
potential losses based upon internal credit evaluations of loan portfolios and
particular loans. It has been our experience that improved economic strength
generally will translate into better credit quality in the banking industry.
Management believes that the reserve for loan losses are adequate.

         The risks and challenges that management believes will be important
during 2006 are price competition for loans and deposits by new market entrants
as well as established competitors, and continued lower mortgage loan volume as
compared to 2005, 2004 and 2003, leading to lower gains on sales of mortgage
loans.




                                       21
<PAGE>

Results of Operations

Year Ended December 31, 2005 Compared to the Year Ended December 31, 2004 and
Year Ended December 31, 2004 Compared to the Year Ended December 31, 2003

         The Corporation's results of operations depend primarily on the level
of its net interest income, its non-interest income and its operating expenses.
Net interest income depends on the volume of and rates associated with interest
earning assets and interest bearing liabilities which results in the net
interest spread. The Corporation had net income of $6,262,526 for the year ended
December 31, 2005 compared to net income of $5,681,049 for the year ended
December 31, 2004 and net income of $5,164,200 for the year ended December 31,
2003. This change is primarily due to the growth of the Bank allowing for more
interest earning assets and net interest income compared to the same period
during 2004 and 2003, thereby offsetting more of the operating expenses.

         The Bank experienced growth during the past three years. Total assets
increased $47,548,075 or 5.4% to $928,461,854 for the year ended December 31,
2005 from $880,913,779 for the year ended December 31, 2004 and total assets
increased from $812,598,814 for the year ended December 31, 2003. This growth is
in part due to an increase in customers as a result of local bank
mergers/consolidations and the addition of experienced corporate and private
bankers to the staff.

Net Interest Income
-------------------

         The following table details the components of net interest income for
the years ended December 31, 2005, 2004, and 2003 (in 000's):

<TABLE>
<CAPTION>
                                                     Year ended                                  Year ended
                                                     December 31           $         %           December 31          $        %
                                                  2005        2004      Change    Change      2004        2003     Change   Change
                                               ------------------------------------------  -----------------------------------------
<S>                                             <C>         <C>         <C>        <C>      <C>         <C>        <C>         <C>
Interest income:
    Interest and fees on loans                  $ 43,256    $ 33,306    $ 9,950    29.9%    $ 33,306    $ 31,010   $ 2,296     7.4%
    Interest on investment securities              6,154       4,403      1,751    39.8%       4,403       3,020     1,383    45.8%
    Interest on federal funds sold                 1,291         725        566    78.1%         725         432       293    67.8%
    Interest on reverse repurchase agreements        146          90         56    62.2%          90          98        (8)   -8.2%
                                               ------------------------------------------  -----------------------------------------
Total interest income                           $ 50,847    $ 38,524    $12,323    32.0%    $ 38,524    $ 34,560   $ 3,964    11.5%

Interest expense:
    Interest on deposits                        $ 16,110     $ 8,975    $ 7,135    79.5%     $ 8,975     $ 7,668   $ 1,307    17.0%
    Interest on repurchase agreements              1,528         570        958   168.1%         570         381       189    49.6%
    Interest on FHLB advances                      1,497       1,775       (278)  -15.7%       1,775       2,414      (639)  -26.5%
    Interest on long term debt                     1,771       1,642        128     7.8%       1,642       1,487       155    10.4%
                                               ------------------------------------------  -----------------------------------------
Total interest expense                          $ 20,906    $ 12,962    $ 7,944    61.3%    $ 12,963    $ 11,950   $ 1,013     8.5%
                                               ------------------------------------------  -----------------------------------------
Net interest income                             $ 29,941    $ 25,562    $ 4,379    17.1%    $ 25,562    $ 22,610   $ 2,952    13.1%
                                               ==========================================  =========================================
</TABLE>

         The increase in interest income is due to the growth in the investment
securities and loan portfolios and higher yields on federal funds sold as well
as on the investment securities and loan portfolios. Over the course of 2005,
the prime interest rate increased by 200 basis points to 7.25% as of December
31, 2005 from 5.25% as of December 31, 2004.

         The increase in interest expense is due to an overall increase in yield
paid as well as a growth of deposits, repurchase agreements and subordinated
debt during 2005 as compared to the same period in 2004 and 2003.


                                       22
<PAGE>

         The following table shows the prime rate in effect as of each year end
and also shows the interest rate increases by the Federal Reserve since 2003:

                Date                          Prime Rate
                ----                          ----------
        December 31, 2003                        4.00%

        December 31, 2004                        5.25%

        December 31, 2005                        7.25%


         Net interest income increased for the year ended December 31, 2005
compared to the years ended December 31, 2004 and 2003. The overall increase was
17.1% and 13.1% between 2005 and 2004 and between 2004 and 2003, respectively.
The overall increase was lower between 2004 and 2003 because the prime rate did
not begin to increase until June 30, 2004 resulting in an overall lower interest
rate environment and the compression of the spread between the yield earned on
loans and the cost paid on deposits.














                                       23
<PAGE>

         The following table details average balances, interest income / expense
and average rates / yields for the Bank's earning assets and interest bearing
liabilities for the years ended December 31, 2005, 2004 and 2003 (in 000's):

<TABLE>
<CAPTION>
                                                  2005                            2004                             2003
                                                Interest  Average               Interest   Average               Interest  Average
                                      Average    Income/    Rate/     Average    Income/     Rate/    Average     Income/    Rate/
                                      Balance    Expense    Yield     Balance    Expense     Yield    Balance     Expense    Yield
                                   -------------------------------  ------------------------------- -------------------------------
<S>                                <C>         <C>        <C>       <C>           <C>       <C>     <C>            <C>      <C>
Assets:
Federal Funds                        $ 43,508    $ 1,291    2.97%    $ 42,637      $ 725     1.70%   $ 39,961       $ 432    1.08%
Reverse Repurchase Agreements           5,000        146    2.92%       9,180         90     0.98%     10,986          98    0.89%
Investments                           186,971      6,154    3.29%     159,795      4,403     2.76%    115,597       3,020    2.61%
Loans (gross)                         668,317     43,256    6.47%     612,096     33,306     5.44%    562,587      31,010    5.51%

                                   -------------------------------  ------------------------------- -------------------------------
Total earning assets                $ 903,796   $ 50,847    5.63%   $ 823,708   $ 38,524     4.68%  $ 729,131    $ 34,560    4.74%
Non-earning assets                     42,777                          39,950                          37,076

                                   -----------                      ----------                      ----------
Total assets                        $ 946,573                       $ 863,658                       $ 766,207
                                   ===========                      ==========                      ==========


Liabilities:
Interest bearing DDA                 $ 94,578    $ 1,076    1.14%    $ 84,954      $ 665     0.78%   $ 69,194       $ 576    0.83%
Savings                               402,131     10,891    2.71%     333,840      4,910     1.47%    275,108       3,764    1.37%
CD's under $100,000                    56,876      1,887    3.32%      56,540      1,695     3.00%     54,146       1,752    3.24%
CD's over $100,000                     54,524      1,805    3.31%      49,265      1,323     2.69%     40,430       1,186    2.93%
Individual Retirement Accounts         13,277        451    3.40%      12,705        382     3.01%     11,848         390    3.29%
Repurchase Agreements                  62,166      1,528    2.46%      74,794        570     0.76%     71,352         381    0.53%
FHLB Advances/Other                    29,170      1,497    5.13%      34,317      1,775     5.17%     46,052       2,414    5.24%
Subordinated Debt                       5,000        283    5.66%       3,992        154     3.86%      1,145          43    3.76%
Long Term Debt                         13,918      1,488   10.69%      13,918      1,488    10.69%     13,500       1,444   10.70%

                                   -------------------------------  ------------------------------- -------------------------------
Total Interest Bearing Liabilities  $ 731,640   $ 20,906    2.86%   $ 664,325   $ 12,962     1.95%  $ 582,775    $ 11,950    2.05%
Non-Interest Bearing Liabilities      160,713                         150,357                         136,846
Other Liabilities                       5,287                           4,460                           3,841

                                   -----------                      ----------                      ----------
Total Liabilities                   $ 897,640                       $ 819,142                       $ 723,462
Equity                                 48,933                          44,516                          42,745

                                   -----------                      ----------                      ----------
Total Liabilities & Equity          $ 946,573                       $ 863,658                       $ 766,207
                                   ===========                      ==========                      ==========


Recap:
Interest Income                                 $ 50,847    5.63%               $ 38,524     4.68%               $ 34,560    4.74%
Interest Expense                                  20,906    2.86%                 12,962     1.95%                 11,950    2.05%

                                              --------------------            ---------------------           ---------------------
Net Interest Income/Spread                      $ 29,941    2.77%               $ 25,562     2.73%               $ 22,610    2.69%
                                              ====================            =====================           =====================

Contribution of Non-Interest
  Bearing Funds                                             0.54%                            0.38%                           0.41%

Net Interest Margin                                         3.31%                            3.10%                           3.10%
                                                         =========                       ==========                       =========
</TABLE>


NOTE: Average balances computed using daily actual balances. The average loan
balance includes non-accrual loans and the interest recognized prior to becoming
non-accrual is reflected in the interest income for loans.


                                       24
<PAGE>


         The following table sets forth an analysis of volume and rate changes
in interest income and interest expense of the Corporation's average earning
assets and average interest-bearing liabilities. The table distinguishes between
the changes related to average outstanding balances of assets and liabilities
(changes in volume holding the initial average interest rate constant) and the
changes related to average interest rates (changes in average rate holding the
initial average outstanding balance constant). The change in interest due to
both volume and rate has been allocated to volume and rate changes in proportion
to the relationship of the absolute dollar amounts of the change in each.


Net Interest Income Changes Due to Volume and Rates (in 000's):
-----------------------------------------------------------------

<TABLE>
<CAPTION>
                                                                   Year Ended December 31

                                        2005 Changes from 2004         2004 Changes from 2003          2003 Changes from 2002
                                       Net      Due to    Due to        Net     Due to   Due to       Net      Due to    Due to
                                      Change     Rate     Volume      Change     Rate    Volume      Change     Rate     Volume
                                    -------------------------------  ----------------------------  -------------------------------
<S>                                   <C>        <C>       <C>         <C>         <C>    <C>          <C>      <C>       <C>
Interest earning assets:
      Federal funds sold                 $ 566     $ 540      $ 26       $ 293    $ 247     $ 46       $ (141)   $ (195)     $ 54
      Reverse repurchase agreements         56       178      (122)         (8)      10      (18)        (147)     (106)      (41)
      Investment securities              1,751       857       894       1,383      165    1,218         (663)     (265)     (398)
      Loans                              9,950     6,311     3,639       2,296     (398)   2,694          417    (3,939)    4,356

                                    -------------------------------  ----------------------------  -------------------------------
          TOTAL                       $ 12,323   $ 7,886   $ 4,437     $ 3,964     $ 24   $3,940       $ (534)  $(4,505)  $ 3,971

Interest bearing liabilities:
      Demand deposits                    $ 411     $ 302     $ 109        $ 89     $(34)   $ 123          $ 2     $ (96)     $ 98
      Savings deposits                   5,981     4,131     1,850       1,146      282      864         (398)     (762)      364
      CDs under $100,000                   192       181        11         (57)    (129)      72         (744)     (621)     (123)
      CDs over $100,000                    482       308       174         137     (100)     237         (235)     (340)      105
      Individual retirement accounts        69        50        19          (8)     (34)      26         (102)     (134)       32
      Repurchase agreements                958     1,268      (310)        189      163       26         (371)     (378)        7
      FHLB Advances                       (278)      (14)     (264)       (639)     (32)    (607)        (307)     (156)     (151)
      Subordinated Debt                    129        72        57         111        1      110           43         -        43
      Long term debt                         -         -         -          44       (1)      45            -         -         -

                                    -------------------------------  ----------------------------  -------------------------------
          TOTAL                        $ 7,944   $ 6,298   $ 1,646     $ 1,012    $ 116    $ 896      $(2,112)  $(2,487)    $ 375
                                    -------------------------------  ----------------------------  -------------------------------

Net change in Net Interest Income      $ 4,379   $ 1,588   $ 2,791     $ 2,952     $(92)  $3,044       $1,578   $(2,018)  $ 3,596
                                    ===============================  ============================  ===============================
</TABLE>

NOTE: Due to Rate Increase was calculated by taking the change in the rate times
the prior year average balance. Due to volume increase was calculated by taking
the change in average balance times the prior year rate.


         Interest on federal funds sold increased for the year ended December
31, 2005 compared to the year ended December 31, 2004 and year ended December
31, 2003. The increase is due to rising interest rates during 2005 as compared
to previous years. The weighted average rate was 2.97% for the year ended
December 31, 2005 compared to a weighted average rate of 1.70% and 1.08% for the
years ended December 31, 2004 and 2003, respectively. The average



                                       25
<PAGE>

balance for federal funds sold increased for the year ended December 31, 2005
compared to the years ended December 31, 2004 and 2003.

         Interest on reverse repurchase agreements increased for the year ended
December 31, 2005 compared to the years ended December 31, 2004 and 2003. The
change is the result of an increase in interest rates for the year ended
December 31, 2005 compared to the years ended December 31, 2004 and 2003. The
weighted average rate was approximately 2.92% for the year ended December 31,
2005 compared to a weighted average rate of .98% and .89% for the years ended
December 31, 2004 and 2003, respectively.

         Investment portfolio income increased for the year ended December 31,
2005 compared to the years ended December 31, 2004 and 2003. The increase is due
to an increase in volume and an increase in interest rates in 2005 as compared
to previous years. The weighted average rate of the investment portfolio was
3.29% for the year ended December 31, 2005 compared to 2.76% and 2.61% for the
years ended December 31, 2004 and 2003, respectively.

         Interest on loans increased for the year ended December 31, 2005
compared to the years ended December 31, 2004 and 2003. Average total loans for
the year ended December 31, 2005 increased compared to the years ended December
31, 2004 and 2003. The loan portfolio produces the highest yield of all earning
assets, the weighed average yield of the loan portfolio for the year ended
December 31, 2005 was 6.47% compared to 5.44% and 5.51% for the years ended
December 31, 2004 and 2003, respectively. The increased loan growth is the
result of new clients and the addition of experienced corporate bankers to the
staff.

         Total interest expense increased for the year ended December 31, 2005
compared to the years ended December 31, 2004 and 2003. The increase in 2005 as
compared to 2004 and 2003 is due primarily to an increase in the interest rates
during the 2005 and an increase in the average balances.

         Total average interest bearing liabilities for the year ended December
31, 2005 increased compared to the years ended December 31, 2004 and 2003. The
average cost of interest bearing liabilities for the year ended December 31,
2005 was approximately 2.86% as compared to 1.95% for the year ended December
31, 2004 and 2.05% for December 31, 2003. This rate increase is due to an
overall interest rate increase in the market and due to higher priced deposits
being replaced by lower priced deposits.




                                       26
<PAGE>

Provision for Loan Losses
-------------------------

         The amount charged to the provision for loan losses by the Bank is
based on management's evaluation as to the amounts required to maintain an
allowance adequate to provide for potential losses inherent in the loan
portfolio. The level of this allowance is dependent upon the total amount of
past due and non-performing loans, general economic conditions and management's
assessment of probable losses based upon internal credit evaluations of loan
portfolios and particular loans. Loans are principally to borrowers in central
Indiana.

         The provision for loan losses was $2,085,000 for the year ended
December 31, 2005 compared to $1,320,000 and $1,200,000 for the years ended
December 31, 2004 and 2003 respectively. The increase in the provision for loan
losses is due to the increase in commercial and real estate loan charge offs.
These charge offs relate to specific commercial and real estate loans and
management does not believe that this is indicative of systematic problems
within the loan portfolio. Based on management's risk assessment and evaluation
of the probable losses of the loan portfolio, management believes that the
current allowance for loan losses is adequate to provide for probable losses in
the loan portfolio.

<TABLE>
<CAPTION>
                                                               Tweleve months ended
                                                                    December 31,
                                          2005           2004           2003           2002           2001
                                       ----------     ----------     ----------     ----------     ----------
<S>                                    <C>            <C>            <C>            <C>            <C>
Beginning of Period                    $7,795,803     $8,029,596     $7,227,000     $5,986,965     $4,700,672
     Provision for loan losses          2,085,000      1,320,000      1,200,000      1,500,000      1,440,000

     Losses charged to the reserve
         Commercial                     1,317,743      1,133,994        506,413        207,716        102,315
         Real Estate                      447,182        280,394          1,297         21,800         18,772
         Consumer                           5,070        132,993          2,185          2,052         10,766
         Credit Cards                      50,125         65,420         26,922         53,661         46,468
                                       ----------     ----------     ----------     ----------     ----------
                                        1,820,120      1,612,802        536,816        285,229        178,321

     Recoveries
         Commercial                       258,920         16,247        121,918         17,024         23,868
         Real Estate                       26,000         26,836         16,438             --             --
         Consumer                             787         12,354            105            266            463
         Credit Cards                          --          3,572            950          7,974            283
                                       ----------     ----------     ----------     ----------     ----------
                                          285,707         59,009        139,412         25,264         24,614

                                       ----------     ----------     ----------     ----------     ----------
End of Period                          $8,346,390     $7,795,803     $8,029,596     $7,227,000     $5,986,965
                                       ==========     ==========     ==========     ==========     ==========

Allowance as a % of Loans                   1.22%          1.19%          1.34%          1.37%          1.32%
</TABLE>








                                       27
<PAGE>

Other Operating Income
----------------------

         The following table details the components of other operating income
for the years ended December 31, 2005, 2004, and 2003 (in 000's):

<TABLE>
<CAPTION>
                                                     Year ended                                Year ended
                                                     December 31          $         %          December 31        $         %
                                                   2005      2004       Change    Change     2004      2003     Change    Change
                                                 ----------------------------------------  --------------------------------------
<S>                                               <C>       <C>          <C>       <C>      <C>       <C>        <C>       <C>
   Wealth Management                              $3,097    $2,464       $633      25.7%    $2,464    $1,971     $493      25.0%
   Service charges and fees on deposit accounts    1,834     2,131       (297)    -13.9%     2,131     2,410     (279)    -11.6%
   Building rental income                            450       485        (35)     -7.2%       485       548      (63)    -11.5%
   Mortgage banking income                           313       564       (251)    -44.5%       564       872     (308)    -35.3%
   Interchange income                                671       594         77      13.0%       594       542       52       9.6%
   Net losses on securities                            -       (84)        84     100.0%       (84)      (37)     (47)    127.0%
   Other                                           1,096     1,034         62       6.0%     1,034     1,079      (46)     -4.3%
                                                 ----------------------------------------  --------------------------------------
Total operating income                            $7,461    $7,188       $273       3.8%    $7,188   $ 7,385   $ (198)     -2.7%
                                                 ----------------------------------------  --------------------------------------
</TABLE>

         Other operating income increased for the year ended December 31, 2005
compared to the years ended December 31, 2004 and 2003. There are several
factors to the overall increase.

         Wealth Management fees increased for the year ended December 31, 2005
compared to the years ended December 31, 2004 and 2003. The increase is
attributable to the overall price appreciation in the stock and treasury
markets, an increase in assets under management and a change in accounting
estimate related to the accrual of fees during 2003.

          Service charges and fees on deposit accounts decreased for the year
ended December 31, 2005 compared to the years ended December 31, 2004 and 2003.
The decrease is attributable to lower overdraft and NSF fees assessed. Also,
contributing to the decrease was an increase in the earnings credit rate paid on
business demand deposits which decreases the service charges accessed.

         Building rental income from the other tenants in the Corporation's main
office building decreased for the year ended December 31, 2005 compared to the
years ended December 31, 2004 and 2003. The decrease is attributable to fewer
tenants in the building and the Corporation occupying more space in the
building.

