10-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-K

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

(Mark One)

x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2005

OR

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from              to             

Commission File Number 000-21267

SUMMIT BANK CORPORATION

(Exact Name of Registrant as Specified in its Charter)

Georgia	58-1722476
(State of Incorporation)	(I.R.S. Employer Identification No.)
4360 Chamblee-Dunwoody Road, Atlanta, Georgia	30341
(Address of principal executive offices)	(Zip Code)

(770) 454-0400

(Registrant’s telephone number, including area code)

Securities Registered Pursuant to Section 12(b) of the Act:

None

Securities Registered Pursuant to Section 12(g) of the Act:

Common Stock, $.01 par value

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.    Yes  ¨    No  x

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act.    Yes  ¨    No  x

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No  ¨

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.  x

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act.

Large accelerated filer  ¨    Accelerated filer  ¨    Non-accelerated filer  x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes   ¨    No  x

As of June 30, 2005, the aggregate market value of the common stock held by persons other than directors and executive officers of the registrant was $58,331,467, as determined by reference to the quoted purchase price for the common stock on the Nasdaq National Market on June 30, 2005. As of March 3, 2006, there were 5,694,604 shares of the Registrant’s common stock outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

Document	Parts Into Which Incorporated
2005 Annual Report to Shareholders	Part II
Proxy Statement for the 2006 Annual Meeting of Shareholders	Part III

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

Some of our statements contained in this report including, without limitation, matters discussed under the captions “Business” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements relate to future events or our future financial performance and include statements about the competitiveness of the banking industry, potential regulatory obligations, our entrance and expansion into other markets, our other business strategies and other statements that are not historical facts. Forward-looking statements are not guarantees of performance or results. When we use words like “may,” “plan,” “contemplate,” “anticipate,” “believe,” “intend,” “continue,” “expect,” “project,” “predict,” “estimate,” “could,” “should,” “would,” “will,” and similar expressions, you should consider them as identifying forward-looking statements, although we may use other phrasing. These forward-looking statements involve risks and uncertainties and are based on our beliefs and assumptions, and on the information available to us at the time that these disclosures were prepared.

These forward-looking statements involve risks and uncertainties and may not be realized due to a variety of factors, including, but not limited to the following:

• the effects of future local, national and international political and economic conditions;

• governmental monetary and fiscal policies, as well as legislative and regulatory changes and compliance;

• international currency fluctuations;

• the risks of changes in interest rates on the level and composition of deposits, loan demand and the values of loan collateral, securities and interest sensitive assets and liabilities;

• the effects of the war on terrorism, and more specifically the U.S. led war in Iraq;

• interest rate and credit risks;

• the effects of competition from other commercial banks, thrifts, mortgage banking firms, consumer finance companies, credit unions, securities brokerage firms, insurance companies, money market and other mutual funds and other financial institutions operating in our market area and elsewhere, including institutions operating regionally, nationally and internationally, together with such competitors offering banking products and services by mail, telephone and the Internet;

• the effect of any mergers, acquisitions or other transactions, including our proposed acquisition of Concord Bank, to which we or our subsidiary may from time to time be a party, including, without limitation, our ability to successfully integrate any businesses that we acquire; and

• the failure of assumptions underlying the establishment of allowances for loan losses.

All written or oral forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by this Cautionary Note. Our actual results may differ significantly from those we discuss in these forward-looking statements.

For other factors, risks and uncertainties that could cause our actual results to differ materially from estimates and projections contained in these forward-looking statements, please read the “Risk Factors” section of this report. We do not intend to update or revise, and assume no responsibility for updating or revising, any forward-looking statements contained in, or incorporated by reference into, this prospectus, whether as a result of new information, future events or otherwise.

PART I.

Item 1. Business.

General

We were organized as a Georgia corporation on October 15, 1986 to become a bank holding company by acquiring all the outstanding common stock of The Summit National Bank (“Summit Bank”) upon its formation. Summit Bank commenced business on March 10, 1988, and our primary activity since then has been the ownership and operation of Summit Bank.

Summit Bank is a national banking association organized under the laws of the United States. Summit Bank engages in commercial banking from its main office and seven branch offices, four of which are located in its primary service area of northern metropolitan Atlanta, Georgia. A fifth office is a limited service branch office located in the south Atlanta area. Two additional branch offices are located in San Jose and Fremont, California, and we maintain a loan production office in San Diego, California. We also have a representative office in Shanghai, China. We announced in December 2005 the signing of a definitive agreement to purchase Concord Bank, a national bank with one office in Houston, Texas. All of these offices, including Concord Bank, are in ethnic communities that are very similar to part of our Atlanta primary service area. We seek to serve four principal markets:

• individuals, professionals and small to medium-sized businesses in Summit Bank’s primary service areas;

• ethnic communities located in our primary service areas, including businesses operated by members of such communities;

• individuals, professionals and businesses in our primary service areas requiring our international financial services offered, including letters of credit, wire transfers and documentary collections; and

• foreign corporations and individuals requiring international private banking and other specialized banking services in the Atlanta metropolitan area and in San Jose and Fremont, California.

We believe these identified markets continue to provide significant growth opportunities for us. We offer these markets a variety of traditional and specialized banking services and emphasize personal service, cultural sensitivity and accessibility of management.

Market Areas

We seek an entrepreneurial customer base, including individuals, professionals and small to medium-sized businesses in our markets. Our strategy targets the growing multi-ethnic populations in major U.S. cities, including Atlanta, Georgia; San Jose, California; San Diego, California and through our pending acquisition of Concord Bank, Houston, Texas. We are the largest community bank headquartered in Atlanta, Georgia with this particular focus. We believe our customers can benefit from our diverse workforce and understanding of multiple cultures and markets. We offer multi-lingual services to our customers primarily in English, Chinese, German, Korean, Spanish and Vietnamese, but also provide services in other languages.

We conduct business through our five full-service and one limited-service banking offices in the Atlanta metro area and two branches in the San Francisco South Bay/San Jose area, where we focus on the multi-ethnic population of these cities. Our full-service offices are located in business areas where many of the businesses are owned by immigrants and other minority groups. Our client base reflects the multi-ethnic composition of these communities. Approximately 80% of our deposits are in the Atlanta metropolitan statistic area (“MSA”) with the remaining 20% in California in the San Francisco and San Jose MSAs.

The following table shows our deposit market share by zip codes of operation in the states of Georgia and California. The data was compiled for each zip code in which we have a banking office and is aggregated by state.

Deposit Market Share

by Summit’s zip codes of operations – Georgia

Rank	Institution	Deposits ($000)	Mkt. Share %		Branches
1	Wachovia Corp. (NC)	1,652,008	30.66	%	16
2	SunTrust Banks, Inc (GA)	1,011,538	18.77		17
3	Bank of America Corp. (NC)	777,877	14.44		11
4	Flag Financial Corp. (GA)	512,222	9.51		3
5	Summit Bank Corp. (GA)	322,640	5.99		5

Deposit Market Share

by Summit’s zip codes of operations – Georgia

Rank	Institution	Deposits ($000)	Mkt. Share %	Branches
6	Community Financial Holding (GA)	229,110	4.25	1
7	Fidelity Southern Corp. (GA)	161,410	3.00	2
8	BB&T Corp (NC)	146,125	2.71	5
9	Colonial BancGroup Inc. (AL)	101,541	1.88	2
10	PB Financial Services Corp. (GA)	99,335	1.84	1

Source: SNL Financial Deposit data as of 6/30/05

Deposit Market Share

by Summit’s zip codes of operations – California

Rank	Institution	Deposits ($000)	Mkt. Share %	Branches
1	Bank of America Corp. (NC)	645,512	37.41	4
2	Wells Fargo & Co. (CA)	394,055	22.83	3
3	Citigroup, Inc. (NY)	149,476	8.66	2
4	Golden West Financial (CA)	124,369	7.21	1
5	Fremont Bancorp (CA)	106,922	6.20	2
6	Summit Bank Corp. (GA)	86,184	4.99	2
7	Downey Financial Corp (CA)	74,697	4.33	1
8	UCBH Holdings Inc. (CA)	47,453	2.74	1
9	Cathay General Bancorp (CA)	46,760	2.71	1
10	California Pacific Bank (CA)	26,102	1.51	1

Source: SNL Financial Deposit data as of 6/30/05

Asian-American Markets

One of our principal target markets is the Atlanta Asian-American population, consisting principally of members of the Asian-Indian, Chinese, Korean and Vietnamese communities. The 2000 U.S. census indicated that the Atlanta Asian-American population exceeded 170,000 people, with the majority of this population located in northern metropolitan Atlanta, including parts of DeKalb, Gwinnett, Fulton and Cobb counties. Through our branches in San Jose, we also target the significant population of Asian-American individuals and businesses in the San Francisco South Bay/San Jose market.

We believe the locations of our main office and Atlanta branch offices are convenient to a large number of Asian-Americans. At year-end 2005, approximately 60% of our Atlanta customers were Asian-American. Vietnamese individuals comprise the majority of our San Jose Tully Road branch customers and our Fremont branch customers are mostly Chinese-Americans. Following our pending acquisition of Concord Bank, we will increase our Chinese-American customer base, as a significant portion of Concord Bank’s customers are also Chinese-American.

We believe the Asian-American community has a high savings rate, low unemployment and a commitment to economic advancement through education and hard work. We believe this culture creates opportunities for us to serve this community’s small owner-operated businesses. In addition, a significant percentage of Asian-Americans in our market are constrained in their current use of banking services at other financial institutions by language and other cultural barriers. To address this issue, we provide a multi-lingual staff with ethnic backgrounds tailored to each local market’s demographics. We emphasize cultural sensitivity and understanding in our interactions with customers and strive to provide a familiar, accessible and professional environment for our clientele. We also offer significant expertise in lending to businesses typically owned and operated by members of the Asian-American community.

2

Latin-American Markets

We also target the growing Latin-American market in Atlanta, which increased by more than 400% from 1990 to 2000 according to the U.S. Census. This market is centered in southern Gwinnett County and has expanded in recent years to northern DeKalb County, northern Fulton County and southern Atlanta. Our Latin-American customer base has reflected this trend. When we established our Peachtree Corners branch in 2000, our Latin-American customer base was primarily located near this branch. Since then, however, our Latin-American customer base has dispersed more widely throughout our branch system.

Unlike many banks or branches that focus on Latin-American customers, we emphasize business lending, as opposed to mass retail lending. Our commercial loans in this market often involve owners of restaurants, landscaping services, music stores and shopping centers catering to the Latin-American community. We believe our specialized understanding of the needs of these businesses, coupled with our Spanish-speaking staff, cultural sensitivity and accessibility of senior management, enhances our competitive position.

International Services Market

We believe that a growing number of domestic businesses in our metropolitan areas (and, in particular, a growing number of small to medium-sized businesses) require our international banking services. While a number of the large financial institutions operating in our markets offer such services, they are typically offered from international banking departments located in central office facilities or from an out-of-state location. Frequently, personnel in the branch facilities of these larger institutions are not trained to address these specialized needs. We believe that we have penetrated, and will be able to further penetrate, this market by providing businesses with convenient access to personnel specially trained to provide international services. We operate a representative office in Shanghai, China to facilitate international documentary transactions for our domestic customers with Chinese banks and to assist domestic customers in their international trade transactions with Chinese entities.

We do not engage in off-shore buyer financing or cross border lending. Occasionally, we discount drafts arising from time letters of credit for selected banks under approved facilities. We believe the commercial and political risks of these activities are acceptable based on our assessment of available information on the banks and the respective countries. As of December 31, 2005, we had approximately $226,000 outstanding under such facilities.

In addition to domestic businesses requiring international banking services, we believe that a growing number of foreign businesses in Atlanta, along with their executives and employees, frequently require the international banking services we provide. Foreign nationals doing business in the U.S. are often unfamiliar with U.S. banking practices. We have personnel with the language and cultural skills suited to serve this clientele. We further believe our managers’ international banking experience, along with our directors’ and executive officers’ contacts in the international and domestic business communities, enhances our ability to compete in this target market.

Business Strategy

We expect to grow our business and increase our profitability by employing the following strategies:

Deliver Superior Relationship Banking to Entrepreneurial Customers. We want to be the best bank in our markets for owner-managed businesses, including ethnic businesses. We believe we understand what small businesses need in order to grow, and therefore can foster a supportive environment to help them achieve their business goals. Toward this end, we offer a variety of government-guaranteed loans under the United States Small Business Administration (the “SBA”) program and have significant expertise in lending to a variety of industries within our market areas. We also offer our customers a variety of services other than commercial lending, including international trade finance, letters of credit, consumer loans and a variety of deposit products.

We believe our friendly service, coupled with knowledgeable and experienced staff, allow us to strengthen customer relationships. We also build customer loyalty through management accessibility, local decision-making, cultural sensitivity and responsiveness. We believe this loyalty provides us with a competitive advantage.

Cater to the Needs of Ethnic Communities. We aim to be a multicultural organization that serves the needs of the multi-ethnic populations of our communities, including our mainstream customers. We want to bridge the immigrant and mainstream perspective by breaking down the language and cultural barriers faced by immigrants. We offer a multilingual staff that has first hand knowledge of different communities and cultures. Our employees speak over two dozen languages, with over half being fluent in at least two languages. We value diversity and this is reflected in the composition of our Board of Directors, which is ethnically diverse and active in the ethnic communities that we serve.

3

We have significant expertise in lending to the types of businesses typically owned and operated by Asian-Americans and Latin-Americans in our market areas. For example, Asian-American businesses often involve local retail trade, such as convenience stores, restaurants, food stores and liquor stores, while Latin-American businesses often consist of restaurants, landscaping services, music stores and shopping centers catering to Latin-American customers. Our loan portfolio reflects our experience in lending to these types of businesses, with approximately 35.8% of our portfolio at December 31, 2005 consisting of loans to borrowers in the convenience store, restaurant, food store and liquor store industries and approximately 35.1% consisting of commercial real estate loans, many of which are secured by local shopping centers owned by members of these ethnic groups.

We also cater to the needs of our target customers by customizing the services offered at each of our branches to conform to the local ethnic community it serves. Our staff at each of our locations reflects its local market demographics. While each of our full-service banking offices provides a full complement of banking services, each of our branches has a particular focus. For example, our main office focuses on international trade finance for domestic customers and is primarily a mainstream office. Our Asian Banking Center and Peachtree Corners branch in Atlanta cater to both the Asian-American and Latin-American communities. Our Park Village branch in Atlanta focuses on the emerging demographic shift of Chinese and Korean businesses into the northern Gwinnett County area, and our Vinings branch offers private banking services to German citizens typically residing in Atlanta for business reasons. In San Jose, our Fremont branch caters primarily to the Chinese community, while our Tully Road branch caters primarily to the Vietnamese community. By tailoring each of our branch services and staff to their local ethnic communities, we believe we enhance our competitive position in each of our market areas.

