EXHIBIT 13.1

INTEGRITY BANCSHARES, INC.
AND SUBSIDIARY

CONSOLIDATED FINANCIAL REPORT

DECEMBER 31, 2006

INTEGRITY BANCSHARES, INC.
AND SUBSIDIARY

CONSOLIDATED FINANCIAL REPORT
DECEMBER 31, 2006

TABLE OF CONTENTS

		Page
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM			1
FINANCIAL STATEMENTS
Consolidated balance sheets			2
Consolidated statements of income			3
Consolidated statements of comprehensive income			4
Consolidated statements of stockholders’ equity			5
Consolidated statements of cash flows			6
Notes to consolidated financial statements			7-33

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors
Integrity Bancshares, Inc.
Alpharetta, Georgia

          We have audited the consolidated balance sheets of Integrity Bancshares, Inc. and subsidiary as of December 31, 2006 and 2005, and the related consolidated statements of income, comprehensive income, stockholders’ equity and cash flows for each of the three years in the period ended December 31, 2006. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

          We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

          In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Integrity Bancshares, Inc. and subsidiary as of December 31, 2006 and 2005, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2006, in conformity with U.S. generally accepted accounting principles.

          We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the effectiveness of Integrity Bancshares, Inc. and subsidiary’s internal control over financial reporting as of December 31, 2006, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) and our report dated March 12, 2007 expressed an unqualified opinion on management’s assessment of the effectiveness of Integrity Bancshares, Inc. and subsidiary’s internal control over financial reporting and an unqualified opinion on the effectiveness of Integrity Bancshares, Inc. and subsidiary’s internal control over financial reporting.

/s/ MAULDIN & JENKINS, LLC

Atlanta, Georgia
March 12, 2007

INTEGRITY BANCSHARES, INC.
AND SUBSIDIARY

CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 2006 AND 2005

		2006				2005
Assets
Cash and due from banks		$	5,718,668			$	5,068,295
Interest-bearing deposits in banks			85,515				66,786
Federal funds sold			—				6,243,000
Securities available for sale			133,923,121				74,109,900
Restricted equity securities, at cost			1,727,100				889,300
Loans			941,579,864				651,778,460
Less allowance for loan losses			9,824,866				5,612,162
Loans, net			931,754,998				646,166,298
Premises and equipment			15,372,097				11,864,983
Bank owned life insurance			20,686,796				—
Other assets			15,553,029				8,666,516
Total assets		$	1,124,821,324			$	753,075,078
Liabilities and Stockholders’ Equity
Liabilities:
Deposits:
Noninterest-bearing		$	20,146,126			$	13,046,167
Interest-bearing			908,640,657				661,397,590
Total deposits			928,786,783				674,443,757
Federal funds purchased			1,551,000				—
Other borrowings			50,000,000				—
Subordinated long-term debentures			52,022,000				6,186,000
Other liabilities			12,089,477				6,326,137
Total liabilities			1,044,449,260				686,955,894
Commitments and contingencies
Stockholders’ equity:
Common stock, no par value, 50,000,000 shares authorized; 14,764,538 and 14,361,542 shares issued, respectively			60,723,092				56,991,897
Retained earnings			20,280,356				10,143,755
Accumulated other comprehensive loss			(631,384	)			(1,016,468	)
Total stockholders’ equity			80,372,064				66,119,184
Total liabilities and stockholders’ equity		$	1,124,821,324			$	753,075,078

See Notes to Consolidated Financial Statements.

INTEGRITY BANCSHARES, INC.
AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF INCOME
YEARS ENDED DECEMBER 31, 2006, 2005 AND 2004

		2006				2005				2004
Interest income:
Loans, including fees		$	74,371,120			$	41,379,076			$	20,830,692
Securities			4,943,988				2,709,786				1,593,333
Federal funds sold			316,305				62,170				27,906
Deposits in banks			3,343				5,015				3,700
Total interest income			79,634,756				44,156,047				22,455,631
Interest expense:
Deposits			37,233,791				17,293,051				6,943,923
Federal funds purchased and other borrowings			3,900,660				1,391,202				627,188
Total interest expense			41,134,451				18,684,253				7,571,111
Net interest income			38,500,305				25,471,794				14,884,520
Provision for loan losses			4,323,396				3,566,212				2,627,348
Net interest income after provision for loan losses			34,176,909				21,905,582				12,257,172
Other income:
Service charges on deposit accounts			79,186				61,009				54,781
Income from bank owned life insurance			686,796				—				—
Other operating income			501,652				509,719				397,385
Total other income			1,267,634				570,728				452,166
Other expenses:
Salaries and employee benefits			10,733,253				7,214,234				4,581,670
Equipment and occupancy expenses			2,346,768				1,530,606				937,537
Other operating expenses			6,307,846				3,720,845				2,402,075
Total other expenses			19,387,867				12,465,685				7,921,282
Income before income taxes			16,056,676				10,010,625				4,788,056
Income taxes			5,920,075				3,688,273				1,775,674
Net income		$	10,136,601			$	6,322,352			$	3,012,382
Basic earnings per share		$	0.69			$	0.45			$	0.28
Diluted earnings per share		$	0.66			$	0.42			$	0.26

See Notes to Consolidated Financial Statements.

INTEGRITY BANCSHARES, INC.
AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
YEARS ENDED DECEMBER 31, 2006, 2005 AND 2004

		2006				2005				2004
Net income		$	10,136,601			$	6,322,352			$	3,012,382
Other comprehensive income (loss):
Unrealized gains (losses) on securities available-for-sale:
Net unrealized holding gains (losses) arising during period, net of (tax) benefits of ($232,846), $479,730, and $155,280, respectively			385,084				(817,720	)			(261,694	)
Comprehensive income		$	10,521,685			$	5,504,632			$	2,750,688

See Notes to Consolidated Financial Statements.