         Mortgage banking income decreased for the year ended December 31, 2005
compared to the years ended December 31, 2004 and 2003. This decrease can be
attributed to many different factors. Net gain on sale of mortgage loans
decreased for the years ended December 31, 2005 to $82,493 compared to $157,145
and $1,056,418 for the years ended December 31, 2004 and 2003 respectively.
During 2003, as a result of lower interest rates, mortgage originations
increased causing the sale of bulk mortgages to increase. During 2004 and 2005,
long term the interest rates remained steady and mortgage originations decreased
resulting in decreased mortgage sales. The Mortgage Division originated in
excess of $33 million in mortgage loans, while selling over $18 million to the
secondary market during 2005. During 2004, the Mortgage Division originated in
excess of $46 million in mortgage loans, while selling over $32 million to the
secondary market. When a mortgage loan is sold, a mortgage servicing right
("MSR") is recorded as an asset on the balance sheet. The value of the MSRs is
sensitive to changes in interest


                                       28
<PAGE>

rates. In a low rate environment, mortgage loan refinancings generally increase,
causing actual and expected loan prepayments to increase, which drives down the
value of existing MSRs. Conversely, as interest rates rise, mortgage loan
refinancings generally decline, causing actual and expected loan prepayments to
decrease, which drives up the value of the MSRs. As of December 31, 2004, a
valuation reserve of $350,136 was recognized for mortgage servicing rights. The
valuation reserve for mortgage servicing rights decreased to $181,218 as of
December 31, 2005. The Corporation recorded a partial recovery of previous
period market value adjustments of the mortgage servicing rights due to higher
interest rates which caused a significant slow down in mortgage refinances and
prepayments of existing mortgages.

         During 2005, there was no net loss recorded on the sale of available
for sale securities compared to a net loss on the sale of two available for sale
securities recorded during the first quarter of 2004. During the third quarter
of 2003, a net loss on the sale of four available for sale securities was
recorded. The securities were replaced with higher yielding investments to place
the portfolio in a better position for rising interest rates for asset/liability
purposes.

         Other Operating Expenses
         ------------------------

         The following table details the components of other operating expenses
for the years ended December 31, 2005, 2004, and 2003 (in 000's):

<TABLE>
<CAPTION>
                                           Twelve Months                                  Twelve Months
                                            December 31,          $          %             December 31,          $          %
                                         2005        2004       Change     Change      2004          2003      Change     Change
                                      --------------------------------------------  ---------------------------------------------
<S>                                    <C>         <C>          <C>          <C>     <C>           <C>         <C>         <C>
Salaries, wages and employee benefits  $15,284     $14,133      $1,151       8.1%    $14,133       $12,122     $2,011      16.6%
Occupancy                                1,705       1,391         314      22.6%      1,391         1,409        (18)     -1.3%
Furniture and equipment                    898         804          94      11.7%        804           891        (87)     -9.7%
Professional services                    1,425       1,169         256      21.9%      1,169           886        283      32.0%
Data processing                          1,572       1,439         133       9.2%      1,439         1,362         77       5.7%
Business development                     1,072         898         174      19.3%        898           838         60       7.2%
Other                                    3,220       2,779         441      15.9%      2,779         2,909       (130)     -4.5%
                                      --------------------------------------------  ---------------------------------------------
Total other operating expenses         $25,176     $22,613      $2,563      11.3%    $22,613       $20,417     $2,196      10.8%
                                      ============================================  =============================================
</TABLE>


         Other operating expenses increased for the year ended December 31, 2005
compared to the years ended December 31, 2004 and 2003.

         Salaries, wages and employee benefits increased for the year ended
December 31, 2005 compared to the years ended December 31, 2004 and 2003. This
increase is primarily due to annual merit increases of employees, training
expenses, and the increase in the number of employees to 201 full time
equivalents at December 31, 2005 from 181 full time equivalents at December 31,
2004 and from 173 full time equivalents at December 31, 2003.

         Occupancy expense increased for the year ended December 31, 2005
compared to the years ended December 31, 2004 and 2003. This is attributable to
the opening of a new banking center at 10590 North Michigan Road in January 2005
and the relocation of the Greenwood banking office from leased space at 1675
West Smith Valley Road to a new full-size freestanding building at 1689 West
Smith Valley Road in September 2005.


                                       29
<PAGE>

         Furniture and equipment expense increased for the year ended December
31, 2005 compared to the years ended December 31, 2004 and 2003. This increase
is primarily due to the opening of two new banking offices, acquiring new assets
at the banking centers and main office and repair expense for older assets.

         Professional services expense increased for the year ended December 31,
2005 compared to the years ended December 31, 2004 and 2003. The increase is
primarily due to additional expense incurred for accounting fees related to new
regulations mandated by the Sarbanes-Oxley Act of 2002 and advertising agency
fees. Attorney fees were lower for the year ended December 31, 2005 compared to
the year ended 2004 but remained higher than the year ended December 31, 2003.
The increase in attorney fees during 2004 and 2005 relates to delinquency in
specific commercial and real estate loans and management does not believe that
this is indicative of systematic problems within the loan portfolio.

         Data processing expenses increased for the year ended December 31, 2005
compared to the years ended December 31, 2004 and 2003 primarily due to
increased service bureau fees relating to increased transaction activity by the
Bank and the Wealth Management department.

         Business development expenses increased for the year ended December 31,
2005 compared to the years ended December 31, 2004 and 2003 due to increased
advertising, public relations, customer promotion and premium items expense.

Tax (Benefit)/Expense
---------------------

         The Corporation applies a federal income tax rate of 34% and a state
tax rate of 8.5% in the computation of tax expense. The provision for income
taxes consisted of the following:

                                             2005          2004         2003
                                          --------------------------------------
           Current tax expense            $4,300,157    $2,940,441   $3,592,053

           Deferred tax (benefit)/expense   (421,841)      194,557     (379,263)
                                          --------------------------------------
                                           $3,878,316   $3,134,998   $3,212,790
                                          ======================================


         Deferred income taxes reflect the net tax effects of temporary
differences between the carrying amount of assets and liabilities for financial
reporting purposes and the amounts used for income tax purposes. Deferred tax
assets are recognized for the estimated tax effects attributable to deductible
temporary differences net of any valuation allowances for amounts which may not
be realized by the Corporation.


                                       30
<PAGE>

         The components of the Corporation's net deferred tax assets in the
consolidated balance sheet as of December 31, 2005 and 2004 are as follows:

                                                    2005            2004
                                                ---------------------------
         Deferred tax assets:
            Allowance for loan losses           $ 3,306,005     $ 3,087,918
            Other                                 1,785,184       1,145,500
                                                ---------------------------
              Total deferred tax assets           5,091,189       4,233,418
         Deferred tax liability:
            Mortgage servicing rights              (515,063)       (483,866)
                                                ---------------------------
              Total deferred tax liabilities       (515,063)       (483,866)
                                                ---------------------------
              Net deferred tax assets           $ 4,576,126     $ 3,749,552
                                                ===========================


Effects of Inflation

         Inflation can have a significant effect on the operating results of all
industries. This is especially true in industries with a high proportion of
fixed assets and inventory. However, management believes that these factors are
not as critical in the banking industry. Inflation does, however, have an impact
on the growth of total assets and the need to maintain a proper level of equity
capital.

         Interest rates are significantly affected by inflation, but it is
difficult to assess the impact since neither the timing nor the magnitude of the
changes in the various inflation indices coincides with changes in interest
rates. There is, of course, an impact on longer-term earning assets; however,
this effect continues to diminish as investment maturities are shortened and
interest-earning assets and interest-bearing liabilities shift from fixed rate,
long-term to rate-sensitive, short-term.

Liquidity and Interest Rate Sensitivity

         The Corporation must maintain an adequate liquidity position in order
to respond to the short-term demand for funds caused by withdrawals from deposit
accounts, extensions of credit and for the payment of operating expenses.
Maintaining an adequate liquidity position is accomplished through the
management of the liquid assets - those which can be converted into cash - and
access to additional sources of funds. The Corporation must monitor its
liquidity ratios as established in the Asset/Liability Committee ("ALCO")
Policy. In addition, the Corporation has established a contingency funding plan
to address liquidity needs in the event of depressed economic conditions. The
liquidity position is continually monitored and reviewed by ALCO.

         The Corporation has many sources of funds available, they include:
overnight federal funds sold, investments available for sale, maturity of
investments held for sale, deposits, Federal Home Loan Bank ("FHLB") advances,
and issuance of debt. Funding sources did not change significantly during 2005.
Deposits are the most significant funding source and loans are the most
significant use of funds for the years ended December 31, 2005, 2004, and 2003.
The


                                       31
<PAGE>

Corporation maintains a $5,000,000 revolving credit agreement with Harris Trust
and Savings Bank to provide additional liquidity support to the Bank, if needed.
There were no borrowings under this agreement at December 31, 2005 or 2004.

         Primary liquid assets of the Corporation are cash and due from banks,
federal funds sold, investments held as available for sale, and maturing loans.
Federal funds sold represent the Corporation's primary source of immediate
liquidity and were maintained at a level adequate to meet immediate needs.
Federal funds sold averaged approximately $44,000,000, $43,000,000, and
$40,000,000 for the years ended December 31, 2005, 2004 and 2003 respectively.
Reverse repurchase agreements may serve as a source of liquidity, but are
primarily used as collateral for customer balances in overnight repurchase
agreements. Maturities in the Corporation's loan and investment portfolios are
monitored regularly to avoid matching short-term deposits with long-term loans
and investments. Other assets and liabilities are also monitored to provide the
proper balance between liquidity, safety, and profitability. This monitoring
process must be continuous due to the constant flow of cash which is inherent in
a financial institution.

         The Corporation's management believes its liquidity sources are
adequate to meet its operating needs and does not know of any trends, events or
uncertainties that may result in a significant adverse effect on the
Corporation's liquidity position.

         The Corporation actively manages its interest rate sensitive assets and
liabilities to reduce the impact of interest rate fluctuations. At December 31,
2005, the Corporation's rate sensitive liabilities exceeded rate sensitive
assets due within one year by $63,614,220. At December 31, 2004, the
Corporation's rate sensitive assets exceeded rate sensitive liabilities due
within one year by $21,623,861.

         The purpose of the Bank's Investment Committee is to manage and balance
interest rate risk, to provide a readily available source of liquidity to cover
deposit runoff and loan growth, and to provide a portfolio of safe, secure
assets of high quality that generate a supplemental source of income in concert
with the overall asset/liability policies and strategies of the Bank.

         The Bank holds securities of the U.S. Government and its agencies along
with asset-backed securities, collateralized mortgage obligations, municipals,
and Federal Home Loan Bank and Federal Reserve Bank stock. In order to properly
manage market risk, credit risk and interest rate risk, the Bank has guidelines
it must follow when purchasing investments for the portfolio and adherence to
these policy guidelines are reported monthly to the board of directors.

         A portion of the Bank's investment securities consist of collateralized
mortgage obligations. The Bank limits the level of these securities that can be
held in the portfolio to a specified percentage of total average assets.

         All mortgage-related securities must pass the FFIEC stress test. This
stress test determines if price volatility under a 200 basis point interest rate
shock for each security exceeds a benchmark 30 year mortgage-backed security. If
the security fails the test, it is considered high risk and the Bank will not
purchase it. All mortgage-related securities purchased and included in the
investment portfolio will be subject to the FFIEC test as of December 31 each
year to determine if they have become high risk holdings. If a mortgage-related
security becomes high risk, it will be evaluated



                                       32
<PAGE>

by the Bank's Investment Committee to determine if the security should be
liquidated. At December 31, 2005 and 2004, the Bank did not hold any high risk
mortgage-related securities

         The Bank's investment portfolio also consists of bank-qualified
municipal securities. Municipal securities purchased are limited to the first
three (3) grades of the rating agencies. The grade is reviewed each December 31
to verify that the grade has not deteriorated below the first three (3) grades.
The Bank may purchase non-rated general obligation municipals, but the credit
strength of the municipality must be evaluated by the Bank's Credit Department.
Generally, municipal securities from each issuer will be limited to $2 million,
never to exceed 10% of the Bank's tier 1 capital and will not have a stated
final maturity date of greater than fifteen (15) years.

         The average yield (FTE) on the Bank's investment portfolio is as
follows as of December 31,


                                                2005      2004      2003
                                                ----      ----      ----
         U.S. Treasuries                        2.40%     1.70%     1.99%
         U.S. Government agencies               3.09%     2.65%     2.72%
         Collateralized mortgage obligations    3.42%     3.41%     1.87%
         Municipals                             6.61%     7.76%     7.32%
         Other securities                       3.33%     1.71%     1.91%


With the exception of securities of the U.S. Government and U.S. Government
agencies and corporations, the Corporation had no other securities with a book
or market value greater than 10% of shareholders' equity as of December 31,
2005, 2004 and 2003.









                                       33
<PAGE>

      The following is a summary of available-for-sale securities and
held-to-maturity securities:

<TABLE>
<CAPTION>
                                                          Available-for-Sale Securities
                                      ---------------------------------------------------------------------
                                                             Gross              Gross           Estimated
                                          Amortized        Unrealized         Unrealized          Fair
                                            Cost              Gain              Loss              Value
                                      ---------------------------------------------------------------------
<S>                                      <C>               <C>               <C>               <C>
December 31, 2005
U.S. Treasury securities                 $  1,494,394      $         --      $      2,009      $  1,492,385
U.S. Government agencies                   70,000,000                --         1,525,300        68,474,700
Collateralized mortgage obligations            35,052                --                12            35,040
                                      ---------------------------------------------------------------------
                                         $ 71,529,446      $         --      $  1,527,321      $ 70,002,125
                                      =====================================================================
December 31, 2004
U.S. Treasury securities                 $  2,016,184                --      $      7,704      $  2,008,480
U.S. Government agencies                   91,000,000           112,700           769,680        90,343,020
Collateralized mortgage obligations            62,486                58                --            62,544
                                      ---------------------------------------------------------------------
                                         $ 93,078,670      $    112,758      $    777,384      $ 92,414,044
                                      =====================================================================
December 31, 2003
U.S. Treasury securities                 $ 21,840,685             5,646      $        954      $ 21,845,377
U.S. Government agencies                   93,904,140           829,297           815,799        93,917,638
Collateralized mortgage obligations            99,203               154                --            99,357
                                      ---------------------------------------------------------------------
                                         $115,844,028      $    835,097      $    816,753      $115,862,372
                                      =====================================================================


                                                             Held-to-Maturity Securities
                                      ---------------------------------------------------------------------
                                                             Gross              Gross           Estimated
                                          Amortized        Unrealized         Unrealized          Fair
                                            Cost              Gain              Loss              Value
                                      ---------------------------------------------------------------------

December 31, 2005
Municipals                               $ 35,715,981      $    315,262      $    582,213      $ 35,449,030
Collateralized mortgage obligations        47,791,685                --         1,400,263        46,391,422
Other securities                              225,000             2,202             1,598           225,604
                                      ---------------------------------------------------------------------
                                         $ 83,732,666      $    317,464      $  1,984,074      $ 82,066,056
                                      =====================================================================
December 31, 2004
Municipals                                  5,444,198      $    484,166                --      $  5,928,364
Collateralized mortgage obligations        50,012,255                --           836,980        49,175,275
Other securities                              250,000             4,584               221           254,562
                                      ---------------------------------------------------------------------
                                         $ 55,706,453      $    488,750      $    837,201      $ 55,358,002
                                      =====================================================================
December 31, 2003
Municipals                                  5,576,468      $    531,499                --      $  6,107,967
Other securities                              250,000             7,082                --           257,082
                                      ---------------------------------------------------------------------
                                         $  5,826,468      $    538,581      $         --      $  6,365,049
                                      =====================================================================
</TABLE>


                                       34
<PAGE>


         The Corporation held eighty-two investment securities as of December
31, 2005 of which the amortized cost was greater than market value. The majority
of these investment securities were purchased during 2004 and 2005. Management
does not believe any individual unrealized loss as of December 31, 2005
represents an other-than-temporary impairment. The unrealized losses relate
primarily to securities issued by the U.S. Treasury, FHLMC and Municipals. These
unrealized losses are primarily attributable to changes in interest rates and
individually were 4.2% or less of their respective amortized cost basis. The
Corporation has both the intent and ability to hold these securities for a time
necessary to recover the amortized cost.

         As part of managing liquidity, the Corporation monitors its loan to
deposit ratio on a daily basis. At December 31, 2005 the ratio was 88.4 percent
and as of December 31, 2004 the ratio was 94.7 percent which is within the
Corporation's acceptable range.

         The following table shows the composition of the Bank's loan portfolio
as of the dates indicated (in 000's):

<TABLE>
<CAPTION>
                                                                 December 31,
                                                                 ------------
                                2005                  2004                 2003                2002                  2001
                                ----                  ----                 ----                ----                  ----
                                    % of                  % of                 % of                 % of                 % of
                          Amount    Total       Amount    Total       Amount   Total      Amount    Total      Amount    Total
                       -------------------   -------------------   ------------------  -------------------   ------------------
<S>                     <C>         <C>       <C>         <C>       <C>        <C>      <C>         <C>       <C>        <C>
TYPES OF LOANS
Commercial              $ 252,528   36.9%     $ 235,705   35.7%     $ 221,846  37.2%    $ 182,994   34.6%     $150,101   33.2%
Construction               50,173    7.3%        37,119    5.7%        35,305   5.9%       21,107    4.0%       17,027    3.8%
Commercial Mortgage       138,075   20.2%       127,773   19.5%       120,135  20.1%      113,399   21.4%       82,256   18.2%
Residential Mortgage      195,766   28.6%       206,599   31.5%       183,095  30.7%      163,034   30.8%      151,874   33.6%
Consumer                   45,188    6.6%        40,534    6.2%        25,183   4.2%       35,934    6.8%       37,493    8.3%
Credit Card                 2,737    0.4%         2,480    0.4%         2,360   0.4%        2,056    0.4%        1,811    0.4%
Other                          20    0.0%         6,243    1.0%         9,139   1.5%       10,387    2.0%       11,498    2.5%

                       -------------------   -------------------   ------------------  -------------------   ------------------
      Total - Gross     $ 684,487  100.0%     $ 656,453  100.0%     $ 597,063 100.0%    $ 528,911  100.0%     $452,060  100.0%
                                  ========              ========              =======             ========             ========

      Allowance            (8,346)               (7,796)               (8,030)             (7,227)              (5,987)

                       ----------            ----------            ----------          ----------            ---------
      Total - Net       $ 676,141             $ 648,657             $ 589,033           $ 521,684             $446,073
                       ==========            ==========            ==========          ==========            =========
</TABLE>






                                       35
<PAGE>

         The following table shows the composition of the commercial loan
category by industry type as of the dates indicated (in $000's):

<TABLE>
<CAPTION>
                                                                                    December 31,
                                                                                    ------------
                                                              2005                      2004                     2003
                                                              ----                      ----                     ----
Type                                                  Amount           %       Amount           %       Amount           %
----                                                  ------           -       ------           -       ------           -
<S>                                                <C>            <C>       <C>            <C>       <C>            <C>