Increase Our International Banking Services. In the upcoming year, we intend to emphasize our international banking products and capabilities. We believe there are few other banks in our markets that offer similar services or make international trade decisions locally and as quickly as we do. Our international banking services, which we offer to our domestic customers, include inbound and outbound international fund transfers, documentary collections, import and export lines of credit and bankers acceptances. Many of our customers engage in import/export activities and require financing for inventory, receivables or general working capital.

In 2004, we opened our representative office in Shanghai, China, which allows us to capitalize on our international trade services for our domestic customers through a network of over 400 banks worldwide. Our Shanghai representative office provides a point of contact in China for our domestic customers who engage in international trade. The office is staffed with an individual representative and an assistant and does not accept loans or deposits or otherwise engage in banking activities. Instead, our representative cultivates relationships with other banks that are positioned to meet our customers’ needs, introduces our customers to these banks and serves generally as a resource for our customers who do business in China.

Expand Our Products and Services to Meet the Needs of our Diverse Customer Base. We continually seek to expand our financial products and services to meet the needs of our customers. We strive to provide the product offerings of larger banks but with a community feel. We offer commercial loans and, to a lesser extent, consumer loans, to our customers. In addition, we offer international trade finance for domestic customers, private banking services and the services of our Shanghai representative office to support our multi-ethnic customer base. In 2006, we plan to provide to our domestic customers a web-based international trade program that will enable them to access account information, request letters of credit, review and track applications and obtain buyer and supplier information via the internet. We believe the ease of access and increased customer exposure to our international banking services will position us for an increase in our volume of business and service fees in this area.

Improve Core Profitability. We intend to continue to grow our earnings through improvements in net interest income and noninterest income, such as fee income. In 2005, net interest income increased by 13.0% as compared to 2004, and while noninterest income declined slightly by 4.1%, fees from international trade finance services increased by 27.6%. We believe that highlighting our international business expertise and Shanghai presence will continue to improve our fee income in the future. In addition, our focus on increasing core deposits will help to keep our cost of funds low. In 2005, we focused on making our balance sheet more efficient by decreasing our dependence on high-cost funding for loans. We believe by de-leveraging the balance sheet that we are in a position to reap the benefits of a rising rate environment and maintain flexibility to take advantage of future expansion opportunities. By managing our balance sheet, we believe we can adapt more readily to changes in the interest rate environment and maximize earnings and value for our shareholders. We plan to continue to emphasize this flexibility as we respond to further economic developments in the future.

Maintain Excellent Asset Quality. We consider credit quality to be of primary importance and have taken measures to ensure that we consistently maintain excellent asset quality through our strong credit culture, extensive underwriting procedures and regular loan review. For example, we generally require our commercial mortgage loans to be collateralized by well-managed income-producing property with adequate margins and guaranteed by owners or other responsible parties. We give careful consideration to operating histories and projections and other data regarding the property and the borrower and analyze cash flows and collateral value on an ongoing basis. Any loan over $100,000 is evaluated by our management loan committee, which may

4

approve loans up to $1.0 million. Loans in amounts of $1.0 million up to $2.5 million are approved by our management loan committee plus members of our Board of Directors who are not insiders. Finally, loans for amounts from $2.5 million up to our legal lending limit must be approved by our Board of Directors. As of December 31, 2005, our nonperforming assets were 0.33% of total loans, and our net charge-offs to average loans were 0.16% for 2005. Our allowance for loan losses to total loans was 1.27% at December 31, 2005. See “—Lending Activities” for additional information.

Banking Services

We offer the full range of deposit services typically offered by most banks and other financial institutions, including checking accounts, NOW accounts, savings accounts and other time deposits of various types, ranging from daily money market accounts to longer-term certificates of deposits. We tailor our transaction accounts and time certificates to pay rates that are competitive with those offered in the area. We also offer Individual Retirement Accounts and solicit accounts from individuals, businesses, associations, and government entities. All deposits are insured by the FDIC up to the maximum amount of $100,000 per deposit account.

We offer a full range of short- to medium-term commercial and personal loans. Commercial loans include both secured and unsecured loans for working capital (including inventory and receivables), business expansion (including acquisition of real estate and improvements), and purchase of equipment and machinery. We also offer government guaranteed loans under the SBA loan program, including Section 7(a) and Section 504 loans and export revolving lines of credit. After originating a guaranteed loan, we may sell the guaranteed portion (approximately 75% of the balance of the loan) for a gain on the sale of the portion of the loan sold. In addition, we retain the servicing rights to these loans, which continue to generate servicing income to us on the portion sold. Personal (or consumer) loans include secured and unsecured loans for financing automobiles, home improvements, education and personal investments.

Lending Activities

We make loans to small and medium-sized commercial businesses and extend international trade lines of credit to domestic customers. A portion of our commercial loans are government-guaranteed loans to small businesses under the SBA program. We also make consumer loans, but these loans comprise a relatively small portion of our loan portfolio.

Our loan portfolio at December 31, 2005 was comprised as follows:

Type	Dollar Amount			Percentage of Portfolio
	(In thousands)
Commercial, financial and agricultural	$	86,051		24.0	%
Real estate - construction		20,019		5.6
Real estate - mortgage (primarily commercial)		251,989		70.4
Installment loans to individuals		969		0.3
Less: Unearned Income		(1,042	)	(0.3	)
Total	$	357,986		100.0	%

In addition, we have entered into contractual commitments, via lines of credit and standby letters of credit, to extend approximately $46 million in credit as of December 31, 2005. We use the same credit policies in making these commitments as we do for our other loans. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Commitments and Contractual Obligations.”

Commercial, Financial and Agricultural Loans. This portion of our portfolio consists of commercial loans to smaller business ventures, credit lines for working capital and short-term seasonal or inventory financing and letters of credit. Commercial borrowers typically secure their loans with assets of the business, personal guaranties of their principals and often mortgages on the principals’ personal residences. Our commercial loans are primarily made within our market areas and are underwritten on the basis of the commercial borrower’s ability to service the debt from income. The risk in commercial loans is generally due to the type of assets collateralizing these loans. General factors affecting a commercial borrower’s ability to repay include interest rates, inflation and the demand for the commercial borrower’s products and services, as well as other factors affecting a borrower’s customers, suppliers and employees. Commercial loans generally will be serviced from the operations of the business, and those operations may not be successful.

5

Real Estate – Construction. Construction loans generally are secured by first liens on real estate and have floating interest rates. They involve additional risks attributable to the fact that loan funds are advanced upon the security of a project under construction, and the value of the project is dependent on its successful completion. As a result of these uncertainties, construction lending often involves the disbursement of substantial funds with repayment dependent, in part, upon the success of the ultimate project rather than the ability of a borrower or guarantor to repay the loan. If we are forced to foreclose on a project prior to completion, there is no assurance that we will be able to recover all of the unpaid portion of the loan. In addition, we may be required to fund additional amounts to complete a project and may have to hold the property for an indeterminate period of time. While we have underwriting procedures designed to identify what we believe to be acceptable levels of risks in construction lending, no assurance can be given that these procedures will prevent losses from the risks described above.

Real Estate – Mortgage. We make commercial mortgage loans to finance the purchase of real property as well as loans to smaller business ventures, credit lines for working capital and short-term seasonal or inventory financing, including letters of credit, that are also secured by real estate. Commercial mortgage lending typically involves higher loan principal amounts, and the repayment of loans is dependent, in large part, on sufficient income from the properties collateralizing the loans to cover operating expenses and debt service. As a general practice, we require our commercial mortgage loans to be collateralized by well-managed income-producing property with adequate margins and to be guaranteed by responsible parties. In addition, a substantial percentage of our commercial mortgage loan portfolio is secured by owner-occupied commercial buildings. We look for opportunities where cash flows from the collateral provides adequate debt service coverage and the guarantor’s net worth is centered on assets other than the project we are financing. Our commercial mortgage loans are generally collateralized by first liens on real estate, have fixed or floating interest rates and amortize over a 10 to 25-year period with balloon payments due at the end of three to five years. Payments on loans collateralized by such properties are often dependent on the successful operation or management of the properties. Accordingly, repayment of these loans may be subject to adverse conditions in the real estate market.

In underwriting commercial mortgage loans, we seek to minimize our risks in a variety of ways, including giving careful consideration to the property’s operating history, future operating projections, current and projected occupancy, location and physical condition. Our underwriting analysis also includes credit checks, reviews of appraisals and environmental hazards or EPA reports and a review of the financial condition of the borrower. We attempt to limit our risk by analyzing our borrowers’ cash flow and collateral value on an ongoing basis.

Consumer. We make a variety of loans to individuals for personal, family and household purposes, including secured and unsecured installment and term loans. Consumer loans entail greater risk than other loans, particularly in the case of consumer loans that are unsecured or secured by depreciating assets such as automobiles. In these cases, any repossessed collateral for a defaulted consumer loan may not provide an adequate source of repayment for the outstanding loan balance. In addition, consumer loan collections are dependent on the borrower’s continuing financial stability, and thus are more likely to be affected by job loss, divorce, illness or personal hardships.

Lending Policies. Our Board of Directors has established and periodically reviews our bank’s lending policies and procedures. We have established common documentation and standards based on the type of loans between our regions. There are regulatory restrictions on the dollar amount of loans available for each lending relationship. National banking regulations provide that no loan relationship may exceed 15% of a bank’s Tier I capital. At December 31, 2005, our legal lending limit was approximately $7.5 million. In addition, we have established an internal limit of $7 million for each lending relationship. Any loan over $100,000 is evaluated by our management loan committee, which may approve loans up to $1.0 million. Loans in amounts of $1.0 million up to $2.5 million are approved by our management loan committee plus members of our Board of Directors who are not insiders. Finally, loans for amounts from $2.5 million up to our legal lending limit must be approved by our Board of Directors. We occasionally sell participation interests in loans to other lenders, primarily when a loan exceeds our house lending limits.

Types of Borrowers. We classify our borrowers as follows, with the amounts and percentages shown representing loans outstanding at December 31, 2005.

Type of Borrower	Dollar Amount ($000s)		Percent of Portfolio
Retail trade(1)	$	128,078	35.8	%
Commercial real estate(2)		125,806	35.1
Services(3)		42,967	12.0
Wholesale trade		32,434	9.1
Religious institutions		13,019	3.6
Commercial construction		4,102	1.2
Manufacturing(4)		3,913	1.1
Individuals		3,712	1.0
All other		3,955	1.1
Total	$	357,986	100.0	%

(1) Includes convenience stores, restaurants, food markets, liquor stores, telecommunications, drug stores, beauty stores and other retail establishments.

6

(2) Includes owners of office buildings, shopping centers, apartment buildings, warehouses and owner-occupied commercial real estate.

(3) Includes insurance agencies, laundry services, health care providers, financial services, hotels, automotive services, educational services and shipping and other services.

(4) Consists principally of manufacturers of durable goods.

Concentrations. At December 31, 2005, we had total credit exposure of $128.1 million to borrowers in the retail trade industry, representing approximately 35.8% of our total loans outstanding as of that date. Additionally, approximately $125.8 million, or 35.1%, of our loans outstanding were to owners of office buildings, shopping centers, warehouses and other forms of commercial real estate. If these industries experience an economic slowdown, our borrowers in these industries could become unable to perform their obligations under their loan agreements. This could negatively affect our earnings and cause the value of our common stock to decline. We mitigate this risk by obtaining U.S. government guarantees under the SBA loan program for a majority of these loans and through in-depth economic analyses of the applicable industries.

Allowance for Loan Losses. There are certain risks in making all loans. A principal economic risk in making loans is the creditworthiness of the borrower. Other risks in making loans include the period of time over which loans may be repaid, changes in economic and industry conditions, circumstances unique to individual borrowers and uncertainties about the future value of any collateral. We maintain an allowance for loan losses based on, among other things, an evaluation of economic conditions and other lending risks and our regular reviews of delinquencies and loan portfolio quality. Our allowance for loan losses was $4.6 million at December 31, 2005, representing 1.27% of total loans. The determination of the allowance is subjective and is based on management’s judgment regarding factors affecting loan quality, assumptions about the economy and other factors. For more information, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Allowance for Loan Losses.”

Other Services

In addition to deposit and loan services, our other domestic services include 24-hour multilingual telephone banking, Internet banking, cash management services, investment sweep accounts, safe deposit boxes, travelers checks, direct deposit of payroll and social security checks, as well as automatic drafts for various accounts. We are a member of the STAR, CIRRUS and EXCHANGE ATM networks. These ATM networks are used by our customers in major cities throughout Georgia and California and in various other cities in the U.S. and worldwide. The ATM located at our Asian Banking Center, located at 3490 Shallowford Road in Atlanta, Georgia, also offers multi-lingual screens for Asian-American patrons. We offer both VISA and MasterCard credit cards to our customers through a third party vendor.

The international banking services we provide to our domestic customers include inbound and outbound international funds transfers, documentary collections and import and export letters of credit. In addition, we offer private banking services to qualified foreign individuals and corporations establishing business operations in Atlanta. These specialized private banking services include bill paying, statement and mail holding, currency exchange, international funds transfers and personal lines of credit (including credit card services).

In addition, our private banking group, which is based at our Vinings branch in Atlanta, assists executives living in the U.S. with personal banking services. Most of this group’s customers are German citizens who manage or own subsidiaries or operational arms of European-headquartered businesses. These services include general banking services and introductions to providers of correspondent financial services and our general business contacts in international trade markets. We do not offer personal or corporate trust services (other than retirement custodial services for IRAs and similar plans).

Competition

We conduct business principally through branches in our market areas, which include Atlanta, Georgia and the San Francisco South Bay/San Jose areas in California. Our recently announced acquisition of Concord Bank will provide us with a presence in Houston, Texas, and we recently opened a loan production office in San Diego, California. Both Concord Bank and our loan production office are proximate to the growing Asian-American communities in those cities.

7

In each of our market areas, we compete in four principal areas of our business: the provision of banking services to one or more specific ethnic groups, international trade, business banking and SBA lending. Our ethnic bank competitors are ethnic-focused banks of all sizes, ranging from large international banks to local community banks. We believe we compete effectively with the large ethnic banks based on our local decision-making and the accessibility of our senior management team and that we compete with ethnic-focused community banks based on the variety of sophisticated services we offer and our ability to serve customers from many different ethnic backgrounds. In the international trade area, we compete with the international departments of ethnic banks and national and regional banks offering international services. We believe our competitive advantage in this area is based principally on our responsiveness, familiarity with our local market areas and ability to make decisions locally. Our principal business banking competitors are independent community banks with a commercial focus and the business banking groups of larger banks, and our competitive advantages in this area are generally the same as those in the ethnic banking area. Finally, in SBA lending we compete principally with loan production offices of out-of-state banks, and our competitive advantage is based principally on our local decision-making, ability to offer a variety of other products and services and familiarity with small business operations in our market areas.

We also compete generally in retail and commercial banking markets with other commercial banks, savings and loan associations, credit unions, mortgage brokers and mortgage companies, mutual funds, securities brokers, consumer finance companies, other lenders and insurance companies, locally, regionally and nationally. Many of our competitors compete with offerings by mail, telephone, computer and/or the Internet. Interest rates, both on loans and deposits, and prices of services are significant competitive factors among financial institutions generally. We believe our office locations, types and quality of services and products, customer service, local presence, understanding of diverse markets and cultures, community reputation and continuity of personnel are also important factors that enhance our general competitive position.

