8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 OR 15(d) of

The Securities Exchange Act of 1934

Date of Report (Date of earliest event reported) February 6, 2006

PLACER SIERRA BANCSHARES

(Exact name of registrant as specified in its charter)

California	0-50652	94-3411134
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)

525 J Street, Sacramento, California	95814
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code (916) 554-4750

(Former name or former address, if changed since last report.)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Section 2. Financial Information

Item 2.02. Results of Operations and Financial Condition

On February 6, 2006, Placer Sierra Bancshares (the “Registrant”) issued a press release regarding its results of operations and financial condition for the period ended December 31, 2005. The text of the press release is included as Exhibit 99.1 to this report. The information included in the press release is furnished (not filed) as Exhibit 99.1 to this Current Report on Form 8-K.

Section 9 – Financial Statements and Exhibits

Item 9.01. Financial Statements and Exhibits

(a) Financial statements of businesses acquired.

(b) Pro forma financial information.

(c) Exhibits.

Exhibit No.	Description of Exhibit
99.1	Press Release dated February 6, 2006, deemed furnished (not filed) as Exhibit 99.1.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	Placer Sierra Bancshares
	(Registrant)
Date February 6, 2006
	/s/ Ronald W. Bachli
	Ronald W. Bachli Chairman and Chief Executive Officer

EXHIBIT INDEX

Exhibit No.	Description of Exhibit
99.1	Press Release dated February 6, 2006, deemed furnished (not filed) as Exhibit 99.1.

EX-99.1

Exhibit 99.1

PLACER SIERRA BANCSHARES

PRESS RELEASE

FOR IMMEDIATE RELEASE

For more information contact:

AT THE COMPANY:	AT FINANCIAL RELATIONS BOARD:
Ronald W. Bachli, Chairman & CEO	Tony Rossi
David E. Hooston, Chief Financial Officer	(310) 854-8317
(916) 554-4750

PLACER SIERRA BANCSHARES REPORTS NET INCOME OF $6.9 MILLION

A 54% INCREASE FROM THE FOURTH QUARTER OF 2004

Sacramento, California – February 6, 2006 - Placer Sierra Bancshares (NASDAQ: PLSB), a $1.9 billion commercial banking company serving the Northern, Central and Southern California markets, today announced financial results for the fourth quarter ended December 31, 2005.

FINANCIAL HIGHLIGHTS – FOURTH QUARTER 2005 VS. FOURTH QUARTER 2004

• An increase of 53.6% in quarterly GAAP net income to $6.9 million from $4.5 million

• An increase of 50.0% in fully diluted GAAP earnings per share to $0.45 from $0.30

• GAAP return on average assets of 1.45% and return on average equity of 13.31%, compared to 1.12% and 9.49%, respectively

• Return on average tangible assets of 1.62% and average tangible equity of 29.60%, compared to 1.25% and 17.06%, respectively

• Net interest margin of 5.31%, compared to 4.77%

• Cost of deposits increased to 1.04% from 0.66%

• Yield on average earning assets increased to 6.56% from 5.58%

• The efficiency ratio improved to 56.87% from 63.39%

• Average loans and leases held for investment, net of deferred fees and costs, grew by $248.1 million, or 22.3%, to $1.358 billion

• Average deposits increased by $254.3 million, or 19.1%, to $1.588 billion

EARNINGS HIGHLIGHTS

Net income for the three months ended December 31, 2005 was $6.9 million, a 53.6% increase over the $4.5 million reported for the same period of 2004. Earnings per diluted share for the three months ended December 31, 2005 was $0.45, an increase of 50.0% over $0.30 per diluted share for the same period of 2004. Net income in the fourth quarter of 2005 was negatively impacted by two charges totaling $164,000 after taxes, or $0.01 per diluted share, associated with an acquisition in Southern California which the Company ceased pursuing in early December and the secondary offering of 5,000,000 shares held by California Community Financial Institutions Fund Limited Partnership.