INTEGRITY BANCSHARES, INC.
AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
YEARS ENDED DECEMBER 31, 2006, 2005 AND 2004

														Accumulated
		Common Stock												Other				Total
						Amount				Retained				Comprehensive				Stockholders’
		Shares				Paid-in				Earnings				Income (Loss)				Equity
Balance, December 31, 2003			2,744,157			$	19,020,303			$	809,021			$	62,946			$	19,892,270
Net income			—				—				3,012,382				—				3,012,382
Issuance of common stock			1,512,935				20,309,609				—				—				20,309,609
Stock compensation expense			—				602,259				—				—				602,259
3-for-2 common stock split			2,128,546				—				—				—				—
Other comprehensive loss			—				—				—				(261,694	)			(261,694	)
Balance, December 31, 2004			6,385,638				39,932,171				3,821,403				(198,748	)			43,554,826
Net income			—				—				6,322,352				—				6,322,352
Issuance of common stock			795,133				15,744,996				—				—				15,744,996
Stock compensation expense			—				1,159,512				—				—				1,159,512
Tax benefit from exercise of stock options			—				155,218				—				—				155,218
2-for-1 common stock split			7,180,771				—				—				—				—
Other comprehensive loss			—				—				—				(817,720	)			(817,720	)
Balance, December 31, 2005			14,361,542				56,991,897				10,143,755				(1,016,468	)			66,119,184
Net income			—				—				10,136,601				—				10,136,601
Issuance of common stock			402,996				1,260,491				—				—				1,260,491
Stock compensation expense			—				1,557,357				—				—				1,557,357
Tax benefit from exercise of stock options			—				913,347				—				—				913,347
Other comprehensive income			—				—				—				385,084				385,084
Balance, December 31, 2006			14,764,538			$	60,723,092			$	20,280,356			$	(631,384	)		$	80,372,064

See Notes to Consolidated Financial Statements.

INTEGRITY BANCSHARES, INC.
AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 2006, 2005 AND 2004

		2006				2005				2004
OPERATING ACTIVITIES
Net income		$	10,136,601			$	6,322,352			$	3,012,382
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, accretion and amortization			783,080				571,115				429,654
Provision for loan losses			4,323,396				3,566,212				2,627,348
Stock compensation			1,557,357				1,159,512				602,259
Deferred income taxes			(2,056,451	)			(1,321,872	)			(531,655	)
Increase in interest receivable			(2,858,859	)			(2,114,063	)			(842,526	)
Increase in interest payable			5,775,878				1,239,945				940,688
Excess tax benefits from exercise of options			(913,347	)			(155,218	)			—
Increase (decrease) in income taxes payable			976,437				1,016,244				(1,701,759	)
Income from bank owned life insurance			(686,796	)			—				—
(Gain) loss on sale of other real estate			120,715				—				(190,024	)
Gain on sale of premises and equipment			(354,400	)			(412,500	)			(147,923	)
Net other operating activities			(3,729,617	)			671,956				436,326
Net cash provided by operating activities			13,073,994				10,543,683				4,634,770
INVESTING ACTIVITIES
Net (increase) decrease in interest-bearing deposits in banks			(18,729	)			221,176				(174,008	)
Net decrease (increase) in federal funds sold			6,243,000				(6,243,000	)			2,439,000
Proceeds from maturities of securities available-for-sale			15,257,774				14,650,628				15,283,233
Purchases of securities available-for-sale			(74,438,353	)			(41,944,145	)			(36,425,538	)
(Purchases) redemptions of restricted equity securities			(837,800	)			343,300				(582,600	)
Purchase of bank owned life insurance			(20,000,000	)			—				—
Net increase in loans			(289,912,095	)			(267,259,858	)			(152,033,595	)
Proceeds from sale of other real estate			1,329,225				—				2,693,669
Proceeds from sale of premises and equipment			—				—				4,996,500
Purchase of premises and equipment			(3,950,507	)			(4,155,702	)			(2,333,013	)
Net cash used in investing activities			(366,327,485	)			(304,387,601	)			(166,136,352	)
FINANCING ACTIVITIES
Net increase in deposits			254,343,026				301,171,506				141,494,529
Net increase (decrease) in federal funds purchased			1,551,000				(4,279,000	)			(5,721,000	)
Net increase in long-term debentures			45,836,000				—				—
Net proceeds (repayments) from other borrowings			50,000,000				(15,000,000	)			5,000,000
Proceeds from exercise of stock options			1,260,491				595,427				—
Excess tax benefits from exercise of options			913,347				155,218				—
Net proceeds from sale of common stock			—				14,994,351				20,309,609
Net cash provided by financing activities			353,903,864				297,637,502				161,083,138
Net increase (decrease) in cash and due from banks			650,373				3,793,584				(418,444	)
Cash and due from banks at beginning of year			5,068,295				1,274,711				1,693,155
Cash and due from banks at end of year		$	5,718,668			$	5,068,295			$	1,274,711
SUPPLEMENTAL DISCLOSURE
Cash paid for:
Interest		$	35,358,573			$	17,444,308			$	6,630,423
Income taxes		$	8,501,455			$	4,149,119			$	4,009,088
NONCASH TRANSACTIONS
Other real estate acquired in settlement of loans		$	2,535,027			$	—			$	—

See Notes to Consolidated Financial Statements.

INTEGRITY BANCSHARES, INC.
AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1.		SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 Nature of Business

Integrity Bancshares, Inc. (the “Company”) is a bank holding company whose principal activity is the ownership and management of its wholly-owned subsidiary, Integrity Bank (the “Bank”). The Bank is a commercial bank located in Alpharetta, Fulton County, Georgia with additional full service branches located in Roswell, Smyrna, and Duluth, Georgia. The Bank also has two loan production offices located in Buford and Cumming, Georgia. The Bank provides a full range of banking services in its primary market area of Fulton County and the surrounding counties of the north metro Atlanta area. These services include providing loans to customers in our primary service area who may have credit needs outside of this area. The Bank occasionally purchases loan participations from local and non-local banks resulting in loans collateralized by properties not located in our primary service area.

 Basis of Presentation and Accounting Estimates

The consolidated financial statements include the accounts of the Company and its subsidiary. Significant intercompany transactions and balances have been eliminated in consolidation.

