Horizon Financial Earns $1.51 per Diluted Share in Fiscal 2008; Loan Portfolio Grows 13 Percent


BELLINGHAM, Wash., April 24, 2008 (PRIME NEWSWIRE) -- Horizon Financial Corp. (Nasdaq:HRZB) today reported strong loan growth contributed to near record profits in its fiscal year ended March 31, 2008. Horizon reported earnings of $18.4 million, or $1.51 per diluted share, in fiscal 2008, compared to record earnings of $19.0 million, or $1.53 per diluted share, posted a year ago. Fiscal fourth quarter earnings were $3.8 million, or $0.31 per diluted share, compared to $4.9 million, or $0.40 per diluted share for the fourth quarter of fiscal 2007.

Fiscal 2008 Highlights (for the year ended March 31, 2008 compared to March 31, 2007):



 * Deposits grew 7% year-over-year and totaled $1.04 billion at fiscal
   year end.
 * Earnings per share benefited from an active share repurchase
   program.
 * Net loans grew 13% to $1.19 billion from $1.05 billion a year ago.
 * Non-performing assets rose due to two large Snohomish county
   construction projects placed on nonaccrual status.
   -- Non-performing assets were $12.3 million, or 0.88% of total
      assets, up from $951,000 or 0.07% a year ago.
   -- The $2 million provision for loan losses in the fourth quarter
      more than doubled the full year provision to $4.1 million up
      from $1.9 million in fiscal 2007.
   -- Loan loss reserves totaled $19.1 million, or 1.60% of net loans
      receivable compared to $15.9 million, or 1.51% a year ago.
   -- Net charge offs were a modest $875,000, or 0.08% of average
      loans, in fiscal 2008.
 * Tangible book value per share grew 7% to $10.72 from $10.04 a year
   ago.
 * Capital ratios remain strong with equity to assets of 9.22% and
   risk-based capital of 11.02%.

"Our local economy continues to perform better than the national averages on most metrics, although we are well below last year's robust levels," stated V. Lawrence Evans, Chairman. "Housing sales activity ticked up in March and, as a result, the number of months of inventory figures declined in most of our markets. However, inventories remain at elevated levels, so we need to see this increased sales activity continue before we can become more optimistic about the outlook for the housing market."

Non-performing assets grew significantly in the final quarter of our fiscal year. Two lending relationships contributed to the majority of the increase in our non-accrual figures, including a residential developer in Snohomish County with inventory consisting of 17 homes (4 of which are in escrow with sales pending), 8 residential building lots; and one commercial development project for a 7.4 acre site in Monroe, Washington. Horizon charged off over $700,000 in the quarter for these projects and the loan balances on its books are now in line with current market values.

Statewide employment growth continued to be strong with 84,700 jobs added to the resident labor force compared to a year ago. The state's labor force also grew, resulting in higher unemployment levels in March compared to a year ago. Washington statewide unemployment in March increased to 5.3% (seasonally adjusted) from 4.7% a year ago. Bellingham's unemployment was at 5.1%, up from 4.1% last year. Tacoma and Mt. Vernon-Anacortes also rose with unemployment at 5.9% in March compared to 4.7% in both markets a year ago. Snohomish County saw unemployment fall to 4.3% from 4.4%.

Conference Call and Investor Conference Information

Management will host a conference call today, April 24, 2008, at 1:30 pm PDT (4:30 pm EDT) to discuss fourth quarter and fiscal 2008 results. The replay, which will be available for a month beginning shortly after the call concludes, can be heard at (303) 590-3000 using access code 11110237#. In addition, Horizon Financial's management team is scheduled to present at the D.A. Davidson 10th Annual Financial Services Conference on May 7, 2008 at 4:45 p.m. PDT.

Review of Operations

In fiscal 2008, net revenues (net interest income plus non-interest income) increased 4% to $60.6 million from $58.3 million in fiscal 2007. In the fourth quarter of fiscal 2008, net revenues were flat compared to the same period in 2007 at $14.7 million and down slightly from $15.3 million from the immediate prior quarter. Interest income fell 2% in the current quarter and increased 8% for the year, while interest expense increased 2% in the current quarter and 16% for the year.

