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Letter portraitLegal landscapeQuarterYTD

Bank of the Southwest

Tempe, AZ · Cert 34952

FDIC

Q1 2006

$63.7MAssets
$50.6MLoans
$51.4MDeposits
$12.2MEquity
Deposit mix
59%Interest-bearing $30.1M41%Noninterest $21.3MQ1 2005Q1 2006

NIM

5.02%Q1 ’045.39%Q1 ’056.36%Q1 ’06+23%+17%

Non-interest income vs. expense

3.37%Q1 ’043.64%Q1 ’054.64%Q1 ’06+7%+30%

Executive Summary

  • Earnings: ROA of 0.53%, down 38 bps year over year; NIM at 5.07%.
  • Asset quality: problem loans at 0.00% of loans (0 bps YoY), with net recoveries of 0.02%.
  • Funding: loans stand at 98.38% of deposits as of Q1 2006.

Financial Results

Return on Assets (YTD, annualized)

0.53%-38 bps YoY

Net Interest Margin (YTD, annualized)

5.07%+75 bps YoY

Efficiency Ratio (YTD, annualized)

88.54%+830 bps YoY

Tier 1 Leverage Ratio

n/a

Year to date, annualized, through each quarter.

MetricQ1 2005Q2 2005Q3 2005Q4 2005Q1 2006YoY ΔTrend
Earnings
Return on Assets0.90%0.99%0.96%1.69%0.53%-38 bps
Return on Equity7.26%7.53%7.01%11.89%2.94%-432 bps
Net Interest Margin4.32%4.40%4.63%4.77%5.07%+75 bps
Efficiency Ratio80.24%77.54%78.56%76.80%88.54%+830 bps
Non-Interest Burden3.42%3.37%3.60%3.62%4.47%+104 bps
Growth
Asset Growth (YoY)-11.16%-7.83%-9.16%-15.33%-14.95%-379 bps
Loan Growth (YoY)-12.60%-17.96%-15.62%-11.86%-19.16%-656 bps
Deposit Growth (YoY)-17.33%-12.64%-13.72%-21.47%-19.29%-196 bps
Asset Quality
Nonperforming Loans / Loans0.00%0.00%0.00%0.00%0.00%0 bps
Net Charge-Offs / Loans0.13%0.10%0.03%0.08%-0.02%-15 bps
Allowance / Loans1.52%1.61%1.68%1.33%1.50%-2 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 Capital17.31%18.48%18.54%19.48%20.66%+335 bps
Equity / Assets14.68%14.46%15.19%16.93%19.11%+443 bps
Liquidity & Funding
Loans / Deposits98.21%88.58%90.50%95.21%98.38%+16 bps
Liquid Assets / Assets0.14%0.14%0.14%0.15%0.00%-14 bps
CRE / Total Capitaln/an/an/an/an/an/an/a