To Our Shareholders
2005: An Investment Year Yielded Excellent Results
Tlic ycar 2005 will he remembereci :as at1 extremely good
yc:ir for (:cntral Viilley Coniminity R a n k , lxdi in terms of
financial pcrfmnance arid in tlie internal perfbrmance of
thc lkinlc. Tlic ycar was highlighted h y record earnings and
significxn1 growtli in all ai-cas of tlic Bank and in each of oiir
markets, ;is the 13:inlc cor~iplctccl ils first full ycar of operation
following the iiierger with B m k of Mader:i County. The
Bank acliicvccl d l the lxnefits expected from the iiierger,
nncl found the employees and customers in the M:itler:i :ind
(>akhirst imrkets to he even more otitst:.itiding t h i
cocrlcl lll1ve hoped.
we
A Year Of Substantial Shareholder Value
(:cntral V ~ i l l c y Coniniunity Hancorp (CVCY) stock price
apprcciiitinn performed lxtter t h n most peers, not only in
2005, h i i for ilic pis1 five years as iriclicatccl in ttie chlirt on
page 7 of this report. We Ixlieve t1i:it tht: two-for-one stock
split in October 2005 will eticout.;age greater potcnii:il liquidily
of C V C Y stock ;ind brosdeti its marketaliliiy io invcslors.
While tlie cornrnunity 17ank sector has gt.nct-:illy pci-foriiiccl
well ove~ill, we believe lxinks t1i:it c~e:ite :in cxccption:il
presence in good tixirket ;irexi, hiild fortress \,:il:incc sliccts
iiiid financially outperforr-n their peers, will 1i:ivc hcllcr stock
price performince over tlie long term. Oiir g(.xiI ;incl (lit-cc.1 ion
is to mcci tlicsc: (:rileria h y clclivcring quality perforiimice m d
service through o u r outstanding tc:im of 1i:inkcrs.
A Year Of Significant Branch Activity
Central killey Cormnunity Birtik w:is quite :ic:tive in 2005,
aclcliiig offices in Mader.a and (T):ikhurst through the 13:ink o f
i County r-nerger, :itid reloating the (:levis & TIcrnclon
office irisicle the expsnded Save Mart Siipermwket :it T Tcrndon
& Fowler Avenues in Clovis. Construction wLis c:oiiiplclcd
on ihc new Frcsno Downtown office, which opened oti
Fe1xu:rry .I 3, zOO6. Tn :.i continued cffoi-1 t o further crillarice
our service :ire;i :and cmstonier convcnicncc, we 1i:ivc plannecl
t o relocate two current l x i n c h offi~rs t o 1:irgci- s p
2006, and one new 1 ~ i n c : l i silc h i s hccn [ai-gctccl foi- possible
exp;insion in the c:oming yc:ir.
A Year Of Added Convenience And Safety For Customers
( k i r pursuit for new prochic.ts i o incci tlic fin:incial needs
ind providt? tlwii with int.i-c:isccl privacy
conliniiccl thro~igli 2005. t'riviicy is one of OW highest
priorities and we conliniic LO :icld softw:ii-c iiricl controls to
protect o u r ciislonicrs. Tlircc of tlic year's iiiost noteworthy
new products iiiclcidcd the lacrricli o f Visn 'lkivel Money, Visa
:ind 13usincss Check Card. 'l'he Rank d s o enhanced
Gift C::ircl
custonicr convcnience with Bailkine ( I~~itik-l~y-plione)
:ind
A'l'M/Check Ciirds a1 hwing access lo cllangc pisswords over
tlic phone. Additionslly, Internet Ixinkiiig will be enhanced
and C)CII' web site will he corqdctcly upgraclccl in ZOO(;. 'I'he
Haiilc also ariticip'ites establishing :in inlcrcst in Central Vdky
C:oiniiiiinily Insurance Services, T.T.C. The purpose of this new
cntily is LO iilarkct insui.nnce prochcts and servicu pi-iiilarily
t o Ixisincss ('iisiotiici-s in the :ire3 of employre Ixnefil plans.