"With 48% of our loan portfolio tied to prime with rates above any applicable floors, the continuing rate cuts by the Federal Reserve significantly impacted revenues and net interest margin this year," said Rich Jacobson, CEO. "During the quarter ended March 31, 2008, we took the opportunity to reposition some of our higher cost deposits and reduce costs on the liabilities side of the ledger. We accomplished this by calling $29 million in callable brokered CDs which averaged 5.29% and replaced them with CDs with an average rate of 3.29%. Additionally, the reversal of accrued interest on nonperforming loans negatively impacted net interest margin during the quarter. The effect of calling the brokered CDs, combined with the interest income lost from the loans placed on non-accrual, adversely impacted net interest margin by 14 basis points during the quarter and shaved 5 basis points from the full year net interest margin."

In fiscal 2008, the net interest margin was 4.37% compared to 4.73% for fiscal 2007. In fiscal 2008, the yield on interest-earning assets was 8.17% compared to 8.35% in fiscal 2007. For fiscal 2008, the cost of interest-bearing liabilities was 3.93% compared to 3.74% in the year-ago period.

The net interest margin was 3.88% in the fourth quarter of fiscal 2008, a decrease of 52 basis points from the immediate prior quarter and down 75 basis points from the same period a year ago, reflecting the recent significant cuts in short term rates. The yield on earning assets was 7.36% in the fourth quarter of fiscal 2008, a decrease from 8.26% in the preceding quarter and 8.45% in the fourth quarter of fiscal 2007. In the fourth quarter of fiscal 2008, the cost of interest-bearing liabilities was 3.60%, down 40 basis points from the preceding quarter and down 36 basis points from the year ago quarter.

In fiscal 2008, non-interest income grew 21% to $7.0 million from $5.8 million during the comparable period in fiscal 2007. Fourth quarter non-interest income grew 46% to $2.2 million compared to $1.5 million in the fourth quarter of fiscal 2007, boosted by gains from sale of loans and investments. Residential mortgage originations were up 20% for the year, providing a solid contribution to revenues as well as contributing to portfolio growth.

For the full year, operating expense increased 5% to $29.2 million from $27.9 million in fiscal 2007, reflecting branch expansion and overall growth of the franchise. Fourth quarter operating (non-interest) expense fell 4% to $7.1 million from $7.4 million in the fourth quarter of fiscal 2007.

In 2008, Horizon's return on average equity was 14.53% and the return on average assets was 1.37%, compared to 16.11% and 1.57%, respectively, in fiscal 2007. Fourth quarter return on average equity was 11.77% compared to 14.72% in the immediate prior quarter and 16.05% in the fourth quarter of fiscal 2007. Return on average assets was 1.08% in the fourth quarter of fiscal 2008, compared to 1.38% in the preceding quarter and 1.56% in the fourth quarter of fiscal 2007. In fiscal 2008, the efficiency ratio was 48.12% compared to 47.79% in fiscal 2007. The efficiency ratio was 48.21% in the fourth quarter of fiscal 2008 compared to 48.46% in the immediate prior quarter and 50.08% in the fourth quarter of fiscal 2007.

Balance Sheet Review

Total assets grew 10% to $1.39 billion at March 31, 2008 from $1.27 billion at March 31, 2007. Net loans increased 13% to $1.19 billion at the end of March 2008 compared to $1.05 billion a year earlier. The loan mix continues to reflect the business banking focus of the lending team, with commercial real estate loans representing 69% of net loans, commercial loans representing 15%, residential 12%, and consumer 4% of net loans. "We are continuing to shift our focus from construction to commercial lending, to better diversify our loan mix," said Dennis Joines, President and COO.

Non-performing loans (NPLs) were $11.6 million at March 31, 2008 representing 0.97% of net loans receivable and non-performing assets (NPAs) totaled $12.3 million or 0.88% of total assets. For fiscal 2007, NPLs were $226,000, or 0.02% of net loans and NPAs were $951,000, or 0.07% of total assets.

"Despite the addition of $10.6 million to nonperforming status at the end of the year, our asset quality remains slightly better than that of banks our size in the nation. As of December 31, 2007, the SNL index of banks with assets of $1 billion to $5 billions shows NPA/Assets for this group was 0.93% and NPL/loans was 1.04%," said Joines. "Asset quality has always been a primary focus for us, and we are working closely with our borrowers to work through the current challenging environment."

"Regarding the three loans in Pierce County that we discussed last quarter, I am happy to report that the developers have made progress on these projects and the loans are current at this time. We remain cautiously optimistic that these borrowers will be able to maintain their loans in good standing as we move into the summer season," Jacobson added.