Many of our competitors have offices in our market areas. These institutions include many of the largest banks operating in Georgia and California, including some of the largest banks in the country. These institutions, as well as other competitors of ours, have greater resources, have broader geographic markets, have higher lending limits, offer various services that we do not offer and can better afford and make broader use of media advertising, support services and electronic technology than we do. To offset these competitive disadvantages, we depend on the factors described above.

8

SUPERVISION AND REGULATION

Summit and Summit Bank are subject to extensive state and federal banking regulations that impose restrictions on and provide for general regulatory oversight of their operations. These laws generally are intended to protect depositors and not shareholders. The following discussion describes the material elements of the regulatory framework that applies to us.

Summit

Because we own all of the capital stock of Summit Bank, we are a bank holding company under the federal Bank Holding Company Act of 1956 (the Bank Holding Company Act). As a result, we are primarily subject to the supervision, examination and reporting requirements of the Bank Holding Company Act and the regulations of the Federal Reserve. As a bank holding company located in Georgia, the Georgia Department of Banking and Finance also regulates and monitors all significant aspects of our operations.

Acquisitions of Banks. The Bank Holding Company Act requires every bank holding company to obtain the Federal Reserve’s prior approval before:

• acquiring direct or indirect ownership or control of any voting shares of any bank if, after the acquisition, the bank holding company will directly or indirectly own or control more than 5% of the bank’s voting shares;

• acquiring all or substantially all of the assets of any bank; or

• merging or consolidating with any other bank holding company.

Additionally, the Bank Holding Company Act provides that the Federal Reserve may not approve any of these transactions if it would result in or tend to create a monopoly or substantially lessen competition or otherwise function as a restraint of trade, unless the anti-competitive effects of the proposed transaction are clearly outweighed by the public interest in meeting the convenience and needs of the community to be served. The Federal Reserve is also required to consider the financial and managerial resources and future prospects of the bank holding companies and banks concerned. The Federal Reserve’s consideration of financial resources generally focuses on capital adequacy, which is discussed below.

Under the Bank Holding Company Act, if we are adequately capitalized and adequately managed, we may purchase a bank located outside of Georgia. However, the laws of the other state may impose restrictions on the acquisition of a bank that has only been in existence for a limited amount of time or that would result in specified concentrations of deposits. For example, Georgia law prohibits a bank holding company from acquiring control of a bank until the target bank has been incorporated for three years. Because Summit Bank has been chartered for more than three years, this restriction would not limit our ability to sell.

Change in Bank Control. Subject to various exceptions, the Bank Holding Company Act and the Change in Bank Control Act, together with related regulations, require Federal Reserve approval prior to any person or company acquiring “control” of a bank holding company. Control is conclusively presumed to exist if an individual or company acquires 25% or more of any class of voting securities of a bank holding company. Control is rebuttably presumed to exist if a person or company acquires 10% or more, but less than 25%, of any class of voting securities and either:

• the bank holding company has registered securities under Section 12 of the Securities Exchange Act of 1934; or

• no other person owns a greater percentage of that class of voting securities immediately after the transaction.

The regulations provide a procedure for challenging any rebuttable presumption of control.

Permitted Activities. A bank holding company is generally permitted under the Bank Holding Company Act, to engage in, or acquire direct or indirect control of more than 5% of the voting shares of any company engaged in, the following activities:

• banking or managing or controlling banks; and

• any activity that the Federal Reserve determines to be so closely related to banking as to be a proper incident to the business of banking.

Activities that the Federal Reserve has found to be so closely related to banking as to be a proper incident to the business of banking include:

• factoring accounts receivable;

• making, acquiring, brokering or servicing loans and usual related activities;

• leasing personal or real property;

9

• operating a non-bank depository institution, such as a savings association;

• trust company functions;

• financial and investment advisory activities;

• conducting discount securities brokerage activities;

• underwriting and dealing in government obligations and money market instruments;

• providing specified management consulting and counseling activities;

• performing selected data processing services and support services;

• acting as agent or broker in selling credit life insurance and other types of insurance in connection with credit transactions; and

• performing selected insurance underwriting activities.

The Federal Reserve may order a bank holding company or its subsidiaries to terminate any of these activities or to terminate its ownership or control of any subsidiary when it has reasonable cause to believe that the bank holding company’s continued ownership, activity or control constitutes a serious risk to the financial safety, soundness or stability of it or any of its bank subsidiaries.

In addition to the permissible bank holding company activities listed above, a bank holding company may qualify and elect to become a financial holding company under the Gramm-Leach-Bliley Act Financial Services Modernization Act of 1999. A financial holding company may engage in additional activities that are financial in nature or incidental or complementary to financial activity. The Bank Holding Company Act expressly lists the following activities as financial in nature:

• lending, trust and other banking activities;

• insuring, guaranteeing or indemnifying against loss or harm, or providing and issuing annuities and acting as principal, agent or broker for these purposes, in any state;

• providing financial, investment or advisory services;

• issuing or selling instruments representing interests in pools of assets permissible for a bank to hold directly;

• underwriting, dealing in or making a market in securities;

• other activities that the Federal Reserve may determine to be so closely related to banking or managing or controlling banks as to be a proper incident to managing or controlling banks;

• foreign activities permitted outside of the U.S. if the Federal Reserve has determined them to be usual in connection with banking operations abroad;

• merchant banking through securities or insurance affiliates; and

• insurance company portfolio investments.

In order for Summit to qualify to become a financial holding company, Summit Bank and any other depository institution subsidiary of Summit is required to be well capitalized and well managed and have a Community Reinvestment Act rating of at least “satisfactory.” Additionally, we would be required to file an election with the Federal Reserve to become a financial holding company and provide the Federal Reserve with 30 days’ written notice prior to engaging in a permitted financial activity. While we meet the qualification standards applicable to financial holding companies, we have not elected to become a financial holding company at this time.

Support of Subsidiary Institution. Under Federal Reserve policy, we are expected to act as a source of financial strength for Summit Bank and to commit resources to support Summit Bank. This support may be required at times when, without this Federal Reserve policy, we might not be inclined to provide it. In addition, any capital loans made by us to Summit Bank will be repaid only after its deposits and various other obligations are repaid in full. In the unlikely event of our bankruptcy, any commitment by us to a federal bank regulatory agency to maintain the capital of Summit Bank will be assumed by the bankruptcy trustee and entitled to a priority of payment.

The Summit National Bank

Because Summit Bank is chartered as a national bank, it is primarily subject to the supervision, examination and reporting requirements of the National Bank Act and the regulations of the Office of the Comptroller of the Currency (OCC). The OCC regularly examines Summit Bank’s operations and has the authority to approve or disapprove mergers, the establishment of branches and similar corporate actions. The OCC also has the power to prevent the continuance or development of unsafe or unsound banking practices or other violations of law. Because Summit Bank’s deposits are insured by the FDIC to the maximum extent provided by law, it is also subject to certain FDIC regulations. Summit Bank is also subject to numerous state and federal statutes and regulations that affect its business, activities and operations.

10

Branching. National banks are required by the National Bank Act to adhere to branching laws applicable to state banks in the states in which their main office is located. Under Georgia law, Summit Bank may open branch offices throughout Georgia with the prior approval of the OCC. In addition, with prior regulatory approval, Summit Bank may acquire branches of existing banks located in Georgia. Summit Bank and any other national or state-chartered bank generally may branch across state lines by merging with banks in other states if allowed by the target states’ laws. Georgia law, with limited exceptions, currently permits branching across state lines through interstate mergers.

Under the Federal Deposit Insurance Act, states may “opt-in” and allow out-of-state banks to branch into their state by establishing a new start-up branch in the state. Currently, Georgia has not opted-in to this provision. Therefore, interstate merger is the only method through which a bank located outside of Georgia may branch into Georgia. This provides a limited barrier of entry into the Georgia banking market, which protects us from an important segment of potential competition. However, because Georgia has elected not to opt-in, our ability to establish a new start-up branch in another state is limited. Many states that have elected to opt-in have done so on a reciprocal basis, meaning that an out-of-state bank may establish a new start-up branch only if their home state has also elected to opt-in. Consequently, until Georgia changes its election, the only way we will be able to branch into states that have elected to opt-in on a reciprocal basis will be through interstate merger.

Prompt Corrective Action. The Federal Deposit Insurance Corporation Improvement Act of 1991 established a system of prompt corrective action to resolve the problems of undercapitalized financial institutions. Under this system, the federal banking regulators have established five capital categories (well capitalized, adequately capitalized, undercapitalized, significantly undercapitalized and critically undercapitalized) into which all institutions are placed. The federal banking agencies have specified by regulation the relevant capital level for each category. Federal banking regulators are required to take various mandatory supervisory actions and are authorized to take other discretionary actions with respect to institutions in the three undercapitalized categories. The severity of the action depends upon the capital category in which the institution is placed. Generally, subject to a narrow exception, the banking regulator must appoint a receiver or conservator for an institution that is critically undercapitalized.

An institution that is categorized as undercapitalized, significantly undercapitalized or critically undercapitalized is required to submit an acceptable capital restoration plan to its appropriate federal regulator. A bank holding company must guarantee that a subsidiary depository institution meets its capital restoration plan, subject to various limitations. The controlling holding company’s obligation to fund a capital restoration plan is limited to the lesser of 5% of an undercapitalized subsidiary’s assets at the time it became undercapitalized or the amount required to meet regulatory capital requirements. An undercapitalized institution is also generally prohibited from increasing its average total assets, making acquisitions, establishing any branches or engaging in any new line of business, except under an accepted capital restoration plan or with FDIC approval. The regulations also establish procedures for downgrading an institution to a lower capital category based on supervisory factors other than capital.

FDIC Insurance Assessments. The FDIC has adopted a risk-based assessment system for insured depository institutions that takes into account the risks attributable to different categories and concentrations of assets and liabilities. The system assigns an institution to one of three capital categories: (1) well capitalized; (2) adequately capitalized; and (3) undercapitalized. These three categories are substantially similar to the prompt corrective action categories described above, with the “undercapitalized” category including institutions that are undercapitalized, significantly undercapitalized and critically undercapitalized for prompt corrective action purposes. The FDIC also assigns an institution to one of three supervisory subgroups based on a supervisory evaluation that the institution’s primary federal regulator provides to the FDIC and information that the FDIC determines to be relevant to the institution’s financial condition and the risk posed to the deposit insurance funds. Assessments range from 0 to 27 cents per $100 of deposits, depending on the institution’s capital group and supervisory subgroup. In addition, the FDIC imposes assessments to help pay off the $780 million in annual interest payments on the $8 billion Financing Corporation bonds issued in the late 1980s as part of the government rescue of the thrift industry. This assessment rate is adjusted quarterly and is set at 1.32 cents per $100 of deposits for the first quarter of 2006.

The FDIC may terminate its insurance of deposits if it finds that the institution has engaged in unsafe and unsound practices, is in an unsafe or unsound condition to continue operations, or has violated any applicable law, regulation, rule, order or condition imposed by the FDIC.

Community Reinvestment Act. The Community Reinvestment Act requires that, in connection with examinations of financial institutions within their respective jurisdictions, the Federal Reserve, the FDIC or the OCC shall evaluate the record of each financial institution in meeting the credit needs of its local community, including low and moderate-income neighborhoods. These facts are also considered in evaluating mergers, acquisitions and applications to open a branch or facility. Failure to adequately meet these criteria could impose additional requirements and limitations on Summit Bank. Additionally, we must publicly disclose the terms of various Community Reinvestment Act-related agreements.

11

Other Regulations. Interest and other charges collected or contracted for by Summit Bank are subject to state usury laws and federal laws concerning interest rates. For example, under the Servicemembers Civil Relief Act, which amended the Soldiers’ and Sailors’ Civil Relief Act of 1940, a lender is generally prohibited from charging an annual interest rate in excess of 6% on any obligation of a borrower who is on active duty with the U.S. military.

Summit Bank’s loan operations are also subject to federal laws applicable to credit transactions, such as the:

• Federal Truth-In-Lending Act, governing disclosures of credit terms to consumer borrowers;

• Home Mortgage Disclosure Act of 1975, requiring financial institutions to provide information to enable the public and public officials to determine whether a financial institution is fulfilling its obligation to help meet the housing needs of the community it serves;

• Equal Credit Opportunity Act, prohibiting discrimination on the basis of race, creed or other prohibited factors in extending credit;

• Fair Credit Reporting Act of 1978, as amended by the Fair and Accurate Credit Transactions Act, governing the use and provision of information to credit reporting agencies, certain identity theft protections, and certain credit and other disclosures;

• Fair Debt Collection Act, governing the manner in which consumer debts may be collected by collection agencies; and

• the rules and regulations of the various federal agencies charged with the responsibility of implementing these federal laws.

The deposit operations of Summit Bank are subject to:

• the Right to Financial Privacy Act, which imposes a duty to maintain confidentiality of consumer financial records and prescribes procedures for complying with administrative subpoenas of financial records; and

• the Electronic Funds Transfer Act and Regulation E issued by the Federal Reserve to implement that act, which govern automatic deposits to and withdrawals from deposit accounts and customers’ rights and liabilities arising from the use of automated teller machines and other electronic banking services.

Capital Adequacy

Summit and Summit Bank are required to comply with the capital adequacy standards established by the Federal Reserve, in the case of Summit, and the OCC, in the case of Summit Bank. The Federal Reserve has established a risk-based and a leverage measure of capital adequacy for bank holding companies. Summit Bank is subject to risk-based and leverage capital requirements adopted by the OCC, which are substantially similar to those adopted by the Federal Reserve for bank holding companies.

The risk-based capital standards are designed to make regulatory capital requirements more sensitive to differences in risk profiles among banks and bank holding companies, to account for off-balance-sheet exposure, and to minimize disincentives for holding liquid assets. Assets and off-balance-sheet items, such as letters of credit and unfunded loan commitments, are assigned to broad risk categories, each with appropriate risk weights. The resulting capital ratios represent capital as a percentage of total risk-weighted assets and off-balance-sheet items.

The minimum guideline for the ratio of total capital to risk-weighted assets is 8%. Total capital consists of two components, Tier I Capital and Tier II Capital. Tier I Capital generally consists of common stock, minority interests in the equity accounts of consolidated depository institution subsidiaries, noncumulative perpetual preferred stock in consolidated non-depository subsidiaries and a limited amount of qualifying cumulative perpetual preferred stock and trust preferred securities, less goodwill and other specified intangible assets. Tier I Capital must equal at least 4% of risk-weighted assets. Tier II Capital generally consists of subordinated debt, other preferred stock and a limited amount of loan loss reserves. The total amount of Tier II Capital is limited to 100% of Tier I Capital. At December 31, 2005 our ratio of total capital to risk-weighted assets was 14.12% and our ratio of Tier I Capital to risk-weighted assets was 12.91%.