In preparing the consolidated financial statements in accordance with accounting principles generally accepted in the United States of America, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities as of the balance sheet date and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Material estimates that are particularly susceptible to significant change in the near term relate to the determination of the allowance for loan losses, the valuation of foreclosed real estate, deferred taxes, stock compensation costs, and contingent assets and liabilities. The determination of the adequacy of the allowance for loan losses is based on estimates that are susceptible to significant changes in the economic environment and market conditions. In connection with the determination of the estimated losses on loans and the valuation of foreclosed real estate, management obtains independent appraisals for significant collateral.

 Cash, Due From Banks and Cash Flows

For purposes of reporting cash flows, cash and due from banks includes cash on hand, cash items in process of collection and amounts due from banks. Cash flows from loans, interest-bearing deposits in banks, federal funds purchased and sold, deposits, securities sold under repurchase agreements and other borrowings are reported net.

The Bank is required to maintain reserve balances in cash or on deposit with the Federal Reserve Bank, based on a percentage of deposits. The total of those reserve balances was approximately $209,000 and $305,000 at December 31, 2006 and 2005, respectively.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1.		SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

 Securities

Securities are classified as available for sale and recorded at fair value with unrealized gains and losses excluded from earnings and reported in other comprehensive loss, net of the related deferred tax effect. Equity securities, including restricted equity securities without a readily determinable fair value, are reported at cost.

The amortization of premiums and accretion of discounts are recognized in interest income using the interest method over the life of the securities. Realized gains and losses, determined on the basis of the cost of specific securities sold, are included in earnings on the settlement date. Declines in the fair value of securities below their cost that are deemed to be other than temporary are reflected in earnings as realized losses. In estimating other-than-temporary impairment losses, management considers (1) the length of time and the extent to which the fair value has been less than cost, (2) the financial condition and near-term prospects of the issuer, and (3) the intent and ability of the Company to retain its investment in the issuer for a period of time sufficient to allow for any anticipated recovery in fair value.

 Loans

Loans are reported at their outstanding principal balances less net deferred fees and the allowance for loan losses. Interest income is accrued on the outstanding principal balance.

Nonrefundable loan fees and loan origination costs on loans are deferred and amortized over the estimated life of the loans using the straight-line method.

The accrual of interest on loans is discontinued when, in management’s opinion, the borrower may be unable to meet payments as they become due, unless the loan is well-secured. All interest accrued but not collected for loans that are placed on nonaccrual or charged off is reversed against interest income, unless management believes that the accrued interest is recoverable through the liquidation of collateral. Interest income on nonaccrual loans is recognized on the cost-recovery method, until the loans are returned to accrual status. Loans are returned to accrual status when all the principal and interest amounts are brought current and future payments are reasonably assured.

A loan is considered impaired when it is probable, based on current information and events, the Company will be unable to collect all principal and interest payments due in accordance with the contractual terms of the loan agreement. Impaired loans are measured by either the present value of expected future cash flows discounted at the loan’s effective interest rate, the loan’s obtainable market price, or the fair value of the collateral if the loan is collateral dependent. The amount of impairment, if any, and any subsequent changes are included in the allowance for loan losses. Interest on accruing impaired loans is recognized as long as such loans do not meet the criteria for nonaccrual status.

The Company sells and purchases participations in certain loans to unrelated financial institutions. Any gain or loss is determined and recognized at the time the sale or purchase is consummated. The amount of gain or loss recognized on the sale or purchase of a specific loan is equal to the percentage resulting from determining the fair value of the portion of the loan sold or purchased relative to the fair value of the entire loan. The Company recognized no gains or losses on the sale or purchase of participations, nor did it recognize servicing right assets or liabilities as of and for the years ended December 31, 2006 or 2005, respectively, because the servicing fees received or paid approximate adequate compensation.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1.		SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

 Allowance for Loan Losses

The allowance for loan losses is established through a provision for loan losses charged to expense. Loan losses are charged against the allowance when management believes the collectibility of the principal is unlikely. Subsequent recoveries, if any, are credited to the allowance.

The allowance is an amount that management believes will be adequate to absorb estimated losses relating to specifically identified loans, as well as probable credit losses inherent in the balance of the loan portfolio, based on an evaluation of the collectibility of existing loans and prior loss experience. This evaluation also takes into consideration such factors as changes in the nature and volume of the loan portfolio, overall portfolio quality, review of specific problem loans, concentrations and current economic conditions that may affect the borrower’s ability to pay. This evaluation does not include the effects of expected losses on specific loans or groups of loans that are related to future events or expected changes in economic conditions. While management uses the best information available to make its evaluation, future adjustments to the allowance may be necessary if there are any significant changes in economic conditions. In addition, regulatory agencies, as an integral part of their examination process, periodically review the Company’s allowance for loan losses, and may require the Company to make additions to the allowance based on their judgment about information available to them at the time of their examinations.

The allowance consists of specific, general and unallocated components. The specific component relates to loans that are classified as either doubtful, substandard or special mention. For such loans that are also classified as impaired, an allowance is established when the discounted cash flows (or collateral value or observable market price) of the impaired loan is lower than the carrying value of that loan. The general component covers non-classified loans and is based on historical experience adjusted for qualitative factors. An unallocated component is maintained to cover uncertainties that could affect management’s estimate of probable losses. The unallocated component of the allowance reflects the margin of imprecision inherent in the underlying assumptions used in the methodologies for estimating specific and general losses in the portfolio.

 Premises and Equipment

Land is carried at cost. Premises and equipment are carried at cost less accumulated depreciation. Depreciation is computed by the straight-line method over the following estimated useful lives of the assets.

		Buildings		40 years
		Equipment		3-7 years

 Other Real Estate Owned

Other real estate owned represents properties acquired through or in lieu of loan foreclosure and is initially recorded at the lower of cost or fair value less estimated costs to sell. Any write-down to fair value at the time of transfer to other real estate owned is charged to the allowance for loan losses. Costs of improvements are capitalized, whereas costs relating to holding other real estate owned and subsequent adjustments to the value are expensed. The Company had $541,893 of other real estate owned at December 31, 2006 and none at December 31, 2005.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1.		SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

 Income Taxes

Deferred income tax assets and liabilities are determined using the balance sheet method. Under this method, the net deferred tax asset or liability is determined based on the tax effects of the temporary differences between the book and tax bases of the various balance sheet assets and liabilities and gives current recognition to changes in tax rates and laws.

