Atlanta’s population grew 36.7% in the 1990s from 3.0 million in 1990 to 4.1 million in 2000. In addition to this population growth, employment in Atlanta increased 22.4% during the same period. According to a February 2006 report issued by Georgia State University, Atlanta is projected to create approximately 117,000 new jobs in 2006 through 2008. The median home value in Atlanta was $171,346 in 2004. The number of Atlanta’s total housing starts, as reported by the aforementioned Georgia State University report, decreased by 3.1% in 2005 and is projected to continue to decrease by 9.9% in 2006 and by 6.1% in 2007. The median year of construction is 1956 for housing structures in the Atlanta “central city,” 1987 for owned housing units and 1980 for rented housing units in the Atlanta Metropolitan Statistical Area (MSA).

Chicago’s population grew 12.2% in the 1990s from 7.4 million in 1990 to 8.3 million in 2000. The median home value in Chicago was $147,742 as of 1999. According to Crain’s Chicago Business Journal, housing starts in the Chicago MSA increased slightly in 2005 and are expected to remain stable in 2006. The median year of construction for housing units is 1964 in the Chicago MSA and 1947 in the Chicago “central city.”

Tampa’s population grew 14.3% in the 1990s, from 2.1 million in 1990 to 2.4 million in 2000. Similar to Atlanta, employment increased in Tampa by 26.7% during the same period with the creation of 32,400 new jobs in 2005. According to the Bureau of Labor Statistics, the creation of new jobs in Tampa is projected to increase by an additional 23.3% through 2015. The median home value in Tampa was $81,500 in 2000, housing starts in Tampa decreased by approximately 13% from 1999 to 2003 and the median year of construction for housing units is 1973.

Fayetteville’s population grew 10.3% in the 1990s from 274,566 in 1990 to 302,963 in 2000. Employment increased by 17.4% during the same period and by 4.8% between 2000 and 2005. Fayetteville is a diverse economy, with 22.9% of its firms minority-owned and 31.3% of its firms women-owned in 2000.

The Company makes both non-owner occupied and owner occupied commercial mortgage loans to finance the purchase of real property. Non-owner occupied 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. As a general practice, the Company requires its non-owner occupied commercial mortgage loans to be collateralized by well-managed income-producing property with adequate margins and to be guaranteed by responsible parties.

Residential real estate loans are generally made on the basis of the borrower’s ability to repay the loan from his or her employment and other income and are secured by residential real estate, the value of which is reasonably ascertainable.

The commercial and industrial portion of the Company’s portfolio consists of commercial loans to business ventures, credit lines for working capital and short-term seasonal or inventory financing and letters of credit. Commercial borrowers typically secure their loans with assets of their businesses, personal guaranties of their principals and occasionally 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. In these cases, any repossessed collateral for a defaulted consumer loan may not provide an adequate source of repayment for the outstanding loan balance.

The Company also provides some specialized lending services to its customers in its market areas.

Interest expense was $4.4 million for the three months ended March 31, 2006 and $2.2 million for the three months ended March 31, 2005, an increase of $2.2 million, or 101%.

Net interest income was $5.6 million for the three months ended March 31, 2006 and $3.8 million for the three months ended March 31, 2005, an increase of $1.8 million, or 45.5%.

Net income was $4.5 million for the three months ended March 31, 2006 and $1.1 million for the three months ended March 31, 2005, an increase of $3.4 million, or 310.8%.