In fiscal 2008, the provision for loan losses totaled $4.1 million compared to $1.9 million a year ago. The provision for loan losses was $2.0 million in the fourth quarter of fiscal 2008, $900,000 in the immediate prior quarter, and none in the fourth quarter of fiscal 2007. In fiscal 2008, net charge-offs totaled $875,000, or 0.08% of average loans, compared to $145,000, or 0.01% of average loans at March 31, 2007. Net charge-offs were $777,000 in the fourth quarter of fiscal 2008, $32,000 in the immediate prior quarter of fiscal 2008, and $80,000 in the fourth quarter of fiscal 2007. The reserve for loan losses totaled $19.1 million at March 31, 2008, representing 1.60% of net loans receivable compared to $15.9 million, or 1.51% of net loans receivable at March 31, 2007.

Total deposits increased 7% to $1.04 billion at March 31, 2008, compared to $975 million a year earlier. Transaction accounts decreased 9% to $344 million compared to $380 million a year ago, and time deposits increased 16.6% to $695 million at March 31, 2008, compared to $596 million at March 31, 2007.

At March 31, 2008, Horizon's book value was $10.79 per share compared to $10.11 per share a year earlier, and tangible book value was $10.72 per share at March 31, 2008, up from $10.04 per share a year ago. During fiscal 2008, Horizon repurchased 399,700 shares of its common stock at an average price of $17.62 per share, of which 119,300 was purchased in the fourth quarter at an average price of $13.51 per share.

Horizon Financial Corp. is a $1.4 billion, state-chartered bank holding company headquartered in Bellingham, Washington. Its primary subsidiary, Horizon Bank, is a state-chartered commercial bank that operates 19 full-service offices, four commercial loan centers and four real estate loan centers throughout Whatcom, Skagit, Snohomish and Pierce counties, Washington.

Safe Harbor Statement: Except for the historical information in this news release, the matters described herein are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and are subject to risks and uncertainties that could cause actual results to differ materially. Such risks and uncertainties include: the ability to successfully expand existing relationships, deposit pricing and the ability to gather low-cost deposits, success in new markets and expansion plans, expense management and the efficiency ratio, expanding or maintaining the net interest margin, interest rate risk, loan quality and the loss levels expected on non-performing loans, the local and national economic environment, and other risks and uncertainties discussed from time to time in Horizon Financial's SEC filings. Accordingly, undue reliance should not be placed on forward-looking statements. These forward-looking statements speak only as of the date of this release. Horizon undertakes no obligation to update publicly any forward-looking statements to reflect new information, events or circumstances after the date of this release or to reflect the occurrence of unanticipated events.

Economic data was derived from reports by the Washington State Employment Security Department, Labor Market and Economic Analysis at www.workforceexplorer.com, Marple's Pacific Northwest Letter at www.marples.com, and other real estate data at www.wcrer.wsu.edu and nwrealestate.com.



 CONSOLIDATED STATEMENTS OF INCOME

                  Quarter              Quarter               Quarter
 (unaudited)       Ended      Three     Ended      One        Ended
 (in 000s, except  Mar 31,    Month    Dec 31,     Year      Mar 31,
  share data)       2008      Change     2007     Change      2007
 ---------------------------------------------------------------------
 Interest income:
   Interest
    on loans    $    22,637     -9%  $    24,917     -2%   $    23,160
   Interest
    and
    dividends
    on
    securities          906     -9%          992     -6%           965
                -----------          -----------           -----------
     Total
      interest
      income         23,543     -9%       25,909     -2%        24,125

 Interest expense:
   Interest on
    deposits          9,215     -4%        9,573      2%         9,012
   Interest on
    borrowings        1,914    -25%        2,536      2%         1,883
                -----------          -----------           -----------
     Total
      interest
      expense        11,129     -8%       12,109      2%        10,895
                -----------          -----------           -----------
     Net interest
      income         12,414    -10%       13,800     -6%        13,230

   Provision for
    loan losses       2,000    122%          900    N/A             --
                -----------          -----------           -----------
     Net interest
      income after
      provision
      for loan
      losses         10,414    -19%       12,900    -21%        13,230