Net income for the twelve months ended December 31, 2005 was $24.8 million, a 90.5% increase over net income of $13.0 million reported for the prior year. Net income totaled $1.63 per diluted share for the twelve months ended December 31, 2005, compared to $0.90 per diluted share for the twelve months ended December 31, 2004.

Commenting on the fourth quarter and the year, Ron Bachli, Chairman and Chief Executive Officer of Placer Sierra Bancshares, said, “We are very pleased with our earnings results. In the fourth quarter we were able to maintain our asset-sensitive position and realize meaningful increases in our net interest margin which grew to 5.31% from 4.77% in the fourth

quarter of 2004. And, we are particularly pleased with the increased earnings power realized from our 2004 acquisitions of Bank of Orange County and Bank of Lodi, which exceeded our expectations and improved our return on average equity to 13.31% in the fourth quarter of 2005 from 9.49% during the same period of 2004. We are also encouraged by the level of new loans funded during 2005. While net loan growth year-over-year was modest, I congratulate Randy Reynoso, President and Chief Operating Officer, and his team for their efforts as they overcame significant early loan payoffs and amortization and achieved total loan fundings of approximately $500 million.”

INCOME STATEMENT

The acquisition of Southland Capital Co. and its subsidiary Bank of Orange County in 2004 was accounted for as an “as if” pooling of interests, and accordingly the loss from restructuring the Bank of Orange County’s investment securities portfolio as well as merger costs were recorded as reductions of net income. Our net income as adjusted for these items is referred to below as operating earnings. Operating earnings for the twelve months ended December 31, 2005 was $24.8 million, or $1.63 per diluted share, representing a 47.9% increase over operating earnings of $16.8 million, or $1.16 per diluted share, for the twelve months ended December 31, 2004.

We believe that the presentation of our 2004 earnings exclusive of merger related costs is important to gaining an understanding of the financial performance of our core banking operations. Accordingly, the following table presents our key performance indicators on both a GAAP basis and operating earnings basis, which is a non-GAAP basis presentation, for the three and twelve months ended December 31, 2005 and 2004:

	For the Three Months Ended December 31,						For the Twelve Months Ended December 31,
	2005			2004			2005			2004
	($ in thousands, except per share data)
Net income	$	6,885		$	4,481		$	24,802		$	13,019
Acquisition related:
Merger expenses, net of tax effect		—			(11	)		—			1,539
Investment security restructuring loss, net of tax effect		—			—			—			2,210
Operating earnings	$	6,885		$	4,470		$	24,802		$	16,768
GAAP earnings per share – basic	$	0.46		$	0.30		$	1.66		$	0.92
GAAP earnings per share – diluted	$	0.45		$	0.30		$	1.63		$	0.90
GAAP return on average assets		1.45	%		1.12	%		1.34	%		0.89	%
GAAP return on average shareholders’ equity		13.31	%		9.49	%		12.51	%		7.41	%
GAAP efficiency ratio		56.87	%		63.39	%		59.09	%		70.86	%
Net interest margin		5.31	%		4.77	%		5.23	%		4.92	%
Operating earnings per share – basic	$	0.46		$	0.30		$	1.66		$	1.19
Operating earnings per share – diluted	$	0.45		$	0.30		$	1.63		$	1.16
Operating return on average assets		1.45	%		1.12	%		1.34	%		1.15	%
Operating return on average shareholders’ equity		13.31	%		9.46	%		12.51	%		9.55	%
Operating efficiency ratio		56.87	%		63.48	%		59.09	%		64.75	%

Net interest income for the fourth quarter of 2005 was $21.9 million, an increase of 31.0% over net interest income of $16.7 million in the same period of 2004. The increase in net interest income reflects the acquisition of First Financial Bancorp and its subsidiary Bank of Lodi on December 10, 2004, as well as the positive effect of the asset sensitive nature of our balance sheet during a period of rising interest rates.