In addition, the Federal Reserve has established minimum leverage ratio guidelines for bank holding companies. These guidelines provide for a minimum ratio of Tier I Capital to average assets, less goodwill and other specified intangible assets, of 3% for bank holding companies that meet specified criteria, including having the highest regulatory rating and implementing the Federal Reserve’s risk-based capital measure for market risk. All other bank holding companies generally are required to maintain a leverage ratio of at least 4%. At December 31, 2005, our leverage ratio was 9.37%. The guidelines also provide that bank holding companies experiencing internal growth or making acquisitions will be expected to maintain strong capital positions substantially above the minimum supervisory levels without reliance on intangible assets. The Federal Reserve considers the leverage ratio and other indicators of capital strength in evaluating proposals for expansion or new activities.

12

Failure to meet capital guidelines could subject a bank or bank holding company to a variety of enforcement remedies, including issuance of a capital directive, the termination of deposit insurance by the FDIC, a prohibition on accepting brokered deposits and certain other restrictions on its business. As described above, significant additional restrictions can be imposed on FDIC-insured depository institutions that fail to meet applicable capital requirements.

Anti-Terrorism and Money Laundering Legislation

Summit Bank is subject to the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (the USA PATRIOT Act) as it amended the Bank Secrecy Act and the rules and regulations of the Office of Foreign Assets Control (OFAC). These statutes and related rules and regulations impose requirements and limitations on specific financial transactions and account relationships, intended to guard against money laundering and terrorism financing. Summit Bank has established a customer identification program pursuant to Section 326 of the USA PATRIOT Act and the Bank Secrecy Act, and otherwise has implemented policies and procedures to comply with the foregoing rules.

On January 17, 2006, we consented to the issuance of a consent order from the OCC that requires us to improve our compliance and operations infrastructure with respect to the BSA. The OCC did not impose any fine or civil money penalty in connection with this action. As part of the consent order, we agreed to strengthen our BSA internal controls, including the appointment of a compliance committee and the development and implementation of enhanced policies and procedures for BSA compliance; to enhance our programs and controls for customer identification and Suspicious Activity Reporting; to enhance our BSA audit functions; and to improve employee training relating to the detection and prevention of money laundering. We have designated a full-time BSA compliance officer to help us develop policies and procedures to improve our BSA compliance and have retained an outside consultant to present training programs on BSA compliance to our employees.

Payment of Dividends

We are a legal entity separate and distinct from Summit Bank. The principal sources of our cash flows, including cash flows to pay dividends to our shareholders, are dividends that Summit Bank pays to us, as we are the sole shareholder of Summit Bank. Statutory and regulatory limitations apply to Summit Bank’s payment of dividends to us as well as to our payment of dividends to our shareholders.

Summit Bank is required by federal law to obtain prior approval of the OCC for payments of dividends if the total of all dividends declared by Summit Bank’s Board of Directors in any year will exceed (1) the total of Summit Bank’s net profits for that year, plus (2) Summit Bank’s retained net profits of the preceding two years, less any required transfers to surplus. The payment of dividends by Summit and Summit Bank may also be affected by other factors, such as the requirement to maintain adequate capital above regulatory guidelines.

In addition, the OCC may require, after notice and a hearing, that Summit Bank stop or refrain from engaging any practice it considers unsafe or unsound. The federal banking agencies have indicated that paying dividends that deplete a depository institution’s capital base to an inadequate level would be an unsafe and unsound banking practice. Under the Federal Deposit Insurance Corporation Improvement Act of 1991, a depository institution may not pay any dividend if payment would cause it to become undercapitalized or if it already is undercapitalized. Moreover, the federal agencies have issued policy statements that provide that bank holding companies and insured banks should generally only pay dividends out of current operating earnings.

Restrictions on Transactions with Affiliates

Summit and Summit Bank are subject to the provisions of Section 23A of the Federal Reserve Act. Section 23A places limits on the amount of:

• a bank’s loans or extensions of credit to affiliates;

• a bank’s investment in affiliates;

• assets a bank may purchase from affiliates, except for real and personal property exempted by the Federal Reserve;

• loans or extensions of credit to third parties collateralized by the securities or obligations of affiliates; and

• a bank’s guarantee, acceptance or letter of credit issued on behalf of an affiliate.

13

The total amount of the above transactions is limited in amount, as to any one affiliate, to 10% of a bank’s capital and surplus and, as to all affiliates combined, to 20% of a bank’s capital and surplus. In addition to the limitation on the amount of these transactions, each of the above transactions must also meet specified collateral requirements. Summit Bank must also comply with other provisions designed to avoid the taking of low-quality assets.

Summit and Summit Bank are also subject to the provisions of Section 23B of the Federal Reserve Act which, among other things, prohibit an institution from engaging in the above transactions with affiliates unless the transactions are on terms substantially the same, or at least as favorable to the institution or its subsidiaries, as those prevailing at the time for comparable transactions with nonaffiliated companies.

Summit Bank is also subject to restrictions on extensions of credit to their executive officers, directors, principal shareholders and their related interests. These extensions of credit (1) must be made on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable transactions with third parties and (2) must not involve more than the normal risk of repayment or present other unfavorable features.

Privacy

Financial institutions are required to disclose their policies for collecting and protecting confidential information. Customers generally may prevent financial institutions from sharing nonpublic personal financial information with nonaffiliated third parties except under narrow circumstances, such as the processing of transactions requested by the consumer or when the financial institution is jointly sponsoring a product or service with a nonaffiliated third party. Additionally, financial institutions generally may not disclose consumer account numbers to any nonaffiliated third party for use in telemarketing, direct mail marketing or other marketing to consumers.

Federal Deposit Insurance Reform

On February 8, 2006, President Bush signed the Federal Deposit Insurance Reform Act of 2005 (FDIRA). The FDIC must adopt rules implementing the various provisions of FDIRA by November 5, 2006.

Among other things, FDIRA changes the Federal deposit insurance system by:

• raising the coverage level for retirement accounts to $250,000;

14

• indexing deposit insurance coverage levels for inflation beginning in 2012;

• prohibiting undercapitalized financial institutions from accepting employee benefit plan deposits;

• merging the Bank Insurance Fund and Savings Association Insurance Fund into a new Deposit Insurance Fund (the DIF); and

• providing credits to financial institutions that capitalized the FDIC prior to 1996 to offset future assessment premiums.

FDIRA also authorizes the FDIC to revise the current risk-based assessment system, subject to notice and comment and caps the amount of the DIF at 1.50% of domestic deposits. The FDIC must issue cash dividends, awarded on a historical basis, for the amount of the DIF over the 1.50% ratio. Additionally, if the DIF exceeds 1.35% of domestic deposits at year-end, the FDIC must issue cash dividends, awarded on a historical basis, for half of the amount of the excess.

Proposed Legislation and Regulatory Action

New regulations and statutes are regularly proposed that contain wide-ranging potential changes to the structures, regulations and competitive relationships of financial institutions operating and doing business in the U.S. We cannot predict whether or in what form any proposed regulation or statute will be adopted or the extent to which our business may be affected by any new regulation or statute.

Effect of Governmental Monetary Polices

Our earnings are affected by domestic economic conditions and the monetary and fiscal policies of the U.S. government and its agencies. The Federal Reserve has, and is likely to continue to have, an important impact on the operating results of commercial banks through its power to implement national monetary policy in order, among other things, to curb inflation or combat a recession. The Federal Reserve affects the levels of bank loans, investments and deposits through its control over the issuance of U.S. government securities, its regulation of the discount rate applicable to member banks and its influence over reserve requirements to which member banks are subject. We cannot predict the nature or impact of future changes in monetary and fiscal policies.

Employees

As of February 1, 2006, we had 127 full-time equivalent employees. We anticipate additional hiring in 2006 only for normal organic growth. The employees are not part of any collective bargaining agreement and we consider employee relations to be good.

15

Item 1A. Risk Factors.

An investment in our common stock involves risks. Before making an investment decision, investors should carefully consider the risks described below in conjunction with the other information in this report, including our consolidated financial statements and related notes. If any of the following risks or other risks, which have not been identified or which we may believe are immaterial or unlikely, actually occur, our business, financial condition and results of operations could be harmed. In such a case, the trading price of our common stock could decline, and investors may lose all or part of their investment

Risks Related to Our Business

If we do not promptly and successfully complete our acquisition of Concord Bank and integrate it and its internal controls into our business, we may not realize the expected benefits from the acquisition.

On December 8, 2005, we entered a binding contract to acquire Concord Bank. The acquisition is contingent upon conditions that may occur on a delayed basis or not at all. As a result, the closing of the acquisition may not occur in the timeframe that we expect, and it is possible that the closing may not occur at all. A delayed closing will set back our efforts to integrate Concord Bank’s business with ours and to expand our business into the Houston market. If we are unable to close the acquisition, we will have diverted resources away from pursuits that would have proved ultimately to be more beneficial to our business.

In addition, if we consummate the transaction, we may encounter unforeseen expenses as well as difficulties and complications in integrating Concord Bank’s operations with our overall operations. We expect to maintain most of Concord Bank’s key customers and personnel and integrate Concord Bank’s systems and procedures into ours with minimal cost and diversion of management time and attention. If we are unable to integrate Concord Bank in a timely manner, or if we experience disruptions with Concord Bank’s customer relationships or departures in Concord Bank’s key personnel, the anticipated benefits of the acquisition of Concord Bank may not be realized and our results of operations may be adversely affected. Pursuant to the merger agreement, if we do not consummate this transaction by April 30, 2006, either party has the right to terminate the merger.

If the value of real estate in our primary market areas were to decline materially, a significant portion of our loan portfolio could become under-collateralized, which could have a material adverse effect on us.

In addition to considering the financial strength and cash flow characteristics of borrowers, we often secure loans with real estate collateral. At December 31, 2005, approximately 76% of our loans had real estate as a primary or secondary component of collateral. The real estate collateral in each case provides an alternate source of repayment in the event of default by the borrower and may deteriorate in value during the time the credit is extended. If we are required to liquidate the collateral securing a loan to satisfy the debt during a period of reduced real estate values, our earnings and capital could be adversely affected.

Because of our geographic concentrations, a decline in the local economic conditions of any of our primary market areas may have a greater effect on our earnings and capital than on the earnings and capital of larger financial institutions whose real estate loan portfolios are more geographically diverse.

We have a concentration of credit exposure to borrowers in the retail trade industry and to small to medium-sized businesses.

At December 31, 2005, we had total credit exposure of approximately $128.1 million to borrowers in the retail trade industry, representing approximately 35.8% of our total loans outstanding as of that date. Our borrowers in this industry consist principally of convenience stores, restaurants, food stores and liquor stores. If these lines of business experience an economic slowdown, our borrowers in these businesses could become unable to perform their obligations under their loan agreements. This could negatively affect our earnings and cause the value of our common stock to decline.

Additionally, a substantial focus of our marketing and business strategy is to serve small to medium-sized businesses in our primary market areas. As a result, a relatively high percentage of our loan portfolio consists of commercial loans to these businesses. At December 31, 2005, commercial loans accounted for approximately 99% of our total loans. During periods of economic weakness, small to medium-sized businesses may be impacted more severely than larger businesses. Consequently, their ability to repay their loans may deteriorate, which would adversely affect our results of operations and financial condition.

We have a concentration of credit exposure in commercial real estate.

At December 31, 2005, we had approximately $125.8 million in loans to borrowers in the commercial real estate industry, representing approximately 35.1% of our total loans outstanding as of that date. The real estate consists primarily of office buildings

16

and shopping centers and also includes apartment buildings, owner-occupied properties and warehouses. These types of loans are generally viewed as having more risk of default than residential real estate loans or consumer loans. They are also typically larger than residential real estate loans and consumer loans and depend on the cash flows from the property to service the debt. Cash flows may be affected significantly by general economic conditions, and a downturn in the local economy or in occupancy rates in the local economy where the property is located could increase the likelihood of default. Because our loan portfolio contains a number of commercial real estate loans with relatively large balances, the deterioration of one or a few of these loans could cause a significant increase in our percentage of non-performing loans. An increase in non-performing loans could result in a loss of earnings from these loans, an increase in the provision for loan losses and an increase in charge-offs, all of which could have a material adverse effect on our financial condition and results of operations.

Our international banking services involve risks presented by economic and political volatility.

For the year ended December 31, 2005, interest income and fees from international banking services represented approximately 8% of our revenues and increased by 47% as compared to 2004. These fees are subject to volatility resulting from global economic and political uncertainties. Additionally, our international banking fee income typically increases as volume in international trade by our clients increases. As a result, events such as terrorist attacks, military actions, natural disasters and changes in laws or regulations governing cross-border transactions could decrease international trade activity and reduce our fee income. Given our emphasis on providing international banking services for our domestic customers, such events may have greater impact on us than on other community banks.

We are subject to a recent consent order from the OCC relating to our compliance with the Bank Secrecy Act (“BSA”). If the OCC finds that we continue to experience deficiencies in our BSA compliance, it could restrict our activities, impose civil money penalties or place limitations on the conduct of our business that could have a material adverse effect on us.

On January 17, 2006, we consented to the issuance of a consent order from the OCC that requires us to improve our compliance and operations infrastructure with respect to the BSA.

As part of the consent order, we agreed to strengthen our BSA internal controls, including the appointment of a compliance committee and the development and implementation of enhanced policies and procedures for BSA compliance; to enhance our programs and controls for customer identification and Suspicious Activity Reporting; to enhance our BSA audit functions; and to improve employee training relating to the detection and prevention of money laundering. We have incurred approximately $70,000 in additional expenses related to these activities and expect to incur similar expenses in connection with this regulatory action in the future. If the OCC finds that we continue to experience deficiencies in our BSA compliance, it could restrict our activities, impose civil money penalties, or place limitations on the conduct of our business that could have a material adverse effect on us. If the OCC continues to pursue regulatory action against us, our reputation could deteriorate.

We face strong competition from larger, more established competitors.

The banking business is highly competitive, and we experience strong competition from many other financial institutions. We compete with commercial banks, credit unions, savings and loan associations, mortgage banking firms, consumer finance companies, securities brokerage firms, insurance companies, money market funds and other financial institutions, which operate in our primary market areas and elsewhere. We also compete with locally-based “niche” banks that serve the Asian-American and other ethnic communities in our primary market areas. These banks are more established in the communities they serve and may be more familiar to local residents. We may have a competitive disadvantage compared to these banks because of our lack of familiarity with the local markets.

We compete with these institutions both in attracting deposits and in making loans. In addition, we must attract our customer base from other existing financial institutions and from new residents. Many of our competitors are well-established and much larger financial institutions, and we may face a competitive disadvantage as a result of our smaller size and lack of geographic diversification. Many of these competitors have substantially greater resources, lending limits and operating histories than we do and may offer services that we do not or cannot provide.

Our business could be harmed if we lose the services of any of our senior management team and are unable to recruit or retain a suitable replacement.