 Non-interest income:
   Service fees         909      2%          893     14%           800
   Net gain on
    sales of loans -
    servicing
    released            191     12%          170    -18%           233
   Net gain on
    sales of loans -
    servicing
    retained            158    N/A             1    N/A              1
   Net gain (loss)
    on sales of
    investment
    securities          480    N/A            --    N/A            (29)
   Other                475      5%          452     -6%           503
                -----------          -----------           -----------
     Total non-
      interest
      income          2,213     46%        1,516     47%         1,508

 Non-interest
  expense:
   Compensation
    and employee
    benefits          3,962     -6%        4,205     -6%         4,195
   Building
    occupancy         1,205     -2%        1,232     -1%         1,212
   Other expenses     1,440     -7%        1,554     -7%         1,542
   Data processing      244      4%          234     11%           220
   Advertising          200      2%          197     -6%           212
                -----------          -----------           -----------
     Total non-
      interest
      expense         7,051     -5%        7,422     -4%         7,381

 Income before
  provision
  for income taxes    5,576    -20%        6,994    -24%         7,357
 Provision for
  income taxes        1,804    -21%        2,282    -26%         2,444
                -----------          -----------           -----------
 Net Income     $     3,772    -20%  $     4,712    -23%   $     4,913
                ===========          ===========           ===========

 Earnings per
  share:
   Basic earnings
    per share   $      0.32    -18%  $      0.39    -20%   $      0.40
   Diluted
    earnings
    per share   $      0.31    -21%  $      0.39    -23%   $      0.40

 Weighted average
  shares
  outstanding:
   Basic         11,943,021     -1%   12,064,265     -3%    12,258,580
   Common stock
    equivalents      81,437    -13%       93,200    -33%       121,981
                -----------          -----------           -----------
   Diluted       12,024,458     -1%   12,157,465     -3%    12,380,561
                ===========          ===========           ===========


 CONSOLIDATED STATEMENTS OF INCOME

                                 Twelve Months            Twelve Months
                                     Ended                    Ended
 (unaudited)                        March 31,                March 31,
 (in 000s, except per share data)    2008        Change       2007
 ---------------------------------------------------------------------
 Interest income:
   Interest on loans              $    96,320        9%    $    88,589
   Interest and dividends on
    securities                          3,923       -2%          4,011
                                  -----------              -----------
     Total interest income            100,243        8%         92,600

 Interest expense:
   Interest on deposits                38,073       18%         32,251
   Interest on borrowings               8,572        9%          7,882
                                  -----------              -----------
     Total interest expense            46,645       16%         40,133
                                  -----------              -----------
     Net interest income               53,598        2%         52,467

   Provision for loan losses            4,100      122%          1,850
                                  -----------              -----------
     Net interest income after
      provision for loan losses        49,498       -2%         50,617

 Non-interest income:
   Service fees                         3,601       10%          3,274
   Net gain on sales of loans -
    servicing released                    848        3%            827
   Net gain on sales of loans -
    servicing retained                    176      665%             23
   Net gain (loss) on sales of
    investment securities                 480      N/A             (10)
   Other                                1,939       12%          1,724
                                  -----------              -----------
     Total non-interest income          7,044       21%          5,838

 Non-interest expense:
   Compensation and employee
    benefits                           16,595        2%         16,328
   Building occupancy                   4,698       10%          4,280
   Other expenses                       6,118        8%          5,640
   Data processing                        957       11%            862
   Advertising                            812        8%            751
                                  -----------              -----------
     Total non-interest expense        29,180        5%         27,861

 Income before provision for
  income tax                           27,362       -4%         28,594
 Provision for income tax               8,949       -6%          9,566
                                  -----------              -----------
 Net Income                       $    18,413       -3%    $    19,028
                                  ===========              ===========

 Earnings per share :
   Basic earnings per share       $      1.52       -2%    $      1.55
   Diluted EPS                    $      1.51       -1%    $      1.53

 Weighted average shares
  outstanding:
   Basic                           12,097,615       -2%     12,287,805
   Common stock equivalents            99,168      -18%        121,287
                                  -----------              -----------
   Diluted                         12,196,783       -2%     12,409,092
                                  ===========              ===========

 CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
 (unaudited) (in 000s, except share data)

