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Mountain National Bank

Galax, VA · Cert 34198

FDIC

Q3 2006

$240.5MAssets
$138.8MLoans
$223.7MDeposits
$16.2MEquity
Deposit mix
87%Interest-bearing $195.6M13%Noninterest $28.1MQ3 2005Q3 2006

NIM

4.39%Q3 ’044.55%Q3 ’055.29%Q3 ’06-12%+5%

Non-interest income vs. expense

1.63%Q3 ’041.61%Q3 ’051.70%Q3 ’06+1%+7%

Executive Summary

  • Earnings: ROA of 0.65%, up 1 bps year over year; NIM at 2.29%.
  • Asset quality: problem loans at 0.00% of loans (0 bps YoY), with net charge-offs at 0.01%.
  • Funding: loans stand at 62.03% of deposits as of Q3 2006.

Financial Results

Return on Assets (quarter, annualized)

0.65%+1 bps YoY

Net Interest Margin (quarter, annualized)

2.29%+10 bps YoY

Efficiency Ratio (quarter, annualized)

66.47%+106 bps YoY

Tier 1 Leverage Ratio

n/a

Discrete quarter, annualized.

MetricQ3 2005Q4 2005Q1 2006Q2 2006Q3 2006YoY ΔTrend
Earnings
Return on Assets0.65%0.47%0.68%0.74%0.65%+1 bps
Return on Equity9.59%6.90%10.12%10.78%9.62%+4 bps
Net Interest Margin2.19%2.21%2.30%2.45%2.29%+10 bps
Efficiency Ratio65.41%74.00%65.17%64.04%66.47%+106 bps
Non-Interest Burden1.34%1.57%1.40%1.48%1.43%+9 bps
Growth
Asset Growth (YoY)3.12%3.91%3.42%1.80%3.70%+58 bps
Loan Growth (YoY)11.51%16.88%15.56%14.80%12.82%+131 bps
Deposit Growth (YoY)3.04%3.97%3.38%1.70%3.67%+63 bps
Asset Quality
Nonperforming Loans / Loans0.00%0.00%0.00%0.00%0.00%0 bps
Net Charge-Offs / Loans0.05%0.03%0.04%0.01%0.01%-3 bps
Allowance / Loans1.36%1.32%1.27%1.27%1.24%-12 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 Capital13.50%13.25%12.97%13.21%12.97%-53 bps
Equity / Assets6.74%6.75%6.78%6.86%6.74%0 bps
Liquidity & Funding
Loans / Deposits57.00%59.09%61.00%61.84%62.03%+503 bps
Liquid Assets / Assets29.76%31.21%29.34%28.19%28.38%-137 bps
CRE / Total Capitaln/an/an/an/an/an/an/a