Net interest margin for the fourth quarter of 2005 was 5.31%, an increase of 54 basis points over the fourth quarter of 2004. During the fourth quarter of 2005 the yield on loans and leases held for investment, net of deferred fees and costs, increased 77 basis points to 7.01% from 6.24% during the fourth quarter of 2004. The cost of deposits in the fourth quarter of 2005 increased 38 basis points to 1.04% from 0.66% in the fourth quarter of 2004. The increase in the yield on earning assets principally reflects the impact of loans tied to indexes associated with the rising prime rate and the reinvestment of liquidity into higher yielding assets at the end of the fourth quarter of 2004. The increase in the cost of deposits principally reflects the increased cost of certificates of deposit. Certificates of deposit were the Company’s principal interest rate sensitive deposit product during 2005, with all other deposit products showing only moderate price sensitivity.

Total non-interest income for the fourth quarter of 2005 totaled $4.4 million, compared with $3.3 million for the fourth quarter of 2004. The growth in non-interest income over the fourth quarter of 2004 was primarily attributable to a 23.9% increase in service charges and fees on deposit accounts, resulting from the Company’s acquisition of First Financial Bancorp, along with a 41.4% increase in referral and other loan-related fees due to an increase in real estate loans referred to third parties.

Total non-interest expense for the fourth quarter of 2005 was $14.9 million, compared with $12.7 million for the fourth quarter of 2004. The increase is principally attributable to the Company’s acquisition of First Financial Bancorp, but was also impacted by the $283,000 pre-tax charges associated with the abandoned acquisition and secondary share offering described earlier.

The Company’s efficiency ratio for the fourth quarter of 2005 improved to 56.87%, compared to 63.39% in the fourth quarter of 2004, principally due to strong growth in revenues in 2005.

BALANCE SHEET

As of December 31, 2005, total assets were $1.860 billion, compared to $1.779 billion at December 31, 2004. Average assets for the fourth quarter of 2005 were $1.880 billion, compared with $1.589 billion for the same quarter of 2004, an increase of $291.2 million, or 18.3%. The increase during the three and twelve months ended December 31, 2005 is principally attributable to the Company’s acquisition of First Financial Bancorp.

Total loans and leases held for investment, net of deferred fees and costs, were $1.375 billion at December 31, 2005, compared with $1.294 billion at December 31, 2004, representing growth of 6.3%. Average loans and leases held for investment for the fourth quarter of 2005 were $1.358 billion, compared with $1.110 billion for the same quarter of 2004, an increase of $248.1 million, or 22.3%. The increase is principally attributable to the Company’s acquisition of First Financial Bancorp. While the Company booked $197.2 million of new commitments during the three months ended December 31, 2005, the Company also experienced early loan payoffs of $90.6 million.

Total deposits increased by $72.8 million, or 4.9%, to $1.573 billion at December 31, 2005, from $1.500 billion at December 31, 2004. Average deposits for the fourth quarter of 2005 were $1.588 billion, compared with $1.334 billion for the same quarter of 2004, an increase of $254.3 million, or 19.1%, principally attributable to the Company’s acquisition of First Financial Bancorp.

Total shareholders’ equity was $209.3 million at December 31, 2005, compared with $191.6 million at December 31, 2004. Average shareholders’ equity for the fourth quarter of 2005 was $205.2 million, compared with $187.9 million for the same quarter of 2004, an increase of $17.3 million, or 9.2%.

CREDIT QUALITY

The Company’s overall credit quality remained strong during the fourth quarter, resulting in the determination by management that no provision for the allowance for loan and lease losses was required.

Non-performing loans to total loans and leases held for investment was 0.22% at December 31, 2005 and 2004.

Net loan and lease recoveries were $478,000 in the fourth quarter of 2005, representing an annualized rate of 0.14% of average loans and leases held for investment, net of deferred fees and costs. Net loan and lease recoveries for the year ended December 31, 2005 of $514,000 were 0.04% of average loans and leases held for investment, net of deferred fees and costs, compared with net charge-offs of 0.15% for the year ended December 31, 2004. The allowance for loan and lease losses totaled $16.7 million at December 31, 2005 and represented 1.22% of loans and leases held for investment, net of deferred fees and costs, and 545.67% of non-performing loans and leases as of that date.