                             Three                One
                 March 31,   Month       Dec 31,  Year       March 31,
                   2008      Change      2007     Change        2007
 ----------------------------------------------------------------------
 Assets:                                                  
  Cash                                                    
   and due                                                
   from banks  $     22,412   -10%   $    24,807   -45%    $   40,833
  Interest-                                               
   bearing                                                
   deposits           2,912     5%         2,785   -46%         5,379
  Investment                                              
   securities-                                            
   available                                              
   for sale          41,241   -14%        47,981   -22%        52,865
  Investment                                              
   securities-                                            
   held to                                                
   maturity              --     0%            --  -100%           370
  Mortgage-                                               
   backed                                                 
   securities-                                            
   available                                              
   for sale          39,100    21%        32,404    49%        26,233
  Mortgage-                                               
   backed                                                 
   securities-                                            
   held to                                                
   maturity              30   -36%            47   -80%           148
  Federal Home                                            
   Loan Bank                                              
   stock              8,867    22%         7,247    22%         7,247
  Loans held                                              
   for sale           2,644     3%         2,561   -41%         4,493
  Gross loans                                             
   receivable     1,210,592     0%     1,208,529    13%     1,070,759
  Reserve for                                             
   loan losses      (19,114)    7%       (17,891)   20%       (15,889)
               ------------          -----------           ----------
  Net loans                                               
   receivable     1,191,478     0%     1,190,638    13%     1,054,870
  Investment                                              
   in real                                                
   estate                                                 
   in a joint                                             
   venture           17,567     1%        17,475     2%        17,169
  Accrued                                                 
   interest                                               
   and                                                    
   dividends                                              
   receivable         7,916     0%         7,881    19%         6,626
  Property                                                
   and                                                    
   equipment,                                             
   net               27,778    -1%        28,127     1%        27,631
  Net                                                     
   deferred                                               
   income tax                                             
   assets             6,253    44%         4,351    68%         3,733
  Income tax                                              
   receivable            --  -100%         1,279     0%            --
  Other real                                              
   estate 
   owned                655     0%           655   -10%           725
  Other assets       23,325     1%        23,077     6%        22,005
               ------------          -----------           ----------
    Total                                                 
     assets    $  1,392,178     0%   $ 1,391,315    10%    $1,270,327
               ============          ===========           ==========
                                                          
 Liabilities:                                             
  Deposits     $  1,038,792     3%   $ 1,009,940     7%    $  975,295
  Other                                                   
   borrowed                                               
   funds            192,343   -14%       222,555    39%       138,715
  Borrowing                                               
   related                                                
   to                                                     
   investment                                             
   in real                                                
   estate in                                              
   a joint                                                
   venture           22,448     2%        21,947    11%        20,243
  Accounts                                                
   payable and                                            
   other                                                  
   liabilities        5,746   -15%         6,757   -40%         9,508
  Advances by                                             
   borrowers for                                          
   taxes and                                              
   insurance            414    93%           215    -9%           454
  Deferred                                                
   compensation       1,944    -1%         1,963    -4%         2,020
  Income tax                                              
   payable            2,174   N/A             --   817%           237
               ------------          -----------           ----------
    Total                                                 
    lia-                                                  
    bilities   $  1,263,861     0%   $ 1,263,377    10%    $1,146,472
                                                          
 Stockholders'                                            
  equity:                                                 
  Serial                                                  
   preferred                                              
   stock,                                                 
   $1.00 par                                              
   value;                                                 
   10,000,000                                             
   shares                                                 
   authorized;                                            
   none issued                                            
   or outstanding        --                   --                   --
  Common stock,                                           
   $1.00 par                                              
   value;                                                 
   30,000,000                                             
   shares                                                 
   authorized;                                            
   11,892,208,                                            
   11,998,978,                                            
   and                                                    
   12,254,476                                             
   shares                                                 
   outstanding $     11,892    -1%   $    11,999    -3%    $   12,254
  Additional                                              
   paid-in                                                
   capital           50,597     0%        50,839    -2%        51,489
  Retained                                                
   earnings          63,906     2%        62,709    13%        56,770
  Accumulated                                             
   other                                                  
   comprehensive                                          
   income             1,922   -20%         2,391   -42%         3,342
               ------------          -----------           ----------
    Total                                                 
     stock-                                               
     holders'                                             
     equity         128,317     0%       127,938     4%       123,855
               ------------          -----------           ----------
    Total                                                 
     liabilities                                                    
     and                                                  
     stock-
     holders'                                                  
     equity     $ 1,392,178     0%   $ 1,391,315    10%    $1,270,327
                ===========          ===========           ==========
                                                          