A Year Of Local Economic Improvement
I h c overall economy in the Central Willcy inclciding
Sacrnmento w;is generdly very good in %005. Lhernployment
in o u r core service :ire;as fell I,clow dout)lc-cligit nurnbers
for the first time in over two dccadcs, aricl while these
iirieriiployrrierit Kites continue lo r u n liiglicr tllaii the rest
of the state, it is encouraging to scc ~ h c I)cncfils o f aclcled
cniplr7yrnent for the 1oc;iI economy. Tlic driving force 1)ehind
lidfof ilic job gi-owth in 2005 c:in be ;rttrilxitecl to the liealtli
of the construction inchistry, with tlic rciilairicler of the job
growth corning from v:arious o~licr sectors. (>ne ;ire:i t h t has
seen climinishing joh opportuiiilics is the agriculture sector,
clue in part to incre;ased aiitom:ilion. Wllilc the core mlrket
is stjl I very depentfent o n :igriculturc, it is encouraging to
see growth in tiianuf:ic.turing, logistics a i ~ l 1iedtIic:ire along
with the construction indcisli-y. Ihfortunately, the net number
of new cornp:inies in ttie Central Xillcy is not growing at
the s3Ille p;rce 3s other parls of h e statc. 1 lowever, there
conlinuc to hc i i i a n y iriitiiitives ;it work to Ixing signifiunt
iniprovement in tlic qudily o f life xid economic opportunity
for the cor-nrnunities we ~
Iioiiic. o u r t)anlr niid employees
1
;ire c1etiic:ited to helping iinpi-ovc hose areas arid are xtively
c n ~ i g e d in muny of the orpnizaLions nnd efforts t h t re
providing 3 Ixtter life for o u r coiiiiiiunily, our ccistoniers :itxi
our Cornpa ny.
~
1
A Year Of Outstanding Earnings
As riieritinriecl earlier, 2005 w:is ;i rcc( jrtl cat-nings y c a r for
Centt.;il W1t.y (:oiriiiiunity Bank. ' h e 04% increase in nei
consolici;ited income wis acllicvccl frnm the successful
merger with 13:ank of M:iclcr:i C o u n t y 011 Decernber 31, 2004,
i i s well :is orginic growth in lonns nnd deposits througlioul
the h n k , :ind [lie hcnclits of the increasing interest Kate
environment. 1,o:in growth iricrensed 4 /I%, with deposiLs
increxsing 32%. Tlicrc was sigiificxit improvement in the
net interest margin lo 5.460/;, fi-om 4.c)l[?h, nrid control of
noii-interest expcnsc n-ioving the Efficiency liutio to 58.7'fi at
yc:ii--cncl 2005 (cornpiired to 60,2?h for ye;ar-end 2004). Asset
cp:ilily conlinuccl t o bc :I strength for the Cotiipny, with
tion-pcrfoi-r-iiing loans at O.2'?h of gross l o m s ;at ye:ir-end ZOO5.
Also, for tlic sixth y e n r in :i row, the k a n k was recognized
:IS ihc largest SBA 504 lender in Fresno, Kings :ind
Mndcra counties.
2
Investing I n So Muny Ways.
A 26-Year Tradition of Service C Dedication
C:entral Valley Coiiiinunity Bnncorp (the “Conip:iny”) was
est:iblishcd as the holcling coriilxitiy for C:cntral Wlcy
Comrniiinjty 13;ink (tlic “H:inlr”) 011 November .If;, 2000, :ind
is registered ;is ;I Ixink holding conipiiiy with the T~oart of
Governors of the F r d e ~ i l Reserve Systciii. ‘I’lie Co1np:itiy
i.Lirrcntly coiicl cicts 110 opewtion (It I icr thin through
its ownership o f the R a n k . The commim stock of the
Cotiipny tradcs on the NASDAQ stock exdi:ingc ciricler
the syinbol (:V(:Y.
Kernian, Madcr:~, Oakliiirst ;itid 1 )owntown Fr‘resno. Guideel
hy a Iiancls-nn board of directors anel ;I seasoned senior
management ~ c : i n i , tlic Bank continLics t o f(-icus cm custimicr
service ;I n d retentic in wllilc reiii:i ini tig c.oinn-iillccl to the
retention of high-quality ciiiployers.