 Earnings Per Share

Basic earnings per share are computed by dividing net income by the weighted average number of shares of common stock outstanding. Diluted earnings per share are computed by dividing net income by the sum of the weighted-average number of shares of common stock outstanding and potential common shares. Potential common shares consist of stock options.

 Stock-Based Compensation

The Company has two stock-based employee compensation plans, which are described more fully in Note 8. Prior to January 1, 2006, the Company accounted for those plans under the recognition and measurement principles of APB Opinion No. 25, Accounting for Stock Issued to Employees, and related Interpretations. For fixed stock options, no stock-based employee compensation cost was reflected in net income, as all fixed options granted under those plans had an exercise price equal to the market value of the underlying stock on the date of grant. For variable stock options, stock-based compensation amounted to $1,159,512 and $602,259 for the years ended December 31, 2005 and 2004, respectively.

Effective January 1, 2006, the Company adopted SFAS No. 123 (revised 2004), entitled Share-Based Payment (“SFAS No. 123R”) using the modified-prospective-transition method. Under that transition method, compensation cost recognized in 2006 includes compensation cost for all share-based payments granted prior to but not vested as of January 1, 2006, based on the grant date fair value estimated in accordance with the original provisions of SFAS No. 123 and compensation cost for all share-based payments granted subsequent to January 1, 2006, based on the grant-date fair value estimated in accordance with the provisions of SFAS No. 123R. Results for prior periods have not been restated.

As a result of adopting SFAS 123R on January 1, 2006, the Company’s income before income taxes and net income for the year ended December 31, 2006, were $2.3 million and $1.4 million lower, respectively, than if it had continued to account for share-based compensation under the provisions of APB Opinion No. 25. Basic and diluted earnings per share for the year ended December 31, 2006 would have been $0.85 and $0.81, respectively, if the Company had not adopted SFAS 123R, compared to reported basic and diluted earnings per share of $0.69 and $0.66, respectively.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1.		SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

The following table illustrates the effect on net income and earnings per share if the Company had applied the fair value recognition provisions of FASB Statement No. 123, Accounting for Stock-Based Compensation, to stock-based employee compensation, in all periods presented.

		Years Ended December 31,
		2005				2004
Net income, as reported		$	6,322,352			$	3,012,382
Stock-based employee compensation expense included in net income, net of tax			(39,719	)			230,673
Pro forma net income		$	6,282,633			$	3,243,055
Earnings per share:
Basic — as reported		$	0.45			$	0.28
Basic — pro forma		$	0.45			$	0.30
Diluted — as reported		$	0.42			$	0.26
Diluted — pro forma		$	0.42			$	0.28

Prior to the adoption of Statement 123(R), the Company would have presented all tax benefits of deductions resulting from the exercise of stock options as operating cash flows in the statement of cash flows. Statement 123(R) requires the cash flows resulting from the tax benefits resulting from tax deductions in excess of the compensation cost recognized for those options (excess tax benefits) to be classified as financing cash flows.

 Comprehensive Income

Accounting principles generally require that recognized revenue, expenses, gains and losses be included in net income. Although certain changes in assets and liabilities, such as unrealized gains and losses on available-for-sale securities, are reported as a separate component of the equity section of the balance sheet, such items, along with net income, are components of comprehensive income.

 Reclassification of Certain Expenses

Certain expenses on the statements of income for the years ended December 31, 2005 and 2004, have been reclassified, with no effect on net income or earnings per common share, to be consistent with the classifications adopted for the year ended December 31, 2006.

 Recent Developments

Accounting Changes and Error Corrections

In May 2005, the FASB issued SFAS 154, Accounting Changes and Error Corrections, a Replacement of APB Opinion 20 and FASB Statement 3. SFAS 154 amends the existing guidance and applies to the accounting for and reporting of a change in accounting principle. Additionally, SFAS 154 applies to changes required by accounting pronouncements when the pronouncement does not include explicit transition provisions. SFAS 154 is effective for accounting changes and error corrections made in fiscal years beginning after December 15, 2005. Accordingly, on January 1, 2006, the Company adopted the provisions of SFAS 154. The adoption of this standard did not have an impact on the financial condition or the results of operations of the Company.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Accounting for Servicing of Financial Assets

In March 2006, the FASB issued SFAS 156, Accounting for Servicing of Financial Assets — an amendment of FASB Statement 140. SFAS 156 amends SFAS 140, Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities, with respect to the initial recognition and subsequent accounting for separately recognized servicing assets and servicing liabilities. This Statement is effective as of the beginning of an entity’s first fiscal year that begins after September 15, 2006, with early adoption allowed. The adoption of this standard is not expected to have a material impact on the financial condition or the results of operations of the Company.

Accounting for Uncertainty in Income Taxes

In June 2006, the FASB issued FASB Interpretation 48 (“FIN 48”), Accounting for Uncertainty in Income Taxes — an interpretation of FASB Statement 109. This interpretation clarifies the accounting for uncertainty in income taxes recognized in an entity’s financial statements in accordance with FASB Statement 109, Accounting for Income Taxes. FIN 48 prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. FIN 48 also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. The provisions of FIN 48 are effective for fiscal years beginning after December 15, 2006, with early adoption allowed. The adoption of this interpretation is not expected to have a material impact on the financial condition or the results of operations of the Company.

Fair Value Measurements

In September 2006, the FASB issued SFAS 157, Fair Value Measurements. SFAS 157 defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles and expands disclosures about fair value measurements. SFAS 157 applies to existing accounting pronouncements that require or permit fair value measurements in which FASB had previously concluded fair value is the most relevant measurement attribute. Accordingly, SFAS 157 does not require any new fair value measurements. SFAS 157 is effective for financial statements issued for fiscal years beginning after November 15, 2007, with early adoption encouraged. Management does not believe the adoption of this standard will have a material impact on the financial condition or the results of operations of the Company.