Agriculture, Foresty & Fishing                       $ 1,136        0.4%        $ 258        0.1%      $ 1,297        0.6%
Mining                                                 2,574        1.0%        2,615        1.1%        1,939        0.9%
Construction                                           9,714        3.8%       13,417        5.7%       17,480        7.9%
Manufacturing                                         38,178       15.1%       30,570       13.0%       18,996        8.6%
Wholesale Trade                                       32,287       12.8%       29,965       12.7%       26,778       12.1%
Retail Trade                                           6,215        2.5%        4,870        2.1%        6,387        2.9%
Transportation                                         8,473        3.4%        9,966        4.2%        5,423        2.4%
Information                                              945        0.4%        1,141        0.5%        1,348        0.6%
Finance & Insurance                                    3,997        1.6%        4,091        1.7%        6,066        2.7%
Real Estate and Rental & Leasing                      55,906       22.1%       46,134       19.6%       38,430       17.3%
Professional, Scientific & Technical Services         31,604       12.5%       30,522       12.9%       33,808       15.2%
Management of Companies & Enterprises                  1,576        0.6%        2,199        0.9%            -        0.0%
Administrative and Support, Waste Management &
     Remediation Services                              1,476        0.6%            -        0.0%        1,180        0.5%
Educational Services                                   4,680        1.9%        4,158        1.8%        2,760        1.2%
Health Care & Social Assistance                       21,028        8.3%       21,253        9.0%       19,912        9.0%
Arts, Entertainment & Recreation                       1,759        0.7%        5,333        2.3%        1,628        0.7%
Accommodation & Food Services                          8,788        3.5%        9,026        3.8%       10,752        4.8%
Other Services                                        22,192        8.8%       20,187        8.6%       27,662       12.5%

                                                  -----------------------  -----------------------  -----------------------
                                                   $ 252,528      100.0%    $ 235,705      100.0%    $ 221,846      100.0%
                                                  =======================  ======================  =======================
</TABLE>

The following table shows the composition of the Bank's deposit portfolio as of
the dates indicated (in 000's):

<TABLE>
<CAPTION>
                                                                        December 31,
                                                                        ------------
                                               2005                         2004                         2003
                                               ----                         ----                         ----
                                                     % of                         % of                         % of
                                       Amount        Total          Amount        Total          Amount        Total
                                   -------------------------    -------------------------   --------------------------
<S>                                  <C>             <C>          <C>             <C>          <C>             <C>
TYPES OF DEPOSITS
Demand                               $ 171,858       26.98%       $ 153,674       26.64%       $ 138,087       26.52%
MMDA/Savings                           465,220       73.02%         423,255       73.36%         382,574       73.48%

                                   -------------------------    -------------------------   --------------------------
     Total Demand Deposits             637,078      100.00%         576,929      100.00%         520,661      100.00%
                                               =============                =============                =============

CDs < $100,000                          59,258       43.18%          55,969       48.04%          57,329       49.05%
CDs > $100,000                          64,021       46.65%          47,502       40.77%          47,051       40.26%
Individual Retirement Accounts          13,959       10.17%          13,031       11.19%          12,496       10.69%

                                   -------------------------    -------------------------   --------------------------
     Total Certificates of Deposit     137,238      100.00%         116,502      100.00%         116,876      100.00%
                                               =============                =============                =============

                                   ------------                 ------------                -------------
     Total Deposits                  $ 774,316                    $ 693,431                    $ 637,537
                                   ============                 ============                =============
</TABLE>



                                       36
<PAGE>
         The following table illustrates the projected maturities and the
repricing mechanisms of the major asset/liabilities categories of the
Corporation as of December 31, 2005, based on certain assumptions. Prepayment
rate assumptions have been made for the residential loans secured by real estate
portfolio. Maturity and repricing dates for investments have been projected by
applying the assumptions set forth below to contractual maturity and repricing
dates.
<TABLE>
<CAPTION>
                              0 - 180     181 - 365        1 - 2       2 - 3        3 -5          5 +     Non-interest
                               days          days          years       years        years        years       Earning      Total
                               ----          ----          -----       -----        -----        -----       -------      -----
<S>                        <C>           <C>           <C>           <C>         <C>         <C>           <C>          <C>
Interest Earning Assets:
 Fed Funds/ Overnight
  Time                     $ 35,536,365                                                                                 $ 35,536,365
 Reverse repurchase
  agreements                  5,000,000                                                                                    5,000,000
 Investments                 19,591,754    26,235,795    30,539,764   29,013,280  14,541,077   37,548,921                157,470,591
 Loans
   Commercial & Industrial
      Fixed                  28,706,725    11,135,699    14,412,461   13,922,664  16,560,385    9,739,669        25,587   94,503,190
      Variable              155,011,109        51,992       547,098    1,195,374      23,597      165,970     1,029,752  158,024,892
   Commercial Loans Secured
    by Real Estate
      Fixed                  16,134,737    13,868,136    18,557,993   13,074,542  14,154,610    7,436,538       285,028   83,511,584
      Variable               52,476,991       127,211     1,012,365      146,684     455,996                    344,292   54,563,539
   Residential Loans Secured
    by Real Estate
      Fixed                   2,844,406     3,215,677     6,371,425    5,696,179   9,588,009   21,043,773       688,212   49,447,681
      Variable              162,001,938     3,816,903     5,352,878   12,158,306   8,311,620    3,760,772     1,089,001  196,491,418
   Other
      Fixed                   1,082,912       990,625     1,824,817    1,566,248   2,799,320                    482,720    8,746,642
      Variable               39,196,160                                                                           2,696   39,198,856

                           ---------------------------------------------------------------------------------------------------------
Total Interest Earning
 Assets                    $517,583,097  $ 59,442,038  $ 78,618,801  $76,773,277 $66,434,614 $ 79,695,643  $  3,947,288 $882,494,758
                           ---------------------------------------------------------------------------------------------------------

Non-Interest Earning Assets                                                                                  45,967,096   45,967,096

                           ---------------------------------------------------------------------------------------------------------
Total Assets               $517,583,097  $ 59,442,038  $ 78,618,801  $76,773,277 $66,434,614 $ 79,695,643  $ 49,914,384 $928,461,854
                           =========================================================================================================


Interest Bearing Liabilities:
  Demand Deposits          $ 10,426,213  $  9,476,047  $ 17,320,935  $15,353,014 $25,671,207 $ 93,251,207  $    358,823 $171,857,446
  Interest Bearing Demand   105,265,553                                                                                  105,265,553
  Savings Deposits           11,158,554                                                                                   11,158,554
  Money Market Accounts     348,796,150                                                                                  348,796,150
  Certificate of Deposits    23,268,668    16,877,267    16,492,867    5,655,044   4,867,027    3,867,300                 71,028,173
  Jumbo CDs                  26,963,656    19,858,460    11,913,132    2,242,375   2,522,052    2,710,164                 66,209,839
  Repurchase Agreements      53,556,402                                                                                   53,556,402
  FHLB Advances              10,000,000                  11,000,000    3,000,000                                          24,000,000
  Subordinated Debt           5,000,000                                                                                    5,000,000
  Company obligated
   mandatorily redeemable
   preferred capital
   securities of
   subsidiary trust
   holding solely the
   junior subordinated
   debentures of the
   parent company            13,918,000                                                                                   13,918,000
                           ---------------------------------------------------------------------------------------------------------
Total Interest Bearing
 Liabilities               $594,435,196  $ 46,211,774  $ 56,726,934  $26,250,433 $33,060,286 $113,746,671  $    358,823 $870,790,117

Non-Interest Bearing
  Liabilities                                                                                                 6,089,215    6,089,215

Equity                                                                                                       51,582,522   51,582,522
                           ---------------------------------------------------------------------------------------------------------
Total Liabilities &
 Shareholders'
 Equity                    $594,435,196  $ 46,211,774  $ 56,726,934  $26,250,433 $33,060,286 $113,746,671  $ 58,030,560 $928,461,854
                           =========================================================================================================

Interest Sensitivy Gap per
 Period                    $(76,852,099) $ 13,230,264  $ 21,891,867  $50,522,844 $33,374,328 $(34,051,028) $ (8,116,176)

Cumulative Interest
 Sensitivity Gap           $(76,852,099) $(63,621,835) $(41,729,968) $ 8,792,876 $42,167,204 $  8,116,176  $         (0)

Interest Sensitivity Gap
 as a  Percentage of
 Earning Assets                   -8.71%         1.50%         2.48%        5.73%       3.78%       -3.86%        -0.92%

Cumulative Sensitivity Gap
  as a Percentage of
  Earning Assets                  -8.71%        -7.21%        -4.73%        1.00%       4.78%        0.92%         0.00%
</TABLE>
         Of the $26,963,656 Jumbo CDs maturing in 0 - 180 days, $17,234,147 will
mature in three months or less.


                                       37
<PAGE>

Contractual Obligations

         The following table presents, as of December 31, 2005, significant
fixed and determinable contractual obligations to third parties by payment date.
Further discussion of the nature of each obligation is included in the
referenced notes to the Consolidated Financial Statements under Item 8 of this
report.

<TABLE>
<CAPTION>
                                            Note       One Year       One to      Three to       Over
          (In Thousands)                  Reference    or Less     Three Years   Five Years    Five Years     Total
---------------------------------------------------------------------------------------------------------------------
<S>                                       <C>         <C>           <C>           <C>            <C>          <C>
Deposits without a stated maturity(a)        10       $ 637,078     $    --       $    --       $    --     $637,078
Consumer certificates of deposits (a)        10          86,968      36,303         7,390         6,577      137,238
FHLB Advances(a)                             11          10,000      14,000            --            --       24,000
Security repurchase agreements(a)            11          53,556          --            --            --       53,556
Long-term debt (a)                        4, 11              --          --            --        18,918       18,918
Operating leases                             8              357         640           417           937        2,351
---------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) Excludes Interest

            The Corporation's operating lease obligations represent rental
payments for banking center offices.

Critical Accounting Policies

         The Corporation's consolidated financial statements are prepared in
accordance with accounting principles generally accepted in the United States
and follow general practices within the industries in which it operates.
Application of these principles requires management to make estimates,
assumptions, and judgments that affect the amounts reported in the financial
statements and accompanying notes. These estimates, assumptions, and judgments
are based on information available as of the date of the financial statements;
accordingly, as this information changes, the financial statements could reflect
different estimates, assumptions, and judgments. Certain policies inherently
have a greater reliance on the use of estimates, assumptions, and judgments and
as such have a greater possibility of producing results that could be materially
different than originally reported. Estimates, assumptions, and judgments are
necessary when assets and liabilities are required to be recorded at fair value,
when a decline in the value of an asset not carried on the financial statements
at fair value warrants an impairment write-down or valuation reserve to be
established, or when an asset or liability needs to be recorded contingent upon
a future event. Carrying assets and liabilities at fair value inherently results
in more financial statement volatility. The fair values and the information used
to record valuation adjustments for certain assets are based either on quoted
market prices or are provided by other third-party sources, when available. When
third-party information is not available, valuation adjustments are estimated in
good faith by management primarily through the use of internal cash flow
modeling techniques.

         Based on the valuation techniques used and the sensitivity of financial
statement amounts to the methods, assumptions, and estimates underlying those
amounts, management has identified the determination of the allowance for loan
losses and the valuation of the mortgage servicing asset, to be the accounting
areas that require the most subjective or complex judgments, and as such could
be most subject to revision as new information becomes available.


                                       38
<PAGE>

Mortgage Servicing Assets
-------------------------

         Mortgage servicing rights are recognized as separate assets when rights
are acquired through sale of mortgage loans. Capitalized servicing rights are
reported in other assets and are amortized into other operating expenses and
reported net in the mortgage banking income section in proportion to, and over
the period of, the estimated future net servicing income of the underlying
financial assets. Mortgage servicing rights are evaluated for impairment based
upon the fair value of the rights as compared to amortized cost. Impairment is
determined by stratifying rights by predominant characteristics, such as loan
type, interest rates, maturities, and other terms. Fair value is determined
using prices for similar assets with similar characteristics, when available, or
based upon discounted cash flows using market-based assumptions. Estimates of
fair value include assumptions about loan prepayment speeds, servicing costs and
revenues, interest rates, and other factors which may change over time.
Impairment is recognized through a valuation allowance for an individual
stratum, to the extent that fair value is less than the cost of the rights for
each stratum.

Off Balance Sheet Arrangements
------------------------------

         During the first quarter of 2004, the Corporation adopted Financial
Accounting Standard Board (FASB) Interpretation No. 46, Consolidation of
Variable Interest Entities (FIN 46), which governs when certain variable
interest entities should be consolidated in the financial statements of the
Corporation. As a result, the Corporation deconsolidated the Trust from its
financial statements. See Note 4 "Trust Preferred Securities" in the notes to
consolidated financial statements of this report for further information.

Derivative Instruments and Hedging Activities
---------------------------------------------

         During the second quarter of 2004, the Corporation entered into a
3-year interest rate swap to mitigate the risk of adverse interest rate
movements on the value of future cash flows related to its investment in
overnight Federal Funds sold. Pursuant to FASB Statement No. 133, "Accounting
for Derivative Instruments and Hedging Activities", cash flow hedges are
accounted for by recording the fair value of the derivative instrument on the
balance sheet as either an asset or liability, with a corresponding offset
recorded in other comprehensive income within shareholders' equity, net of tax.
See Note 6 Derivative Instruments and Hedging Activities in the Notes to the
Consolidated Financial Statements under Item 8 of this report for further
information.

         Under the cash flow hedge accounting method, derivative gains and
losses not effective in hedging the change in expected cash flows of the hedged
item are recognized immediately in the income statement. At the hedge's
inception and quarterly thereafter, a formal assessment is performed to
determine whether changes in cash flows of the derivative instrument have been
highly effective in offsetting changes in the cash flows of the hedged item and
whether they are expected to be highly effective in the future. If it is
determined a derivative instrument has not been or will not continue to be
highly effective as a hedge, hedge accounting is discontinued.



                                       39
<PAGE>

Allowance for Loan Losses
-------------------------

         The allowance for loan losses is established through provisions for
loan losses charged against income. Loans deemed to be uncollectible are charged
against the allowance for loan losses, and subsequent recoveries, if any, are
credited to the allowance. The allowance for loan losses allocated to loans that
are identified as impaired is based on cash flows using the loan's initial
effective interest rate or the fair value of the collateral for collateral
dependent loans.

         The allowance for loan losses is maintained at a level believed
adequate by management to absorb inherent losses in the loan portfolio. The
determination of the allowance is based on factors which, in management's
judgment, deserve recognition under existing economic conditions in estimating
probable loan losses. This evaluation is inherently subjective as it requires
material estimates including the amounts and timing of future cash flows
expected to be received on impaired loans that may be susceptible to significant
change. The allowance is increased by provisions for loan losses charged against
income and reduced by net charge-offs.

         The allowance for loan losses is allocated to each loan category based
on specific loss allocation, management's estimate of expected losses, based on
the Bank's historical loss experience, and a qualitative analysis. Although the
loan loss reserve is allocated by loan category, the entire allowance is
available to cover any loan loss that may occur.

         The following table shows the dollar amount of the allowance for loan
losses using management's estimate by loan category (in $000's):

<TABLE>
<CAPTION>
                                                          December 31,
                            2005            2004            2003            2002            2001
                            ----            ----            ----            ----            ----
<S>                       <C>             <C>             <C>             <C>             <C>
Commercial                $ 4,204         $ 5,094         $ 6,519         $ 5,173         $ 4,792
Construction                  404             155              77              82              21
Commercial Mortgage         1,319             618             261             437             104
Residential Mortgage        1,758           1,108             639             906             499
Consumer                      586             745             318             391             322
Credit Card                    74              11              63              61              55
Other                           1              65             153             177             194

                        --------------------------------------------------------------------------
                          $ 8,346         $ 7,796         $ 8,030         $ 7,227         $ 5,987
                        ==========================================================================
</TABLE>

         Management considers the present allowance to be appropriate and
adequate to cover losses inherent in the loan portfolio based on the current
economic environment. However, future economic changes cannot be predicted.
Deterioration in economic conditions could result in an increase in the risk
characteristics of the loan portfolio and an increase in the provision for loan
losses.



                                       40
<PAGE>

         The following table presents a summary of non-performing assets as of
December 31, (in 000's):

<TABLE>
<CAPTION>
Non-Performing Assets
($ 000)
                                      2005              2004              2003              2002            2001
                                      ----              ----              ----              ----            ----
                                           % of              % of              % of              % of             % of
                                 Amount   Total    Amount   Total    Amount   Total    Amount   Total  Amount    Total
                              ------------------ ----------------- ----------------- ----------------- ----------------
<S>                             <C>      <C>      <C>      <C>      <C>      <C>      <C>      <C>      <C>     <C>
Non-Accrual Loans
Commercial                      $ 1,055   28.9%   $ 1,800   57.7%   $ 4,063   83.4%   $ 1,605   49.7%   $ 335    40.1%
Construction                          -    0.0%         -    0.0%         -    0.0%         -    0.0%       -     0.0%
Commercial Mortgage                 629   17.2%         -    0.0%         -    0.0%         -    0.0%     184    22.0%
Residential Mortgage              1,777   48.8%       815   26.1%       808   16.6%     1,624   50.3%     303    36.3%
Consumer                            187    5.1%         -    0.0%         -    0.0%         -    0.0%      13     1.6%
Credit Card                           -    0.0%         -    0.0%         -    0.0%         -    0.0%       -     0.0%
Other                                 -    0.0%       504   16.2%         -    0.0%         -    0.0%       -     0.0%

                              ------------------ ----------------- ----------------- ----------------- ----------------
     Total                      $ 3,648  100.0%   $ 3,119  100.0%   $ 4,871  100.0%   $ 3,229  100.0%   $ 835   100.0%
                              ================== ================= ================= ================= ================


Loans 90 Days Past Due -
Still Accruing                  $    --           $    73           $   517           $     9           $   5


Restructured due to troubled
conditions of the borrower      $    --           $    --           $    --           $ 2,902           $  --
</TABLE>


         The following table presents a summary of non-performing loans as of
December 31:

<TABLE>
<CAPTION>
                                                                  2005         2004         2003         2002        2001
                                                                  ----         ----         ----         ----         ----
<S>                                                           <C>          <C>          <C>          <C>          <C>
Loan Type
Commercial
       # of loans                                                     15           14           28           11            7
       Interest income recognized                             $   57,110   $   73,795   $  112,102   $  111,591   $    9,534
       Additional interest income if loan had been accruing   $  165,475   $  101,190   $  168,426   $   54,952   $   25,191


Consumer
       # of loans                                                      3            3           --           --            1
       Interest income recognized                             $      382   $   20,155   $       --   $       --   $       --
       Additional interest income if loan had been accruing   $   22,461   $   36,531   $       --   $       --   $    1,545


Residential mortgage loans
       # of loans                                                     20           15           13           12            6
       Interest income recognized                             $   52,430   $    8,737   $   42,539   $   18,650   $    1,925
       Additional interest income if loan had been accruing   $   73,499   $   68,942   $   22,527   $   34,598   $   24,785


Credit cards
       # of loans                                                     --           --           --           --           --
       Interest income recognized                             $       --   $       --   $       --   $       --   $       --
       Additional interest income if loan had been accruing   $       --   $       --   $       --   $       --   $       --

Restructured loans                                                    --           --           --   $2,901,600   $       --
</TABLE>


                                       41
<PAGE>

Capital Resources

         The Corporation's only source of capital since commencing operations
has been from issuance of common stock, results of operations, issuance of long
term debt to a non-affiliated third party, and the issuance of junior
subordinated debentures.

         The Corporation maintains a Revolving Credit Agreement with Harris
Trust and Savings Bank in the amount of $5,000,000, of which none has been
drawn, that will mature September 30, 2006.

         The Bank entered into an agreement in the amount of $5,000,000 pursuant
to a Subordinated Term Loan Agreement with Harris Trust and Savings Bank dated
June 6, 2003. Under the agreement the Bank can make up to two advances against
the term loan prior to June 6, 2004. The first advance was made in the amount of
$2,000,000 on June 6, 2003. The second advance was made in the amount of
$3,000,000 on May 3, 2004. The final maturity date of the loan is June 6, 2012.
The outstanding principal balance is due at maturity; however, prepayment of the
principal balance is permitted prior to maturity with prior consent from the
Federal Reserve.