Competitive Products, State-of-the-Art Convenience
Centt.al Villcy Cnmnunity I h n k iiiairitaiiis statr-of-thc-
iiig and inforimlion systems, :tnd offers a
A History of Growth
Centr:.il Villcy Conirnunity Bank, foiincL:d in 1979 :is
Clovis Cor-nmunity lkink, is a Cdifornia St:itr ch;irtt:red
lxinlr with deposit xuiiints insur-ccl by the f;eder:iI Depijsit
Insurance Corporation. The lkinli coii1iiicnced oper:itjons
on )iiiciary 10, 1980, in Clovis, Chlifornia, with 12 profession:il
I-xinlicrs aricl heginning assets of $2,(U),()()(). Currently, the
I’xitik opemtcs ten full-service offices in Chvis, f;resno,
Kerrn:in, Maclcra, Ckikliurst, Ptxtlicr :ind S:wmieiitc:J, plus
Comincrci:il, 1cC.d Est:W, ST3A :ind Agrilxisincss Leridirig
lkpi-liiicnts. hrestment services :ii-c :ilso provided hy
Ttivtrslnicnt Centers of America. Now will1 over 150 employees
xid ;issets of owi- $483,000,000, Central Valley C:oniiriunity
Bank 1x1s grown inlo :I well-capitalized institution, witli
k recud of fin:incial strength, security ;rnd
slatjility. Yet despite the Ikink’s growth, it l i x rem;iined
true to its original “roots” - :i coiiliilitincIit to the core
values o f integrity, triistwortliincss, caring, loyalty,
lcaclcrship iiricl teamwork.
(:cnlral killey Community 13:inlc distinguishes itself f r i m
other financ:i:il institutions I-7y providing superior client
service ;itid hy rcrriainiilg inclepencirnt sinr.e i)pcning 2h
yexs ;igo. Tn rrccnt yc:irs, the B ~ i k h:is expanded its Liniqcic
tmnd of persimilizccl service hy expanding its ni:irkcts in
the Centr’aI Wley :ind opening new offices in Sac:r:irricnto,
ni c( invcnie lice , perst ,ti :iI
complete line of cniiipetitive husincss ancl persons1 deposit
:.i t i (1 1 (,an pi-( i d ci c t s , or tm axi m i
Ixisincss Intcriict txinking is availa1,lc at www.Cwb.com ai~cl
24-liour Autotii:ilcd ‘I’c.llcr Mxhines ( ATMs) arc avaihble ;it
most Centrnl Yilley Con-iiilunity R ~ i k offices. Additionally,
13:inliLine 24 -hour telepl ii inc h i k i n g is wsi l a l k tc) povide
ccistiiincr xcess to ;icrount inforrnation, deposit :ind
witliclrawal history, interest c:ii-necI or paid, ; m t tlic atiility
ti) transfer checking :itid s:ivings funds via toiic.li-tonc phone.
:I nd
“Relationship Banking” Means Service
The lkink is conimittrd to inc.1-casinlg m c l enhncing
incl services offered to (:ustoiilcrs, while
rccls-tiasccl consulting within tlic hrancti
environment. Serving tioth new :itid long-time customers
COIitiKilieS to IY an irnportant frlctor in the IcpciicIable
valcies a n d secwrity 1i:ivc alwiiys heen imporlanl lo Ariieric
lxirilring customers, :ind tllc Baiik is well-positii)nccl to
pi-oviclc tlieni, with an incrc:lsccl emp1i:isis on privxy,
security xid c[mvenicn(:c. Tlic Bank t k r s protc(:ting the
privwy :mcl security of cxstotiicr inforiirLition very serii)usly,
:is cienionstt-atcd t)y ;I ~ i g e
o f exp:indccl opeixtional security
iiie;isiires. Thcsc iriclcicle specialized softw:irc, procedures :ind
helpfiil i.iistonicr tonls like the 1k.inlc’s identity theft protec.tion
kit. A l l designcd t o give Central v:illcy C:oriiinunity Rank’s
customers iiimirmii~i protectjon and p i c e of mind.