REGULATORY CAPITAL

Placer Sierra Bancshares’ regulatory capital ratios at December 31, 2005 are as follows:

Leverage Ratio
Placer Sierra Bancshares	8.7	%
Minimum regulatory requirement	4.0	%
Tier 1 Risk-Based Capital Ratio
Placer Sierra Bancshares	10.4	%
Minimum regulatory requirement	4.0	%
Total Risk-Based Capital Ratio
Placer Sierra Bancshares	11.6	%
Minimum regulatory requirement	8.0	%

OUTLOOK

For the year ending December 31, 2006, the Company expects GAAP fully diluted earnings per share to range from $1.80 to $1.83.

The 2006 fully diluted earnings per share estimate includes the effect of FASB Statement No. 123 (revised 2004) (“FAS 123 (R)”), Share-Based Payments, which is effective for the Company in January 2006 and requires all entities to recognize compensation expense in an amount equal to the fair value of share-based payments, such as stock options granted to employees. Accordingly, the 2006 estimate includes, as compensation expense, the cost of previously granted unvested options that were outstanding on January 1, 2006 and will vest during the year and an estimate of the cost of future options that may be granted and will vest during 2006. Together, the Company estimates this compensation expense will have an impact of approximately $0.03 per fully diluted share. In prior periods, the Company’s GAAP financial results were not required to, and did not, include expenses associated with stock-based compensation.

Commenting on the outlook for Placer Sierra Bancshares, Mr. Bachli said, “We believe we have excellent growth opportunities throughout our footprint, and during 2006 we will be opening, renovating or relocating a number of branches and expanding our business relationship management teams to help us further penetrate our markets. Given the significant investments we are making to support our future growth, we expect that our expense levels in the first half of 2006 will be elevated until the new branches and relationship managers become sufficiently productive. Despite the increased spending, we believe we will still generate double-digit earnings growth and continue to improve our return on equity and return on assets.”

ABOUT PLACER SIERRA BANCSHARES

Placer Sierra Bancshares is a Northern California-based bank holding company for Placer Sierra Bank with 40 branches operating throughout California as of December 31, 2005. The bank has 31 branches in an eight-county area of Northern California, including Placer, Sacramento, El Dorado, Sierra, Nevada, Amador, San Joaquin and Calaveras counties and nine branches in Southern California’s Orange and Los Angeles counties. Placer Sierra Bank and its divisions, Sacramento Commercial Bank, Bank of Orange County and Bank of Lodi, offer customers the resources of a large financial institution and the resourcefulness and superior customer service of a community bank.

Placer Sierra Bank offers a broad array of deposit products and services for both commercial and retail customers. These products include electronic banking, cash management services, electronic bill payment and investment services with an emphasis on relationship banking. Placer Sierra Bank also provides competitive loan products such as commercial loans and lines of credit, commercial real estate loans, Small Business Administration loans, residential mortgage loans, home equity lines of credit and construction loans. For more information, please visit www.placersierrabank.com.

Placer Sierra Bancshares is publicly traded on NASDAQ under the stock symbol PLSB. For more information about Placer Sierra Bancshares, please visit www.placersierrabancshares.com.

FORWARD-LOOKING STATEMENTS

This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended that involve inherent risks and uncertainties. The Company cautions readers that a number of important factors could cause actual results to differ materially from those in such forward-looking statements. All statements other than statements of historical fact are forward-looking statements. Risks and uncertainties include, but are not limited to: the possibility that personnel changes will not proceed as planned; growth may be inhibited if the Company cannot attract deposits; planned acquisitions and relative cost savings cannot be realized or realized within the expected time frame; revenues are lower than expected; competitive pressure among depository institutions increases significantly; the integration of acquired businesses costs more, takes longer or is less successful than expected; the cost of additional capital is more than expected; changes in the interest rate environment reduces interest margins; general economic conditions, either nationally or in the market areas in which the Company does business, are less favorable than expected; legislation or regulatory requirements or changes adversely affect the Company’s business; changes that may occur in the securities markets; the Company may suffer an interruption of services from third-party service providers that could adversely affect the Company’s business; the Company may not be able to maintain an effective system of internal and disclosure controls; and other risks that are described in the Company’s Securities and Exchange Commission filings. If any of these uncertainties materializes or any of these assumptions proves incorrect, the Company’s results could differ materially from the Company’s expectations as set forth in these statements. Placer Sierra assumes no obligation to update such forward-looking statements.

