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Letter portraitLegal landscapeQuarterYTD

Islands Community Bank, National Association

Beaufort, SC · Cert 35437

FDIC

Q3 2006

$76.9MAssets
$62.2MLoans
$68.3MDeposits
$7.0MEquity
Loan mix
69%RE $16.8M29%C&I $7.1M2%Consumer $0.6MQ3 2005Q3 2006
Deposit mix
91%Interest-bearing $62.0M9%Noninterest $6.3MQ3 2005Q3 2006

NIM

5.74%Q3 ’046.97%Q3 ’057.99%Q3 ’06+17%+2%

Non-interest income vs. expense

3.51%Q3 ’043.21%Q3 ’053.42%Q3 ’06-2%+15%

Executive Summary

  • Earnings: ROA of 0.84%, down 19 bps year over year; NIM at 4.59%.
  • Asset quality: problem loans at 0.00% of loans (0 bps YoY), with net charge-offs at 0.03%.
  • Funding: loans stand at 91.03% of deposits as of Q3 2006.

Financial Results

Return on Assets (quarter, annualized)

0.84%-19 bps YoY

Net Interest Margin (quarter, annualized)

4.59%+10 bps YoY

Efficiency Ratio (quarter, annualized)

67.13%+494 bps YoY

Tier 1 Leverage Ratio

n/a

Discrete quarter, annualized.

MetricQ3 2005Q4 2005Q1 2006Q2 2006Q3 2006YoY ΔTrend
Earnings
Return on Assets1.03%0.89%0.78%1.05%0.84%-19 bps
Return on Equity10.99%9.88%8.51%10.78%8.94%-205 bps
Net Interest Margin4.49%4.24%4.15%4.63%4.59%+10 bps
Efficiency Ratio62.19%77.83%68.47%65.73%67.13%+494 bps
Non-Interest Burden2.54%3.14%2.62%2.84%2.92%+38 bps
Growth
Asset Growth (YoY)30.82%38.03%23.58%19.17%26.85%-397 bps
Loan Growth (YoY)36.63%30.96%25.97%24.79%22.03%-1,460 bps
Deposit Growth (YoY)35.60%45.09%25.80%20.01%29.98%-561 bps
Asset Quality
Nonperforming Loans / Loans0.00%0.00%0.00%0.00%0.00%0 bps
Net Charge-Offs / Loans0.15%0.10%0.12%-0.07%0.03%-12 bps
Allowance / Loans1.23%1.25%1.23%1.21%1.27%+4 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 Capital12.07%11.71%12.73%12.41%12.05%-2 bps
Equity / Assets9.30%8.73%9.68%9.83%9.07%-24 bps
Liquidity & Funding
Loans / Deposits96.96%93.01%95.96%101.28%91.03%-593 bps
Liquid Assets / Assets0.00%0.20%0.15%0.15%0.15%+15 bps
CRE / Total Capitaln/an/an/an/an/an/an/a