Considering the Effects of Misstatements

In September 2006, the SEC issued Staff Accounting Bulletin (“SAB”) 108, Financial Statements — Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements. SAB 108 provides guidance on the consideration of prior year misstatements in determining whether the current year’s financial statements are materially misstated. In providing this guidance, SAB 108 allows two alternatives, the “iron curtain” or the “rollover” method, in quantifying a current year misstatement for purposes of determining materiality. The iron curtain method focuses on how the current year’s balance sheet would be affected in correcting misstatements without considering the year in which the misstatement originated. The rollover method focuses on the amount of the misstatements that originated in the current year’s income statement. SAB 108 indicates that companies should quantify the impact of correcting all misstatements, including both the carryover and reversing effects of prior year misstatements, on the current year financial statements. SAB 108 is effective for fiscal years ending after November 15, 2006. The adoption of this standard did not have a material impact on the financial condition or the results of operations of the Company.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 2.		SECURITIES AVAILABLE FOR SALE

The amortized cost and fair value of securities available for sale are summarized as follows:

						Gross				Gross
		Amortized				Unrealized				Unrealized				Fair
		Cost				Gains				Losses				Value
December 31, 2006:
Equity securities		$	1,712,000			$	—			$	—			$	1,712,000
Government sponsored agencies			18,995,102				119,288				(34,350	)			19,080,040
Mortgage-backed securities			114,210,987				191,349				(1,271,255	)			113,131,081
		$	134,918,089			$	310,637			$	(1,305,605	)		$	133,923,121
December 31, 2005:
Equity securities		$	876,000			$	—			$	—			$	876,000
Mortgage-backed securities			74,846,798				27,040				(1,639,938	)			73,233,900
		$	75,722,798			$	27,040			$	(1,639,938	)		$	74,109,900

The amortized cost and fair value of debt securities as of December 31, 2006 by contractual maturity are shown below. Actual maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations with or without call or prepayment penalties.

		Amortized				Fair
		Cost				Value
Due from one to five years		$	18,995,102			$	19,080,040
Mortgage-backed securities		$	114,210,987			$	113,131,081
		$	133,206,089			$	132,211,121

The market value of securities is based on quoted market values and is significantly affected by the interest rate environment.

At December 31, 2006, all unrealized losses in the securities portfolio were for debt securities. From the December 31, 2006 tables above, 51 out of 79 securities purchased from Government sponsored agencies, including mortgage-backed securities, contained unrealized losses. The amortized cost and fair value of these securities at December 31, 2006 was $78,529,615 and $77,224,010, respectively. At December 31, 2006, 9 of the 51 securities with unrealized losses have been in a continuous unrealized loss position for less than twelve months, and 42 securities with unrealized losses have been in a continuous unrealized loss position for more than 12 months. These unrealized losses are considered temporary because of acceptable investment grades on each security and the repayment sources of principal and interest are government backed.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 2.		SECURITIES AVAILABLE FOR SALE (Continued)

The following table shows the gross unrealized losses and fair value of securities, aggregated by category and length of time that securities have been in a continuous unrealized loss position at December 31, 2006 and 2005.

		Less Than 12 Months								12 Months or More								Total
		Fair				Unrealized				Fair				Unrealized				Fair				Unrealized
		Value				Losses				Value				Losses				Value				Losses
December 31, 2006
Government sponsored agencies		$	4,965,650			$	(34,350	)		$	—			$	—			$	4,965,650			$	(34,350	)
Mortgage-backed securities			20,273,163				(41,818	)			51,985,197				(1,229,437	)			72,258,360				(1,271,255	)
Total		$	25,238,813			$	(76,168	)		$	51,985,197			$	(1,229,437	)		$	77,224,010			$	(1,305,605	)
December 31, 2005
Mortgage-backed securities		$	43,274,798			$	(853,476	)		$	22,009,964			$	(786,462	)		$	65,284,762			$	(1,639,938	)

Securities with a carrying value of $55,143,196 and $5,401,855 at December 31, 2006 and 2005, respectively, were pledged to secure public deposits and for other purposes required or permitted by law.

The Company had no gains or losses on sales of securities for the years ended December 31, 2006, 2005, or 2004.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 3.		LOANS

The composition of loans is summarized as follows:

		December 31,
		2006				2005
Commercial		$	47,802,843			$	46,295,635
Real estate — construction			658,970,814				384,989,612
Real estate — commercial			189,419,723				191,399,868
Real estate — mortgage			44,598,285				27,974,565
Consumer installment and other			1,193,707				1,426,619
			941,985,372				652,086,299
Deferred loan fees			(405,508	)			(307,839	)
Allowance for loan losses			(9,824,866	)			(5,612,162	)
Loans, net		$	931,754,998			$	646,166,298

Changes in the allowance for loan losses are as follows:

		Years Ended December 31,
		2006				2005				2004
Balance, beginning of year		$	5,612,162			$	3,433,130			$	3,572,984
Provision for loan losses			4,323,396				3,566,212				2,627,348
Loans charged off			(159,959	)			(1,442,451	)			(2,841,802	)
Recoveries of loans previously charged off			49,267				55,271				74,600
Balance, end of year		$	9,824,866			$	5,612,162			$	3,433,130

The total recorded investment in impaired loans consisting solely of loans on nonaccrual status was $13,351,247 and $1,651,746 at December 31, 2006 and 2005, respectively. There were no impaired loans that had related allowances determined in accordance with SFAS No. 114, Accounting by Creditors for Impairment of a Loan, at December 31, 2006 and 2005. The average recorded investment in impaired loans for 2006, 2005 and 2004 was $2,019,261, $1,127,053 and $2,138,069, respectively. Interest income recognized for cash payments received on impaired loans was not material for the years ended December 31, 2006, 2005 and 2004, respectively.

There were no loans past due ninety days or more and still accruing interest at December 31, 2006, 2005 or 2004.

