Year-to-date net income was $475,000 compared to $625,000 a year ago, a decrease of $150,000. The decrease was attributable to increase in net interest income and non-interest income of $961,000 and $82,000, respectively; offset by an increase in non-interest expense of $850,000 and a decrease in income tax benefits and loan loss provision of $426,000 and $63,000, respectively. The increase in non-interest expense was related to increases in business development, personnel, and data processing expenses. Income tax benefit was decreased to reflect decrease in net interest margin. Operating income before loan loss provision, stock options and income tax benefits was $682,000 compared to $489,000 a year ago, an increase of $193,000 or 39%.

There was one non-performing C&I loan for $25,000 at September 30, 2008. The ratio of non-performing loans to total loans was less than 0.02%.

The following are some of the balance sheet highlights at September 30, 2008.

• Total assets increased 22% to $165,410,000 at September 30, 2008 from $135,350,000 a year ago
• Total Investments also increased by 39% to $16,244,000 from $11,653,000 last year.
• Total loans outstanding increased to $140,307,000 at September 30, 2008 compared to $110,697,000 at September 30, 2007.
• Allowance for loan losses was $1,804,000 versus $1,341,000 a year ago.
• Total deposits increased 16% to $133,070,000 from $114,109,000 at September 30, 2007.

Highlights of results of operations for the period ended September 30, 2008 include the following:

• Year-to-date net interest income was $4,497,000 compared to $3,537,000 for the same period a year ago, an increase of 27%.
• Year-to-date non-interest income was $243,000 compared to $161,000 a year ago.
• Total non-interest expense as of September 30, 2008 climbed to $4,059,000 compared to $3,209,000 for the nine months ended 2007, an increase of 26%.
• Year-to-date net interest margin decreased to 3.87% from 4.13% a year ago due to series of decreases in WSJ Prime Rates in 2008.

Mr. Brian H. Kelley, Chief Executive Officer, commented, “These are obviously challenging times for our national economy as we grapple with a credit crunch largely attributable to falling housing prices, rising default rates and a global financial meltdown. Happily, as a small business bank, we have largely been spared the problems endured by bigger banks with their lending concentrations in the areas of Subprime housing, construction and subdivision development. Our loan portfolio is fundamentally sound, the bank remains well capitalized and we are still actively looking to expand our client base.” In looking forward to the coming year, Kelley stated: “In times such as these, we often see increased opportunities for well-run companies and banks such as ours to increase market share. Where others might be overwhelmed by challenges and problems, we see greater opportunities for growth and innovation.”