 Intangible                                               
  assets:                                                 
   Goodwill     $       545     0%   $       545     0%   $       545
   Mortgage                                              
    servicing                                            
    asset               254    12%           227     2%           250
               ------------          -----------           ----------
   Total                                                 
    intangible                                                 
    assets      $       799     3%   $       772     1%   $       795
                ===========          ===========           ==========
 



 LOANS
 (unaudited)(in 000s)
                 March 31,            Dec 31,            March 31,
                   2008               2007                2007
 --------------------------------------------------------------------
 1-4 Mortgage    
  1-4 Family     
   residential   $ 165,824          $ 164,933          $ 149,885
  1-4 Family     
   construction     35,303             36,584             28,576
  Participations        
   sold            (54,269)           (49,105)           (54,592)
                ----------         ----------         ----------
 Subtotal          146,858            152,412            123,869
                 
 Construction    
  and land       
  development      486,535            477,908            405,348
 Multi 
  family    
  residential       45,049             45,415             52,727
 Commercial      
  real estate      300,109            312,669            292,212
 Commercial      
  loans            177,685            168,120            146,265
 Home equity     
  secured           47,351             44,267             45,307
 Other           
  consumer       
  loans              7,005              7,738              5,031
                ----------         ----------         ----------
 Subtotal        1,063,734          1,056,117            946,890
                ----------         ----------         ----------
 Subtotal        1,210,592          1,208,529          1,070,759
 Less:           
  Reserve        
  for loan       
  losses          (19,114)           (17,891)           (15,889)
                ----------         ----------         ----------
 Net             
  loans          
  receivable    $1,191,478         $1,190,638         $1,054,870
                ==========         ==========         ==========
                 
 Net             
  residential    
  loans         $  145,565   12%   $  151,151   13%      122,839   12%
 Net             
  commercial     
  loans            174,263   15%      165,077   14%      143,604   13%
 Net             
  commercial     
  real estate    
  loans            818,215   69%      823,257   69%      738,861   70%
 Net consumer    
  loans             53,435    4%       51,153    4%       49,566    5%
                ---------------    ---------------    ---------------
                $1,191,478  100%   $1,190,638  100%   $1,054,870  100%
                ===============    ===============    ===============
 

 DEPOSITS
 (unaudited)(in 000s)
               March 31,            Dec 31,            March 31,
                  2008                2007                2007
 ---------------------------------------------------------------------
 Demand 
  Deposits
   Savings    $   17,933     2%   $   18,880     2%   $   21,628     2%
   Checking       72,434     7%       71,300     7%       78,294     8%
   Checking -
    non interest
    bearing       70,438     7%       81,747     8%       91,703    10%
   Money 
    market       183,063    17%      186,402    18%      187,912    19%
              ----------------    ----------------    ----------------
 Subtotal        343,868    33%      358,329    35%      379,537    39%

 Certificates
  of Deposit
   Under
   $100,000      286,657    27%      280,276    28%      273,022    28%
   $100,000
   and above     287,281    28%      273,437    27%      243,346    25%
   Brokered
    Certificates
    of Deposit   120,986    12%       97,898    10%       79,390     8%
              ----------------    ----------------    ----------------
 Total 
  Certificates 
  of
  Deposit        694,924    67%      651,611    65%      595,758    61%
              ----------------    ----------------    ----------------

 Total        $1,038,792   100%   $1,009,940   100%   $  975,295   100%
              ================    ================    ================


 WEIGHTED AVERAGE INTEREST RATES:
  (unaudited) 
                                                    Twelve    Twelve
                      Quarter    Quarter  Quarter   Months    Months
                       Ended      Ended     Ended    Ended     Ended
                      March 31,  Dec 31,  March 31, March 31, March 31,
                        2008      2007      2007      2008      2007
 ---------------------------------------------------------------------
 Yield on loans         7.60%     8.55%     8.79%     8.47%     8.71%
 Yield on 
  investments           4.16%     4.47%     4.36%     4.39%     4.36%
                        -----     -----     -----     -----     -----
   Yield on interest
    earning assets      7.36%     8.26%     8.45%     8.17%     8.35%

 Cost of deposits       3.61%     3.88%     3.82%     3.83%     3.56%
 Cost of borrowings     3.56%     4.52%     4.80%     4.44%     4.74%
                        -----     -----     -----     -----     -----
   Cost of 
    interest-bearing 
    liabilities         3.60%     4.00%     3.96%     3.93%     3.74%