In the ordinary course of business, the Company has granted loans to certain related parties, including executive officers, directors and their affiliates. The interest rates on these loans were substantially the same as rates prevailing at the time of the transaction and repayment terms are customary for the type of loan. Changes in related party loans for the year ended December 31, 2006 are as follows:

Balance, beginning of year		$	11,926,835
Advances			13,290,233
Repayments			(1,934,599	)
Change in Directors			(2,258,878	)
Balance, end of year		$	21,023,591

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 4. PREMISES AND EQUIPMENT

Premises and equipment are summarized as follows:

		December 31,
		2006				2005
Land		$	5,362,270			$	4,145,780
Buildings			7,015,395				4,770,443
Construction in progress			792,601				1,707,171
Equipment			3,696,924				2,601,626
Leasehold Improvements			603,618				24,856
			17,470,808				13,249,876
Accumulated depreciation			(2,098,711	)			(1,384,893	)
		$	15,372,097			$	11,864,983

		In 2003, the Company purchased from a director of the Company, an administrative building adjacent to its main office building at a cost of $2.6 million. In August, 2004 the Company sold to an unrelated party the administrative building and related improvements, with a book value of $2.9 million, for $5.0 million cash in a sale-leaseback transaction. A five year non-renewable operating lease on the building was entered into between the Bank and the buyer, with minimum annual lease payments of $560,000. The resulting $2.1 million gain on sale was deferred and is being recognized over the life of the lease. The unamortized balance of $1,099,875 and $1,512,375 of the deferred gain is included in other liabilities at December 31, 2006 and 2005, respectively.
		On January 31, 2007, the Bank repurchased the administrative building at a cost of $6 million. The balance of unamortized gain on sale of $1,066,000 was offset against the purchase price.
		The Company has a loan production office in Cumming (Forsyth County), Georgia in which office space is leased. A one-year non-renewable operating lease was entered into in August, 2005. Extended for a period of nine months, this lease expires on May 31, 2007. In 2006, the Company entered into a contract with a third party builder to construct an additional branch banking facility in Cumming to replace the loan production office. The full-service branch was under construction at December 31, 2006, and is scheduled to open in mid-2007. A second loan production office was opened in December 2006 in Buford (Gwinnett County), Georgia in which office space is also leased. A 12.5 month non-renewable operating lease was entered into in December 2006. There was also an expansion project under way at December 31, 2006 to build out additional space in the above administrative building. The same party that was building the Cumming office was also completing this project. As of December 31, 2006, the total estimated costs to complete this project and the Cumming office were $1.1 million.
		Total rental expense was $641,581, $614,540, and $210,457 for the years ended December 31, 2006, 2005 and 2004, respectively.
		Future minimum lease payments as of December 31, 2006 are as follows:

2007		$	593,800
2008			560,000
2009			373,333
		$	1,527,133

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 5. DEPOSITS

The aggregate amount of time deposits in denominations of $100,000 or more at December 31, 2006 and 2005 was $169,614,614 and $135,473,297, respectively. The scheduled maturities of time deposits at December 31, 2006 are as follows:

2007		$	596,862,139
2008			112,260,900
2009			29,623,427
2010			5,784,899
2011			6,700,073
		$	751,231,438

		At December 31, 2006, total time deposits included $247,988,365 of brokered deposits. At December 31, 2005, total time deposits included $150,585,785 of brokered deposits.
		Overdraft demand deposits reclassified to loans totaled $1,183 and $2,688 at December 31, 2006 and 2005, respectively.

NOTE 6. OTHER BORROWINGS

Other borrowings consist of the following:

		December 31,
		2006				2005
Reverse Repurchase Agreement, interest payable quarterly at the three month LIBOR minus 0.50% until August 14, 2007, then fixed at 4.84% until maturity at August 13, 2013, callable on August 14, 2007 or any quarterly period thereafter		$	15,000,000			$	—
Reverse Repurchase Agreement, interest payable quarterly at the three month LIBOR minus 0.50% until September 13, 2007, then fixed at 4.48% until maturity at September 13, 2013, callable on September 13, 2007 or any quarterly period thereafter			15,000,000				—
Reverse Repurchase Agreement, interest payable quarterly at the three month LIBOR minus 0.87% until June 5, 2008, then fixed at 4.57% until maturity at December 5, 2013, callable on June 8, 2008 or any quarterly period thereafter			15,000,000				—
Federal Home Loan Bank Daily Rate Credit Advance, interest payable monthly at variable rates set daily , due December 27, 2007			5,000,000				—
		$	50,000,000			$	—

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 6. OTHER BORROWINGS (Continued)

		In late 2006, the Company entered into several reverse repurchase agreements which have seven–year terms, and the rates are floating for a portion of the term and fixed for the balance. These instruments are collateralized with mortgage-backed securities.
		The Company has a line of credit with the Federal Home Loan Bank that was $57 million at December 31, 2006. Any advances from the Federal Home Loan Bank are collateralized with certain qualifying loans of approximately $52 million, mortgage-backed securities of $5.0 million, and Federal Home Loan Bank stock of $1.7 million. The Company also had available unused lines of credit with various financial institutions totaling $69 million at December 31, 2006. There were no other advances outstanding at December 31, 2006 or 2005.

NOTE 7. SUBORDINATED LONG-TERM DEBENTURES

Subordinated long-term debentures consist of the following:

		December 31,
		2006				2005
Floating rate junior subordinated debentures, interest payable quarterly at the three month LIBOR plus 2.85%, due December 17, 2033. The rate at December 31, 2006 was 8.21%		$	6,186,000			$	6,186,000
Floating rate junior subordinated debentures, interest payable quarterly at the three month LIBOR plus 1.44%, due March 15, 2036. The rate at December 31, 2006 was 6.80%			27,836,000				—
Floating rate subordinated debentures, interest payable quarterly at prime, due October 30, 2014. The rate at December 31, 2006 was 8.25%			18,000,000				—
		$	52,022,000			$	6,186,000

		In 2003, the Company formed a wholly-owned grantor trust to issue cumulative trust preferred securities to the public. The grantor trust has invested the proceeds of the trust preferred securities in junior subordinated debentures of the Company. The trust preferred securities can be redeemed prior to maturity at the option of the Company on or after December 17, 2008. The sole assets of the grantor trust are the Junior Subordinated Deferrable Interest Debentures of the Company (the “Debentures”) held by the grantor trust. The Debentures have the same interest rate (three month LIBOR plus 2.85%, floating) as the trust preferred securities. The Company has the right to defer interest payments on the Debentures at any time or from time to time for a period not exceeding 20 consecutive quarters provided that no extension period may extend beyond the stated maturity of the related Debentures. During any such extension period, distributions on the trust preferred certificates would also be deferred.
		In February 2006, the Company formed a second wholly-owned grantor trust to issue cumulative trust preferred securities to the public. The grantor trust has invested the proceeds of the trust preferred securities in junior subordinated debentures of the Company. The trust preferred securities can be redeemed prior to maturity at the option of the Company on or after March 15, 2011. The sole assets of the grantor trust are the Junior Subordinated Deferrable Interest Debentures of the Company (the “Debentures”) held by the grantor trust. The Debentures have the same interest rate (three month LIBOR plus 1.44%, floating) as the trust preferred securities.