         There are many different interest rate options available. Each floating
rate option is available for a fixed term of 1-3 months. The Bank is currently
paying adjusted 3-month LIBOR plus 2.0% which equates to 6.42% at December 31,
2005. Interest payments are due at the expiration of the fixed term option.

         In September 2000, the Trust, which is wholly owned by the Corporation,
issued $13,500,000 of company obligated mandatorily redeemable capital
securities. The proceeds from the issuance of the capital securities and the
proceeds from the issuance of the common securities of $418,000 were used by the
Trust to purchase from the Corporation $13,918,000 Fixed Rate Junior
Subordinated Debentures. The capital securities mature September 7, 2030, or
upon earlier redemption as provided by the Indenture. The Corporation has the
right to redeem the capital securities, in whole or in part, but in all cases in
a principal amount with integral multiples of $1,000, on any March 7 or
September 7 on or after September 7, 2010 at a premium, declining ratably to par
on September 7, 2020. The capital securities and the debentures have a fixed
interest rate of 10.60%, and are guaranteed by the Bank. The net proceeds
received by the Corporation from the sale of capital securities were used for
general corporate purposes.

         The Bank has incurred indebtedness pursuant to FHLB advances as
follows:

                         Amount             Rate              Maturity
                         ------             ----              --------

                      5,000,000             5.43%             03/16/2006

                      5,000,000             5.32%             05/08/2006

                      8,000,000             4.19%             07/24/2007

                      3,000,000             5.57%             08/13/2007

                      3,000,000             5.55%             10/02/2008
                  -------------

                    $24,000,000
                  =============


                                       42
<PAGE>

         During 2005, the maximum amount outstanding at any month-end during the
year for FHLB Advances was $32,000,000. The Bank may add indebtedness of this
nature in the future if determined to be in the best interest of the Bank.

         Security repurchase agreements are short-term borrowings that generally
mature within one to three days from the transaction date. At December 31, 2005
and 2004 the weighted average interest rate on these borrowings was 2.51% and
0.74%, respectively. During 2005, the maximum amount outstanding at any
month-end during the year was $91,111,736.

         Capital for the Bank is above well-capitalized regulatory requirements
at December 31, 2005. Pertinent capital ratios for the Bank as of December 31,
2005 are as follows:

                                                          Well     Adequately

                                        Actual     Capitalized    Capitalized
                                        ------     -----------    -----------
Tier 1 risk-based capital ratio           9.0%            6.0%           4.0%

Total risk-based capital ratio           10.9%           10.0%           8.0%

Leverage ratio                            6.8%            5.0%           4.0%


         Dividends from the Bank to the Corporation may not exceed the net
undivided profits of the Bank (included in consolidated retained earnings) for
the current calendar year and the two previous calendar years without prior
approval of the OCC. In addition, Federal banking laws limit the amount of loans
the Bank may make to the Corporation, subject to certain collateral
requirements. No loans were made during 2005 or 2004 by the Bank to the
Corporation. A dividend of $1,300,000 was declared and made during 2005 and a
dividend of $1,000,000 was declared and made during 2004 by the Bank to the
Corporation.

         In January 2003, the Board of Directors of the Corporation authorized a
repurchase program entitled "Program One" which covers employees and directors
and was set to expire on December 31, 2005 unless terminated earlier by the
Board. However, during the fourth quarter of 2005, the Board of Directors of the
Corporation authorized the effective date to be extended until December 31, 2008
unless terminated earlier by the Board of Directors.

         During the fourth quarter of 2005 Board of Directors of the Corporation
also authorized an additional $1,900,000 to be allocated to Program One. Under
Program One, the Corporation may spend up to $7,400,000 in individually
negotiated transactions to repurchase its shares from employees and directors
who wish to sell. The repurchase program may be suspended or discontinued at any
time if management determines that additional purchases are not warranted or if
the cost of the repurchase program reaches $7,400,000.

         The amount and timing of shares repurchased under the repurchase
program, as well as the specific price, will be determined by management after
considering market conditions, company performance and other factors.

         At December 31, 2005, the remaining authority under Program One was
approximately $2,396,187.


                                       43
<PAGE>

         In January 2003, the Board of the Corporation authorized a separate
repurchase program entitled "Program Two" which covers all other shareholders
and was set to expire at December 31, 2005, however, during the fourth quarter
of 2005, the Board of the Corporation authorized the effective date to be
extended until December 31, 2008 unless terminated earlier by the Board.

         During the fourth quarter of 2005 Board of Directors of the Corporation
also authorized an additional $2,600,000 to be allocated to Program Two. Under
Program Two, the Corporation may spend up to $10,200,000 in individually
negotiated transactions to repurchase its shares from shareholders who wish to
sell. The repurchase program may be suspended or discontinued at any time if
management determines that additional purchases are not warranted or if the cost
of the repurchase program reaches $10,200,000.

         The amount and timing of shares repurchased under the repurchase
program, as well as the specific price, will be determined by management after
considering market conditions, company performance and other factors.

         At December 31, 2005, the remaining authority under Program Two was
approximately $4,706,270.


Recent Accounting Pronouncements and Developments

         Note 2 to the Consolidated Financial Statements under Item 8 discusses
new accounting policies adopted by the Corporation during 2005 and the expected
impact of accounting policies. Note 2 also discusses recently issued or proposed
new accounting policies but not yet required to be adopted and the impact of the
accounting policies if known. To the extent the adoption of new accounting
standards materially affects financial conditions; results of operations, or
liquidity, the impacts if known are discussed in the applicable section(s) of
notes to consolidated financial statements.


CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION

         This discussion contains certain forward-looking statements that are
subject to risks and uncertainties and includes information about possible or
assumed future results of operations. Many possible events or factors could
affect our future financial results and performance. This could cause results or
performance to differ materially from those expressed in our forward-looking
statements. Words such as "expects," "anticipates," "believes," "estimates,"
variations of such words and other similar expressions are intended to identify
such forward-looking statements. These statements are not guarantees of future
performance and involve certain risks, uncertainties and assumptions which are
difficult to predict. Therefore, actual outcomes and results may differ
materially from what is expressed or forecasted in, or implied by, such
forward-looking statements. Readers should not rely solely on the
forward-looking statements and should consider all uncertainties and risks
discussed throughout this discussion. These statements are representative only
on the date hereof.

         The possible events or factors include, but are not limited to, the
following matters. Our loan growth is dependent on economic conditions, as well
as various discretionary factors, such as decisions to sell or purchase certain


                                       44
<PAGE>

loans or loan portfolios; participations of loans; retention of residential
mortgage loans; the management of a borrower; industry, product and geographic
concentrations and the mix of the loan portfolio. The rate of charge-offs and
provision expense can be affected by local, regional and international economic
and market conditions, concentrations of borrowers, industries, products and
geographic locations, the mix of the loan portfolio and management's judgments
regarding the collectibility of loans. Liquidity requirements may change as a
result of fluctuations in assets and liabilities and off-balance sheet
exposures, which will impact our capital and debt financing needs and the mix of
funding sources. Decisions to purchase, hold or sell securities are also
dependent on liquidity requirements and market volatility, as well as on- and
off-balance sheet positions. Factors that may impact interest rate risk include
local, regional and international economic conditions, levels, mix, maturities,
yields or rates of assets and liabilities, and the wholesale and retail funding
sources of the Bank. We are also exposed to the potential of losses arising from
adverse changes in market rates and prices which can adversely impact the value
of financial products, including securities, loans, deposits, debt and
derivative financial instruments, such as futures, forwards, swaps, options and
other financial instruments with similar characteristics.

         In addition, the banking industry in general is subject to various
monetary and fiscal policies and regulations, which include those determined by
the Federal Reserve Board, the Office of the Comptroller of the Currency
("OCC"), and the Federal Deposit Insurance Corporation ("FDIC"), whose policies
and regulations could affect our results. Other factors that may cause actual
results to differ from the forward-looking statements include the following:
competition with other local, regional and international banks, thrifts, credit
unions and other non-bank financial institutions, such as investment banking
firms, investment advisory firms, brokerage firms, investment companies and
insurance companies, as well as other entities which offer financial services,
located both within and outside the United States and through alternative
delivery channels such as the World Wide Web; interest rate, market and monetary
fluctuations; inflation; market volatility; general economic conditions and
economic conditions in the geographic regions and industries in which we
operate; introduction and acceptance of new banking-related products, services
and enhancements; fee pricing strategies, mergers and acquisitions and our
ability to manage these and other risks.





                                       45
<PAGE>

Item 7A.  Quantitative and Qualitative Disclosures about Market Risk
--------------------------------------------------------------------

         Market risk is the risk of loss due to adverse changes in market prices
and rates. The Corporation's market risk arises primarily from interest rate
risk inherent in its lending and deposit taking activities. Management actively
monitors and manages its interest rate exposure and makes monthly reports to the
Asset Liability Committee (the "ALCO"). The ALCO is responsible for reviewing
the interest rate sensitivity position and establishing policies to monitor and
limit exposure to interest rate risk. The guidelines established by ALCO are
reviewed by the ALCO/Investment Committee of the Corporation's Board of
Directors.

         The Corporation's profitability is affected by fluctuations in interest
rates. A sudden and substantial increase in interest rates may adversely impact
the Corporation's earnings to the extent that the interest rates earned by
assets and paid on liabilities do not change at the same speed, to the same
extent, or on the same basis. The Corporation monitors the impact of changes in
interest rates on its net interest income. The Corporation attempts to maintain
a relatively neutral gap between earning assets and liabilities at various time
intervals to minimize the effects of interest rate risk.

         One of the primary goals of asset/liability management is to maximize
net interest income and the net value of future cash flows within authorized
risk limits. Net interest income is affected by changes in the absolute level of
interest rates. Net interest income is also subject to changes in the shape of
the yield curve. In general, a flattening of the yield curve would result in a
decline in earnings due to the compression of earning asset yields and funding
rates, while a steepening would result in increased earnings as investment
margins widen. Earnings are also affected by changes in spread relationships
between certain rate indices, such as prime rate.

         Interest rate risk is monitored through earnings simulation modeling.
The earnings simulation model projects changes in net interest income caused by
the effect of changes in interest rates. The model requires management to make
assumptions about how the balance sheet is likely to behave through time in
different interest rate environments. Loan and deposit balances remain static
and maturities reprice at the current market rate. The investment portfolio
maturities and prepayments are assumed to be reinvested in similar instruments.
Mortgage loan prepayment assumptions are developed from industry median
estimates of prepayment speeds. Non-maturity deposit pricing is modeled on
historical patterns. The Corporation performs a 200 basis point upward and
downward interest rate shock to determine whether there would be an adverse
impact on its annual net interest income and that it is within the established
policy limits. The earnings simulation model as of December 31, 2005 projects an
approximate decrease of 2.0% in net interest income in a 200 basis point
downward interest rate shock and an approximate decrease of .60% in net interest
income in a 200 basis point upward interest rate shock. The upward and downward
change is well within the policy limits established by the ALCO policy.

         During 2005, the interest rate position of the Corporation was
liability sensitive, meaning net income should decrease as rates rise and
increase as rates fall. Due to the mix and timing of the repricing of the
Corporation's assets and liabilities, interest income is not materially impacted
whether rates increase or decrease in a 200 basis point interest rate shock. See
further discussion on interest rate sensitivity on page 31.


                                       46
<PAGE>

Item 8.  Financial Statements and Supplementary Data
----------------------------------------------------



Report of Independent Registered Public Accounting Firm

The Board of Directors
The National Bank of Indianapolis Corporation

We have audited the accompanying consolidated balance sheets of The National
Bank of Indianapolis Corporation and subsidiary as of December 31, 2005 and
2004, and the related consolidated statements of income, shareholders' equity
and cash flows for each of the three years in the period ended December 31,
2005. These financial statements are the responsibility of the Corporation's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. We were not engaged to perform an
audit of the Corporation's internal control over financial reporting. Our audits
included consideration of internal control over financial reporting as a basis
for designing audit procedures that are appropriate in the circumstances, but
not for the purpose of expressing an opinion on the effectiveness of the
Corporation's internal control over financial reporting. Accordingly we express
no such opinion. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of The National Bank
of Indianapolis Corporation and subsidiary at December 31, 2005 and 2004, and
the consolidated results of their operations and their cash flows for each of
the three years in the period ended December 31, 2005, in conformity with U.S.
generally accepted accounting principles.



February 3, 2006
                                                          /s/ Ernst & Young, LLP


                                       47
<PAGE>

                  The National Bank of Indianapolis Corporation

                           Consolidated Balance Sheets
<TABLE>
<CAPTION>

                                                                                        December 31
                                                                                 2005                 2004
                                                                         ------------------------------------------
<S>                                                                               <C>                 <C>
Assets
Cash and due from banks                                                           $ 32,223,665        $ 22,824,622
Reverse repurchase agreements                                                        5,000,000           5,000,000
Federal funds sold                                                                  33,214,446          31,766,783

Available-for-sale securities                                                       70,002,125          92,414,044
Held-to-maturity securities                                                         83,732,666          55,706,453
                                                                         ------------------------------------------
Total investment securities                                                        153,734,791         148,120,497

Loans                                                                              684,487,802         656,452,569
Less:  Allowance for loan losses                                                    (8,346,390)         (7,795,803)
                                                                         ------------------------------------------
Net loans                                                                          676,141,412         648,656,766
Premises and equipment                                                              11,872,396           9,676,268
Accrued interest receivable                                                          4,602,045           4,000,738
Stock in federal banks                                                               3,735,800           3,678,300
Other assets                                                                         7,937,299           7,189,805
                                                                         ------------------------------------------
Total assets                                                                     $ 928,461,854       $ 880,913,779
                                                                         ==========================================

Liabilities and shareholders' equity
Deposits:
Noninterest-bearing demand deposits                                              $ 171,857,446       $ 153,674,215
Money market and savings deposits                                                  465,220,257         423,254,826
Time deposits over $100,000                                                         66,209,839          49,039,847
Other time deposits                                                                 71,028,173          67,462,157
                                                                         ------------------------------------------
Total deposits                                                                     774,315,715         693,431,045
Security repurchase agreements                                                      53,556,402          84,162,626
FHLB advances                                                                       24,000,000          32,000,000
Subordinated debt                                                                    5,000,000           5,000,000
Junior subordinated debentures owed to unconsolidated subsidiary trust              13,918,000          13,918,000
Other liabilities                                                                    6,089,215           5,858,421
                                                                         ------------------------------------------
Total liabilities                                                                  876,879,332         834,370,092

Shareholders' equity:
Common stock, no par value:
Authorized shares; 2005 and 2004 3,000,000 shares;
issued 2,657,802 in 2005 and 2,628,497 in 2004;
outstanding 2,333,406 in 2005 and 2,349,174 in 2004                                 19,549,673          20,595,989
Unearned compensation                                                                 (357,507)           (624,543)
Additional paid-in capital                                                           4,009,263           3,836,613
Retained earnings                                                                   29,627,677          23,365,151
Accumulated other comprehensive loss                                                (1,246,584)           (629,523)
                                                                         ------------------------------------------
Total shareholders' equity                                                          51,582,522          46,543,687
                                                                         ------------------------------------------
Total liabilities and shareholders' equity                                       $ 928,461,854       $ 880,913,779
                                                                         ==========================================

</TABLE>
See accompanying notes.


                                       48
<PAGE>

                  The National Bank of Indianapolis Corporation

                        Consolidated Statements of Income
<TABLE>
<CAPTION>
                                                                                     Years Ended December 31
                                                                         2005                  2004                  2003
                                                                 -----------------------------------------------------------------
<S>                                                                        <C>                   <C>                  <C>
Interest income:
Interest and fees on loans                                                $ 43,255,856          $ 33,305,992         $ 31,010,185
Interest on investment securities                                            6,154,277             4,402,788            3,020,337
Interest on federal funds sold                                               1,291,306               725,134              432,019
Interest on reverse repurchase agreements                                      145,668                89,643               97,600
                                                                 -----------------------------------------------------------------
Total interest income                                                       50,847,107            38,523,557           34,560,141

Interest expense:
Interest on deposits                                                        16,109,423             8,974,585            7,668,136
Interest on repurchase agreements                                            1,527,886               570,295              381,077
Interest on FHLB advances and overnight borrowings                           1,497,247             1,775,010            2,414,070
Interest on long-term debt                                                   1,771,259             1,642,416            1,486,637
                                                                 -----------------------------------------------------------------
Total interest expense                                                      20,905,815            12,962,306           11,949,920
                                                                 -----------------------------------------------------------------
Net interest income                                                         29,941,292            25,561,251           22,610,221

Provision for loan losses                                                    2,085,000             1,320,000            1,200,000
                                                                 -----------------------------------------------------------------
Net interest income after provision for loan losses                         27,856,292            24,241,251           21,410,221

Other operating income:
Wealth management fees                                                       3,096,847             2,464,266            1,971,262
Service charges and fees on deposit accounts                                 1,833,825             2,130,994            2,409,577
Rental income                                                                  449,715               485,241              548,060
Mortgage banking income                                                        313,588               563,901              871,659
Interchange income                                                             670,725               594,093              542,221
Losses on sale of securities, net                                                    -               (83,739)             (36,891)
Other income                                                                 1,096,173             1,033,031            1,078,631
                                                                 -----------------------------------------------------------------
Total other operating income                                                 7,460,873             7,187,787            7,384,519

Other operating expenses:
Salaries, wages, and employee benefits                                      15,283,832            14,132,773           12,122,238
Occupancy                                                                    1,704,720             1,390,658            1,409,226
Furniture and equipment                                                        898,355               804,492              891,328
Professional services                                                        1,424,921             1,169,109              885,595
Data processing                                                              1,571,855             1,439,248            1,362,202
Business development                                                         1,071,823               898,072              838,132
Other                                                                        3,220,817             2,778,639            2,909,029
                                                                 -----------------------------------------------------------------
Total other operating expenses                                              25,176,323            22,612,991           20,417,750
                                                                 -----------------------------------------------------------------
Income before tax                                                           10,140,842             8,816,047            8,376,990
Federal and state income tax                                                 3,878,316             3,134,998            3,212,790
                                                                 -----------------------------------------------------------------
Net income                                                                 $ 6,262,526           $ 5,681,049          $ 5,164,200
                                                                 =================================================================

Basic earnings per share                                                         $2.72                 $2.47                $2.20
                                                                 =================================================================

Diluted earnings per share                                                       $2.62                 $2.37                $2.08
                                                                 =================================================================
</TABLE>
See accompanying notes.


