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Valley State Bank

Lamar, CO · Cert 10412

FDIC

Q2 2006

$99.1MAssets
$73.9MLoans
$82.4MDeposits
$8.8MEquity
Loan mix
69%RE $24.5M30%C&I $10.7M1%Consumer $0.4MQ2 2005Q2 2006
Deposit mix
88%Interest-bearing $72.7M12%Noninterest $9.7MQ2 2005Q2 2006

NIM

5.77%Q2 ’046.01%Q2 ’056.92%Q2 ’06-2%+9%

Non-interest income vs. expense

2.76%Q2 ’042.39%Q2 ’052.32%Q2 ’06-21%+6%

Executive Summary

  • Earnings: ROA of 2.10%, up 24 bps year over year; NIM at 4.46%.
  • Asset quality: problem loans at 0.00% of loans (0 bps YoY), with net charge-offs at 5.71%.
  • Funding: loans stand at 89.72% of deposits as of Q2 2006.

Financial Results

Return on Assets (quarter, annualized)

2.10%+24 bps YoY

Net Interest Margin (quarter, annualized)

4.46%+35 bps YoY

Efficiency Ratio (quarter, annualized)

47.44%-306 bps YoY

Tier 1 Leverage Ratio

n/a

Discrete quarter, annualized.

MetricQ2 2005Q3 2005Q4 2005Q1 2006Q2 2006YoY ΔTrend
Earnings
Return on Assets1.86%2.26%-0.95%2.13%2.10%+24 bps
Return on Equity16.34%20.04%-8.33%18.06%19.98%+365 bps
Net Interest Margin4.11%4.35%4.13%4.30%4.46%+35 bps
Efficiency Ratio50.50%45.95%110.09%51.10%47.44%-306 bps
Non-Interest Burden1.78%1.62%4.60%1.72%1.89%+11 bps
Growth
Asset Growth (YoY)-1.47%0.08%-3.36%-3.63%-2.05%-58 bps
Loan Growth (YoY)5.36%1.89%-2.04%-2.43%-1.02%-639 bps
Deposit Growth (YoY)-2.60%-1.45%0.71%3.95%4.57%+717 bps
Asset Quality
Nonperforming Loans / Loans0.00%0.00%0.00%0.00%0.00%0 bps
Net Charge-Offs / Loans0.26%0.12%3.63%-0.03%5.71%+546 bps
Allowance / Loans2.99%3.06%2.41%2.63%1.31%-168 bps
Allowance Coverage of NPLsn/an/an/an/an/an/an/a
Capital
Tier 1 Leverage Ration/an/an/an/an/an/an/a
Total Risk-Based Capital16.42%16.74%16.87%17.92%13.36%-305 bps
Equity / Assets11.16%11.38%11.39%12.18%8.89%-227 bps
Liquidity & Funding
Loans / Deposits94.79%95.98%90.78%88.93%89.72%-507 bps
Liquid Assets / Assets0.08%0.05%0.23%0.12%0.10%+2 bps
CRE / Total Capitaln/an/an/an/an/an/an/a