We believe that our success to date and our prospects for future success depend significantly on the efforts of our senior management team, which includes Pin Pin Chau, our Chief Executive Officer; David Yu, our President and Chairman of the Board of Summit Bank; Thomas J. Flournoy, our Chief Financial Officer; and H. A. Dudley, Jr., Executive Vice President and Chief Lending Officer of Summit Bank. We do not have an employment agreement with these officers or with any of our employees.

17

Therefore, they are free to terminate their employment with us at any time, and we could have difficulty replacing our officers with equally competent persons who are experienced in the specialized aspects of our business. The loss of the services of any of these persons could have an adverse effect on our business. In particular, Ms. Chau has announced her intention to retire in 2007, and we may not be successful in identifying or retaining a chief executive officer with the skills necessary to lead our company successfully.

If we fail to maintain an effective system of internal controls over financial reporting, we may not be able to accurately report our financial results or prevent fraud, which could adversely affect our business and the trading price of our stock.

We are currently in the process of evaluating our internal controls system to allow management to report on, and our independent auditors to audit, our internal controls over financial reporting. Following the consummation of our acquisition of Concord Bank, we will include its internal controls in this process and intend to integrate them with ours. As part of this process, we will perform the system and process evaluations and testing (and any necessary remediation) required to comply with the management certification and auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002. Assuming we complete our current offering during the first or second quarter of 2006, we may be required to begin complying with Section 404 as early as the current fiscal year; however, we cannot be certain as to the timing of completion of our evaluation, testing and remediation actions or the impact of the same on our operations. Furthermore, upon completion of this process, we may identify control deficiencies of varying degrees of severity under applicable SEC and Public Company Accounting Oversight Board rules and regulations that remain unremediated. As a public company, we will be required to report, among other things, certain control deficiencies. If we fail to satisfy the requirements of Section 404 in a timely manner, we may be subject to sanctions or investigation by regulatory authorities such as the SEC or the Nasdaq National Market. In addition, if any material weakness or deficiency is identified or is not remedied, investors may lose confidence in the accuracy of our reported financial information, and our stock price could be significantly adversely affected as a result.

We face risks with respect to future expansion and acquisitions or mergers.

We may seek to acquire other financial institutions or parts of those institutions and may continue to engage in de novo branch expansion in the future. Acquisitions and mergers involve a number of risks, including:

• the time and costs associated with identifying and evaluating potential acquisitions and merger partners may negatively affect our business;

• the estimates and judgments used to evaluate credit, operations, management and market risks with respect to the target institution may not be accurate;

• the time and costs of evaluating new markets, hiring experienced local management and opening new offices and the delays between these activities and the generation of sufficient assets and deposits to support the costs of the expansion may negatively affect our business;

• we may not be able to finance an acquisition without diluting our existing shareholders;

• the diversion of our management’s attention to the negotiation of a transaction may detract from their business productivity;

• we may enter into new markets where we lack experience;

• we may introduce new products and services into our business with which we have no prior experience; and

• we may incur an impairment of goodwill associated with an acquisition and experience adverse short-term effects on our results of operations.

In addition, no assurance can be given that we will be able to integrate our operations after an acquisition without encountering difficulties including, without limitation:

• the loss of key employees and customers; and

• the disruption of our respective ongoing businesses or possible inconsistencies in standards, controls, procedures and policies.

Successful integration of our operations with another entity’s will depend primarily on our ability to consolidate operations, systems and procedures and to eliminate redundancies and costs. If we have difficulties with an integration, we might not achieve the economic benefits we expect to result from any particular acquisition or merger. In addition, we may experience greater than expected costs or difficulties relating to such integration.

18

Our business strategy includes the continuation of growth plans, and our financial condition and results of operations could be negatively affected if we fail to grow or fail to manage our growth effectively.

We intend to continue pursuing a growth strategy for our business. Our ability to grow successfully will depend on a variety of factors, including the continued availability of desirable business opportunities, the competitive responses from other financial institutions in our market areas and our ability to manage our growth. Our prospects must be considered in light of the risks, expenses and difficulties frequently encountered by companies in significant growth stages of development. We may not be able to expand our market presence in our existing markets or enter new markets successfully, and such expansion could adversely affect our results of operations. Failure to manage our growth effectively could have a material adverse effect on our business, future prospects, financial condition or results of operations, and could adversely affect our ability to successfully implement our business strategy. Also, if our growth occurs more slowly than anticipated or declines, our operating results could be materially adversely affected.

Our expansion plans may require us to raise additional capital in the future, but that capital may not be available when it is needed or may be available only on unfavorable terms that could have a material adverse effect on our financial condition and results of operations.

We are required by federal and state regulatory authorities to maintain adequate levels of capital to support our operations. As a result, we may from time to time need to raise additional capital to support our continued growth. Our ability to raise additional capital will depend on conditions in the capital markets at that time, which are outside our control, and on our financial performance. Accordingly, we cannot assure you of our ability to raise additional capital on terms acceptable to us. If we cannot raise additional capital when needed, our ability to further expand our operations through internal growth and acquisitions could be materially impaired. Alternatively, we may be able to raise capital only by issuing debt on unfavorable terms to us that could have a material adverse effect on our financial condition and results of operations.

We are subject to the local economies where we operate, and unfavorable economic conditions in these areas could have a material adverse effect on our financial condition and results of operations.

Our success depends upon the growth in population, income levels and deposits in our primary market areas. If the communities, and more specifically the ethnic communities, in which we operate do not grow, or if prevailing economic conditions locally or nationally are unfavorable, our business may not succeed. Unpredictable economic conditions may have an adverse effect on the quality of our loan portfolio and our financial performance. Economic recession over a prolonged period or other economic problems in our market areas could have a material adverse impact on the quality of our loan portfolio and the demand for our products and services. Future adverse changes in the economies in our market areas may have a material adverse effect on our financial condition, results of operations or cash flows. Further, the banking industry in our primary market areas is affected by general economic conditions such as inflation, recession, unemployment and other factors beyond our control. As a community bank, we are less able to spread the risk of unfavorable local economic conditions than larger or more regional banks. Moreover, we cannot give any assurance that we will benefit from any market growth or favorable economic conditions in our primary market areas even if they do occur. See “Business — Market Areas.”

Our recent results may not be indicative of our future results.

We may not be able to sustain our historical rate of growth or may not even be able to grow our business at all. Various factors, such as poor economic conditions, changes in interest rates, regulatory and legislative considerations and competition may also impede or prohibit our ability to expand our market presence. If we experience a significant decrease in our rate of growth, our results of operations and financial condition may be adversely affected due to a high percentage of our operating costs being fixed expenses.

Our directors and executive officers own a significant portion of our common stock and can influence shareholder decisions.

Our directors and executive officers, as a group, beneficially owned approximately 34% of our fully diluted outstanding common stock as of January 31, 2006. As a result of their ownership, the directors and executive officers will have the ability, by voting their shares in concert, to influence the outcome of any matter submitted to our shareholders for approval, including the election of directors. The directors and executive officers may vote to cause Summit to take actions with which shareholders do not agree or that are not beneficial to shareholders.

19

Antitakeover provisions of our articles of incorporation may increase the control by current directors in a way that shareholders do not favor.

Certain provisions of our articles of incorporation may be deemed to have the effect of making an acquisition of control of our company more difficult when attempted in a transaction not approved by our Board of Directors. Our articles of incorporation authorize the issuance of “special stock” with such designations, rights and preferences as may be determined from time to time by the Board of Directors. Accordingly, the Board of Directors is empowered, without shareholder approval, to issue special stock with dividend, liquidation, conversion, voting or other rights that could adversely affect the voting power or other rights of the holders of common stock. In the event of such issuance, the special stock could also be used, under certain circumstances, as a method of discouraging, delaying or preventing a change in control of our company. Although we do not currently intend to issue any shares of special stock, we may issue such shares in the future.

Our articles of incorporation also provide that the Board of Directors will be divided into three classes serving staggered three-year terms and that a director may only be removed for cause upon a 66 ²/3% vote of our shareholders. These provisions could enable a minority of our shareholders to prevent the removal of a director sought to be removed by a majority of the shareholders and may tend to enhance management’s ability to retain control over our affairs and to preserve the director’s present position on the board.

Finally, our articles of incorporation require approval by at least 66 ²/3% of our shareholders of a merger or consolidation with, or sale of at least 20% of our assets to, another entity if that entity and its affiliates beneficially own more than five percent of our then-outstanding shares of common stock. This special voting requirement will not apply, however, to a transaction approved by at least 80% of our directors. This provision makes it more difficult for a potential acquiror to acquire us without significant support from our Board of Directors. Amendment of any of the provisions of our articles of incorporation requires the vote of at least 66 ²/3% of our shareholders.

Risks Related to Our Industry

Changes in the interest rate environment could reduce our profitability.

Our profitability depends substantially upon our net interest income. Net interest income is the difference between the interest earned on assets, such as loans and investment securities, and the interest paid for liabilities, such as savings and time deposits. Market interest rates for loans, investments and deposits are highly sensitive to many factors beyond our control. Recently, interest rate spreads have generally narrowed due to changing market conditions, policies of various government and regulatory authorities and competitive pricing pressures, and we cannot predict whether these rate spreads will narrow even further. This narrowing of interest rate spreads could adversely affect our earnings and financial condition. In addition, we cannot predict whether interest rates will continue to remain at present levels. Changes in interest rates may cause significant changes, up or down, in our net interest income. Even if rates remain constant, a decrease in the percentage of our deposit base consisting of non-interest-bearing deposits could adversely affect our net interest income. Depending on our portfolio of loans and investments, our results of operations may be adversely affected by changes in interest rates. In addition, any significant increase in prevailing interest rates could adversely affect our mortgage banking business because higher interest rates could cause customers to request fewer refinancings and purchase money mortgage originations.

We could suffer loan losses from a decline in credit quality.

We could sustain losses if borrowers, guarantors and related parties fail to perform in accordance with the terms of their loans. Our underwriting and credit monitoring procedures and credit policies, including the establishment and review of the allowance for loan losses, may not prevent unexpected losses that could materially adversely affect our results of operations. See “Business—Lending Activities.”

If our allowance for loan losses is not sufficient to cover actual loan losses, our earnings could decrease.

Our loan customers may not repay their loans according to the terms of these loans, and the collateral securing the payment of these loans may be insufficient to assure repayment. We may experience significant loan losses, which could have a material adverse effect on our operating results. Management makes various assumptions and judgments about the collectibility of our loan portfolio, including the creditworthiness of our borrowers and the value of the real estate and other assets serving as collateral for the repayment of many of our loans. We maintain an allowance for loan losses in an attempt to cover any loan losses that may occur. In determining the size of the allowance, we rely on an analysis of our loan portfolio based on historical loss experience, volume and types of loans, trends in classification, volume and trends in delinquencies and non-accruals, national and local economic conditions and other pertinent information. As we expand into new markets, our determination of the size of the allowance could be inaccurate due to our lack of familiarity with market-specific factors.

20

If our assumptions are wrong, our current allowance may not be sufficient to cover our loan losses, and adjustments may be necessary to allow for different economic conditions or adverse developments in our loan portfolio. Material additions to our allowance would materially decrease our net income. Our allowance for loan losses was $4.6 million, or 1.27% of loans, as of December 31, 2005.

In addition, federal and state regulators periodically review our allowance for loan losses and may require us to increase our provision for loan losses or recognize future loan charge-offs based on judgments different than those of our management. Any increase in our allowance for loan losses or loan charge-offs as required by these regulatory agencies could have a negative effect on our operating results.

We are subject to extensive regulation that could limit or restrict our activities and impose financial requirements or limitations on the conduct of our business.

As a bank holding company, we are primarily regulated by the Board of Governors of the Federal Reserve System (the “Federal Reserve”). Our bank subsidiary is primarily regulated by the OCC. Our compliance with Federal Reserve and OCC regulations is costly and may limit our growth and restrict certain of our activities, including payment of dividends, mergers and acquisitions, investments, loans and interest rates charged, interest rates paid on deposits and locations of offices. We are also subject to capital requirements of our regulators.

The laws and regulations applicable to the banking industry could change at any time, and we cannot predict the effects of these changes on our business and profitability. Because government regulation greatly affects the business and financial results of all commercial banks and bank holding companies, our cost of compliance could adversely affect our ability to operate profitably.

The Sarbanes-Oxley Act of 2002 and the related rules and regulations promulgated by the Securities and Exchange Commission and the Nasdaq National Market that apply to us have increased the scope, complexity and cost of corporate governance, reporting and disclosure practices. As a result, we may experience greater compliance costs.

Changes in monetary policies may have an adverse effect on our business.

Our results of operations are affected by credit policies of monetary authorities, particularly the Federal Reserve. Actions by monetary and fiscal authorities, including the Federal Reserve, could have an adverse effect on our deposit levels, loan demand or business and earnings. See “Business—Supervision and Regulation.”

Item 1B. Unresolved Staff Comments.

None.

Item 2. Properties.

The following table provides information about our properties:

Location	Owned/ Leased	Lease Expiration	Square Footage
Atlanta, Georgia
Main office 4360 Chamblee-Dunwoody Rd.	Leased	2007 (1st floor) 2010 (3rd floor)	23,475
Asian Banking Center 3490 Shallowford Rd.	Owned	—	18,000
Vinings Branch 2727 Paces Ferry Rd.	Leased	2007	5,266
Peachtree Corners Branch 3280 Holcomb Bridge Road	Leased	2010	2,500
Deposit Processing Center* Phoenix Blvd.	Leased	2009	2,706

21

Location	Owned/ Leased	Lease Expiration	Square Footage
Park Village Branch 2540 Pleasant Hill Rd.	Leased	2015	4,800
San Jose, California
San Jose Branch 1648-A Tully Rd.	Leased	2019	3,570
Fremont Branch 46615 Mission Blvd.	Leased	2008	5,092
San Diego, California
Loan Production Office 12707 High Bluff Dr.	Leased	Nov. 2006	170

* We anticipate closing this limited-service location during 2006.

Additionally, Concord Bank owns its main office in Houston, Texas and does not have any other branches. It does, however, own a parcel of land in Houston that we may develop as a branch site in the future, assuming completion of the acquisition.

Item 3. Legal Proceedings.

We are involved in no material legal proceedings, other than ordinary routine litigation incidental to our business. Our management does not believe that such legal proceedings, individually or in the aggregate, are likely to have a material adverse effect on our results of operations, cash flows or financial condition.

Item 4. Submission of Matters to a Vote of Security-Holders.

No matter was submitted during the fourth quarter of the fiscal year covered by this report to a vote of security-holders, through the solicitation of proxies or otherwise.

22

PART II.

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.

Our common stock is listed on the Nasdaq National Market under the symbol “SBGA.” As of March 7, 2006 there were 5,694,604 shares of our common stock outstanding, held by approximately 334 holders of record. The par value of our common stock is $0.01 per share. Additionally, there are an estimated 1,138 shareholders who hold shares in various brokerage and investment accounts.

The following table sets forth for the periods indicated the high and low sale prices (adjusted for stock splits) for our common stock as reported by the Nasdaq National Market and the cash dividends paid per share on our common stock during each quarter.