The Company has the right to defer interest payments on the Debentures at any time or from time to time for a period not exceeding 20 consecutive quarters provided that no extension period may extend beyond the stated maturity of the related Debentures. During any such extension period, distributions on the trust preferred certificates would also be deferred.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 7. SUBORDINATED LONG-TERM DEBENTURES (Continued)

Payment of periodic cash distributions and payment upon liquidation or redemption with respect to the trust preferred securities are guaranteed by the Company to the extent of funds held by the grantor trusts (the “Preferred Securities Guarantee”). The Preferred Securities Guarantee, when taken together with the Company’s other obligations under the Debentures, constitute a full and unconditional guarantee, on a subordinated basis, by the Company of payments due on the trust preferred securities.

In October 2006, the Bank issued subordinated debentures with a term of seven years. Interest is payable quarterly, and there is no prepayment penalty. The debentures were issued to three financial institutions and totaled $18 million. For regulatory purposes, these debt instruments can be included in Tier two capital. The Bank is required to establish reserves to fund the repayment of the subordinated debentures.

NOTE 8. STOCK-BASED COMPENSATION

		As of December 31, 2006, the Company has two stock-based compensation plans that allow for grants of incentive stock options and nonqualified stock options. One of the plans is an employee plan which permits the granting of stock options to employees for up to 1,950,000 shares of common stock, and the other is a director plan which permits the granting of stock options to directors for up to 585,000 shares of common stock. Under both plans, stock options granted generally have an exercise price no less than the fair market value of the underlying stock at the date of grant. The general terms of the plans include a vesting period (usually five years) with an exercisable period not to exceed ten years. Dividends are not paid on unexercised options and dividends are not subject to vesting. Option awards provide for accelerated vesting if there is a change in control (as defined in the plan). As of December 31, 2006, approximately 332,536 awards could be granted under the employee plan, and 2,000 awards could be granted under the director plan.
		In January 2003 the Company granted to its President options to acquire 5% of the Company’s outstanding shares. The options were divided into two groups: (1) the fixed number of options equal to 5% of the Company’s outstanding shares on the grant date (the “Original Option”); and (2) the additional options that accrue by virtue of increases in the Company’s outstanding shares (the “Additional Option”). In August 2006 the President’s option agreement was amended to limit the shares obtainable under the Additional Option. Specifically, the option agreement was amended to provide that the total number of shares obtainable pursuant to both the Original Option and the Additional Option will not exceed 731,672 (as adjusted for stock splits, stock dividends, and similar recapitalizations), which equaled 5% of the outstanding shares on the date of the amendment. The effect of this amendment was to cut off further increases of the Additional Option when the number of outstanding shares of the Company increased.
		The fair value of each option granted was estimated on the date of grant using the Black-Scholes-Merton option valuation model. Expected volatilities are based on historical volatility of the Company’s stock. The Company uses historical data to estimate option exercise, employee termination, forfeitures and expected dividends within the valuation model. Separate groups of employees that have similar historical exercise behavior are considered separately for valuation purposes. The expected term of options granted is estimated based on the short-cut method. The risk-free rate for periods within the estimated life of the option is based on the U.S. Treasury yield curve in effect at the time of grant. The key assumptions used to determine the fair value of options are presented in the table below.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 8. STOCK-BASED COMPENSATION (Continued)

		Years Ended December 31,
		2006				2005				2004
Dividend yield			0.00	%			0.00	%			0.00	%
Average expected life		2.08 - 7.50 years				10 years				10 years
Expected volatility			30.00	%			30.40	%			0.01	%
Forfeiture rate			3.00	%			3.00	%			3.00	%
Risk-free interest rate			4.60% - 5.07	%			4.25	%			4.52	%

Employee Plan

The following table summarizes our stock options activity for year ended December 31, 2006:

										Weighted-
						Weighted-				Average
						Average				Remaining
						Exercise				Contractual				Aggregate
		Shares				Price				Term (Years)				Intrinsic Value
Outstanding at beginning of year			1,409,072			$	4.67
Granted (below market)			13,590				2.45
Granted (at market)			124,000				12.19
Exercised			(161,996	)			3.29
Terminated			(170,200	)			9.70
Outstanding at end of year			1,214,466			$	4.89				4.92			$	9,862,000
Options exercisable at year-end			573,710			$	3.97				6.75			$	5,166,000

		The weighted-average grant-date fair value of options granted during the years ended December 31, 2006, 2005 and 2004 was $5.86, $6.72 and $3.28, respectively.
		Total intrinsic value of options exercised was $1,426,784, $1,604,889 and $ 0 for the years ended December 31, 2006, 2005 and 2004, respectively. The total fair value of options vested during the years ended December 31, 2006, 2005 and 2004 was $562,744, $1,478,574 and $674,870, respectively.
		The compensation cost charged against income for the years ended December 31, 2006, 2005 and 2004 were $1,557,358, $1,159,512 and $602,259, respectively. Income tax benefits recognized for the respective years were $460,953, $455,031 and $227,267.
		Cash received from the exercise of options was $533,714 for the year ended December 31, 2006. The tax benefit realized for the tax deductions from option exercise of the share-based payment arrangements totaled $8,059 for the year ended December 31, 2006.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 8. STOCK-BASED COMPENSATION (Continued)

		As of December 31, 2006, there was $1.1 million of total unrecognized compensation cost related to the nonvested share based compensation arrangements granted under the option plan. That cost is expected to be recognized over a weighted-average period of 1.68 years.
		Information pertaining to employee options outstanding at December 31, 2006 is as follows:

		Options Outstanding												Options Exercisable
						Weighted-
						Average				Weighted-								Weighted-
						Remaining				Average								Average
Range of		Number				Contractual				Exercise				Number				Exercise
Exercise Prices		Outstanding				Life				Price				Exercisable				Price
$2.45			789,466			3.03 years				$	2.45				379,255			$	2.45
4.50			153,000			7.67 years					4.50				127,600				4.50
11.00 – 14.25			272,000			8.88 years					12.18				66,855				11.62
			1,214,466			4.92 years					4.89				573,710				3.97

Director Plan

The following table shows option activity of the Director Plan for the year ended December 31, 2006.