 
 AVERAGE BALANCES
 (unaudited) (in 000s) 
                                                  Twelve      Twelve
             Quarter     Quarter      Quarter     Months      Months
              Ended       Ended        Ended      Ended       Ended
             March 31,   Dec 31,     March 31,   March 31,   March 31,
               2008        2007        2007        2008        2007
 ---------------------------------------------------------------------
  Loans     $1,192,023  $1,165,555  $1,053,947  $1,137,051  $1,017,461
  Investments   87,138      88,687      88,532      89,324      91,955
            ----------  ----------  ----------  ----------  ----------
   Total
    interest-
    earning
    assets   1,279,161   1,254,242   1,142,479   1,226,375   1,109,416


  Deposits   1,020,979     987,250     942,906     992,866     906,047
  Borrowings   214,973     224,558     156,840     193,272     166,276
            ----------  ----------  ----------  ----------  ----------
   Total
    interest-
    bearing
    liabili-
    ties    $1,235,952  $1,211,808  $1,099,746  $1,186,138  $1,072,323

 Average
  assets    $1,391,746  $1,368,723  $1,262,266  $1,340,698  $1,213,048
 Average
  stock-
  holders'
  equity    $  128,128  $  128,002  $  122,477  $  126,762  $  118,105


 CONSOLIDATED
 FINANCIAL RATIOS
  (unaudited)
                                                   Twelve     Twelve
               Quarter     Quarter     Quarter     Months     Months
                Ended       Ended       Ended      Ended      Ended
               March 31,   Dec 31,     March 31,   March 31,  March 31,
                 2008       2007        2007        2008       2007
 ---------------------------------------------------------------------
 Return on
  average
  assets         1.08%      1.38%       1.56%       1.37%      1.57%
 Return on
  average
  equity        11.77%     14.72%      16.05%      14.53%     16.11%
 Efficiency
  ratio         48.21%     48.46%      50.08%      48.12%     47.79%
 Net
  interest
  spread         3.76%      4.27%       4.48%       4.24%      4.60%
 Net 
  interest
  margin         3.88%      4.40%       4.63%       4.37%      4.73%
 Equity-
  to-assets 
  ratio          9.22%      9.20%       9.75%
 Equity-to
  -deposits
  ratio         12.35%     12.67%      12.70%
 Book 
  value
  per share   $ 10.79    $ 10.66     $ 10.11
 Tangible
  book 
  value
  per share   $ 10.72    $ 10.60     $ 10.04


 RESERVE FOR
 LOAN LOSSES  
 (unaudited)(dollars in 000s)
                                                   Twelve      Twelve
              Quarter      Quarter    Quarter      Months      Months
               Ended        Ended      Ended       Ended       Ended
              March 31,    Dec 31,    March 31,   March 31,   March 31,
                2008        2007        2007        2008        2007
 ---------------------------------------------------------------------
 Balance 
  at
  beginning
  of period  $ 17,891    $ 17,023    $ 15,969    $ 15,889    $ 14,184
 Provision
  for loan
  losses        2,000         900          --       4,100       1,850
 Charge 
  offs -
  net of
  recoveries     (777)        (32)        (80)       (875)       (145)
            ----------  ----------  ----------  ----------  ----------
 Balance 
  at end 
  of
  period     $ 19,114    $ 17,891    $ 15,889    $ 19,114    $ 15,889
 Reserves/
  Loans
  Receivable     1.60%       1.50%       1.51%



 NON-PERFORMING ASSETS
 (unaudited)(dollars in 000s)

               March 31,     Dec 31,   March 31,
                  2008        2007       2007
 -----------------------------------------------
 Accruing
  loans -
  90 days
  past due       $  --       $  --       $  --
 Non-
  accrual
  loans         11,608         990         226
 Restructured
  loans             --          --          --
            ----------  ----------  ----------
 Total 
  non-
  performing
  loans       $ 11,608      $  990      $  226
 Total 
  non-
  performing
  loans/
  net
  loans           0.97%       0.08%       0.02%
 Real estate
  owned       $    655      $  655      $  725
            ----------  ----------  ----------
 Total 
  non-
  performing
  assets      $ 12,263     $ 1,645      $  951
 Total
  non-
  performing
  assets/
  total
  assets          0.88%       0.12%       0.07%


            

Contact Data