	High		Low		Cash Dividends Per Share
2006
First quarter*	$	16.49	$	14.60	$	0.10
2005
Fourth quarter	$	16.70	$	14.10	$	0.10
Third quarter		15.28		13.65		0.10
Second quarter		16.30		13.25		0.10
First quarter		17.30		15.01		0.10
2004
Fourth quarter	$	18.70	$	16.25	$	0.10
Third quarter		18.68		15.90		0.10
Second quarter		17.60		14.02		0.10
First quarter		16.98		10.90		0.10

* Through March 7, 2006

Holders of our common stock are entitled to receive dividends when, as and if declared by our Board of Directors out of funds legally available for that purpose. We paid cash dividends of $0.40 per share in each of 2005 and 2004. Although we currently plan to continue paying cash dividends on a quarterly basis, our dividend policy may change in the future. The declaration and payment of dividends will depend upon business conditions, operating results, capital and reserve requirements and the Board of Directors’ consideration of other relevant factors.

There are a number of restrictions on our ability to pay cash dividends. It is the policy of the Federal Reserve that bank holding companies should pay cash dividends on common stock only out of net income available over the past year and only if prospective earnings retention is consistent with the organization’s expected future needs and financial condition. The policy provides that bank holding companies should not maintain a level of cash dividends that undermines the bank holding company’s ability to serve as a source of strength to its banking subsidiaries. Our ability to pay cash dividends is further subject to our continued payment of interest that we owe on our junior subordinated debentures. As of December 31, 2005, we had approximately $12.0 million of junior subordinated debentures outstanding. We have the right to defer payment of interest on the junior subordinated debentures for a period not exceeding 20 consecutive quarters. If we defer, or fail to make, interest payments on the junior subordinated debentures, or if we fail to comply with certain covenants under our loan agreements, we will be prohibited, subject to certain exceptions, from paying cash dividends on our common stock until we pay all deferred interest and resume interest payments on the junior subordinated debentures and until we comply with the covenants under our loan agreements.

Our principal source of cash will be dividends paid by Summit Bank with respect to its capital stock. There are certain restrictions on the payment of these dividends imposed by federal banking laws, regulations and authorities. As of December 31, 2005, an aggregate of approximately $8.56 million was available for payment of dividends by Summit Bank to us under applicable regulatory restrictions, without regulatory approval. Regulatory authorities could impose administratively stricter limitations on the ability of Summit Bank to pay dividends to us if such limits were deemed appropriate to preserve certain capital adequacy requirements. See “Business—Supervision and Regulation—Payment of Dividends.”

During the fourth quarter of 2005, we did not repurchase any of our securities or sell any of our securities without registration under the Securities Act of 1933, as amended.

23

Item 6. Selected Financial Data.

Our selected consolidated financial data is presented below as of and for the years ended December 31, 2001 through 2005. The selected financial data presented below as of December 31, 2005 and 2004 and for each of the years in the three-year period ended December 31, 2005, are derived from our audited consolidated financial statements and related notes included in this report and should be read in conjunction with the consolidated financial statements and related notes, along with “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” The selected consolidated financial data as of December 31, 2003, 2002 and 2001 and for the two years ended December 31, 2002 and 2001 have been derived from our audited consolidated financial statements that are not included in this report. Our audited consolidated financial statements for the years ended December 31, 2003, 2002 and 2001 are included as exhibits to our annual reports on Form 10-K filed with the Securities and Exchange Commission on March 19, 2004, March 28, 2003 and March 27, 2002, respectively. The per share financial data presented below has been adjusted to give effect to the 3-for-2 stock split in the form of a stock dividend effected on February 17, 2004.

	As of or for the year ended December 31,
	2005			2004			2003			2002			2001
	(Dollars in thousands, except share and per share data)
Balance Sheet Data:
Total assets	$	525,922		$	547,708		$	477,145		$	402,860		$	341,443
Investment securities		125,187			151,891			125,726			112,924			90,209
Loans		357,986			339,205			317,072			258,723			219,744
Allowance for loan losses		4,555			4,549			4,047			3,435			3,234
Deposits		438,232			434,453			368,599			317,426			294,924
Federal Home Loan Bank advances		20,000			25,000			25,000			20,000			10,000
Other borrowed funds		8,717			35,394			34,957			30,725			5,466
Long-term debentures		12,000			12,000			12,000			—			—
Shareholders’ equity		36,639			34,629			32,736			31,176			27,396
Income Statement Data:
Interest income	$	31,261		$	26,828		$	23,648		$	21,901		$	23,539
Interest expense		10,274			8,260			7,145			8,099			11,074
Net interest income		20,987			18,568			16,503			13,885			12,587
Provision for loan losses		539			1,090			1,199			1,130			755
Net interest income after provision for loan losses		20,448			17,478			15,304			12,672			11,710
Noninterest income		3,633			3,790			3,829			4,940			3,062
Noninterest expense		15,583			13,737			12,211			11,808			11,002
Income before income tax expense		8,498			7,531			6,922			5,887			3,892
Income tax expense		2,386			2,378			2,100			1,743			1,280
Net income		6,112			5,153			4,822			4,144			2,612
Per Share Data:
Book value	$	6.43		$	6.09		$	5.79		$	5.51		$	4.72
Basic earnings		1.07			0.91			0.85			0.74			0.44
Diluted earnings		1.07			0.91			0.85			0.74			0.44
Weighted-average shares outstanding—basic		5,694,222			5,686,563			5,652,604			5,636,904			5,905,365
Weighted-average shares outstanding—diluted		5,695,765			5,687,303			5,672,007			5,646,608			5,905,365
Dividends declared	$	0.40		$	0.40		$	0.35		$	0.27		$	0.24
Dividend payout ratio		37.26	%		44.15	%		40.63	%		36.36	%		53.73	%
Performance Ratios:
Return on average assets		1.16	%		1.03	%		1.11	%		1.12	%		0.80	%
Return on average equity		17.36	%		15.29	%		15.09	%		14.61	%		9.65	%
Efficiency ratio		63.30	%		61.84	%		60.35	%		63.59	%		71.43	%
Net interest margin		4.31	%		3.96	%		4.10	%		4.04	%		4.18	%
Average loans to average deposits		79.61	%		83.37	%		81.30	%		78.56	%		72.42	%
Capital Ratios:
Average equity to average assets		6.67	%		6.72	%		7.38	%		7.60	%		8.31	%
Tier I capital to risk-weighted assets		12.91	%		12.41	%		12.26	%		10.23	%		11.06	%
Total capital to risk-weighted assets		14.12	%		13.92	%		14.09	%		11.49	%		12.31	%
Tier I capital to average tangible assets		9.37	%		8.56	%		8.52	%		7.04	%		7.69	%
Asset Quality Ratios:
Net loans charged-off to average loans		0.16	%		0.18	%		0.21	%		0.38	%		0.33	%
Provision for loan losses to average loans		0.16	%		0.33	%		0.42	%		0.47	%		0.33	%
Non-performing assets total loans and other real estate		0.33	%		0.84	%		0.12	%		0.39	%		0.21	%
Allowance for loan losses to total loans		1.27	%		1.34	%		1.28	%		1.33	%		1.47	%

24

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Incorporated by reference to the 2005 Annual Report to Shareholders. See Exhibit 13.1, pages 1 through 20.

Item 7a. Quantitative and Qualitative Disclosures About Market Risk.

Incorporated by reference to the 2005 Annual Report to Shareholders. See Exhibit 13.1, page 18.

Item 8. Financial Statements and Supplementary Data.

Incorporated by reference to the 2005 Annual Report to Shareholders. See Exhibit 13.1, pages F-2 through F-31.

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

None.

Item 9A. Controls and Procedures

As of the end of the period covered by this report, our management, including our Chief Executive Officer and Chief Financial Officer, reviewed and evaluated the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Exchange Act Rule 13a-15. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures are effective in timely alerting them to material information relating to us (including our consolidated subsidiaries) that is required to be included in our periodic filings with the Securities and Exchange Commission. There have been no significant changes in our internal controls or, to our knowledge, in other factors that could significantly affect those internal controls subsequent to the date management carried out its evaluation, and there have been no corrective actions with respect to significant deficiencies or material weaknesses.

Item 9B. Other Information

None.

25

PART III

Item 10. Directors and Executive Officers of the Registrant

We have a Code of Conduct that applies to all of our employees (including our principal executive, financial and accounting officers) and directors. A copy of the Code of Conduct is posted on our website at www.summitbk.com under “Investor Relations/Officers and Directors.” Additional information regarding our directors and executive officers is incorporated by reference to the Definitive Proxy Statement for the 2006 Annual Shareholders’ Meeting.

Item 11. Executive Compensation

Incorporated by reference to the Definitive Proxy Statement for the 2006 Annual Shareholders’ Meeting.

Item 12. Security Ownership of Certain Beneficial Owners and Management

The following table provides information regarding compensation plans under which our equity securities are authorized for issuance. All data is presented as of December 31, 2005.

Equity Compensation Plan Table

Plan category	(a) Number of securities to be issued upon exercise of outstanding options, warrants and rights	(b) Weighted-average exercise price of outstanding options, warrants and rights		(c) Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a))
Equity compensation plans approved by security holders	90,000	$	15.04	589,409
Equity compensation plans not approved by security holders	—		—	—
Total	90,000	$	15.04	589,409

Additional disclosure is incorporated by reference to “Security Ownership of Certain Beneficial Owners and Management” heading in the Definitive Proxy Statement for the 2006 Annual Shareholders’ Meeting.

Item 13. Certain Relationships and Related Transactions

Incorporated by reference to the “Related Party Transactions” heading in the Definitive Proxy Statement for the 2006 Annual Shareholders’ Meeting.

Item 14. Principal Accountant Fees and Services

Incorporated by reference to the “Independent Auditors” heading in the Definitive Proxy Statement for the 2006 Annual Shareholders’ Meeting.

26

PART IV

Item 15. Exhibits and Financial Statement Schedules

(a) The following documents are filed as part of this report:

1. Financial Statements – The consolidated financial statements, notes to consolidated financial statements, and report of independent registered public accounting firm thereon, appear in the excerpts from the 2005 Annual Report to Shareholders attached as Exhibit 13.1 to this report.

2. Financial Statement Schedules – These are omitted as they are not required or are not applicable or the information is contained in the Consolidated Financial Statements.

3. Exhibits (numbered in accordance with Item 601 of Regulation S-K). Our SEC file number for exhibits incorporated by reference is 0-21267.

Exhibit Number	Exhibit
2.1	Agreement and Plan of Merger among Summit Bank Corporation, The Summit National Bank and Concord Bank, N.A. dated December 8, 2005 (incorporated by reference to Exhibit 2.1 to the Company’s Current Report on Form 8-K filed on December 12, 2005)
3.1	Amended and Restated Articles of Incorporation of Summit Bank Corporation (incorporated by reference to Exhibit 3.1 to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2002)
3.2	Bylaws of Summit Bank Corporation, as amended (incorporated by reference to Exhibit 3.2 to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2002)
4.1	The rights of security holders are defined in (i) Articles Five, Six, Nine, Ten, Eleven, Thirteen, Fourteen, and Sixteen of the Amended and Restated Articles of Incorporation of Summit Bank Corporation and (ii) Articles Two, Three, Eight, Ten, and Eleven of the amended Bylaws of Summit Bank Corporation, as provided in Exhibits 3.1 and 3.2, respectively.
4.2	Indenture dated September 30, 2003 between Summit Bank Corporation and The Bank of New York relating to Trust Preferred Securities issued by the Company (incorporated by reference to Exhibit 4.2 to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2003).
10.1*	Summit Bank Corporation 1998 Stock Incentive Plan, as of February 23, 1998 (incorporated by reference to Appendix A to the Company’s Proxy Statement filed on March 18, 1998)
10.1a*	Form of option agreement pursuant to the Summit Bank Corporation 1998 Stock Incentive Plan for employees (incorporated by reference to Exhibit 10.1a to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2005)
10.1b*	Form of option agreement pursuant to the Summit Bank Corporation 1998 Stock Incentive Plan for non-employees (incorporated by reference to Exhibit 10.1b to the Annual Report on Form 10-K for the fiscal year ended December 31, 2005)
10.2	Lease Agreement dated December 3, 1993, between Baker Dennard Co., Lessor, and The Summit National Bank, Lessee (incorporated by reference to Exhibit 10.4 to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 1993) (Main office).
10.2a	Fifth Amendment to Lease Agreement (referenced in Exhibit 10.2 and incorporating amendments One through Four), dated March 13, 2000, between The Realty Associates Fund IV, L.P., successor in interest to Baker Dennard Co., Lessor, and The Summit National Bank, Lessee (incorporated by reference to Exhibit 10.2a to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2000) (Main office).

27

Exhibit Number	Exhibit
10.2b	Sixth Amendment to Lease Agreement (referenced in Exhibit 10.2), dated January 4, 2001 between The Realty Associates Fund IV, L.P., successor in interest to Baker Dennard Co, Lessor, and The Summit National Bank, Lessee (incorporated by reference to Exhibit 10.2b to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2000) (Main office).
10.2c	Seventh Amendment to Lease Agreement (referenced in Exhibit 10.2), dated March 29, 2002 between The Realty Associates Fund IV, L.P., successor in interest to Baker Dennard Co, Lessor, and The Summit National Bank, Lessee (incorporated by reference to Exhibit 10.2c to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2002) (Main office).
10.3*	Change in Control Agreement dated August 25, 1995 by and between Pin Pin Chau, President of Summit Bank Corporation and The Summit National Bank (incorporated by reference to Exhibit 10.7 to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 1995).
10.4*	Change in Control Agreement dated August 25, 1995 by and between David Yu, President of Summit Bank Corporation and The Summit National Bank (incorporated by reference to Exhibit 10.8 to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 1995).
10.5*	Change in Control Agreement dated August 25, 1995 by and between Alec Dudley, Executive Vice President of Summit Bank Corporation and The Summit National Bank (incorporated by reference to Exhibit 10.9 to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 1995).
10.6*	Change in Control Agreement dated May 31, 2005 by and between Thomas J. Flournoy, Executive Vice President of Summit Bank Corporation and The Summit National Bank (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K dated June 3, 2005).
10.7*	Post Retirement Compensation Agreement dated December 20, 2004 by and between Pin Pin Chau, Chief Executive Officer of Summit Bank Corporation and The Summit National Bank (incorporated by reference to Exhibit 10.7 to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2004).
10.8*	Summary of Director Compensation
13.1	Excerpts from 2005 Annual Report to Shareholders •      Management’s Discussion and Analysis of Financial Condition and Results of Operations •      Consolidated Financial Statements, Notes Thereto and Report of Independent Registered Public Accounting Firm Thereon
14.1	Code of Ethics (incorporated by reference to Exhibit 14.1 to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2003)
21.1	Subsidiaries of Summit Bank Corporation
23.1	Consent of Independent Registered Public Accounting Firm
31.1	Certification of Chief Executive Officer
31.2	Certification of Chief Financial Officer
32.1	Certifications of Chief Executive Officer and Chief Financial Officer

* Denotes a management contract, compensatory plan or arrangement

28

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, on March 8, 2006.