(:t.ntt.;iI Villcy C:ornrminity 13;ink offers investment
srrvic.es priividccl hy licensed reprcscntativrs fro111
c
‘l’liis level of pci-form:.incc would not 1 x pssiblc withoiil a
tcmi of highly prc)fessional :I nd dcelicsttd employees fc,cusccl
c)n provieling supcrjor customer scrvicy. We expect mir
crnployces to 1:x aclvoc~:itcs for o ~ ~ r
custonicrs, ant1 it is :I
role we :ill Lake very serioiisly.
A Year Of Change In The Banking Industry
c c mipetit it )n conti nuccl to i ncrcase in (xir prirnar y m ;irkcts
in 2005, with new slart-up Iianlis ;ind 1,runc.h expansion b y
o~licr comtriuiiity lxiriks. Wliilc the Frcsno :irc:i is growirig in
popcilation, the net nurnber ol‘ new hisinesscs is not growing
:is fast 3s some other regions. Since mist comniunity I-,:inks
focus on Ixsiness ccistomers :IS their pi-iiiiaty t:irget, arc
cxpecl Lliere to he intensc competition for this seclor, nnd
iliis could he reflecteel in pi-cssure o n pricing for the services
wt‘ providc. I iowevcr, we arc riot tr(.)Lihled hy cwripetition,
and txlievc that with (xir strong l o c d presence arid team of
c.oininitted cmployccs, we c:in compctc i~ggrcssively in ~lic
nlarket. We also feel t h s t wc hive positioned ocir IT (i 1 mce
sheet to allow flexibility for the potential interest K i t e trends
in the coming year. We :ii-c optimistic for tlic Company’s
future mcl our aldity to renuin c.ornpetitivt. :inel proviclc the
h s t possihlc products and services fc )r our ci.istmiers, now
and for years l o comr.
A Bright Year Ahead
As we iriove inLo 2000, we are t!ncour+yd b y the t.conomic.
strenglli we set‘ in our niarliets fi)r all of tlic sectors with
wlii~li we work. Liliewisc., tlir Tkinlr’s geographic re:icli
appe:irs LO be strong throughout the Cmtr:il Viilley and
Foothills. We continue to look for opportunilics to strengthen
OCIT presetice in :I prudenl :inel long term :ippmich thai
will allow LIS to grow with our cust(.)nicrs, to enatie c111r
employees to invest in k i r c:;irccrs, :md t o meet I lie needs of
our ~:ornrriutiitics;. If tz‘c clo aJl o f hese things well, wc believe
that you - oiir sllarelioldcrs - will be rewLircled. We thank
you for your c:onficiencc xid support, ;ind we don’t take
ttietn lightly; aficr 311, we Imow you hnvt. riiany opportunities
in which yoti can invest your hncls. We arc energized md
optimistic about ZOO(.), :ind a1xni1 pursuing results we h o w
can he :ichiwecl.
Ci-LZJL -c-;L
!3anicl N . Cunnirig1i;in-1
Clxiirimn of the Board
:ive
Dat
and Dirt
President
Founding
Central
Directur
iiel
xtor.
Dire
Vallt:
and
-
-
-
Central Valley Community Bancor;~ Trend Analysis
tc Knn
Y",.,V"
$1.00
0
2001 2002 2003 2004 2005
v - u w
2001 2002 2003 2004 2005
2001 2002 2008 2004 2005
U
2001 2002 2003 2004 2005
450
400
350
300
250
200
150
100
50
2001 2002 2003 2004 2005
2001 2002 2003 2004 2005
6
creljtion, :is cviclrnc.ccl hy its cx:rtification in SKA’s I-’rrft.rrccl
~ c n d e r Prograin, wliicli a1low.s for r:ipid lo;m i-cspcmse t o
loc::il srnrill 1~usincss ciiston1ci.s tbriiiigliout the Central Vnlley.
(:cntral Millcy (;niiiiiiiinity k i n k hxs lieen recognizccl for
the sixth const:(.utive ye;ir :is twing thc: t o p lencler in the
S r ~ i l l lhsiness A(~niiiiist~itior1 504 1 ( m i prograni in thc
counties it serves. Tlic Bank’s p;irticip;ition in progressive nncl
specializccl lending progr.;ims for siiial I Ixisincsses in :dl :ircx
of the C‘cntr;i I Vdlcy deriionstr:[tes its ongoirig cc:immitriicnt t o
builtling :I stronger, lies Ithici- V:illey eciinoiiiy.