UNAUDITED CONSOLIDATED BALANCE SHEETS

($ in thousands, except per share data)

	December 31, 2005			December 31, 2004
Assets:
Cash and due from banks	$	55,768		$	39,255
Federal funds sold		1,500			361
Cash and cash equivalents		57,268			39,616
Interest bearing deposits with other banks		—			125
Investment securities available-for-sale		228,379			249,916
Federal Reserve Bank and Federal Home Loan Bank stock		14,385			10,430
Loans and leases held for investment, net of allowance for loan and lease losses of $16,714 in 2005 and $16,200 in 2004		1,358,772			1,278,064
Premises and equipment, net		25,288			27,645
Cash surrender value of life insurance		44,330			42,390
Other real estate		—			657
Goodwill		103,260			101,329
Other intangible assets		11,589			14,172
Other assets		17,110			15,071
Total assets	$	1,860,381		$	1,779,415
Liabilities and shareholders’ equity:
Liabilities:
Non-interest bearing deposits	$	502,387		$	485,193
Interest bearing deposits		1,070,495			1,014,866
Total deposits		1,572,882			1,500,059
Short-term borrowings		11,369			16,265
Accrued interest payable and other liabilities		13,238			17,839
Junior subordinated deferrable interest debentures		53,611			53,611
Total liabilities		1,651,100			1,587,774
Shareholders’ equity:
Common stock		160,596			157,834
Retained earnings		50,948			33,323
Accumulated other comprehensive (loss) income		(2,263	)		484
Total shareholders’ equity		209,281			191,641
Total liabilities and shareholders’ equity	$	1,860,381		$	1,779,415
Shares outstanding		15,042,981			14,877,056
Book value per share	$	13.91		$	12.88

UNAUDITED CONSOLIDATED STATEMENTS OF INCOME

($ in thousands, except per share data)

	Three Months Ended December 31,					Twelve Months Ended December 31,
	2005		2004			2005			2004
Interest income:
Interest and fees on loans and leases held for investment	$	23,983	$	17,411		$	89,331		$	63,193
Interest on loans held for sale		—		1			—			9
Interest on deposits with other banks		—		1			2			1
Interest and dividends on investment securities:
Taxable		2,535		1,452			10,028			6,949
Tax-exempt		182		135			717			529
Interest on federal funds sold		335		564			953			1,150
Total interest income		27,035		19,564			101,031			71,831
Interest expense:
Interest on deposits		4,153		2,234			13,946			7,303
Interest on short-term borrowings		31		25			111			167
Interest on junior subordinated deferrable interest debentures		963		592			3,457			1,974
Total interest expense		5,147		2,851			17,514			9,444
Net interest income		21,888		16,713			83,517			62,387
Provision for the allowance for loan and lease losses		—		—			—			560
Net interest income after provision for the allowance for loan and lease losses		21,888		16,713			83,517			61,827
Non-interest income:
Service charges and fees on deposit accounts		1,962		1,583			7,763			6,293
Referral and other loan-related fees		1,107		783			3,941			2,914
Loan servicing income		70		67			410			310
Gain on sale of loans, net		—		6			—			185
Revenues from sales of non-deposit investment products		257		199			827			695
Loss on sale of investment securities available-for-sale, net		—		—			(56	)		(3,335	)
Increase in cash surrender value of life insurance		420		291			1,660			1,210
Debit card and merchant discount fees		322		258			1,223			902
Other		213		86			621			1,441
Total non-interest income		4,351		3,273			16,389			10,615
Non-interest expense:
Salaries and employee benefits		7,299		6,633			29,768			25,423
Occupancy and equipment		2,036		1,862			8,066			7,031
Merger		—		(19	)		—			2,300
Other		5,588		4,193			21,204			16,976
Total non-interest expense		14,923		12,669			59,038			51,730
Income before provision for income taxes		11,316		7,317			40,868			20,712
Provision for income taxes		4,431		2,836			16,066			7,693
Net income	$	6,885	$	4,481		$	24,802		$	13,019
Earnings per share:
Basic	$	0.46	$	0.30		$	1.66		$	0.92
Diluted	$	0.45	$	0.30		$	1.63		$	0.90
Weighted average shares outstanding:
Basic		15,008,485		14,790,697			14,943,874			14,123,894
Diluted		15,290,600		15,135,063			15,257,539			14,414,735
Cash dividends declared per share	$	0.12	$	0.05		$	0.48		$	0.05

