Jimmy Tallent Quotations

Our balance sheet remains asset sensitive, which allowed us to benefit modestly from the rise in interest rates that produced a slight margin expansion throughout 2005.

Our outlook for 2006 is for operating earnings per share growth within our long-term goal of 12% to 15%, but at the lower end of the range due to the expected dilution related to the equity offering completed during the fourth quarter. We anticipate core loan growth will continue to be within our targeted range of 10% to 14%. Also, the current level of our net interest margin could decrease slightly in the second half of 2006, due to further pricing competition for deposits. Our outlook assumes a stable economic environment and continued strong credit quality.

Our operating efficiency ratio of 58.80% for the quarter is within our long-term efficiency goal of 58% to 60%, reflecting the success of our recent expansion efforts and the continued strength of our existing franchise.

Loan and deposit growth was strong across all markets. Total assets at year-end were $5.9 billion, a 15% increase from a year ago. Loans increased $144 million during the fourth quarter, or 14% on an annualized basis, and helped drive the increase in net interest revenue. Our net interest margin rose to 4.20%, up 15 basis points from a year ago and up three basis points from last quarter, as increasing short-term interest rates continued to positively affect our slightly asset-sensitive balance sheet. Fee revenue, excluding securities losses taken in the fourth quarter of 2005, was up 12%, reflecting increases in nearly every category.

We are committed to excellent customer service, superior operating performance and solid credit quality as we continue our efforts to build shareholder value through our balanced growth strategy of strong internal growth, complemented by selective de novo and merger expansion.

This represents an annual cash dividend of $.32 per share and an increase of $.04 per share, or 14%, over the dividends paid for 2005. This increase reflects our continued strong performance and commitment to deliver value to our shareholders.

Excluding securities losses in the fourth quarter of 2005, core fee revenue growth from a year ago was $1.3 million, or 12%, with steady growth achieved in nearly every category. Service charges and fees on deposit accounts increased $970,000 to $6.6 million, primarily due to growth in transactions and new accounts resulting from core deposit program and the cross-selling of other products and services. Brokerage fees increased 85% to $789,000 due to strong market activity. Consulting fees of $1.7 million were down slightly, due to the timing of work completed last year for the documentation and testing of internal controls in our risk management practice.

During the fourth quarter, we resolved several non-performing assets, which slightly increased net charge-offs while lowering non-performing assets. Asset quality continues to compare favorably with peer banks and remains well within our tolerance levels. Strong credit quality, rooted with our guiding principle of securing loans with hard assets, is essential to our balanced growth strategy and overall success.

This is a significant milestone and our first public equity offering. We're very pleased with the investor community's positive response. This additional capital will allow us to continue to pursue and execute our successful balanced growth strategy.

Once again we met our performance goals of double-digit earnings per share growth and a return on tangible equity above 18% for the year. This year was exceptional. We took an opportunity to leverage our strong earnings performance by making strategic investments in the future growth of our company through a significant de novo expansion. We grew deposits faster than loans while expanding our margin. We raised additional capital through a very successful equity offering during the fourth quarter. And most importantly, this was all done while continuing to meet our primary financial goals.

The fourth quarter was outstanding for deposit growth. We added $281 million of deposits, nearly doubling the level needed to fund our strong loan growth of $144 million. Our relentless focus on the highest level of customer service has generated customer satisfaction scores that continue to exceed 90%, well above the comparable industry average of 75%. This is invaluable in building deposits through customer referrals while also maintaining and growing long-term relationships with existing customers.