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Northeast National Bank

Mesquite, TX · Cert 26854

FDIC

Q3 2006

$41.8MAssets
$23.8MLoans
$37.7MDeposits
$3.9MEquity
Loan mix
55%RE $7.2M45%C&I $5.8M0%Consumer $0.0MQ3 2005Q3 2006
Deposit mix
68%Interest-bearing $25.6M32%Noninterest $12.1MQ3 2005Q3 2006

NIM

4.75%Q3 ’045.77%Q3 ’056.75%Q3 ’06+19%+16%

Non-interest income vs. expense

4.85%Q3 ’044.71%Q3 ’054.66%Q3 ’06+4%+4%

Executive Summary

  • Earnings: ROA of 1.39%, up 51 bps year over year; NIM at 4.87%.
  • Asset quality: problem loans at 0.00% of loans (0 bps YoY), with net charge-offs at 0.29%.
  • Funding: loans stand at 63.11% of deposits as of Q3 2006.

Financial Results

Return on Assets (quarter, annualized)

1.39%+51 bps YoY

Net Interest Margin (quarter, annualized)

4.87%+67 bps YoY

Efficiency Ratio (quarter, annualized)

76.84%-766 bps YoY

Tier 1 Leverage Ratio

n/a

Discrete quarter, annualized.

MetricQ3 2005Q4 2005Q1 2006Q2 2006Q3 2006YoY ΔTrend
Earnings
Return on Assets0.88%1.04%1.10%1.37%1.39%+51 bps
Return on Equity11.54%13.12%13.55%16.60%15.97%+443 bps
Net Interest Margin4.20%4.49%4.74%4.93%4.87%+67 bps
Efficiency Ratio84.50%81.89%78.29%76.42%76.84%-766 bps
Non-Interest Burden3.34%3.42%3.43%3.48%3.47%+13 bps
Growth
Asset Growth (YoY)3.26%6.58%-3.13%-2.21%-2.19%-546 bps
Loan Growth (YoY)4.48%4.54%3.42%-12.06%-7.83%-1,231 bps
Deposit Growth (YoY)-4.76%6.63%-6.78%7.13%9.73%+1,449 bps
Asset Quality
Nonperforming Loans / Loans0.00%0.00%0.00%0.00%0.00%0 bps
Net Charge-Offs / Loans-0.02%0.00%-0.05%1.89%0.29%+30 bps
Allowance / Loans1.61%1.62%1.69%1.48%1.38%-23 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 Capital17.98%17.54%18.39%19.15%15.37%-261 bps
Equity / Assets7.91%7.88%8.31%8.21%9.21%+130 bps
Liquidity & Funding
Loans / Deposits75.13%64.07%69.83%58.13%63.11%-1,202 bps
Liquid Assets / Assets0.37%0.80%0.48%0.77%1.34%+97 bps
CRE / Total Capitaln/an/an/an/an/an/an/a