UNAUDITED CONSOLIDATED AVERAGE BALANCE SHEETS

($ in thousands)

	Three Months Ended December 31,						Twelve Months Ended December 31,
	2005			2004			2005			2004
Average assets:
Loans and leases, held for investment	$	1,358,155		$	1,110,071		$	1,323,467		$	1,021,151
Loans and leases held for sale		—			62			—			215
Investment securities available-for-sale		228,612			146,942			231,650			152,096
Federal funds sold		33,548			127,463			29,721			84,483
Interest bearing deposits with other banks		14			125			97			63
Other earning assets		14,493			9,423			13,170			8,832
Average earning assets		1,634,822			1,394,086			1,598,105			1,266,840
Other assets		245,407			194,979			250,884			194,809
Average total assets	$	1,880,229		$	1,589,065		$	1,848,989		$	1,461,649
Average liabilities and shareholders’ equity:
Average liabilities:
Non-interest bearing deposits	$	510,454		$	451,319		$	498,419		$	409,333
Interest bearing deposits		1,077,912			882,750			1,065,468			803,925
Average deposits		1,588,366			1,334,069			1,563,887			1,213,258
Other interest bearing liabilities		67,064			57,080			66,953			59,211
Other liabilities		19,590			9,991			19,823			13,566
Average liabilities		1,675,020			1,401,140			1,650,663			1,286,035
Average shareholders’ equity		205,209			187,925			198,326			175,614
Average liabilities and shareholders’ equity	$	1,880,229		$	1,589,065		$	1,848,989		$	1,461,649
YIELD ANALYSIS:
Average loans and leases held for investment	$	1,358,155		$	1,110,071		$	1,323,467		$	1,021,151
Yield		7.01	%		6.24	%		6.75	%		6.19	%
Average earning assets	$	1,634,822		$	1,394,086		$	1,598,105		$	1,266,840
Yield		6.56	%		5.58	%		6.32	%		5.67	%
Average interest bearing deposits	$	1,077,912		$	882,750		$	1,065,468		$	803,925
Cost		1.53	%		1.01	%		1.31	%		0.91	%
Average deposits	$	1,588,366		$	1,334,069		$	1,563,887		$	1,213,258
Cost		1.04	%		0.66	%		0.89	%		0.60	%
Average interest bearing liabilities	$	1,144,976		$	939,830		$	1,132,421		$	863,136
Cost		1.78	%		1.21	%		1.55	%		1.09	%
Interest spread		4.78	%		4.37	%		4.77	%		4.58	%
Net interest margin		5.31	%		4.77	%		5.23	%		4.92	%

CREDIT QUALITY MEASURES

loans and leases held for investment, net of deferred fees and costs	0.22	%	0.13	%	0.24	%	0.24	%	0.22	%
Non-performing assets to total assets	0.16	%	0.09	%	0.17	%	0.20	%	0.20	%
Allowance for loan and lease losses to total loans and leases held for investment, net of deferred fees and costs	1.22	%	1.20	%	1.24	%	1.29	%	1.25	%
Allowance for loan and lease losses to non-performing loans and leases	545.67	%	948.36	%	527.20	%	549.51	%	558.81	%
Allowance for loan and lease losses to non-performing assets	545.67	%	948.36	%	527.20	%	452.01	%	455.57	%
Net recoveries/(charge-offs) to average loans and leases held for investment (1)	0.04	%	0.00	%	0.04	%	0.17	%	(0.15	)%

(1) The ratios for interim periods are presented on an annualized basis.