Centr:il Vdlcy (hmiiicinity lhnk lias Ixiilt a 1-elmtation
for supci-ior txinking scrvice hy ofli.iing persoixilized
“relntionsl iil) Ixinking” h r Ixisincsscs, priAwionals m d
indiviclu:ils. Sei-viiig tht: Ixisiness corninunity h:is nlways 1xen
;i priiuary fociis [or (kitwl W l e y Coniinuriity Tbnlc, xicl
the: Ikink continues t o exp:ind its commcrcial Ixinking t c ~ i i
io cnliancr [lie lcvrl o f scrvice t o even inore indiviclu:il id
Imsiiiess ciistoiiicrs, This sector is further served I>y courier
service for Ixisiness mstoiners.
“Communlty”, It’s More Than Just the
Bank’s Middle Name
At Cenrral Valley (:otnniunjty lkinlc, serving ;I communir y
iiicms mire t l i m jus[ 1)ciiig in lmsincss there. bfor-c. than
meeting the: miterial nccels of its people. It me:ins investing
time, tn lent, :incl iwoiirccs Lo niskr :i coiniiiunity :I strong ;ind
satisfying p1:ic.e t o live. That’s ;i role tlic H a n k t:ilics
very srriody.
Which is wliy C e n i ~ i l V~illey (7imiiiiunity Rink supports such
:I wick viiricty ol‘ locxl cIi;irities, agcncics m d pliilnnt1irc~pit:s.
l k i i i i eciwxl ional cxiscs t o clise;isc I-cscarch, tlic :irts t o the
uncleri~i-ivilegecl, :ill :ire lwIpe:(l c:ieli 17e:ir I1y C;cntrril V:illcy
CmimLinity Bank. Atid not o n l y with the lkink’s fimncid
support, licit :ilso witli its peoplc wlio generously volunteer
their tiiiic to servc tlicse import:int c;nises. C:oiiirnunity is
truly iiiore tti:in just the 13:ink’s niiddlr n:iiiic.
Strategic Vlsion
‘I’hrougli the vision of our holeling cc:lmp:.iny, Centr:iI V:illcy
Community B;mcoi-p, and the Ic:iclci.ship o f its 1x)iird o f
clirectots, ~ l i c B m k 11:~s grown consistently w c r the p x t 2h
ye:trs, Irceping p c e with llic tieeds of ils customers :itid its
c~otiiimirdty. Now iiiore t h i cvcr, Centr:il Valley Coniimiriity
1hnk is positionccl to hil fill its niission o f provicling “(:oiiiiii~n
scnsc sc:)lutions” t o its persond und Ixisincss cwtonici-s iili ke.
December 31, 2005 and 2004 (In thousands, except share amounts)
2004
Total shareholders' equity
Total Uahilitics and shareholders' equity
13,055
28.977
6,343
22,933
lnde x Value
410
400
350
300
250
200
150
100
50
7
For the Years Ended December 31, 2005, 2004 and 2003 (In thousands, except share and per share amounts)
(:oi~uiion Stock
Shams
Amount
Hetaincd
Earnings
Accumulated
Other
Total
Cbmprchmsive
Income (loss) Sharehnldcrs' Comprehensive
(Net of Taxes)
Equity
Income
T O d
K:il:rnc.r. J:IIILI:I~Y 1. 2003
5,140, I X i 4
5,854 $
10,387 4
1,858
$
24,O')')
$
-
12,039
185
1,092
754
14,971)
~
.