										Weighted-
						Weighted-				Average
						Average				Remaining
						Exercise				Contractual				Aggregate
		Shares				Price				Term (Years)				Intrinsic Value
Outstanding at beginning of year			538,000			$	3.85
Granted			—				—
Exercised			(241,000	)			3.01
Terminated			—				—
Outstanding at end of year			297,000			$	4.52				6.75			$	2,504,000
Options exercisable at year-end			297,000			$	4.52				6.75			$	2,504,000

		The weighted-average grant-date fair value of options granted during the years ended December 31, 2006, 2005 and 2004 was $0, $5.80 and $0, respectively.
		Total intrinsic value of options exercised was $2.3 million, $405,000, and $0 for the years ended December 31, 2006, 2005 and 2004, respectively. The total fair value of options vested during the years ended December 31, 2006, 2005 and 2004 was $0, $510,400 and $0, respectively.
		There was no compensation cost charged against income for the years ended December 31, 2006, 2005 and 2004 for options under this plan, therefore, no income tax benefits.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 8. STOCK-BASED COMPENSATION (Continued)

		Cash received from the exercise of options was $658,850 for the year ended December 31, 2006. The tax benefit realized for the tax deductions from option exercise of the share-based payment arrangements totaled $905,305 for the year ended December 31, 2006.
		As of December 31, 2006, there was no unrecognized compensation cost related to nonvested share based compensation arrangements granted under the option plan.
		Information pertaining to director options outstanding at December 31, 2006 is as follows:

		Options Outstanding												Options Exercisable
						Weighted-
						Average				Weighted-								Weighted-
						Remaining				Average								Average
Range of		Number				Contractual				Exercise				Number				Exercise
Exercise Prices		Outstanding				Life				Price				Exercisable				Price
$2.45			225,000			6.22 years				$	2.45				225,000			$	2.45
11.00			72,000			8.42 years					11.00				72,000				11.00
			297,000			6.75 years					4.52				297,000				4.52

NOTE 9. EMPLOYEE BENEFIT PLAN

The Company has a 401(k) retirement plan covering substantially all employees. Contributions to the plan charged to expense amounted to $255,507, $191,075 and $104,132 for the years ended December 31, 2006, 2005 and 2004, respectively.

NOTE 10. INCOME TAXES

Income tax expense consists of the following:

		Years Ended December 31,
		2006				2005				2004
Current		$	7,976,526			$	5,010,145			$	2,307,329
Deferred			(2,056,451	)			(1,321,872	)			(531,655	)
Income tax expense		$	5,920,075			$	3,688,273			$	1,775,674

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 10. INCOME TAXES (Continued)

The Company’s income tax differs from the amounts computed by applying the federal income tax statutory rates to income before income taxes. A reconciliation of the differences is as follows:

		Years Ended December 31,
		2006				2005				2004
Income tax at statutory federal rate		$	5,619,837			$	3,404,056			$	1,627,939
State taxes			405,527				319,025				144,432
Bank owned life insurance income			(240,379	)			—				—
Stock-based compensation			129,547				—				—
Other items			5,543				(34,808	)			3,303
Income tax expense		$	5,920,075			$	3,688,273			$	1,775,674

The components of deferred income taxes are as follows:

		December 31,
		2006				2005
Deferred tax assets:
Deferred gain on sale-leaseback		$	425,424			$	584,975
Deferred loan fees			156,847				119,070
Loan loss reserves			3,518,189				1,808,175
Stock compensation			1,175,826				716,617
Nonaccrual loan interest			36,445				52,041
Securities available for sale			363,583				596,430
			5,676,314				3,877,308
Deferred tax liabilities:
Depreciation			234,459				259,057
Net deferred taxes		$	5,441,855			$	3,618,251

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 11. EARNINGS PER SHARE

Presented below is a summary of the components used to calculate basic and diluted earnings per common share.

		Years Ended December 31,
		2006				2005				2004
Basic Earnings Per Share:
Weighted average common shares outstanding			14,594,208				14,050,847				10,809,936
Net income		$	10,136,601			$	6,322,352			$	3,012,382
Basic earnings per share		$	0.69			$	0.45			$	0.28
Diluted Earnings Per Share:
Weighted average common shares outstanding			14,594,208				14,050,847				10,809,936
Net effect of the assumed exercise of stock options based on the treasury stock method using average market prices for the year			824,469				910,700				742,740
Total weighted average common shares and common stock equivalents outstanding			15,418,677				14,961,547				11,552,676
Net income		$	10,136,601			$	6,322,352			$	3,012,382
Diluted earnings per share		$	0.66			$	0.42			$	0.26

NOTE 12. COMMITMENTS AND CONTINGENCIES

Loan Commitments

The Company is a party to financial instruments with off-balance sheet risk in the normal course of business to meet the financing needs of its customers. These financial instruments include commitments to extend credit and standby letters of credit. They involve, to varying degrees, elements of credit risk and interest rate risk in excess of the amount recognized in the balance sheets. The majority of all commitments to extend credit and standby letters of credit are variable rate instruments.

The Company’s exposure to credit loss in the event of nonperformance by the other party to the financial instrument for commitments to extend credit and standby letters of credit is represented by the contractual amount of those instruments. The Company uses the same credit policies in making commitments and conditional obligations as it does for on-balance sheet instruments. A summary of the Company’s commitments is as follows:

		December 31,
		2006				2005
Commitments to extend credit		$	332,168,227			$	220,048,484
Standby letters of credit			1,958,215				1,396,042
		$	334,126,442			$	221,444,526