                                       49
<PAGE>

                  The National Bank of Indianapolis Corporation

                 Consolidated Statements of Shareholders' Equity
<TABLE>
<CAPTION>
                                                                                                Accumulated
                                                                     Additional                     Other
                                          Common        Unearned       Paid-In      Retained    Comprehensive
                                           Stock      Compensation     Capital      Earnings     Income (Loss)     Total
                                       -------------------------------------------------------------------------------------
<S>                                     <C>            <C>            <C>         <C>               <C>        <C>
Balance at December 31, 2002            $ 26,862,276   $(1,218,746)   $2,562,990  $ 12,519,902      $ 520,729  $ 41,247,151

Comprehensive income:
Net income                                         -             -             -     5,164,200              -     5,164,200
Other comprehensive income:
Net unrealized loss on
investments, net of tax
of $334,282                                        -             -             -             -       (509,651)     (509,651)
                                                                                                              --------------
Total comprehensive income                                                                                        4,654,549

Income tax benefit from exercise of
warrants and options                               -             -       456,013             -              -       456,013
Issuance of stock (69,907 shares)          1,051,171       (72,025)            -             -              -       979,146
Repurchase of stock (160,002 shares)      (5,054,547)            -             -             -              -    (5,054,547)
Compensation earned                                -       396,092             -             -              -       396,092
                                       -------------------------------------------------------------------------------------
Balance at December 31, 2003              22,858,900      (894,679)    3,019,003    17,684,102         11,078    42,678,404

Comprehensive income:
Net income                                         -             -             -     5,681,049              -     5,681,049
Other comprehensive income:
Net unrealized loss on
investments, net of tax
of $270,524                                        -             -             -             -       (412,445)     (412,445)
Net unrealized loss on
swap, net of tax
of $149,648                                        -             -             -             -       (228,156)     (228,156)
                                                                                                              --------------
Total comprehensive income                                                                                        5,040,448

Income tax benefit from exercise of
warrants and options                               -             -       817,610             -              -       817,610
Issuance of stock (111,366 shares)         1,516,423       (29,859)            -             -              -     1,486,564
Repurchase of stock (114,421 shares)      (3,779,334)            -             -             -              -    (3,779,334)
Compensation earned                                -       299,995             -             -              -       299,995
                                       -------------------------------------------------------------------------------------
Balance at December 31, 2004              20,595,989      (624,543)    3,836,613    23,365,151       (629,523)   46,543,687

Comprehensive income:
Net income                                         -             -             -     6,262,526              -     6,262,526
Other comprehensive income:
Net unrealized loss on
investments, net of tax
of $341,714                                        -             -             -             -       (520,982)     (520,982)
Net unrealized loss on
swap, net of tax
of $63,019                                         -             -             -             -        (96,079)      (96,079)
                                                                                                              --------------
Total comprehensive income                                                                                        5,645,465

Income tax benefit from exercise of
warrants and options                               -             -       172,650             -              -       172,650
Issuance of stock (29,305 shares)            646,906         9,809             -             -              -       656,715
Repurchase of stock (45,073 shares)       (1,693,222)            -             -             -              -    (1,693,222)
Compensation earned                                -       257,227             -             -              -       257,227
                                       -------------------------------------------------------------------------------------
Balance at December 31, 2005            $ 19,549,673    $ (357,507)   $4,009,263  $ 29,627,677   $ (1,246,584) $ 51,582,522
                                       =====================================================================================
</TABLE>
See accompanying notes.


                                       50
<PAGE>

                  The National Bank of Indianapolis Corporation

                      Consolidated Statements of Cash Flows
<TABLE>
<CAPTION>
                                                                                   Years Ended December 31
                                                                           2005              2004              2003
                                                                     -----------------------------------------------------
<S>                                                                        <C>               <C>              <C>
Operating activities
Net income                                                                 $ 6,262,526       $ 5,681,049      $ 5,164,200
Adjustments to reconcile net income to net
cash provided by operating activities:
Provision for loan losses                                                    2,085,000         1,320,000        1,200,000
Depreciation and amortization                                                1,413,527         1,281,526        1,099,026
Mortgage servicing rights impairment (recoveries) charges                     (167,918)         (256,140)         345,102
Loss on sale of investment securities available-for-sale                             -            83,739           36,891
Gain on sale of loans                                                          (82,493)         (157,145)      (1,056,418)
Gain on disposal of premises and equipment                                     (23,100)           (2,150)               -
Income tax benefit from exercise of warrants and options                       172,650           817,610          456,013
Stock compensation                                                              99,793            99,990          110,000
Net accretion of investments                                                   314,501           294,755          841,086
Unearned compensation amortization                                             257,227           299,995          396,092
(Increase) decrease in:
Accrued interest receivable                                                   (601,307)         (497,337)         470,857
Other assets                                                                  (596,426)       (1,355,428)        (735,424)
Increase (decrease) in:
Other liabilities                                                              230,794         2,950,137       (1,824,744)
                                                                     -----------------------------------------------------
Net cash provided by operating activities                                    9,364,774        10,560,601        6,502,681

Investing activities
Net change in federal funds sold                                            (1,447,663)      (11,264,397)      (2,324,923)
Net change in reverse repurchase agreements                                          -        10,000,000      (10,000,000)
Proceeds from maturities of investment
securities held-to-maturity                                                  1,921,232         1,165,586       24,124,021
Proceeds from maturities of investment
securities available-for-sale                                               42,527,411        24,186,692       48,297,884
Proceeds from sales of investment securities available-for-sale                      -        19,952,500       25,330,500
Purchases of investment securities held-to-maturity                        (30,311,560)      (51,426,350)        (181,700)
Purchases of investment securities available-for-sale                      (20,986,074)      (21,491,649)    (107,055,082)
Net increase in loans                                                      (47,859,537)      (93,781,818)    (143,204,249)
Proceeds from sale of loans                                                 18,372,384        32,995,345       75,711,736
Purchases of premises and equipment                                         (3,324,070)       (1,562,075)        (999,445)
                                                                     -----------------------------------------------------
Net cash used in investing activities                                      (41,107,877)      (91,226,166)     (90,301,258)

Financing activities
Net increase in deposits                                                    80,884,670        55,893,965       93,194,560
Net change in security repurchase agreements                               (30,606,224)       12,605,580       (2,716,728)
Net change in FHLB advances                                                 (8,000,000)      (10,000,000)      (6,000,000)
Proceeds from issuance of long-term debt                                             -         3,000,000        2,000,000
Repurchase of stock                                                         (1,693,222)       (3,779,334)      (5,054,547)
Proceeds from issuance of stock                                                556,922         1,386,574          869,146
                                                                     -----------------------------------------------------
Net cash provided by financing activities                                   41,142,146        59,106,785       82,292,431
                                                                     -----------------------------------------------------

Increase (decrease) in cash and cash equivalents                             9,399,043       (21,558,780)      (1,506,146)
Cash and cash equivalents at beginning of year                              22,824,622        44,383,402       45,889,548
                                                                     -----------------------------------------------------
Cash and cash equivalents at end of year                                  $ 32,223,665      $ 22,824,622     $ 44,383,402
                                                                     =====================================================

Interest paid                                                             $ 20,394,928      $ 12,959,914     $ 12,149,305
                                                                     =====================================================
Income taxes paid                                                          $ 4,293,994       $ 1,368,989      $ 4,268,861
                                                                     =====================================================
</TABLE>
See accompanying notes.


                                       51
<PAGE>

1. Organization and Significant Accounting Policies

Organization

The National Bank of Indianapolis Corporation (the Corporation) was incorporated
in the State of Indiana on January 29, 1993. The Corporation subsequently formed
a de novo national bank, The National Bank of Indianapolis (the Bank), and a
statutory trust, NBIN Statutory Trust I (the Trust). The Bank is a wholly owned
subsidiary and commenced operations in December 1993. The Trust was formed in
September 2000 as part of the issuance of trust preferred capital securities.
The Corporation and the Bank engage in a wide range of commercial, personal
banking, and trust activities primarily in central Indiana.

The consolidated financial statements include the accounts of the Corporation
and the Bank. During the first quarter of 2004, as a result of applying
Financial Accounting Standards Board (FASB) Interpretation No. 46, Consolidation
of Variable Interest Entities, an Interpretation of Accounting Research Bulletin
No. 51 (FIN 46), the Corporation was required to deconsolidate the Trust from
its financial statements. See Note 4, "Trust Preferred Securities" in the notes
to the consolidated financial statements of this report for further information.
All intercompany accounts and transactions have been eliminated in consolidation

Cash and Cash Equivalents

Cash and cash equivalents consist of cash and interest-bearing deposits.
Interest-bearing deposits are available on demand.

Investment Securities

Investments in debt securities are classified as held-to-maturity or
available-for-sale. Management determines the appropriate classification of the
securities at the time of purchase per Board-approved policy.

When the Corporation classifies debt securities as held-to-maturity, it has the
positive intent and ability to hold the securities to maturity. Held-to-maturity
securities are stated at cost, adjusted for amortization of premiums and
accretion of discounts on the constant effective yield method.









                                       52
<PAGE>

1. Organization and Significant Accounting Policies (continued)

Debt securities not classified as held-to-maturity are classified as
available-for-sale. Available-for-sale securities are stated at fair value, with
the unrealized gains and losses, net of tax, reported as a component of other
comprehensive income, net of taxes.

The amortized cost of debt securities classified as held-to-maturity or
available-for-sale is adjusted for amortization of premiums and accretion of
discounts on the constant effective yield method to maturity, or in the case of
mortgage-backed securities, over the estimated life of the security. Such
amortization is included in interest income from investments. Interest and
dividends are included in interest income from investments. Realized gains and
losses, and declines in value judged to be other-than-temporary are included in
losses on sale of securities, net. The cost of securities sold is based on the
specific identification method.

Loans

Interest income on commercial, mortgage, and certain installment loans are
accrued on the principal amount of such loans outstanding. Loans are placed on
nonaccrual status when significant doubt exists as to the collectibility of
principal or interest. Interest continues to accrue on the loan, but no income
is recognized. All payments, principal, and interest received are applied to the
outstanding principal balance.

Deferred loan fees are amortized over the life of the loan.

Allowance for Loan Losses

The allowance for loan losses is established through provisions for loan losses
charged against income. Loans deemed to be uncollectible are charged against the
allowance for loan losses, and subsequent recoveries, if any, are credited to
the allowance. The allowance for loan losses allocated to loans that are
identified as impaired is based on cash flows using the loan's initial effective
interest rate or the fair value of the collateral for collateral dependent
loans.






                                       53
<PAGE>

1.  Organization and Significant Accounting Policies (continued)

The allowance for loan losses is maintained at a level believed adequate by
management to absorb inherent losses in the loan portfolio. The determination of
the allowance is based on factors which, in management's judgment, deserve
recognition under existing economic conditions in estimating possible loan
losses. This evaluation is inherently subjective as it requires material
estimates including the amounts and timing of future cash flows expected to be
received on impaired loans that may be susceptible to significant change. The
allowance is increased by provisions for loan losses charged against income and
reduced by net charge-offs.

The allowance for loan losses is allocated to each loan category based on
specific loss allocation, management's estimate of expected losses, based on the
Bank's historical loss experience, and a qualitative analysis. Although the loan
loss reserve is allocated by loan category, the entire allowance is available to
cover any loan loss that may occur.

Mortgage Servicing Rights

Mortgage servicing rights are recognized as separate assets when rights are
acquired through sale of mortgage loans. Capitalized servicing rights are
reported in other assets and are amortized into other operating expenses in
proportion to, and over the period of, the estimated future net servicing income
of the underlying financial assets. Mortgage servicing rights are evaluated for
impairment based upon the fair value of the rights as compared to amortized
cost. Impairment is determined by stratifying rights by predominant
characteristics, such as loan type, interest rates, maturities, and other terms.
Fair value is determined using prices for similar assets with similar
characteristics, when available, or based upon discounted cash flows using
market-based assumptions. Estimates of fair value include assumptions about loan
prepayment speeds, servicing costs and revenues, interest rates, and other
factors which may change over time. Impairment is recognized through a valuation
allowance for an individual stratum, to the extent that fair value is less than
the cost of the rights for each stratum.







                                       54
<PAGE>


1. Organization and Significant Accounting Policies (continued)

Off-Balance Sheet Arrangements

During the first quarter of 2004, the Corporation adopted FASB Interpretation
No. 46, Consolidation of Variable Interest Entities (FIN 46), which governs when
certain variable interest entities should be consolidated in the financial
statements of the Corporation. As a result, the Corporation deconsolidated the
Trust from its financial statements. See Note 4 "Trust Preferred Securities" in
the notes to consolidated financial statements of this report for further
information.

Derivative Instruments and Hedging Activities

During the second quarter of 2004, the Corporation entered into a three-year
interest rate swap to mitigate the risk of adverse interest rate movements on
the value of future cash flows related to its investment in overnight federal
funds sold. Pursuant to FASB Statement No. 133, Accounting for Derivative
Instruments and Hedging Activities, (Statement 133) cash flow hedges are
accounted for by recording the fair value of the derivative instrument on the
consolidated balance sheets as either an asset or liability, with a
corresponding offset recorded in other comprehensive income within shareholders'
equity, net of tax. See Note 6, "Derivative Instruments and Hedging Activities"
in the notes to consolidated financial statements of this report for further
information.

Under the cash flow hedge accounting method, derivative gains and losses not
effective in hedging the change in expected cash flows of the hedged item are
recognized immediately in the consolidated income statements. At the hedge's
inception and quarterly thereafter, a formal assessment is performed to
determine whether changes in cash flows of the derivative instrument have been
highly effective in offsetting changes in the cash flows of the hedged item and
whether they are expected to be highly effective in the future. If it is
determined a derivative instrument has not been or will not continue to be
highly effective as a hedge, hedge accounting is discontinued.

Premises and Equipment

Premises and equipment are stated at cost less accumulated depreciation computed
by the straight-line method over their useful lives or, for leasehold
improvements, the remaining lease term.







                                       55
<PAGE>


1. Organization and Significant Accounting Policies (continued)

Comprehensive Income

Comprehensive income is defined as net income plus other comprehensive income,
which, under existing accounting standards includes unrealized gains and losses
on certain investments in debt securities and unrealized gains or losses on
interest rate swaps. Comprehensive income is reported by the Corporation in the
consolidated statements of shareholders' equity.

Earnings Per Share

Basic earnings per share is computed by dividing net income applicable to common
shareholders by the weighted-average number of shares of common shares
outstanding for the period. Diluted earnings per share is computed by dividing
an adjusted net income by the sum of the weighted-average number of shares and
the potentially dilutive shares that could be issued through stock award
programs or convertible securities.

Fair Values of Financial Instruments

The fair values of financial instruments are estimated using relevant market
information and other assumptions. Fair value estimates involve uncertainties
and matters of significant judgment concerning several factors, especially in
the absence of broad markets for particular items.

Stock-Based Compensation

The Corporation has granted stock options to certain employees and directors.
The stock options are for a fixed number of shares with an exercise price which
approximates the fair value of shares at the date of grant. As discussed further
in Note 12, "Stock Option and Award and Employee Benefit Programs", the expense
for director and employee compensation under stock option plans is based on
Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to
Employees, (APB 25), with expense reported only if options are granted with an
exercise price below the market price on the grant date. Pro forma disclosures
of net income and earnings per share are provided as if the fair value method of
FASB Statement No. 123, Accounting for Stock-Based Compensation, as amended by
FASB Statement No. 148, were used for stock-based compensation.






                                       56
<PAGE>


1. Organization and Significant Accounting Policies (continued)

For purposes of pro forma disclosures, the estimated fair value of the options
is amortized to expense over their vesting periods. The following table
illustrates the effect on net income and earnings per share if the fair value
recognition provisions of FASB Statement No. 123, as amended by FASB Statement
No. 148, to stock-based compensation had been applied.

<TABLE>
<CAPTION>
                                                                  2005             2004             2003
                                                           ----------------------------------------------------
<S>                                                        <C>             <C>               <C>
     Net income, as reported                               $    6,262,526  $     5,681,049   $     5,164,200
     Add: stock-based compensation expense, net of related
        taxes                                                     155,340         181,167           239,200
     Less: total stock-based compensation expense
        determined under fair-value-based method, net of
        taxes                                                    (286,764)       (358,475)         (459,052)
                                                           ----------------------------------------------------
     Pro forma net income                                  $    6,131,102  $     5,503,741   $    4,944,348
                                                           ====================================================

     Earnings per share:
        Basic, as reported                                     $     2.72     $      2.47        $     2.20
        Basic, pro forma                                       $     2.67     $      2.39        $     2.11

        Diluted, as reported                                   $     2.62     $      2.37        $     2.08
        Diluted, pro forma                                     $     2.57     $      2.30        $     1.99
</TABLE>

Reportable Segments

The Corporation has determined that it has one reportable segment, banking
services. The Bank provides a full range of deposit, credit, and money
management services to its target markets, which are small to medium size
businesses, affluent executive and professional individuals, and not-for-profit
organizations.






                                       57
<PAGE>

1. Organization and Significant Accounting Policies (continued)

Reclassifications

Certain amounts in the 2004 and 2003 consolidated financial statements have been
reclassified to conform with the 2005 presentation.

Use of Estimates

The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the amounts reported in the financial statements and accompanying notes.
Actual results could differ from those estimates.

2. New Accounting Pronouncements

In December 2004, the FASB issued Statement No. 123(R) (revised 2004),
Share-Based Payment, (Statement 123 (R)) which is a revision of Statement No.
123, Accounting for Stock-Based Compensation. Statement 123(R) supersedes APB 25
and amends FASB Statement No. 95, Statement of Cash Flows. Statement 123(R)
requires all share-based payments to employees, including grants of employee
stock options, to be recognized on the balance sheet at their fair values with a
corresponding charge to expense. Pro forma disclosure will no longer be an
alternative.

In April 2005, the Securities and Exchange Commission (SEC) announced that it
would provide for a phased-in implementation process for Statement 123(R). The
SEC would require that registrants that are not small business issuers adopt
Statement 123 (R)'s fair value method of accounting for share-based payments to
employees no later than the beginning of the first fiscal year beginning after
June 15, 2005.







                                       58
<PAGE>

2. New Accounting Pronouncements (continued)

Statement 123(R) permits public companies to adopt its requirements using one of
two methods:

1.            A "modified prospective" method in which compensation cost is
              recognized beginning with the effective date (a) based on the
              requirements of Statement 123(R) for all share-based payments
              granted after the effective date and (b) based on the requirements
              of Statement 123 for all awards granted to employees prior to the
              effective date of Statement 123(R) that remain unvested on the
              effective date.

2.            A "modified retrospective" method which includes the requirements
              of the modified prospective method described above, but also
              permits entities to restate based on the amounts previously
              recognized under Statement 123 for purposes of pro forma
              disclosures either (a) all prior periods presented or (b) prior
              interim periods of the year of adoption.

As permitted by Statement 123, the Corporation currently accounts for
share-based payments to employees using APB 25's intrinsic value method and, as
such, generally recognizes no compensation cost for employee stock options. Had
the Corporation adopted Statement 123(R) in prior periods, the impact of that
standard would have approximated the impact of Statement 123 as described in the
disclosure of pro forma net income and earnings per share in Note 1 to the
consolidated financial statements. Statement 123(R) also requires the benefits
of tax deductions in excess of recognized compensation cost to be reported as a
financing cash flow, rather than as an operating cash flow as required under
current literature. This requirement will have the effect of reducing reported
net operating cash flows and increasing reported net financing cash flows in
periods after adoption. While the Corporation cannot estimate what those amounts
will be in the future (because they depend on, among other things, when
employees exercise stock options), the amount of operating cash flows recognized
in prior periods for such excess tax deductions were $172,650, $817,610, and
$456,013 in 2005, 2004, and 2003, respectively.






                                       59
<PAGE>

2. New Accounting Pronouncements (continued)

In September 2005, SEC voted to extend for an additional one year the compliance
dates regarding its internal control reporting requirements rules for companies
that are not accelerated filers. Under the new compliance schedule, a company
that is not an accelerated filer will begin to be required to comply with the
Section 404 requirements for its first fiscal year ending on or after July 15,
2007.

3. Restrictions on Cash and Due from Bank Accounts

The Corporation is required to maintain average reserve balances with the
Federal Reserve Bank or as cash on hand or on deposit with a correspondent bank.
The required amount of reserve was approximately $25,000 at December 31, 2005
and 2004.

4. Trust Preferred Securities

In September 2000, the Corporation established the Trust, a Connecticut
statutory business trust, which subsequently issued $13,500,000 of company
obligated mandatorily redeemable capital securities and $418,000 of common
securities. The proceeds from the issuance of both the capital and common
securities were used by the Trust to purchase from the Corporation $13,918,000
fixed rate junior subordinated debentures. The capital securities and debentures
mature September 7, 2030, or upon earlier redemption as provided by the
Indenture. The Corporation has the right to redeem the capital securities, in
whole or in part, but in all cases in a principal amount with integral multiples
of $1,000, on any March 7 or September 7 on or after September 7, 2010 at a
premium, declining ratably to par on September 7, 2020. The capital securities
and the debentures have a fixed interest rate of 10.60%, and are guaranteed by
the Bank. The subordinated debentures are the sole assets of the Trust and the
Corporation owns all of the common securities of the Trust. The net proceeds
received by the Corporation from the sale of capital securities were used for
general corporate purposes. The indenture, dated September 7, 2000, requires
compliance with certain non-financial covenants.