2,004
2Hh
2 ,E
12,680
12,680
2,215
488
303
500
2s
485
52 1
7,152
1,57h
202
12,355
4,871
1,400
'I, 1 s
.-
0 05
0 (10
2005
2004
200s
INTEREST INCOME:
Inlercst and fer5 cjn IO'lllS
Irrtiicst on Iw1rr.d funds sold
htcrcst , i n d tliviclcnds o n invrrinrcnt sccuritir5
'l'JxLIMc
Exempt troni kclcr.d ~ i i c ~ ) i i i c
I.IXCC
Total interest income
INTEREST EXPENSE:
Inlzrrrf on dcposits (Ni)tc 7)
Ollicr (Note 8 )
e
$
-
~~
-
21,115
702
1,061
1,192
26,070
3,886
253
Total interest expense
'
I D
- -
Net interest i n c o m e before provision f o r credit losscs
21,WI
PROVISION FOR CREDIT LOSSES (NOTE 4)
Net interest incoiiie after provision for credit losses
NON-INTERES1' INCOME:
\ r l v l c e ch.lrgcs
I.oLln placelllznl Ires
A~ppiec t ~ i l t o r i 111 c.ish surrzntlrr VJILIC of h i n k
ownrtl lilc insur:inc r (Notc 13)
N r l rdizcc1 R.i1tw o n S J ~ S
:Ind cdllr
of invesltiirrit remrities ( N i ) l r 3 )
Pcdc~il HOIIW I.nan U,inh \IO( h clividcncis
Rc.nt,il\ 1 1 o i r 1 cquipiiieiil Ir.rsecl
t i ) i ) t l i t I s (Nntc 5)
( ) I l l r l Incnmc
l b t a l lion-interest income
NON-INTEREST EXPENSES:
2,414
300
215
9.2
(18
58 1
15,227
254
2,499
879
10,7<93
1,797
185
1,978
14,821
2,540
330
200
48s
41
38
50s
l o t a l non-interest cxpenses
15,733
~~
13,l l o
-
9.38s
AS44
5 , iy30
1 ,C&
0,044
__
I:
- -
1 03
1) 71
$
- ~-
B
3,hOS
0 04
0 04
$
$
Income before provision for income taxes
PROVISION FOR INLOME TAXES (NOW 9)
Net incoriic
Basic earnings pcr share (Note 11)
13iluted earnings per share (Note 11)
rr
$
$
-
~ ' h c ,iccoiiip.iiiyiiig riotcs .ire ,in tnlegr,d p x t of thr5r (onsnlidatcd tin.inc MI \tLltcincnt\
9
IIFlCA IT CCOIJN'I'WG POLICIES
12
For the Years Ended December 31, 2005, 2004 and 2003 (in thousands)
2005
2004
2003
$
3,572
25,405
1,087
(47,458)
(781
32,000
9,034
(2,000)
45H
50,402
8,181
45,814
5 1,005
-
.
b
( 2 . 0 0 0 )
s
s
2,000
2,/109
s
17.5
$
I ts
s
78
11
2. MERGER OF BANK OF MADERA COUNTY INTO CENTRN
VALLEY COMMIJNI'I'Y BANCOW
14
hccomc vrslrtl
$
$
1.03 $
0.71
S:
0.65
0 . 9 5 9
0 . 6 6 $
0.01
13
4. LOANS AND ALLOWANCE FOR CREPlT LOSSES
$
208,403
9
~. -
200,582
B
2,012 J
2,724
7. DEPOSITS
Dal3Ilcc, cIld of yrsr
$
2 4 , 3 8 9 $
I O8,lu4
56,991
48,070
39011
20,518
89,904
52,571
25,854
j z , 104
___ L
Ajigrrg:ite ;innual iiiaturities of tiriic deposits :irr ;is follows
$
277,385 $
210,951
(in thousands ):
Ye:lr bhcling rkccmbcr 31.
2000:
2007
2 i m
2000
20 10
$
7i1,615
13,002
5'17
2,796
1,021
$
88,581
~
16
Notes to Coxsolidated Financial Statcmmts
" or(
IOh,+j7
15
' 1 ' 1 1 ~ following firuncial instntmcnts 1-rprrsrril ofl-tlalaticc-slicct credit risk:
2005
2004
2003
10.