SUMMIT BANK CORPORATION
BY:	/s/ Pin Pin Chau
	Pin Pin Chau
	Chief Executive Officer

29

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

/s/ Pin Pin Chau Pin Pin Chau	Director, Chief Executive Officer (Principal Executive Officer)	Dated: March 8, 2006
/s/ Thomas J. Flournoy Thomas J. Flournoy	Executive Vice President and Chief Financial Officer (Principal Financial and Accounting Officer)	Dated: March 8, 2006
/s/ David Yu David Yu	Director, President	Dated: March 8, 2006
/s/ Carl L. Patrick, Jr. Carl L. Patrick, Jr.	Director, Chairman of the Board	Dated: March 8, 2006
/s/ Gerald L. Allison Gerald L. Allison	Director, Vice Chairman of the Board	Dated: March 8, 2006
/s/ Aaron I. Alembik Aaron I. Alembik	Director	Dated: March 8, 2006
/s/ Paul C.Y. Chu Paul C.Y. Chu	Director	Dated: March 8, 2006
/s/ Peter M. Cohen Peter M. Cohen	Director	Dated: March 8, 2006
/s/ Jose I. Gonzalez Jose I. Gonzalez	Director	Dated: March 8, 2006
/s/ Jack N. Halpern Jack N. Halpern	Director	Dated: March 8, 2006
/s/ Donald R. Harkleroad Donald R. Harkleroad	Director	Dated: March 8, 2006
/s/ Shafik H. Ladha Shafik H. Ladha	Director	Dated: March 8, 2006
/s/ James S. Lai James S. Lai	Director	Dated: March 8, 2006
/s/ Sion Nyen (Francis) Lai Sion Nyen (Francis) Lai	Director	Dated: March 8, 2006
/s/ Shih Chien (Raymond) Lo Shih Chien (Raymond) Lo	Director	Dated: March 8, 2006
/s/ W. Clayton Sparrow, Jr. W. Clayton Sparrow, Jr.	Director	Dated: March 8, 2006
/s/ Howard L. Tai Howard H. L. Tai	Director	Dated: March 8, 2006

30

Index to Exhibits

Exhibit Number	Exhibit
2.1	Agreement and Plan of Merger among Summit Bank Corporation, The Summit National Bank and Concord Bank, N.A. dated December 8, 2005 (incorporated by reference to Exhibit 2.1 to the Company’s Current Report on Form 8-K filed on December 12, 2005)
3.1	Amended and Restated Articles of Incorporation of Summit Bank Corporation (incorporated by reference to Exhibit 3.1 to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2002)
3.2	Bylaws of Summit Bank Corporation, as amended (incorporated by reference to Exhibit 3.2 to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2002)
4.1	The rights of security holders are defined in (i) Articles Five, Six, Nine, Ten, Eleven, Thirteen, Fourteen, and Sixteen of the Amended and Restated Articles of Incorporation of Summit Bank Corporation and (ii) Articles Two, Three, Eight, Ten, and Eleven of the amended Bylaws of Summit Bank Corporation, as provided in Exhibits 3.1 and 3.2, respectively.
4.2	Indenture dated September 30, 2003 between Summit Bank Corporation and The Bank of New York relating to Trust Preferred Securities issued by the Company (incorporated by reference to Exhibit 4.2 to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2003).
10.1*	Summit Bank Corporation 1998 Stock Incentive Plan, as of February 23, 1998 (incorporated by reference to Appendix A to the Company’s Proxy Statement filed on March 18, 1998)
10.1a*	Form of option agreement pursuant to the Summit Bank Corporation 1998 Stock Incentive Plan for employees (incorporated by reference to Exhibit 10.1a to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2005)
10.1b*	Form of option agreement pursuant to the Summit Bank Corporation 1998 Stock Incentive Plan for non-employees (incorporated by reference to Exhibit 10.1b to the Annual Report on Form 10-K for the fiscal year ended December 31, 2005)
10.3	Lease Agreement dated December 3, 1993, between Baker Dennard Co., Lessor, and The Summit National Bank, Lessee (incorporated by reference to Exhibit 10.4 to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 1993) (Main office).
10.2a	Fifth Amendment to Lease Agreement (referenced in Exhibit 10.2 and incorporating amendments One through Four), dated March 13, 2000, between The Realty Associates Fund IV, L.P., successor in interest to Baker Dennard Co., Lessor, and The Summit National Bank, Lessee (incorporated by reference to Exhibit 10.2a to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2000) (Main office).
10.2b	Sixth Amendment to Lease Agreement (referenced in Exhibit 10.2), dated January 4, 2001 between The Realty Associates Fund IV, L.P., successor in interest to Baker Dennard Co, Lessor, and The Summit National Bank, Lessee (incorporated by reference to Exhibit 10.2b to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2000) (Main office).
10.2c	Seventh Amendment to Lease Agreement (referenced in Exhibit 10.2), dated March 29, 2002 between The Realty Associates Fund IV, L.P., successor in interest to Baker Dennard Co, Lessor, and The Summit National Bank, Lessee (incorporated by reference to Exhibit 10.2c to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2002) (Main office).
10.3*	Change in Control Agreement dated August 25, 1995 by and between Pin Pin Chau, President of Summit Bank Corporation and The Summit National Bank (incorporated by reference to Exhibit 10.7 to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 1995).
10.4*	Change in Control Agreement dated August 25, 1995 by and between David Yu, President of Summit Bank Corporation and The Summit National Bank (incorporated by reference to Exhibit 10.8 to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 1995).

31

Exhibit Number	Exhibit
10.5*	Change in Control Agreement dated August 25, 1995 by and between Alec Dudley, Executive Vice President of Summit Bank Corporation and The Summit National Bank (incorporated by reference to Exhibit 10.9 to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 1995).
10.6*	Change in Control Agreement dated May 31, 2005 by and between Thomas J. Flournoy, Executive Vice President of Summit Bank Corporation and The Summit National Bank (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K dated June 3, 2005).
10.7*	Post Retirement Compensation Agreement dated December 20, 2004 by and between Pin Pin Chau, Chief Executive Officer of Summit Bank Corporation and The Summit National Bank (incorporated by reference to Exhibit 10.7 to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2004).
10.8*	Summary of Director Compensation
13.1	Excerpts from 2005 Annual Report to Shareholders •      Management’s Discussion and Analysis of Financial Condition and Results of Operations •      Consolidated Financial Statements, Notes Thereto and Report of Independent Registered Public Accounting Firm Thereon
14.1	Code of Ethics (incorporated by reference to Exhibit 14.1 to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2003)
21.1	Subsidiaries of Summit Bank Corporation
23.1	Consent of Independent Registered Public Accounting Firm
31.1	Certification of Chief Executive Officer
31.2	Certification of Chief Financial Officer
32.1	Certifications of Chief Executive Officer and Chief Financial Officer

* Denotes a management contract, compensatory plan or arrangement

32

EX-10.8

Exhibit 10.8

Summary of Director Compensation

Each non-employee director of Summit and Summit Bank receives an attendance fee of $800 for each meeting of the board of directors, as well as a fee of $250 for each committee meeting attended. Summit’s chairman receives an additional $1,000 per month. The committee chairmen receive $300 per committee meeting, except for the Audit Committee chairman who receives $500 per Audit Committee meeting. A director who is an employee of Summit or Summit Bank receives no fees or other compensation for serving as a director, or as a member of a board committee, from either Summit or Summit Bank.

EX-13.1

Exhibit 13.1

Excerpts from the 2005 Annual Report to Shareholders

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis should be read in conjunction with our financial statements and notes included in this report. The discussion in this report contains forward-looking statements that involve risks and uncertainties, such as our plans, objectives, expectations and intentions. The cautionary statements made in this report should be read as applying to all related forward-looking statements wherever they appear in this report. Our actual results could differ materially from those discussed in this report.

All per share data has been retroactively adjusted for the 3-for-2 stock split in the form of a stock dividend effected on February 17, 2004. Retroactive adjustments were also made to all per share data for the previous stock splits. Certain reclassifications have been made to the prior years’ financial presentation to conform to the current year presentation.

Overview

As of December 31, 2005, we had total assets of $525.9 million, total loans of $358.0 million, total deposits of $438.2 million and shareholders’ equity of $36.6 million. While loan and deposit growth slowed compared to historic growth rates and total assets declined as a result of the repositioning of our balance sheet to reduce our dependence on high-cost funding, in 2005 we saw an increase of 3.5% in average loans outstanding and an increase of 8.4% in average deposits. In 2005, our net income was $6.1 million, resulting in basic and diluted net income of $1.07 per share, compared to net income of $5.2 million, resulting in basic and diluted net income of $0.91 per share in 2004. Income increases outpaced expense increases as a result of the rising interest rate environment, the repositioning of our balance sheet, reduced loan loss provisions due to improved credit quality and a strong increase in our fee-based international trade business.

We believe that our net income will continue to improve in 2006 as a result of our proposed acquisition of Concord Bank, further repositioning of our balance sheet and our branching and marketing efforts.

Effect of Pending Business Acquisition

On December 12, 2005, we entered into an agreement to acquire Concord Bank, a commercial bank headquartered in Houston, Texas. At December 31, 2005, Concord Bank had total assets of approximately $116.0 million, total deposits of approximately $102.6 million, total net loans of approximately $97.1 million and total shareholders’ equity of approximately $11.7 million. The acquisition of Concord Bank is expected to be completed near the end of the first or at the beginning of the second quarter of 2006. Accordingly, the results of operations and financial condition included in this report do not include the results of operations or financial condition of Concord Bank.

Critical Accounting Policies

In reviewing and understanding our financial information, you are encouraged to read and understand the significant accounting policies which are used in preparing our consolidated financial statements. These policies are described in Note 1 to our consolidated financial statements which are presented elsewhere in this report. Of these policies, we believe that our accounting policy for the allowance for loan losses is the most critical, as the amount of the allowance is based on a number of subjective factors. The allowance is replenished by means of a provision for loan losses that is charged against our earnings. As a result, earnings will vary based, in part, on subjective judgments made by us relating to our provision for loan losses.

Losses on loans result from a broad range of causes including borrower-specific problems, industry-wide issues and the impact of the economic environment. The identification of the factors that may lead to default or non-performance under a borrower loan agreement and the estimation of subsequent losses are both subjective determinations. In addition, a dramatic change in the performance of a small number of borrowers can have a significant impact on the overall estimate of

1

losses. Broader economic factors, such as the depth and duration of any economic recession, can also have a material impact on the analysis of the allowance. Another factor in the analysis is a consideration of concentrations of credit within specific industry sectors. We monitor loan concentrations in any one industry in relation to our capital and have established limits to mitigate these risks. At December 31, 2005, our largest concentrations were retail trade loans (convenience stores, restaurants, food markets and liquor stores) which totaled approximately $128.1 million, or 243% of capital, commercial real estate loans which totaled approximately $125.8 million, or 239% of capital, and loans to service providers (financial, health, hotel and dry cleaners) which totaled approximately $43.0 million, or 82% of capital.

As described under “Statement of Financial Condition—Allowance and Provision for Loan Losses” below, we have implemented a process that systematically considers the many variables that impact the estimation of the allowance for loan losses.

THREE MONTHS ENDED DECEMBER 31, 2005

Our net income for the fourth quarter of 2005 was $1.9 million, an increase of 55.6% from the net income of $1.2 million for the fourth quarter of 2004. The increase was primarily attributed to increased net interest income, decreased loan loss provision and decreased noninterest expense due to a customer-related fraud loss that was detected in the fourth quarter of 2004 and was resolved in the fourth quarter of 2005.

Net interest income increased $632,000 from the fourth quarter of 2004 to the fourth quarter of 2005. The net interest margin for the fourth quarter of 2005 was 4.55%, significantly up from 4.04% for the same period in 2004. This increase was primarily due to the eight prime rate increases aggregating 200 basis points during 2005 and the resulting impact on our $261.1 million floating rate loan portfolio. The yield on earning assets increased 101 basis points, from 5.89% in the fourth quarter of 2004 to 6.90% in the fourth quarter of 2005. At the same time, due in part to the repositioning of our balance sheet, our cost of funds increased only 50 basis points, from 1.85% in the fourth quarter of 2004 to 2.35% in the fourth quarter of 2005.

Noninterest income decreased $156,000 in the fourth quarter of 2005 compared to the fourth quarter of 2004 due to losses in our low income housing tax credit investment and our interest rate floor, both of which were initiated during 2005. Noninterest expense decreased $267,000 in the fourth quarter of 2005 from the fourth quarter of 2004. Part of this decrease was due to the $350,000 fraud loss in the fourth quarter of 2004 mentioned above. In addition, a $243,000 recovery on that fraud loss was recorded in the fourth quarter of 2005. Excluding the effect of the fraud loss and recovery, noninterest expense increased by $326,000, or 9.2%, in the fourth quarter of 2005 compared to the fourth quarter of 2004 due to higher salary, occupancy and equipment costs from branch expansion, increased bonus and commission expense and increased legal and professional fees.

Basic and diluted net earnings per share for the fourth quarter were $0.33 and $0.22 per share for 2005 and 2004, respectively. We paid cash dividends of $0.10 per share in the fourth quarter of both years.

Total assets at December 31, 2005 were $525.9 million, down from total assets at September 30, 2005 of $534.2 million due to the repositioning of our balance sheet. Loans increased by $12.0 million during the fourth quarter of 2005, while deposits declined by $2.6 million from our third quarter. The loan growth during the fourth quarter of 2005 was largely funded by investment maturities and paydowns.

YEARS ENDED DECEMBER 31, 2005, 2004 AND 2003

RESULTS OF OPERATIONS

We had record net earnings in 2005 as a result of a significant increase in net interest income due to the rising interest rate environment and the repositioning of our balance sheet to reduce high cost funding, a reduced loan loss provision due to improved credit quality and a strong increase in our fee-based international trade business. We continued our infrastructure development in 2005, particularly in our risk management functions, which resulted in increased operating expenses for the year. While loan and deposit growth slowed in 2005 compared to historic levels and total assets declined due to the repositioning of our balance sheet, average loans increased 3.5% and average deposits increased 8.4% over last year. We completed construction and began operation of a new branch in Duluth, Georgia in early 2005. We also opened a

2

loan production office in San Diego, California in January, 2006. We also closed our operations facility in our old San Jose, California branch in January, 2006 and relocated those functions to our new San Jose branch that was opened in a more visible location in late 2004. Our announced acquisition of Concord Bank headquartered in Houston, Texas, which is expected to close in the first or second quarter of 2006, will complement our growth strategy of establishing locations in specific target markets.