In January of 2003, the FASB issued FIN 46 which requires the consolidation of
entities in which an enterprise absorbs a majority of the entity's expected
losses, receives a majority of the entity's expected residual returns, or both,
as a result of ownership, contractual, or other variable interests in the
entity.






                                       60
<PAGE>


4. Trust Preferred Securities (continued)

In the first quarter of 2004, as a result of applying the provisions of FIN 46,
the Corporation was required to deconsolidate the Trust from its financial
statements. The deconsolidation of the net assets and results of operations of
the Trust had virtually no impact on the Corporation's consolidated financial
statements or liquidity position since the Corporation continues to be obligated
to repay the debentures held by the Trust and guarantees repayment of the
capital securities issued by the Trust. The junior subordinated debt obligation
issued to the Trust of $13,918,000 for December 31, 2005 and 2004, respectively,
is reflected in the Corporation's consolidated balance sheets.

The junior subordinated debentures owed to the Trust and held by the Corporation
qualify as Tier 1 capital for the Corporation under Federal Reserve Board
guidelines. As a result of the issuance of FIN 46, the Federal Reserve Board
determined that the deconsolidation of the Trust will not affect the
qualifications of the capital securities as Tier 1 capital.

5. Investment Securities

The following is a summary of available-for-sale and held-to-maturity
securities:

<TABLE>
<CAPTION>
                                                        Available-for-Sale Securities
                                      -------------------------------------------------------------
                                                           Gross           Gross         Estimated
                                         Amortized       Unrealized      Unrealized        Fair
                                           Cost             Gain            Loss           Value
                                      -------------------------------------------------------------
<S>                                     <C>             <C>             <C>             <C>
December 31, 2005
U.S. treasury securities                $ 1,494,394     $        --     $     2,009     $ 1,492,385
U.S. government agencies                 70,000,000              --       1,525,300      68,474,700
Collateralized mortgage obligations          35,052              --              12          35,040
                                      -------------------------------------------------------------
                                        $71,529,446     $        --     $ 1,527,321     $70,002,125
                                      =============================================================
December 31, 2004
U.S. treasury securities                $ 2,016,184     $        --     $     7,704     $ 2,008,480
U.S. government agencies                 91,000,000         112,700         769,680      90,343,020
Collateralized mortgage obligations          62,486              58              --          62,544
                                      -------------------------------------------------------------
                                        $93,078,670     $   112,758     $   777,384     $92,414,044
                                      =============================================================
</TABLE>


                                       61
<PAGE>

5. Investment Securities (continued)
<TABLE>
<CAPTION>
                                                          Held-to-Maturity Securities
                                     --------------------------------------------------------------
                                                          Gross            Gross         Estimated
                                        Amortized       Unrealized       Unrealized         Fair
                                          Cost             Gain             Loss           Value
                                     --------------------------------------------------------------
<S>                                     <C>             <C>             <C>             <C>
December 31, 2005
Municipals                              $35,715,981     $   315,262     $   582,213     $35,449,030
Collateralized mortgage obligations      47,791,685              --       1,400,263      46,391,422
Other securities                            225,000           2,202           1,598         225,604
                                     --------------------------------------------------------------
                                        $83,732,666     $   317,464     $ 1,984,074     $82,066,056
                                     ==============================================================
December 31, 2004
Municipals                              $ 5,444,198     $   484,166     $        --     $ 5,928,364
Collateralized mortgage obligations      50,012,255              --         836,980      49,175,275
Other securities                            250,000           4,584             221         254,363
                                     --------------------------------------------------------------
                                        $55,706,453     $   488,750     $   837,201     $55,358,002
                                     ==============================================================
</TABLE>

The amortized cost, fair value, and weighted-average yield of investment
securities at December 31, 2005, by contractual maturity, are shown below.
Expected maturities will differ from contractual maturities because the issuers
of the securities may have the right to call and/or prepay obligations prior to
maturity.

<TABLE>
<CAPTION>
                                                           Available-for-Sale Securities
                                      --------------------------------------------------------------------
                                                                                                Weighted-
                                       Within 1                        5 to 10                   Average
                                         Year        1 to 5 Years       Years         Total       Yield
                                      --------------------------------------------------------------------
<S>                                   <C>            <C>               <C>         <C>            <C>
U.S. treasury and U.S. government
         agency debentures            $ 1,494,394    $ 70,000,000      $    --     $71,494,394    3.32%
Collateralized mortgage obligations            --          35,052                       35,052    4.56%
                                      ----------------------------------------------------------
Amortized cost                        $ 1,494,394    $ 70,035,052      $    --     $71,529,446

                                      ==========================================================
Fair value                            $ 1,492,385    $ 68,509,740      $    --     $70,002,125
                                      ==========================================================
Weighted-average yield                      3.02%           3.33%           --           3.33%
                                      ==========================================================
</TABLE>







                                       62
<PAGE>

5. Investment Securities (continued)
<TABLE>
<CAPTION>
                                                         Held-to-Maturity Securities
                                                                                                    Weighted-
                                Within 1                     5 to 10    Greater than                 Average
                                  Year      1 to 5 Years      Years       10 Years        Total       Yield
                              --------------------------------------------------------------------------------
<S>                           <C>             <C>           <C>         <C>            <C>            <C>
Other securities              $    25,000     $  175,000    $   25,000  $        --    $   225,000    4.79%
Municipals                             --      3,274,675     7,119,947   25,321,359     35,715,981    3.96%
Collateral mortgage
   obligations                         --             --     7,397,485   40,394,200     47,791,685    3.44%
                              =====================================================================
Amortized costs               $    25,000     $3,449,675   $14,542,432  $65,715,559    $83,732,666
                              =====================================================================
Fair value                    $    25,000     $3,645,344   $14,303,467  $64,092,245    $82,066,056
                              =====================================================================
Weighted-average yield              6.98%          4.95%         3.93%        3.65%          3.67%
                              =====================================================================
</TABLE>


The Corporation held 82 investment securities as of December 31, 2005, of which
the amortized cost was greater than market value. The majority of these
investment securities were purchased during 2004 and 2005. Management does not
believe any individual unrealized loss as of December 31, 2005, represents an
other-than-temporary impairment. The unrealized losses relate primarily to
securities issued by the U.S. treasury, FHLMC and Municipals. These unrealized
losses are primarily attributable to changes in interest rates and individually
were 4.2% or less of their respective amortized cost basis. The Corporation has
both the intent and ability to hold these securities for a time necessary to
recover the amortized cost.

<TABLE>
<CAPTION>
                                                      Available for Sale Securities
                              ---------------------------------------------------------------------------
                                        Less than 12 months                   Greater than 12 months
                                  In an unrealized loss position         In an unrealized loss position
                              -------------------------------------  ------------------------------------
                                                                                                             Total
                               Unrealized    Number                   Unrealized    Number                 Unrealized      Total
                                  Loss         of       Estimated        Loss         of       Estimated      Loss       Estimated
                                 Amount    Securities   Fair Value      Amount    Securities   Fair Value    Amount      Fair Value
                              -------------------------------------  --------------------------------------------------------------
<S>                           <C>          <C>         <C>           <C>          <C>         <C>           <C>         <C>
Investment securities:
   U.S. treasury securities   $       949           2  $   991,055   $     1,060           1  $   501,330   $    2,009  $ 1,492,385
   U. S. government agencies      337,399           1   19,662,601     1,187,901           3   48,812,099    1,525,300   68,474,700
   Collateralized mortgage
    obligations                        --          --           --            12           1       35,040           12       35,040
                              -----------------------------------------------------------------------------------------------------
Total                         $   338,348  $        3  $20,653,656   $ 1,188,973  $        5  $49,348,469   $1,527,321  $70,002,125
                              =====================================================================================================
</TABLE>


                                       63
<PAGE>

5. Investment Securities (continued)
<TABLE>
<CAPTION>
                                        Held-to-Maturity Securities
                    ------------------------------------------------------------------------
                            Less than 12 Months                Greater than 12 Months
                      In an Unrealized Loss Position       In an Unrealized Loss Position
                    -----------------------------------   ----------------------------------
                                                                                                Total         Total
                     Unrealized    Number                 Unrealized    Number                Unrealized    Estimated
                        Loss         of       Estimated      Loss         of      Estimated      Loss         Fair
                       Amount    Securities  Fair Value     Amount    Securities  Fair Value    Amount        Value
                    --------------------------------------------------------------------------------------------------
<S>                  <C>              <C>    <C>          <C>               <C>  <C>          <C>          <C>
Collateralized
Mortgage
Obligations          $        --      --     $        --  $ 1,400,263       3    $46,391,422  $1,400,263   $46,391,422
Municipal Bonds          582,213      66      29,643,479           --      --             --     582,213    29,643,479
Other securities              --      --              --        1,598       5        123,402       1,598       123,402
                     -------------------------------------------------------------------------------------------------
                     $   582,213      66     $29,643,479  $ 1,401,861       8    $46,514,824  $1,984,074   $76,158,303
                     =================================================================================================
</TABLE>


Investment securities with a carrying value of approximately $51,000,000 and
$81,000,000 at December 31, 2005 and 2004, respectively, were pledged as
collateral for bankruptcy accounts to the U.S. Department of Justice, Treasury
Tax and Loan, and securities sold under agreements to repurchase.

6. Derivative Instruments and Hedging Activities

During the second quarter of 2004, the Corporation entered into a three-year
interest rate swap to reduce the volatility of variable interest payments
received on a portion of its overnight federal funds sold. This interest rate
swap qualified as and is being accounted for as a cash flow hedge pursuant to
Statement 133. Statement 133 requires changes in the fair value of cash flow
hedges to be reported as a component of other comprehensive income, net of taxes
to the extent that the hedge is effective.

<TABLE>
<CAPTION>
                                        December 31, 2005                          December 31, 2004
                           ---------------------------------------------------------------------------------------
                                                             Net                                       Net
                              Notional    Derivative   Ineffectiveness   Notional    Derivative  Ineffectiveness
                               Amount      Liability     Hedge Gains      Amount      Liability    Hedge Gains
                                                          (Losses)                                   (Losses)
                           ---------------------------------------------------------------------------------------
<S>                           <C>             <C>            <C>         <C>             <C>           <C>
   Receive fixed interest
     rate swap                $20,000,000     $536,902       $ -         $20,000,000     $377,804      $ -
                           =======================================================================================
</TABLE>




                                       64
<PAGE>


7. Loans and Allowance for Loan Losses

Loans consist of the following at December 31:

                                                    2005            2004
                                                -------------------------------

     Residential loans secured by real estate    $ 245,939,099  $ 243,717,433
     Commercial loans secured by real estate       138,075,123    127,772,683
     Other commercial and industrial loans         252,528,082    235,704,551
     Consumer loans                                 47,945,498     49,257,902
                                                -------------------------------
     Total loans                                   684,487,802    656,452,569
     Less allowance for loan losses                (8,346,390)     (7,795,803)
                                                -------------------------------
     Total loans, net                            $ 676,141,412  $ 648,656,766
                                                ===============================

Activity in the allowance for loan losses was as follows:

                                        2005            2004          2003
                                    -------------------------------------------

     Beginning balance                $7,795,803     $ 8,029,596    $7,227,000
     Loans charged off (net)          (1,534,413)     (1,553,793)     (397,404)
     Provision for loan losses         2,085,000       1,320,000     1,200,000
                                    -------------------------------------------
     Ending balance                   $8,346,390     $ 7,795,803    $8,029,596
                                    ===========================================

A loan is considered delinquent when a payment has not been made more than 30
days past its contractual due date.

Loans past due over 30 days totaled $4,417,657 or .65% of total loans at
December 31, 2005 compared to $3,019,524, or .46% of total loans at December 31,
2004.

Loans are considered to be impaired when it is determined that the obligor will
not pay all contractual principal and interest when due. At December 31, 2005,
38 loans with a total balance of $3,648,491 were considered to be impaired. At
December 31, 2004, 32 loans with a total balance of $3,119,000 were considered
to be impaired. The average combined balance of impaired loans during 2005 and
2004 was $2,964,000 and $3,542,000, respectively. For loans classified as
impaired at December 31, 2005, the contractual interest due and the actual
accrued interest recorded and paid on those loans during 2005 was $371,357 and
$109,922, respectively. The related allowance on impaired loans at December 31,
2005 was $865,268.





                                       65
<PAGE>

7. Loans and Allowance for Loan Losses (continued)

At December 31, 2005 and 2004, there were approximately $0 and $73,000 of loans
greater than 90 days past due and still accruing interest.

Loans are made principally to borrowers in the central Indiana area.

8. Premises and Equipment

Premises and equipment consist of the following at December 31:

                                                         2005           2004
                                                    ----------------------------

     Land and improvements                          $  2,270,444    $ 2,270,444
     Building and improvements                         8,516,806      5,426,385
     Construction in progress                            101,405      1,109,187
     Leasehold improvements                            1,628,213      1,628,213
     Furniture and equipment                           8,449,483      7,276,869
                                                    ----------------------------
                                                      20,966,351     17,711,098
     Less accumulated depreciation and amortization   (9,093,955)    (8,034,830)
                                                    ----------------------------
     Net premises and equipment                     $ 11,872,396    $ 9,676,268
                                                    ============================

Certain Corporation facilities and equipment are leased under various operating
leases. Rental expense under these leases was $363,640, $260,378, and $247,822
for 2005, 2004, and 2003, respectively.

Future minimum rental commitments under noncancelable leases are:

     2006                                              $   357,130
     2007                                                  336,262
     2008                                                  303,808
     2009                                                  256,853
     2010                                                  160,465
     Thereafter                                            936,612
                                                       -----------
                                                        $2,351,130
                                                       ===========





                                       66
<PAGE>

9. Mortgage Banking Activities

The Corporation may sell certain originated mortgage loans into the secondary
market as part of its overall risk management and liquidity strategy. The
Corporation typically retains the responsibility for servicing these mortgage
loans in return for a servicing fee received from the purchaser. Mortgage loans
sales of $18,372,384 and $32,995,345 occurred during 2005 and 2004 and gains of
$82,493 and $157,145 were recognized on these loan sales in the respective
periods. Mortgage loans serviced for others are not included in the accompanying
consolidated balance sheets. However, an asset representing the allocated basis
of the mortgage servicing rights is recognized upon the sale of the underlying
mortgage loan. The unpaid principal balances of mortgage loans serviced for
others were $99,128,860 and $96,362,758 at December 31, 2005 and 2004,
respectively.

Gains and losses on the sales of mortgage loans, along with the amortization of
mortgage servicing rights is included in mortgage banking income on the
statement of income.

The following table is a breakdown of mortgage servicing rights:

                                                     2005              2004
                                                 ------------------------------

     Balance at January 1                        $ 1,571,712       $ 1,505,241
     Plus: additions                                 173,327           311,332
     Less: amortization                             (262,485)         (244,861)
                                                 ------------------------------
     Balance at December 31                        1,482,554         1,571,712
     Less: valuation allowance                      (182,218)         (350,136)
                                                 ------------------------------
     Balance, net                                $ 1,300,336       $ 1,221,576
                                                ==============================

Mortgage servicing rights are amortized in proportion to and over the period of
estimated net servicing income. Future amortization expense may be different
depending on changes in the mortgage servicing pool, interest rates, and market
conditions.









                                       67
<PAGE>

10. Deposits

Deposits are summarized as follows:

                                                        December 31
                                                2005                  2004
                                          -----------------------------------
     Demand accounts:
        Noninterest-bearing               $ 171,857,446         $ 153,674,215
        Interest bearing                    105,265,553            96,248,216
                                          -----------------------------------
     Total demand accounts                  277,122,999           249,922,431

     Money market accounts                  348,796,150           316,175,384
     Savings accounts                        11,158,554            10,831,226
     Certificate accounts:
        Over $100,000                        66,209,839            49,039,847
        Under $100,000                       71,028,173            67,462,157
                                          -----------------------------------
     Total deposits                       $ 774,315,715         $ 693,431,045
                                          ===================================


At December 31, 2005, the stated maturities of time deposits are as follows:

                                                                    Greater
                                                    Less Than         Than
                                                     $100,000       $100,000
                                                   ---------------------------

     Mature in three months or less                  $13,826,565   $17,234,147
     Mature after three months through six months      9,442,103     9,729,509
     Mature after six months through twelve months    16,877,266    19,858,460
     Mature in 2007                                   16,492,867    11,913,132
     Mature in 2008                                    5,655,044     2,242,375
     Thereafter                                        8,734,328     5,232,216
                                                   ---------------------------
                                                     $71,028,173   $66,209,839
                                                   ===========================





                                       68
<PAGE>

11. Other Borrowings

Security repurchase agreements are short-term borrowings that generally mature
within one to three days from the transaction date. At December 31, 2005 and
2004, the weighted-average interest rate on these borrowings was 2.51% and
0.74%, respectively.

All of the FHLB advances have a fixed interest rate and require monthly interest
payments. The principal balances for each of the advances is due at maturity.
The advances are collateralized by a pledge covering certain of the
Corporation's mortgage loans.

A schedule of the FHLB advances as of December 31, 2005 and 2004 is as follows:

<TABLE>
<CAPTION>
                           2005                                                       2004
  --------------------------------------------------------   -------------------------------------------------------
          Amount             Rate          Maturity                   Amount             Rate         Maturity
  --------------------------------------------------------   -------------------------------------------------------

<S>  <C>                    <C>           <C>   <C>               <C>                   <C>          <C>   <C>
     $       5,000,000      5.43%         03/16/2006              $     5,000,000       5.14%        08/01/2005
             5,000,000      5.32%         05/08/2006                    3,000,000       5.39%        10/03/2005
             8,000,000      4.19%         07/24/2007                    5,000,000       5.43%        03/16/2006
             3,000,000      5.57%         08/13/2007                    5,000,000       5.32%        05/08/2006
             3,000,000      5.55%         10/02/2008                    8,000,000       4.19%        07/24/2007
                                                                        3,000,000       5.57%        08/13/2007
                                                                        3,000,000       5.55%        10/02/2008


  ------------------------                                   -------------------------
     $    24,000,000                                              $    32,000,000
  ========================                                   =========================
</TABLE>

The Corporation maintains a revolving credit agreement with Harris Trust and
Savings Bank in the amount of $5,000,000 that will mature on September 30, 2006.
At December 31, 2005 and 2004, $0 was outstanding. The Corporation pays a
commitment fee of .25% per annum on the average daily unused portion of the line
of credit.

The Bank entered into a $5,000,000 subordinated term loan agreement with Harris
Trust and Savings Bank dated June 6, 2003. The first advance was made in the
amount of $2,000,000 on June 6, 2003. The second advance was made in the amount
of $3,000,000 on May 3, 2004. The final maturity date of the loan is June 6,
2012. The outstanding principal balance is permitted to be repaid prior to
maturity with prior consent from the Federal Reserve. There are many different
interest rate options available. Each floating rate option is available for a
fixed term of 1-3 months. The Bank is currently






                                       69
<PAGE>

11. Other Borrowings (continued)

paying adjusted three-month LIBOR plus 2.0% which equates to 6.42% at December
31, 2005. Interest payments are due at the expiration of the fixed term option.