COMMJTMENTS AND CONTINGENCIES
18
17
20
Fl'l'cct of dilul ivr htock uplii )nx
57 I , L W
585,252
184,072
19
22,105 $
2'),8X)
22,105
29,wr)
$
17,507 $
20,707
17,507
2h,307
Off lxil;r nc~r-slreet linmc.ia1 inslt-iiincnts:
Coni t i 1 il I I iri its to
rxlrrid credit $
Ijj,870 5
13j,H7(? $i 106,561 $
100,501
~i:incll>y 1cmi-s
of c r r d i l
80
SO
1.255
1,255
17. PARENT ONLY CON13ENSED FINANCIAL STATEMENTS
CONDENSED BALANCE SHEET
IJecembrr 31, 2005 axid ZOO4
(111 thC111~:IIlIlh)
ASSE'I'S
- 2 0 0 5 -~
2004
$
1,205 $
42,240
b3')
-~
s
43,093 5
700
j0,26 1
1,257
32.227
22
111
( 1 H i )
B
1,485
21
24
17. PARENT ONLY CONI)ENSEI) FINANCLU STATEMENTS i(:onliiitird)
C:ONI)ENSED S'l'ATEMENT OF INCOME
For the Years Endcd December 31, 2005, 2004 and 2003
i I n tI1olls;l nds)
2005
. -~
100. t
IOOj
I ll~Y~lllc:
Dividends dcchi-rd hy
sulxidiary - t.1 im in:hrtl
i t i ( Y )nw )I itlxl i o n
I
C) t her iiicomc
9
-
1
503
$
-
--4I
2005
9
0.044
458
7
ii> I
700 ~-
$
5
175
5
78
Operations for the year:
2005
2004
2003
2002
2001
Years Ended December 31,
(In thousands, except per sharc amounts)
$
$
14,070
2,29g
1 %.080
14,53(1
2,7W
1 1,808
~. -
12,080
4,540
17,226
12,555
,'t,871
1,490
- .~
~-
1 1,808
4,212
16,020
1 1 ,?8!
4,032
1,248
-
-
Nct income
$
(1,044
$
S,6?5
4
3,372 $
2,784
$
~-
2,578
Balances at end of year:
2005
2004
200.3
2002
2001
neceriiber 31,
(In thousands)
Average balances:
2005
2004
2005
2002
2001
$
175,670 $
274,548
115,0011 $
192,b'iH
407,188
455,080
38,691
414,257
307,455
340,217
28 205
311,456
$
101,222
172,SlO
270, J 50
300,184
25 484
275,846
$
74,111
J46,2h4
2 I L,62?
218,048
22,604
222,067
70,326
1 10,293
183,189
206,522
20,181
182,418
25
RESULTS OF OPERATIONS
NET INCOME
28
27
30
INTEREST INCOME AND EXPENSE ((:oritinuccl)
For The Yrar Ended Deceiiiber 31, 2005
Average
Interest
Rate
For The Year Ended December 31,2004
Average
Balance
Interest
Average
Interest
Rate
ti.
2,192 J
77,734
18,833
06,567
1G,SliI - .
--
115,063
195,187
1 200
311,156 $
(2,565)
56
23,567
2,865
1 0,8<,?
146,217
$
-. .~
S
$
67,090
84,1713
5 7 . ~ 1 ~ 2
2 I ,88+
210,243
7 511
2
217,550
07,LliI
5,218
2S,LUS
$
__ .~
37
2,462
1,271
-3,733
234
4,004
15,227
41
17,272
1 I8
660
550
4(75
1,793
1 HS
1,973
289,758 $
124,175
q,lB
Total average liabilities and sharclioW equity $
455,080
$
346,217
Irltcrcst inconic ; i d i;i1e
cariicd on ;ivri-:igr earning :issets
Intcrcsl expense aiicl intcrcst cos(
related lo ;rvrr:igc interest-bearins 1 i;il!ili1 ies
Net interest income and net intcrcst margin ( 4 )
.-
$
26,752
4,1zc)
6
- --
12,6 1 5
b
$
_
17,272
1,97:2
15,294
_
~
29
NON-INTEREST EXPENSES ( Continued )
$
41%
334
707
110
1 ss
114
81
120
1'12
1%
104
207
123
46
44
100
1,437
$ 365
244
h(7.3
134
1.33
lOS
50
117
12')
147
92
151
105
4 0
65
150
127
I. ,097
$ 4,482
$ 3,021
FINANCIALCONDmON
SlJMMAKY OF CHANGES IN CONSOLLDATEI) HALANCE SHEETS
1jrcrrnt.w 31, zo05, invrstiiimt srcuritirs wilh :r h i r v;iIuc of $27,800,000
werv liclcl :IS r:ollateral for IiLil)lic f u r i d > , treasury, kix, :ind liir otticr
purposes. Our investment policic
1 cst:ildishcd by the Board of
esl mrn fJAssrt Lia I i l i ty Coiiiinitt e?. 1 I
Uirrcton; and implcnimted by our
is desigrud pririiarily I o pr(.)vidc :md nlaintain liquidity. to cridilc L I ~
t o meet
our pledging rcquirciricnts for p i hlic money and borrowing arr:ingcnicnts,
fo gcncrritc a favorable return on investments without incurring undue
ititrrrsl rate and crrdit risk, ;ind to complrnirnl o i i r Imding :rctivitirs.