LOANS

($ in thousands)

	Balance at 12/31/05			Balance at 09/30/05			Balance at 06/30/05			Balance at 03/31/05			Balance at 12/31/04
Loans and leases held for investment:
Real estate - mortgage	$	990,362		$	966,523		$	949,131		$	901,956		$	892,136
Real estate - construction		207,078			197,975			183,886			191,834			184,317
Commercial		147,830			153,172			155,938			155,478			167,035
Agricultural		5,779			8,363			7,652			14,539			17,423
Consumer		11,703			10,910			10,950			9,961			11,110
Leases receivable and other		15,431			17,475			20,477			22,784			24,575
Total gross loans and leases held for investment		1,378,183			1,354,418			1,328,034			1,296,552			1,296,596
Less: Allowance for loan and lease losses		(16,714	)		(16,236	)		(16,475	)		(16,738	)		(16,200	)
Deferred loan and lease fees, net		(2,697	)		(2,567	)		(2,172	)		(2,233	)		(2,332	)
Total net loans and leases held for investment	$	1,358,772		$	1,335,615		$	1,309,387		$	1,277,581		$	1,278,064
Total loans and leases held for investment, net of deferred fees and costs	$	1,375,486		$	1,351,851		$	1,325,862		$	1,294,319		$	1,294,264
Percent of gross loans and leases held for investment:
Real estate - mortgage		71.9	%		71.4	%		71.5	%		69.5	%		68.8	%
Real estate - construction		15.0	%		14.6	%		13.9	%		14.8	%		14.2	%
Commercial		10.7	%		11.3	%		11.7	%		12.0	%		12.9	%
Agricultural		0.4	%		0.6	%		0.6	%		1.1	%		1.3	%
Consumer		0.8	%		0.8	%		0.8	%		0.8	%		0.9	%
Leases receivable and other		1.2	%		1.3	%		1.5	%		1.8	%		1.9	%
		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%

DEPOSITS

($ in thousands)

	Balance at 12/31/05			Balance at 09/30/05			Balance at 06/30/05			Balance at 03/31/05			Balance at 12/31/04
Non-interest bearing deposits	$	502,387		$	496,787		$	501,492		$	491,667		$	485,193
Interest bearing deposits:
Interest bearing demand		223,932			248,013			248,653			246,475			256,650
Money market		289,497			292,154			285,149			281,347			262,957
Savings		164,123			173,138			181,797			178,953			179,578
Time, under $100,000		211,029			197,177			196,076			193,325			176,026
Time, $100,000 or more		181,914			168,478			170,012			163,043			139,655
Total interest bearing deposits		1,070,495			1,078,960			1,081,687			1,063,143			1,014,866
Total deposits	$	1,572,882		$	1,575,747		$	1,583,179		$	1,554,810		$	1,500,059
Percent of total deposits:
Non-interest bearing deposits		31.9	%		31.5	%		31.7	%		31.6	%		32.3	%
Interest bearing deposits:
Interest bearing demand		14.2	%		15.7	%		15.7	%		15.9	%		17.1	%
Money market		18.5	%		18.6	%		18.0	%		18.1	%		17.5	%
Savings		10.4	%		11.0	%		11.5	%		11.5	%		12.0	%
Time, under $100,000		13.4	%		12.5	%		12.4	%		12.4	%		11.8	%
Time, $100,000 or more		11.6	%		10.7	%		10.7	%		10.5	%		9.3	%
Total interest bearing deposits		68.1	%		68.5	%		68.3	%		68.4	%		67.7	%
		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%