12. Stock Option and Award and Employee Benefit Programs

The Board of Directors and the shareholders of the Corporation adopted stock
option plans for directors and key employees at the initial formation of the
Bank in 1993. The Board of Directors authorized 130,000 shares in 1993, 90,000
shares in 1996, 150,000 shares in 1999, and an additional 120,000 during 2002 to
be reserved for issuance under the Corporation's stock option plan. In May 2003,
the director stock option plan was dissolved, and in June 2005, the key employee
stock option plan was dissolved; however, all of the options in these plans
remain exercisable for a period of ten years from the date of issuance, subject
to the terms and conditions of the plans.

Shares subject to outstanding options are summarized as follows:

<TABLE>
<CAPTION>
                                     2005                          2004                          2003
                         -----------------------------------------------------------------------------------------
                                         Weighted-                       Weighted-                   Weighted-
                                          Average                         Average                     Average
                                          Exercise                       Exercise                     Exercise
                            Options        Price          Options          Price        Options        Price
                         -----------------------------------------------------------------------------------------
<S>                          <C>           <C>            <C>             <C>           <C>           <C>
Options outstanding at
   beginning of year
                             278,056       $21.99         379,695         $19.15        391,557       $18.75
New options
   granted                         -         -              6,892          33.92          5,800        29.98
Options exercised            (19,531)       14.70        (101,931)         11.70        (17,662)       13.79
Options forfeited             (1,000)       27.75          (6,600)         28.52              -         -
                         ------------                 ------------                  ------------
Options outstanding at
   end of year               257,525       $22.52         278,056         $21.99        379,695       $19.15
                         ============                 ============                  ============

Exercisable at year end      173,820       $19.77         187,321         $19.17        266,881       $16.25
</TABLE>




                                       70
<PAGE>

12. Stock Option and Award and Employee Benefit Programs (continued)

There were no options granted during 2005. The weighted-average fair value of
the options granted during 2004 and 2003 was $12.19, and $10.43, respectively.

As of December 31, 2005, total shares which may be purchased under the plans is
257,525 with option prices ranging from $12.50 to $34.50. The weighted-average
remaining contractual life of those options is five years.

The following table is a breakdown of the available options which can be
exercised with their respective weighted-average exercise price and
weighted-average contractual life:

                                                               Weighted-Average
       Number of Options                    Weighted-Average   Contractual Life
          Outstanding          Range         Exercise Price        (Years)
     --------------------------------------------------------------------------
             107,700        $12.50-$19.00        $16.87              2.7
             142,933        $20.00-$29.50        $26.23              6.0
               6,892        $31.25-$34.50        $33.75              8.6
     --------------------------------------------------------------------------
             257,525        $12.50-$34.50        $22.52              4.7

The Board of Directors also approved a restricted stock plan in 1993. Shares
reserved by the Corporation for the restricted stock plan include 50,000 shares
in 1993, 20,000 shares in 1996, 40,000 in 1999, and an additional 55,000 shares
in 2002. Under this plan, shares were issued in the proceeding years as detailed
in the following table. The Corporation recorded each stock issuance in
shareholders' equity at an amount equal to the fair market value of the shares
at the grant date with an offsetting amount recorded to unearned compensation
(contra-equity). The unearned compensation is amortized to salary expense over
the vesting period. In June 2005, the restricted stock plan was dissolved and no
additional restricted stock will be issued from this plan.











                                       71
<PAGE>

12. Stock Option and Award and Employee Benefit Programs (continued)

<TABLE>
<CAPTION>
 Fiscal Year    Number of        Shares         Unearned
    Ended     Shares Issued     Forfeited     Compensation     Vesting Schedule  Date Fully Vested
---------------------------------------------------------------------------------------------------
<S> <C>           <C>             <C>            <C>             <C>             <C>
    1997          19,500            700         $242,332         20% per year    January 1, 2002
    1998           1,000              -           14,000         20% per year    January 1, 2003
    1999          36,000          2,000          646,000         5 year cliff    June 30, 2004
    2000           5,000              -          100,000         5 year cliff    March 16, 2005
    2001           3,000              -           69,000         5 year cliff    January 26, 2006
    2002           1,500              -           37,500         5 year cliff    June 11, 2006
    2002           6,500              -          178,750         4 year cliff    August 31, 2006
    2002          30,800            500          845,200         5 year cliff    June 20, 2007
    2003           1,700              -           50,150         5 year cliff    January 8, 2008
    2003             700              -           21,875         5 year cliff    July 17, 2008
    2004           3,100            700           82,800         5 year cliff    December 16, 2009
    2005               -           (300)               -                    -           -
</TABLE>

During 2005, certain officers/directors of the Corporation exercised their
options to purchase 19,531 shares of common stock. The exercise price ranged
from $10.00 to $27.50 with a weighted-average exercise price of $14.70 and a
weighted-average fair market value of the stock was $37.30.

During 2004, certain officers/directors of the Corporation exercised their
options to purchase 101,931 shares of common stock. The exercise price ranged
from $10.00 to $27.50 with a weighted-average exercise price of $11.70 and a
weighted-average fair market value of the stock was $32.99.

During 2003, certain officers/directors of the Corporation exercised their
warrants/options to purchase 55,662 shares of common stock. The exercise price
ranged from $10.00 to $27.50 with a weighted average exercise price of $11.20
and a weighted average fair market value of the stock was $31.40.

Due to the exercise of the options, the Corporation received a deduction for tax
purposes for the difference between the fair value of the stock at the date of
the exercise and the exercise price. In accordance with APB 25, the Corporation
has recorded an income tax benefit of $172,650 and $817,610, 456,013 as
additional paid-in capital during 2005, 2004 and 2003, respectively.








                                       72
<PAGE>

12.  Stock Option and Award and Employee Benefit Programs (continued)

The Corporation has elected to follow APB 25 and related Interpretations in
accounting for its director and employee stock options and restricted stock.
Under APB 25, because the exercise price of the Corporation's director and
employee stock options equals the market price of the underlying stock on the
date of grant, no compensation expense is recognized.

The fair value for the options was estimated at the date of grant using a
Black-Scholes option pricing model with the following weighted-average
assumptions: a dividend yield; a volatility factor of the expected market price
of the Corporation's common stock; an expected life of the options of ten years;
and the risk-free interest rate. The fair value for the restricted stock is
estimated to equal the fair value of unrestricted stock and to be restricted for
five years.

During 2005, the Board of Directors and the shareholders of the Corporation
adopted The National Bank of Indianapolis Corporation 2005 Equity Incentive
Plan. The maximum number of shares to be delivered upon exercise of all options
and restricted stock awarded under the Plan will not exceed 333,000 shares.
There were no grants during 2005 under this plan.

The following is a summary of the weighted-average assumptions used in the
Black-Scholes pricing model:

        Year    Dividend Yield     Volatility Factor      Risk Free Rate
       -------------------------------------------------------------------
        2005          -                    -                    -
        2004          0%               0.054485                4.4%
        2003          0%                 0.001               4.3%-4.4%


The Black-Scholes option valuation model was developed for use in estimating the
fair value of traded options which have no vesting restrictions and are fully
transferable. In addition, option valuation models require the input of highly
subjective assumptions including the expected stock price volatility.

The Corporation has a trusteed 401(k) retirement savings plan covering
substantially all employees and encouraging employee contributions. Employer
contributions include Board of Director discretionary contributions and the
matching of a portion of employee contributions. The Corporation expensed
approximately $264,000, $201,000, and $211,000 for employer contributions to the
plan during 2005, 2004, and 2003, respectively.









                                       73
<PAGE>

13. Dividend and Loan Limitation and Regulatory Capital Ratios

Dividends from the Bank to the Corporation may not exceed the undivided profits
of the Bank (included in consolidated retained earnings) without prior approval
of a federal regulatory agency. In addition, federal banking laws limit the
amount of loans the Bank may make to the Corporation, subject to certain
collateral requirements. No loans were made during 2005 or 2004 by the Bank to
the Corporation. The Bank declared a $1,300,000 and $1,000,000 dividend to the
Corporation during 2005 and 2004, respectively.

The Bank is subject to various regulatory capital requirements administered by
the federal banking agencies. Failure to meet minimum capital requirements can
initiate certain mandatory-and possibly additional discretionary-actions by
regulators that, if undertaken, could have a direct material effect on the
Bank's consolidated financial statements. Under capital adequacy guidelines and
the regulatory framework for prompt corrective action, the Bank must meet
specific capital guidelines that involve quantitative measures of the Bank's
assets, liabilities, and certain off-balance sheet items as calculated under
regulatory accounting practices. The Bank's capital amounts and classification
are also subject to qualitative judgments by the regulators about components,
risk weightings, and other factors.

Quantitative measures established by regulation to ensure capital adequacy
require the Bank to maintain amounts and ratios (set forth in the table below)
of total and Tier 1 capital (as defined in the regulations) to risk-weighted
assets (as defined), and of total qualifying capital to total adjusted asset (as
defined). Management believes, as of December 31, 2005 and 2004, that the Bank
meets all capital adequacy requirements to which it is subject.

As of December 31, 2005, the most recent notification from the comptroller of
the currency categorized the Bank as well capitalized under the regulatory
framework for prompt corrective action. To be categorized as well capitalized,
the Bank must maintain minimum total risk-based, Tier 1 risk-based, and
leveraged capital ratios as set forth in the following table. There are no
conditions or events since that notification that management believes have
changed the institution's category.








                                       74
<PAGE>

13. Dividend and Loan Limitation and Regulatory Capital Ratios (continued)

The Bank's actual capital amounts and ratios are also presented in the following
table:

<TABLE>
<CAPTION>
                                                                                             To be well
                                                                                      Capitalized under Prompt
                                                                     For Capital          Corrective Action
                                             Actual                Adequacy Purposes           Provisions
                                ------------------------------------------------------------------------------
As of December 31, 2005               Amount        Ratio          Amount      Ratio      Amount        Ratio
                                ------------------------------------------------------------------------------
<S>                                 <C>              <C>         <C>            <C>     <C>              <C>
Tier 1 risk-based capital           $64,121,192      9.0%        $28,491,721    4.0%    $42,737,581      6.0%

Total risk-based capital             77,467,582     10.9%         56,983,441    8.0%    $71,229,301     10.0%

Leveraged capital                    64,121,192      6.8%         37,563,394    4.0%    $46,954,242      5.0%

As of December 31, 2004

Tier 1 risk-based capital           $57,978,004      8.6%        $26,995,059    4.0%    $40,492,588      6.0%

Total risk-based capital             70,773,807     10.5%        $53,990,118    8.0%    $67,487,647     10.0%

Leveraged capital                    57,978,004      6.5%        $35,705,850    4.0%    $44,632,312      5.0%
</TABLE>










                                       75
<PAGE>

14. Related Parties

Certain directors and principal shareholders of the Corporation, including their
families and companies in which they are principal owners, are loan customers of
and have other transactions with the Corporation or its subsidiary in the
ordinary course of business. The aggregate dollar amount of these loans was
approximately $13,673,699 and $7,129,516 on December 31, 2005 and 2004,
respectively. All of the loans made were on substantially the same terms,
including interest rate and collateral, as those prevailing at the time for
comparable transactions with unrelated parties. The amounts do not include loans
made in the ordinary course of business to companies in which officers or
directors of the Corporation are either officers or directors, but are not
principal owners, of such companies. During 2005, new loans to these parties
amounted to $3,560,997, draws amounted to $3,083,015, and repayments amounted to
$99,829.

15. Income Taxes

The Corporation applies a federal income tax rate of 34% and a state tax rate of
8.5% in the computation of tax expense or benefit. The provision for income
taxes consisted of the following:

                                            2005          2004          2003
                                       -----------------------------------------

     Current tax expense                 $4,300,157    $2,940,441    $3,592,053
     Deferred tax (benefit) expense        (421,841)      194,557      (379,263)
                                       -----------------------------------------
                                         $3,878,316    $3,134,998    $3,212,790
                                       =========================================












                                       76
<PAGE>

15. Income Taxes (continued)

The statutory tax rate reconciliation is as follows:

<TABLE>
<CAPTION>
                                                              2005                2004                2003
                                                      --------------------------------------------------------
<S>                                                        <C>                 <C>                 <C>
     Income before provision for income tax                $10,140,842         $8,816,047          $8,376,990
                                                      ========================================================

     Tax expense at federal statutory rate                 $ 3,447,886         $2,997,456          $2,848,177

     Increase (decrease) in taxes resulting from:
          State income taxes                                   524,884            454,644             485,239
          Deferred compensation                                (28,135)          (154,275)                  -
          Tax-exempt interest                                 (135,688)           (95,303)            (96,360)
          Other                                                 69,369            (67,524)            (24,266)
                                                      --------------------------------------------------------
                                                           $ 3,878,316         $3,134,998          $3,212,790
                                                      ========================================================

     Effective tax rate                                      38.24%             35.56%              38.35%
</TABLE>


Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amount of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes. Deferred tax assets are
recognized for the estimated tax effects attributable to deductible temporary
differences and operating loss carryforwards, net of any valuation allowances
for amounts which may not be realized by the Corporation.







                                       77
<PAGE>

15. Income Taxes (continued)

The components of the Corporation's net deferred tax assets in the consolidated
balance sheets as of December 31 are as follows:

                                      2005             2004
                                -------------------------------

Deferred tax assets:
   Allowance for loan losses       $ 3,306,005      $ 3,087,918
   Other                             1,785,184        1,145,500
                                -------------------------------
Total deferred tax assets            5,091,189        4,233,418
Deferred tax liability:
   Mortgage servicing rights          (515,063)        (483,866)
                                -------------------------------
Total deferred tax liabilities        (515,063)        (483,866)
                                -------------------------------
Net deferred tax assets            $ 4,576,126      $ 3,749,552
                                ===============================

16. Commitments and Contingencies

A summary of the contractual amount of commitments to extend credit is as
follows:

                                                   2005             2004
                                             --------------------------------
Commercial credit lines                         $167,641,092     $181,996,327
Revolving home equity and credit card lines       85,400,798       82,362,909
Standby letters of credit                         10,867,093       13,538,965
Other loans                                        2,860,892        2,811,446
                                             --------------------------------
                                                $266,769,875     $280,709,647
                                             ================================

Commitments to extend credit are agreements to lend. Since many of the
commitments to extend credit may expire without being drawn upon, the total
commitment amounts do not necessarily represent future cash-flow requirements.

Standby letters of credit are conditional commitments issued to guarantee the
performance of a customer to a third party. Standby letters of credit generally
are contingent upon the failure of the customer to perform according to the
terms of the underlying contract with the third party.


                                       78
<PAGE>

16. Commitments and Contingencies (continued)

The credit risk associated with loan commitments and standby letters of credit
is essentially the same as that involved in extending loans to customers and is
subject to normal credit policies. Collateral may be obtained based on
management's credit assessment of the customer.

17. Fair Value of Financial Instruments

FASB Statement No. 107, Disclosures About Fair Value of Financial Instruments,
requires disclosure of fair value information about financial instruments,
whether or not recognized in the balance sheet, for which it is practicable to
estimate that value. In cases where quoted market prices are not available, fair
values are based on estimates using present value or other valuation techniques.
Those techniques are significantly affected by the assumptions used, including
the discount rate and estimates of future cash flows. In that regard, the
derived fair value estimates cannot be substantiated by comparison to
independent markets and, in many cases, could not be realized in immediate
settlement of the instrument. Statement No. 107 excludes certain financial
instruments and all non financial instruments from its disclosure requirements.
Accordingly, the aggregate fair value amounts presented do not represent the
underlying value of the Corporation.

The following methods and assumptions were used by the Corporation in estimating
its fair value disclosures for financial instruments:

     Cash and short-term investments: The carrying amounts reported in the
     consolidated balance sheets for cash and short-term investments approximate
     those assets' fair values due to the short maturity of those assets.

     Investment securities (including collateralized mortgage obligations and
     stock in federal banks): Fair values for investment securities are based on
     quoted market prices, where available. If quoted market prices are not
     available, fair values are based on quoted market prices of comparable
     instruments.

     Loans receivable: For variable-rate loans that re-price frequently and with
     no significant change in credit risk, fair values are based on carrying
     values. The fair values for all other loans are estimated using discounted
     cash flow analyses, using interest rates currently being offered for loans
     with similar terms to borrowers of similar credit quality. The carrying
     amount of accrued interest approximates its fair value.


                                       79
<PAGE>


17. Fair Value of Financial Instruments (continued)

     Deposits: The fair values disclosed for demand deposits, including
     interest-bearing and non-interest bearing accounts, passbook savings, and
     certain types of money market accounts are, by definition, equal to the
     amount payable on demand at the reporting date (i.e., their carrying
     amounts). Fair values for fixed-rate certificates of deposit are estimated
     using a discounted cash flow calculation that applies interest rates
     currently being offered on certificates to a schedule of aggregated
     expected monthly maturities on time deposits.

     Security repurchase agreements: The carrying amounts of borrowings under
     repurchase agreements approximate their fair values due to variable
     interest rates.

     FHLB advances: The fair value of FHLB advances are based upon discounted
     cash flows using rates for similar advances with the same maturities.

     Subordinated debt: The carrying amounts of borrowings under subordinated
     debt approximate their fair values due to variable interest rates.

     Capital securities: The fair value of the preferred capital securities are
     based upon discounted cash flows using rates for similar securities with
     the same maturities.

     Junior subordinated debt: The fair value of the preferred capital
     securities are based upon discounted cash flows using rates for similar
     securities with the same maturities.

     Off-balances-sheet instruments: Due to variable interest rates, the fair
     value of commitments to extend credit approximate the carrying value. Fair
     values for derivative instruments are based on cash flow projection models
     acquired from third parties.