I <
I hr vtiliitnr o f o u r invrsltnrnt p(ii-tfolio is grnrt-:illy cnwidrrrd highrr
than our peers (hie riic-istly t o o u r relatively Iciw I(-,arr t o deposit d o .
'l'lie t(itxl invrslirirnt IiortTliilici incw:isrtl h.f>'%)
frorri $127,805,000 :*I
M:unagcrncnt pcric-iclically c v a h t c s cach irivcstrncrrt security I'm other
thnn tcmporniy inqxiirmcnt, relying primnrily on industry nnnlyst rcports,
obsew;ition of mirkrt conditions ;ind ititrrrst i-:i tr fl~ictu;itii.ins. M:inagrmrnt
twlirvrs il will tw ;it+
uinIrwtii:+l lei-iiis oI llie iintlrrlying investriiciil sr(.iirilirs :ind Ili:il I t i r inotetl
clccliiic in faii, value is consiclcrccl tctrlprruy :inel due o n l y to intcrcst mtc
f1uctu:itions.
l ( i c,cillrc,l ;ill ;iiiioiin1s tlur ;recording 10 tlir
See Notc .I to the Conip:iny's audited Consolidatcei Financinl Stxcnicnts
o n p1gr 15 for cmying v:ilucs and cstim;itcd friir v:ilucs of o w invcstmcnt
srciii-i 1 i r s po t
folio,
i
LOANS
$
301,802
As o f 1)rcrtnbrt- j I , 2005, ;I concrnlr:rlion of Io;itv rxistrd jn loans
(~iIl:+leralizrtl tiy irr:iI esl:+le (i-ral rskilr, irr:il rsl:ilr C Y
clcvclopincnt and orhcr land Icfiiris. xicI equity lincs
04.2% of tc-if31 Icmis. This lcvcl o f coticcntrxiciii is consistent with
Dcccnihcr .31, 2004 Although inxlagciiic~it I>clicvcs the lo:uns within
this concent~3tirm hnvc no niorc tlxin the tiornxil risk of collcctihility, ~i
substantial decline in tlic pcrformnncc of the economy in gcncrril or a
tlrt.litir in rr;il t.skilt. v:iliirs in Ilir o u t - pritn:iy iii;ii-krt ;it-r;is, in psitjcd;ir,
c:ould tiavc an :itlvrrsc iiriIxic.1 oii c.ollec:tiliiliry, imwxse lie lev
csmtc-rclntccl Iic-)ti-ijcrf(>riiiitig lrxins, or havc nthcr :idvci~sc cff -
;1lonc UT in the :iggrcgarc could 11:ivc :I ni:itc.rid :idvcrsc cffcct on o w
litisinrss, lin:inci:iI c.ontlilion, rrsulls of oprr:ilicins ;rnd wsli flow$.
32
PKC
31
LOANS (Continuctl)
34
Il:lt the
33
9E
- $
35
38
CRITICAL ACCOUNTING POLICTES
37
STOCK PRICE INFORMATION
EXCEPTIONAL EMPLOYEES
Quarter Ended
LOW
High
x
10.25
11.50
I I .oo
11.38
11.25
1 I .Oh
1 I .oo
15.95
39
Our Mission
Bank Oflcers:
. . .
.
.