The Houston economy is strong, diverse and growing, and benefits from large energy and healthcare industries. Houston is also the home for more than 76,000 small businesses. Southwest Florida continues its rapid economic growth supported by a strong increase in population and expanded service-related and healthcare industries.

The Houston-Sugar Land-Baytown MSA had a population of approximately 5.6 million people in 2006 and was ranked 6th in the nation in terms of size. The Houston-Sugar Land-Baytown MSA had a median household income of approximately $56,000 in 2006, which was 8% higher than the national median. The MSA also has access to approximately $98 billion in deposits. Often called the world’s energy capital, Houston is also home to one of the world’s largest healthcare complexes, the nation’s largest port in volume of foreign tonnage and 24 companies on the 2006 Fortune 500 list. In addition, Houston boasts a significant and growing number of legal and accounting professionals.

The Naples-Marco Island MSA had a population of approximately 325,000 in 2006 and continues to grow rapidly. The Naples-Marco Island MSA is one of the wealthiest in the nation, having a median household income of approximately $59,000 in 2006, which was 15% higher than the national median. The Naples-Marco Island MSA has approximately $11 billion in deposits.

In addition to commercial loans, the Company originates commercial real estate mortgage loans to finance the purchase of real property, which generally consists of real estate with completed structures. Commercial real estate lending typically involves higher loan principal amounts and the repayment of these loans is dependent, in large part, on sufficient income from the properties securing the loans to cover operating expenses and debt service.

The Company’s lending activities also include the origination of first and second lien residential real estate loans. The Company offers a variety of mortgage loan products which generally are amortized over 15 to 30 years. The Company originates second mortgage loans through a network of brokers, primarily in the Houston, Dallas and Austin, Texas markets and, to a lesser extent, the Denver, Colorado market.

The Company makes loans to finance the construction of residential properties. The Company also makes construction loans to custom high-end home builders who operate in the markets where its clients are located, and to a limited extent, to finance commercial properties.

The Company provides a variety of consumer loans, including automobile loans, personal loans and lines of credit (secured and unsecured) and deposit account collateralized loans. The terms of these loans typically range from 12 to 120 months and vary based upon the nature of the collateral and size of the loan.

The Company’s primary sources of funds for use in its lending and investing activities consist of deposits, maturities and principal and interest payments on loans and securities and other borrowings.

Deposits are the principal source of the Company’s funds for use in lending and for other general business purposes. The Company provides checking, savings, money market accounts, time deposits ranging from 90 days to five years and individual retirement accounts. For businesses, the Company provides a range of cash management products and services.

Noninterest income increased $5.7 million, or 19.6%, to $35.1 million for the year ended December 31, 2006 compared with $29.3 million for the year ended December 31, 2005.

Noninterest expense increased $4.8 million, or 10.6%, to $50.3 million for the year ended December 31, 2006 compared with $45.5 million for 2005.