                                       80
<PAGE>


17. Fair Value of Financial Instruments (continued)

The estimated fair values of the Corporation's financial instruments at December
31 are as follows:

<TABLE>
<CAPTION>
                                                2005                               2004
                                   ---------------------------------------------------------------
                                     Carrying          Fair            Carrying          Fair
                                      Amount           Value             Amount          Value
                                   ---------------------------------------------------------------
<S>                                <C>              <C>              <C>              <C>
Assets
Cash and due from banks            $ 32,223,665     $ 32,223,665     $ 22,824,622     $ 22,824,622
Federal funds sold                   33,214,446       33,214,446       31,766,783       31,766,783
Reverse repurchase agreements
                                      5,000,000        5,000,000        5,000,000        5,000,000
Investment securities
   available-for-sale                70,002,125       70,002,125       92,414,044       92,414,044
Investment securities
   held-to-maturity                  83,732,666       82,066,056       55,706,453       55,358,002
Net loans                           676,141,412      669,912,825      648,656,766      650,492,553
Stock in federal banks                3,735,800        3,735,800        3,678,300        3,678,300

Liabilities
Deposits                            774,315,715      772,895,870      693,431,045      692,209,547
Security repurchase agreements
                                     53,556,402       53,556,402       84,162,626       84,162,626
FHLB advances                        24,000,000       24,020,353       32,000,000       32,753,126
Subordinated debt                     5,000,000        4,492,063        5,000,000        4,997,851
Capital securities                           --               --               --               --
Junior subordinated debentures       13,918,000       17,464,789       13,918,000       15,571,225
Interest rate swap                      536,902          536,902          377,804          377,804
Off-balance-sheet instruments
Commitments to extend credit                 --               --               --               --
</TABLE>



                                       81
<PAGE>

18. Shareholders' Equity

The following is a summary of activity in accumulated other comprehensive
income:

<TABLE>
<CAPTION>
                                                          2005           2004           2003
                                                    -------------------------------------------
<S>                                                   <C>            <C>            <C>
Accumulated unrealized gains (losses) on securities   $  (401,367)   $    11,078    $   520,729
   available for sale at January 1, net of tax
Net unrealized losses for period                         (862,696)      (599,230)      (807,042)
Tax benefit                                               341,714        237,355        319,669
Reclassification adjustment of losses included in
   net income                                                  --        (83,739)       (36,891)
Tax benefit                                                    --         33,169         14,613
                                                    -------------------------------------------
Ending other comprehensive income (loss) at           $  (922,349)   $  (401,367)   $    11,078
   December 31, net of tax
                                                    ===========================================

Accumulated unrealized gains on swap at January 1,
   net of tax                                         $  (228,156)   $        --    $        --
Net unrealized loss for period                           (159,098)      (377,804)            --
Tax benefit                                                63,019        149,648             --
                                                    -------------------------------------------
Ending other comprehensive loss at December 31, net   $  (324,235)   $  (228,156)   $        --
   of tax
                                                    ===========================================

Accumulated other comprehensive income (loss) at
   January 1, net of tax                              $  (629,523)   $    11,078    $   520,729
Other comprehensive loss, net of tax                     (617,061)      (640,601)      (509,651)
                                                    -------------------------------------------
Accumulated other comprehensive income (loss) at      $(1,246,584)   $  (629,523)   $    11,078
   December 31, net of tax
                                                    ===========================================
</TABLE>


                                       82
<PAGE>

19. Earnings Per Share

Basic net income per common share is computed by dividing net income applicable
to common stock by the weighted average number of shares of common stock
outstanding during the period. Diluted net income per common share is computed
by dividing net income applicable to common stock by the weighted average number
of shares, nonvested stock and dilutive common stock equivalents outstanding
during the period. Common stock equivalents consist of common stock issuable
under the assumed exercise of warrants and stock options granted under the
Corporation's stock plans, using the treasury stock method. A computation of
earnings per share follows:

<TABLE>
<CAPTION>
                                                         2005         2004         2003
                                                     -------------------------------------
<S>                                                    <C>          <C>          <C>
Basic EPS Calculation:
Basic average shares outstanding                       2,298,593    2,302,522    2,343,460
                                                     =====================================

Net income                                            $6,262,526   $5,681,049   $5,164,200
                                                     =====================================

Basic earnings per common share                       $     2.72   $     2.47   $     2.20
                                                     =====================================

Diluted EPS Calculation:
Average shares outstanding                             2,298,593    2,302,522    2,343,460
Nonvested restricted stock                                26,820       30,206       49,620
Net effect of the assumed exercise of stock options
                                                          62,025       61,643       89,919
                                                     -------------------------------------
Diluted average shares                                 2,387,438    2,394,371    2,482,999
                                                     =====================================

Net income                                            $6,262,526   $5,681,049   $5,164,200
                                                     =====================================

Diluted earnings per common share                     $     2.62   $     2.37   $     2.08
                                                     =====================================
</TABLE>



                                       83
<PAGE>

20. Parent Company Financial Statements

The condensed financial statements of the Corporation, prepared on a parent
company unconsolidated basis, are presented as follows:

Balance Sheet

<TABLE>
<CAPTION>
                                                                                December 31
                                                                            2005           2004
                                                                        --------------------------
<S>                                                                      <C>           <C>
Assets
Cash                                                                     $ 1,871,388   $ 2,449,327
Investment in subsidiary                                                  63,004,642    57,470,639
Other assets                                                               1,350,305     1,296,944
                                                                        --------------------------
Total assets                                                              66,226,335   $61,216,910
                                                                        ==========================

Liabilities and shareholders' equity
Other liabilities                                                        $   725,813   $   755,223
Junior subordinated debentures owed to unconsolidated subsidiary trust    13,918,000    13,918,000
                                                                        --------------------------
Total liabilities                                                         14,643,813    14,673,223

Shareholders' equity                                                      51,582,522    46,543,687
                                                                        --------------------------
Total liabilities and shareholders' equity                               $66,226,335   $61,216,910
                                                                        ==========================
</TABLE>



                                       84
<PAGE>

20. Parent Company Financial Statements (continued)

Statements of Income

<TABLE>
<CAPTION>
                                                        Years Ended December 31
                                                  2005           2004           2003
                                             ------------------------------------------
<S>                                           <C>            <C>            <C>
Interest income                               $    32,879    $    26,579    $    76,863
Interest expense                                1,487,982      1,488,053      1,590,506
                                             ------------------------------------------
Net interest income                            (1,455,103)    (1,461,474)    (1,513,643)
                                             ------------------------------------------
Other income                                       44,308         44,308             --
Other operating expenses:
Unearned compensation amortization                257,227        299,995        396,092
Other expenses                                    334,703        306,430        305,923
                                             ------------------------------------------
Total other operating expenses                    591,930        606,425        702,015
                                             ------------------------------------------
Net loss before tax benefit and equity in
   undistributed net income of subsidiary
                                               (2,002,725)    (2,023,591)    (2,215,658)
Tax benefit                                       814,187        949,289        817,343
                                             ------------------------------------------

Net loss before equity in undistributed net
   income of subsidiary
                                               (1,188,538)    (1,074,302)    (1,398,315)

Equity in undistributed net income of
   subsidiary                                   7,451,064      6,755,351      6,562,515
                                             ------------------------------------------
Net income                                    $ 6,262,526    $ 5,681,049    $ 5,164,200
                                             ==========================================
</TABLE>





                                       85
<PAGE>

20. Parent Financial Statements (continued)

Statements of Cash Flows

<TABLE>
<CAPTION>
                                                                         Years Ended December 31
                                                                    2005           2004           2003
                                                            ---------------------------------------------

<S>                                                             <C>            <C>            <C>
Operating activities
Net income                                                      $ 6,262,526    $ 5,681,049    $ 5,164,200
Adjustments to reconcile net income to net cash provided by
   (used by) operating activities:
     Undistributed net income of subsidiary                      (7,451,064)    (6,755,351)    (6,562,516)
     Income tax benefit from exercise of options and warrants       172,650        817,610        456,013
     Stock compensation                                              99,793         99,990        110,000
     Unearned compensation amortization                             257,227        299,995        396,092
     Increase(decrease) in other assets                             (53,361)           830       (337,378)
     Increase (decrease) in other liabilities                       (29,410)       113,087       (419,942)
                                                            ---------------------------------------------
Net cash provided by (used by) operating activities                (741,639)       257,210     (1,193,531)

Investing activities
Dividends from The National Bank of Indianapolis                  1,300,000      1,000,000      1,650,000
                                                            ---------------------------------------------
Net cash provided by investing activities                         1,300,000      1,000,000      1,650,000

Financing activities
Proceeds from issuance of stock                                     556,922      1,386,574        869,146
Repurchase of stock                                              (1,693,222)    (3,779,334)    (5,054,547)
                                                            ---------------------------------------------
Net cash used by financing activities                            (1,136,300)    (2,392,760)    (4,185,401)
                                                            ---------------------------------------------

Decrease in cash and cash equivalents                              (577,939)    (1,135,550)    (3,728,932)

Cash and cash equivalents at beginning of year                    2,449,327      3,584,877      7,313,809
                                                            ---------------------------------------------
Cash and cash equivalents at end of year                        $ 1,871,388    $ 2,449,327    $ 3,584,877
                                                            =============================================
</TABLE>






                                       86
<PAGE>

21. Quarterly Results of Operations (Unaudited)

The following is a summary of the unaudited quarterly results of operations for
the years ended December 31, 2005 and 2004:
<TABLE>
<CAPTION>
                                  March 31         June 30       September 30    December 31
                                -------------------------------------------------------------
<S>                              <C>             <C>             <C>             <C>
2005

Interest income                  $11,257,015     $12,360,413     $13,429,898     $13,799,781
Interest expense                   4,244,692       5,086,617       5,572,173       6,002,333
                                -------------------------------------------------------------

Net interest income                7,012,323       7,273,796       7,857,725       7,797,448

Provision for loan losses            425,000         495,000         565,000         600,000
Other operating income             1,747,392       1,909,241       1,937,129       1,961,678
Other operating expense            6,041,241       6,232,053       6,505,891       6,491,705
                                -------------------------------------------------------------

Net income before tax              2,293,474       2,455,984       2,723,963       2,667,421

Federal and state income tax         864,141         967,939       1,058,942         987,294
                                -------------------------------------------------------------

Net income after tax             $ 1,429,333     $ 1,488,045     $ 1,665,021     $ 1,680,127
                                ============================================================

Basic earnings per share         $      0.62     $      0.65     $      0.72     $      0.73

Diluted earnings per share       $      0.60     $      0.62     $      0.70     $      0.70


2004

Interest income                  $ 8,758,927     $ 9,057,485     $ 9,894,386     $10,812,759
Interest expense                   2,980,095       2,902,881       3,323,504       3,755,826
                                -------------------------------------------------------------

Net interest income                5,778,832       6,154,604       6,570,882       7,056,933

Provision for loan losses            300,000         300,000         330,000         390,000
Other operating income             1,732,917       1,832,407       1,816,372       1,794,812
Other operating expense            5,476,831       5,725,926       5,672,721       5,726,234
                                -------------------------------------------------------------

Net income before tax              1,734,918       1,961,085       2,384,533       2,735,511

Federal and state income tax         685,628         439,384         910,503       1,099,483
                                -------------------------------------------------------------

Net income after tax             $ 1,049,290     $ 1,521,701     $ 1,474,030     $ 1,636,028
                                ============================================================

Basic earnings per share         $      0.46     $      0.66     $      0.64     $      0.71
Diluted earnings per share       $      0.43     $      0.64     $      0.61     $      0.69
</TABLE>




                                       87
<PAGE>

Item 9.  Changes in and Disagreements With Accountants on Accounting and
         Financial Disclosure.
------------------------------------------------------------------------


         None.



Item 9A.  Controls and Procedures
---------------------------------

(a)      Evaluation of Disclosure Controls and Procedures. The Corporation's
         principal executive officer and principal financial officer have
         concluded that the Corporation's disclosure controls and procedures (as
         defined under Rules 13(a)-15(e) or Rules 15d-15(e) under the Securities
         Exchange Act of 1934, as amended), based on their evaluation of these
         controls and procedures as of the period covered by this Form 10-K, are
         effective.

(b)      Changes in Internal Controls. There has been no change in the
         Corporation's internal controls over financial reporting that has
         occurred during the Corporation's last fiscal quarter that has
         materially affected or is reasonable likely to materially affect, the
         Corporation's internal control over financial reporting.


         The Corporation's management, including its principal executive officer
         and principal financial officer, does not expect that the Corporation's
         disclosure controls and procedures and other internal controls will
         prevent all error and all fraud. A control system, no matter how well
         conceived and operated, can provide only reasonable, not absolute,
         assurance that the objectives of the control system are met. Further,
         the design of a control system must reflect the fact that there are
         resource constraints, and the benefits of controls must be considered
         relative to their costs. Because of the inherent limitations in all
         control systems, no evaluation of controls can provide absolute
         assurance that all control issues and instances of fraud, if any,
         within the company have been detected. These inherent limitations
         include the realities that judgments in decision-making can be faulty,
         and that breakdowns can occur because of simple error or mistake.
         Additionally, controls can be circumvented by the individual acts of
         some persons, by collusion of two or more people, or by management
         override of the control.


         The design of any system of controls also is based in part upon certain
         assumptions about the likelihood of future events, and there can only
         be reasonable assurance that any design will succeed in achieving its
         stated goals under all potential future conditions; over time, control
         may become inadequate because of changes in conditions, or the degree
         of compliance with the policies or procedures may deteriorate. Because
         of the inherent limitations in a cost-effective control system,
         misstatements due to error or fraud may occur and not be detected.


         Appearing immediately following the Signatures section of this report
         there are Certifications of the Corporation's principal executive
         officer and principal financial officer. The Certifications are
         required in accord with Section 302 of the Sarbanes-Oxley Act of 2002
         (the "Section 302 Certifications"). This Item of this report which you
         are currently reading is the information concerning the Evaluation
         referred to in the Section 302 Certifications and this information
         should be read in conjunction with the Section 302 Certifications for a
         more complete understanding of the topics presented.


                                       88
<PAGE>


Item 9B.  Other Information

Not Applicable
































                                       89
<PAGE>

PART III

Items 10.  11, 12, 13 and 14
----------------------------

         In accordance with the provisions of General Instruction G to Form
10-K, the information required for the required disclosures under Items 10, 11,
12, 13 and 14 are not set forth herein because the Corporation intends to file
with the Securities and Exchange Commission a definitive Proxy Statement
pursuant to Regulation 14A not later than 120 days following the end of its 2005
fiscal year, which Proxy Statement will contain such information. The
information required by Items 10, 11, 12, 13 and 14 is incorporated herein by
reference to such Proxy Statement.




























                                       90
<PAGE>

Part IV


Item 15.  Exhibits and Financial Statement Schedules
----------------------------------------------------

(a)      (1) The following consolidated financial statements are included in
             Item 8:
<TABLE>
<CAPTION>
                                                                                Page Number in
                                                                                       10-K

<S>                                                                                      <C>
         Independent Auditors' Report on Consolidated Financial Statements               47

         Consolidated Balance Sheets December 31, 2005 and 2004                          48

         Consolidated Statements of Income                                               49
         For the years ended December 31, 2005, 2004 and 2003

         Consolidated Statements of Shareholders' Equity                                 50
         For the years ended December 31, 2005, 2004 and 2003

         Consolidated Statements of Cash Flows                                           51
         For the years ended December 31, 2005, 2004, and 2003

         Notes to consolidated Financial Statements                                      52
</TABLE>

         (2)      See response to Item 15 (a)(1). All other financial statement
                  schedules have been omitted because they are not applicable,
                  or the required information is shown in the consolidated
                  financial statements or notes thereto.

         (3)      List of Exhibits




                                       91
<PAGE>

EXHIBIT INDEX

         3.01     Articles of Incorporation of the Corporation, filed as Exhibit
                  3(i) to the Corporation's Form 10-QSB as of September 30, 1995
                  are incorporated by reference and Articles of Amendment filed
                  as Exhibit 3(i) to the Form 10-K for the fiscal year ended
                  December 31, 2001

         3.02     Bylaws of the Corporation, filed as Exhibit 3(ii) to the
                  Corporation's Form 10-Q as of September 30, 1996 are
                  incorporated by reference

         10.01*   1993 Key Employees' Stock Option Plan of the Corporation, as
                  amended, filed as Exhibit 10(a) to the Form 10-K for the
                  fiscal year ended December 31, 2004 is incorporated by
                  reference

         10.02*   1993 Directors' Stock Option Plan of the Corporation, as
                  amended, filed as Exhibit 10(b) to the Corporation's Form 10-Q
                  as of June 30, 2001 is incorporated by reference

         10.03*   1993 Restricted Stock Plan of the Corporation, as amended,
                  filed as Exhibit 10(c) to the Form 10-K for the fiscal year
                  ended December 31, 2004 is incorporated by reference

         10.04*   Form of agreement under the 1993 Key Employees Stock Option
                  Plan, filed as Exhibit 10(d) to the Form 10-K for the fiscal
                  year ended December 31, 2004 is incorporated by reference

         10.05*   Form of agreement under the 1993 Restricted Stock Plan, filed
                  as Exhibit 10(e) to the Form 10-K for the fiscal year ended
                  December 31, 2004 is incorporated by reference

         10.06*   Schedule of Directors Compensation Arrangements, filed as
                  Exhibit 10(f) to the Form 10-K for the fiscal year ended
                  December 31, 2004 is incorporated by reference

         10.07*   Schedule of Named Executive Officers Compensation
                  Arrangements, as amended

         10.08*   The National Bank of Indianapolis Corporation 2005 Equity
                  Incentive Plan, filed as Exhibit 10.01 to the Corporation's
                  Form 8-K dated June 22, 2005 is incorporated by reference

         10.09*   Form of Restricted Stock Award Agreement for The National Bank
                  of Indianapolis Corporation 2005 Equity Incentive Plan, filed
                  as Exhibit 10.02 to the Corporation's Form 8-K dated June 22,
                  2005 is incorporated by reference

         10.10*   Form of Stock Option Award Agreement for The National Bank of
                  Indianapolis Corporation 2005 Equity Incentive Plan, filed as
                  Exhibit 10.03 to the Corporation's Form 8-K dated June 22,
                  2005 is incorporated by reference

         10.11*   Employment Agreement dated December 15, 2005 between Morris L.
                  Maurer and the Corporation, filed as Exhibit 10.06 to the
                  Corporation's Form 8-K dated December 21, 2005 is incorporated
                  by reference

         10.12*   Employment Agreement dated December 15, 2005 between Philip B.
                  Roby and the Corporation, filed as Exhibit 10.07 to the
                  Corporation's Form 8-K dated December 21, 2005 is incorporated
                  by reference

         10.13*   The National Bank of Indianapolis Corporation Executive's
                  Deferred Compensation Plan, filed as Exhibit 10.08 to the
                  Corporation's Form 8-K dated December 21, 2005 is incorporated
                  by reference

         10.14*   The National Bank of Indianapolis Corporation 401(K) Savings
                  Plan (as amended and restated generally effective January 1,
                  2006)

         21.00    Subsidiaries of The National Bank of Indianapolis Corporation


                                       92
<PAGE>

         31.1     Certificate of Chief Executive Officer pursuant to Rule
                  13a-14(a)/Rule 15d-14(a) of the Securities Exchange Act of
                  1934, as amended

         31.2     Certificate of Chief Financial Officer pursuant to Rule
                  13a-14(a)/Rule 15d-14(a) of the Securities Exchange Act of
                  1934, as amended

         32.1     Chief Executive Officer Certification pursuant to 18 U.S.C.
                  Section 1350

         32.2     Chief Financial Officer Certification pursuant to 18 U.S.C.
                  Section 1350


















                                       93
<PAGE>

Signatures

In accordance with Section 13 or 15(d) of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.

(Registrant)    The National Bank of Indianapolis Corporation
                --------------------------------------------------------------
By (Signature and Title)  /S/ Morris L. Maurer                  March 24, 2006
                          ------------------------------------  --------------
                              Morris L. Maurer, President            Date
                              (Principal Executive Officer)

In accordance with the Exchange Act, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.

 By (Signature and Title) /S/ Morris L. Maurer                  March 24, 2006
                          ------------------------------------  --------------
                          Morris L. Maurer, President                Date
                          (Principal Executive Officer)

 By (Signature and Title) /S/ Philip B. Roby                    March 24, 2006
                          ------------------------------------  --------------
                          Philip B. Roby, Executive Vice President   Date
                          Executive Vice President

 By (Signature and Title) /S/ Debra L. Ross                     March 24, 2006
                          ------------------------------------  --------------
                          Debra L. Ross, Senior Vice President       Date
                          (Principal Financial and Accounting Officer)

 By (Signature and Title) /S/ Michael S. Maurer                 March 24, 2006
                          ------------------------------------  --------------
                          Michael S. Maurer, Chairman of the Board   Date

 By (Signature and Title) /S/ Kathryn G. Betley                 March 24, 2006
                          ------------------------------------  --------------
                          Kathryn G. Betley, Director                Date

 By (Signature and Title) /S/ James M. Cornelius                March 24, 2006
                          ------------------------------------  --------------
                          James M. Cornelius, Director               Date

 By (Signature and Title) /S/ David R. Frick                    March 24, 2006
                          ------------------------------------  --------------
                          David R. Frick, Director                   Date

 By (Signature and Title) /S/ Andre B. Lacy                     March 24, 2006
                          ------------------------------------  --------------
                          Andre B. Lacy, Director                    Date

 By (Signature and Title) /S/ G. Benjamin Lantz                 March 24, 2006
                          ------------------------------------  --------------
                          G. Benjamin Lantz, Director                Date

 By (Signature and Title) /S/ Todd H. Stuart                    March 24, 2006
                          ------------------------------------  --------------
                          Todd H. Stuart, Director                   Date

 By (Signature and Title) /S/ John T. Thompson                  March 24, 2006
                          ------------------------------------  --------------
                          John T. Thompson, Director                 Date


                                       94