The Company originates loans primarily secured by single and multi-family real estate, residential construction and owner-occupied commercial buildings. In addition, the Company makes loans to small and medium-sized commercial businesses, as well as to consumers for a variety of purposes.

The Company’s commercial lease portfolio includes leases made by its leasing companies, Kenesaw Leasing and J&S Leasing. Kenesaw Leasing leases new and used equipment, fixtures and furnishings to owner-managed businesses, while J&S Leasing leases forklifts, heavy equipment and other machinery to owner-managed businesses primarily in the trucking and construction industries.

The Company’s commercial leases are underwritten on the basis of the value of the underlying leased property as well as the basis of the commercial lessee’s ability to service the lease.

The Company’s commercial loan portfolio includes loans to smaller business ventures, credit lines for working capital and short-term seasonal or inventory financing, as well as letters of credit that are generally secured by collateral other than real estate. Commercial borrowers typically secure their loans with assets of the business, personal guaranties of their principals and often mortgages on the principals’ personal residences.

The Company makes a variety of loans to individuals for personal, family and household purposes, including secured and unsecured installment and term loans. Consumer loans entail greater risk than other loans, particularly in the case of consumer loans that are unsecured or secured by depreciating assets such as automobiles.

The Company also makes construction and development loans to residential and, to a lesser extent, commercial contractors and developers located within its market areas. Construction loans generally are secured by first liens on real estate and have floating interest rates. Construction loans involve additional risks attributable to the fact that loan funds are advanced upon the security of a project under construction, and the value of the project is dependent on its successful completion.

The Company makes commercial mortgage loans to finance the purchase of real property as well as loans to smaller business ventures, credit lines for working capital and short-term seasonal or inventory financing, including letters of credit, that are also secured by real estate. Commercial mortgage lending typically involves higher loan principal amounts, and the repayment of loans is dependent, in large part, on sufficient income from the properties collateralizing the loans to cover operating expenses and debt service.

The Company offers a range of products and services, including 24-hour internet banking, direct deposit, traveler’s checks, safe deposit boxes, United States savings bonds and automatic account transfers.

The provision for loan losses charged to operations during the three months ended March 31, 2005 was $1.1 million compared to $675.0 thousand in the same period of 2004.

Noninterest income totaled $1.7 million for the three months ended March 31, 2005, an increase of $357.0 thousand, or 27.3%, from the same period in 2004.

Noninterest expense for the three months ended March 31, 2005 increased $1.7 million, or 27.9%, to $8.0 million compared to $6.2 million for the same period in 2004.

Income tax expense was $493.0 thousand for the three months ended March 31, 2005 compared to $223.0 thousand for the same period in 2004.