Our net income in 2005 was $6.1 million, representing an 18.6% increase over our 2004 net income of $5.1 million, which represented a 6.9% increase over our 2003 net income of $4.8 million. This improvement was largely due to increased net interest income resulting from increasing yields on prime rate based loans outpacing increasing funding costs. Earnings per share, basic and diluted, for 2005 were $1.07, compared to $0.91 for 2004 and $0.85 for 2003. Despite loan growth of 5.5% from year end December 31, 2004 to year end December 31, 2005, the provision for loan losses was lower in 2005 compared to 2004 due to the modest average loan growth, the improving quality of the loan portfolio and a slightly lower net charge-off rate from year to year. Noninterest expense increased 13.4% in 2005 compared to the prior year primarily as a result of salary and other expenses related to branch network growth and strengthening risk management and compliance functions. Additional check fraud loss expense of $452,000 was recorded in the second quarter due to additional claims in 2005 for the check fraud initiated in 2004 by a customer. In the fourth quarter of 2005, all of our claims against the customer were settled and we received a $243,000 recovery against the approximately $800,000 losses taken in 2004 and 2005. The increases in noninterest expense resulted in an operating efficiency ratio of 63.3% in 2005, as compared to 61.8% in 2004. Despite an increase of 12.8% in pre-tax income over last year, income tax expense was flat compared to 2004 due to tax credits from a low income housing partnership investment implemented in 2005.

Our return on average assets was 1.16% in 2005 compared to 1.03% in 2004. This increase is primarily due to increased earnings and the flat asset growth. Increased earnings also translated into an improvement in the return on average shareholders’ equity of 17.4% in 2005 from 15.3% in 2004. Our equity to assets ratio increased from 6.3% at December 31, 2004 to 7.0% at December 31, 2005, due to earnings growing at a faster pace than assets, as well as the presence of the temporary deposits at the end of last year.

Net Interest Income

Net interest income, our primary source of revenue, is the difference between the yield earned on interest-earning assets, such as loans and investments, and the rate paid on interest-bearing liabilities, such as deposits and borrowed funds. Changes in net interest income from period to period reflect the increases or decreases in average interest-earning assets, average interest-bearing liabilities and the interest rate spread which is affected by the degree of mismatch in maturity and repricing characteristics of our interest-earning assets and interest-bearing liabilities.

In 2005, net interest income was $21.0 million or 13.0% more than the 2004 level of $18.6 million, which in turn was 12.5% more than the 2003 level of $16.5 million. Our net interest margin in 2005 increased to 4.31%, compared to 3.96% in 2004 and 4.10% in 2003. In 2005, increases in interest rates and the growth in our interest-earning assets, offset by increased rates on our interest-bearing liabilities, resulted in our net interest income increasing by $2.4 million in 2005. In 2004, growth in our interest-earning assets, offset by growth in our interest-bearing liabilities, resulted in our net interest income increasing by $2.0 million in 2004.

3

The following table sets forth information with respect to average balance sheet data and related interest income, expense, yields and rates for the years ended December 31, 2005, 2004 and 2003.

Average Consolidated Balance Sheets and Net Interest Income Analysis

	2005							2004							2003
	Average Balances			Income/ Expense		Yields/ Rates		Average Balances			Income/ Expense		Yields/ Rates		Average Balances			Income/ Expense		Yields/ Rates
	(Dollar amounts in thousands)
Assets
Interest-earning assets:
Loans(1)	$	341,961		$	25,255	7.39	%	$	330,531		$	21,154	6.40	%	$	284,096		$	18,495	6.51	%
Investment securities:
Taxable		118,250			4,825	4.08	%		116,662			4,758	4.0	%		100,783			4,444	4.41	%
Non-taxable(2)		20,647			977	4.73	%		18,768			885	4.72	%		14,334			677	4.72	%
Federal funds sold		5,570			167	3.00	%		1,874			24	1.28	%		2,337			26	1.11	%
Interest-bearing deposits with other banks		1,049			37	3.5	%		456			7	1.54	%		380			6	1.58	%
Total interest-earning assets		487,477			31,261	6.41	%		468,291			26,828	5.73	%		401,930			23,648	5.88	%
Noninterest-earning assets:
Cash and due from banks		17,695							16,671							15,668
Premises and equipment, net		4,677							4,009							3,803
Allowance for loan losses		(4,540	)						(4,419	)						(3,713	)
Other assets		22,913							17,214							15,368
Total noninterest-earning assets		40,745							33,475							31,126
Total assets	$	528,222						$	501,766						$	433,056
Liabilities and Shareholders’ Equity
Interest-bearing liabilities:
Interest-bearing deposits:
NOW accounts	$	21,253		$	64	0.30	%	$	19,071		$	21	0.11	%	$	17,274		$	28	0.16	%
Money market accounts		68,468			927	1.35	%		53,652			357	0.67	%		56,792			411	0.72	%
Savings deposits		12,018			100	0.83	%		14,121			35	0.25	%		11,951			45	0.38	%
Time deposits		222,592			7,037	3.16	%		221,388			6,210	2.81	%		183,347			5,776	3.15	%
Total interest-bearing deposits		324,331			8,128	2.51	%		308,232			6,623	2.15	%		269,364			6,260	2.32	%
Other interest-bearing liabilities:
Federal funds purchased		2,969			113	3.81	%		3,960			67	1.69	%		3,939			58	1.47	%
FHLB advances		24,384			862	3.54	%		25,000			636	2.54	%		24,260			516	2.13	%
Short-term borrowings		15,846			382	2.41	%		28,462			366	1.29	%		17,805			178	1.00	%
Long-term debt		12,000			789	6.5	%		12,000			568	4.7	%		3,058			133	4.3	%
Total interest-bearing liabilities		379,530			10,274	2.7	%		377,654			8,260	2.1	%		318,426			7,145	2.2	%
Noninterest-bearing liabilities and shareholders’ equity:
Noninterest-bearing demand deposits		105,228							88,210							80,076
Other liabilities		8,263							2,197							2,611
Shareholders’ equity		35,201							33,705							31,943
Total noninterest-bearing liabilities and shareholders’ equity		148,692							124,112							114,630
Total liabilities and shareholders’ equity	$	528,222						$	501,766						$	433,056
Interest rate spread						3.7	%						3.5	%						3.6	%
Net interest income				$	20,987						$	18,568						$	16,503
Net interest margin(3)						4.31	%						3.96	%						4.10	%

⁽¹⁾ Average loans include non-accruing loans. Interest on loans includes loan fees of $897,000 in 2005, $856,000 in 2004, and $811,000 in 2003. Bankers acceptance discount income has been reclassified from international fee income to interest income as of the 2005 reporting period; all prior period data have been adjusted as well (See Note 1 to the Notes to Consolidated Financial Statements.

⁽²⁾ Yields on non-taxable investments have not been tax-effected.

⁽³⁾ Net interest margin is net interest income divided by average total interest-earning assets.

The table below details the components of the changes in net interest income for the last two years. For each major category of interest-earning assets and interest-bearing liabilities, information is provided with respect to changes due to average volumes and changes due to rates. The change in interest income and expense due to both rate and volume has been allocated to the volume and rate components in proportion to the relationship of the dollar amounts of the absolute change in each. The yield on non-taxable investments has not been tax-effected.

4

Change in Interest Income and Expenses

	2005 Compared with 2004 Due to Changes in							2004 Compared with 2003 Due to Changes in
	Average Volume			Average Rate		Net Increase (Decrease)		Average Volume			Average Rate			Net Increase (Decrease)
	(Dollar amounts in thousands)
Interest income
Loans	$	751		$	3,350	$	4,101	$	2,965		$	(306	)	$	2,659
Investment securities:
Taxable		65			2		67		600			(286	)		314
Non-taxable		89			3		92		209			(1	)		208
Federal funds sold		85			58		143		(8	)		6			(2	)
Interest-bearing deposits with other banks		15			15		30		1			—			1
Total interest income		1,005			3,428		4,433		3,768			(588	)		3,180
Interest expense
NOW accounts		3			40		43		3			(10	)		(7	)
Money market accounts		120			450		570		(22	)		(32	)		(54	)
Savings deposits		(4	)		69		65		11			(21	)		(10	)
Time deposits		34			793		827		920			(486	)		434
Federal funds purchased		(12	)		58		46		—			9			9
FHLB advances		(15	)		241		226		16			104			120
Short-term borrowings		(16	)		32		16		127			61			188
Long-term debt		—			221		221		422			13			435
Total interest expense		110			1,904		2,014		1,477			(362	)		1,115
Change in net interest income	$	895		$	1,524	$	2,419	$	2,291		$	(226	)	$	2,065

The primary cause of our increase in net interest income in 2005 was the 200 basis point increase in the prime rate from 5.25% at December 31, 2004 to 7.25% at December 31, 2005. With approximately 73% of our loan portfolio consisting of prime-based floating rate commercial loans, our yield on loans increased from 6.40% for 2004 to 7.39% for 2005. Growth in our loan portfolio also contributed to the increase in interest income as average loans increased from $330.5 million in 2004 to $342.0 million in 2005. In total, rate increases accounted for 82% of the increase in loan interest income of $4.1 million with loan growth accounting for the remaining 18%. In contrast to our loan portfolio, our investment portfolio yield remained flat this year. Although the average balance of our investment portfolio increased in 2005 over 2004, the balance trended downward throughout 2005 as maturities and paydowns on mortgage-backed securities occurred. Investments had increased in 2004 as deposit growth exceeded loan growth. Strong demand for loans in the second half of 2005, even as rates continued to increase, coupled with investment security maturities and paydowns, caused additional enhancement to our net interest margin in the second half of 2005. Our net interest margin during the first half of 2005 was 4.16%, but increased to 4.45% for the second half of 2005, resulting in a net interest margin of 4.31% for all of 2005. In total, average interest-earning assets increased $19.7 million during the year while our yield on interest-earning assets increased from 5.73% in 2004 to 6.41% in 2005.

Another factor affecting our interest income on loans was our use of interest rate swap and floor contracts. Interest rate swaps and floor contracts can hedge against significant movements in interest rates and resulting cash flows that could negatively impact net interest income and serve as a critical tool in our asset and liability management. An interest rate swap involves a financial transaction whereby we enter into an agreement to pay a floating or fixed rate of interest on a notional amount. In return, we are paid a fixed or floating rate of interest. In 2005, our interest rate swap provided for a fixed yield in exchange for paying a floating rate. During 2005, our interest rate swap resulted in a reduction of interest income of $13,000 compared to $991,000 of additional interest income in 2004. As the prime rate increased in 2005, the value of the swap contract that matures in 2008 declined. Due to the rising level of interest rates in 2005, we decided to enter into an interest rate floor contract to protect our increasing yield on our loan portfolio. In October, we purchased a five-year, $25.0 million interest rate floor at a cost of $246,000 that will result in Summit Bank being paid if and when the prime rate falls below 6%. As a result of additional prime rate increases in late 2005, the value of this floor declined, resulting in an $89,000 expense in the fourth quarter.

5

The overall increase in interest rates also caused an increase in our interest expense, partially offsetting our increase in interest income. However, due to the lag time in repricing maturing time deposits, our overall cost of funds did not increase as significantly as did our yield on earning assets. Our cost of interest-bearing liabilities increased from 2.19% in 2004 to 2.71% in 2005. Although our average balance of interest-bearing deposits increased $16.1 million from 2004 to 2005, this increase was largely offset by the $12.6 million decline in our average short term borrowings due to the repositioning of our balance sheet. Therefore 95% of our increase in interest expense of $2.0 million was the increase in rates. Moreover, the cost of our long-term funds increased significantly as the rate we pay on our trust preferred securities is tied to LIBOR. Interest expense related to our $12.0 million of floating rate trust preferred securities increased by $221,000 in 2005.

Growth in our loan portfolio was the primary cause of our increase in net interest income in 2004. Although from December 31, 2003 to December 31, 2004 total loans increased by 6.9%, average loans during 2004 grew 16.3% as a result of strong loan growth early in the year. This increase in volume led to an additional $3.0 million in loan interest income. However, lower yields partially offset this gain, resulting in an overall increase of $2.7 million in loan interest income in 2004. The yield on loans fell despite the prime rate increases during 2004, due to a thinning spread to prime on new loans. Additionally, the yield on fixed rate loans declined in 2004 by 24 basis points, largely due to attrition of loans originated in a higher interest rate environment. The investment portfolio yield also cycled downward in 2004 due to a decline in the reinvestment rate as most of our investment purchases were made early in the year at lower rates than were earned on investments, primarily mortgage-backed securities, that were paid down in 2004. However, growth in the volume of investment securities more than offset the lower yields, resulting in an increase in interest income on our investment securities. Our shift in the latter part of 2004 to focus on investment security growth rather than loan growth pressured our net interest margin, causing our net interest margin in 2004 to fall 14 basis points to 3.96% from 4.10% in 2003.

Our 20.7% growth in time deposit volume and increased cost of long term debt partially offset our increase in interest income, as our interest expense increased to $8.3 million in 2004 from $7.1 million in 2003. While increased volume resulted in an increase in expense of $920,000 on our time deposits, maturing certificates of deposit repricing at lower rates, particularly in the first half of the year, resulted in total interest expense on such deposits increasing by only $434,000, from $5.8 million in 2003 to $6.2 million in 2004. The year 2004 also reflected the first full year of expense related to our issuance of $12.0 million in trust preferred securities in September of 2003.

Loan Loss Provision

The provision for loan losses is a charge to income in the current period to replenish the allowance for loan losses and maintain it at a level that we have determined to be appropriate. Our provision for loan losses for 2005 was $539,000, down from $1,090,000 in 2004 due to our slower loan growth rate, declining charge-off ratio and improving loan portfolio quality during 2005. Nonperforming assets decreased from $2.8 million at December 31, 2004 to $1.2 million at December 31, 2005. Net charge-offs for the year ended December 31, 2005 were $533,000, or 0.16% of average loans, compared to net charge-offs of $588,000, or 0.18% of average loans, in 2004. Gross charge-offs in 2005 consisted primarily of commercial loans ranging in size from $3,000 to $109,000, as well as a total of approximately $434,000 representing SBA loans. Installment loan charge-offs represented only $6,000 of the total gross amount. We have experienced a downward trend in charge-offs over the past three years, although changes in economic and other conditions could lead to a return to charge-off levels experienced prior to 2003.

Noninterest Income

Total noninterest income for 2005 was $3.6 million, compared to $3.8 million in both 2004 and 2003. The following table presents the principal components of noninterest income for the years ended December 31, 2005, 2004, and 2003.

6

Noninterest Income

	2005			2004		2003
	(Dollar amounts in thousands)
Fees from international trade finance services	$	1,511		$	1,184	$	1,128
Overdraft charges		822			927		913
Service charge income		539			633		734
Income from bank-owned life insurance		461			437		436
Net gains on sales of investment securities		3			143		100
Partnership loss in low income housing investment		(286	)		—		—
SBA loan servicing fees		97			72		95
Other		486			394		423
Total noninterest income	$	3,633		$	3,790	$	3,829

Total noninterest income was down slightly in 2005 primarily due to losses on a new type of investment, a low income housing partnership investment to provide income tax credits. In March 2005, we purchased the low income housing partnership investment, which generates partnership income (loss) and federal income tax credits. During 2005, we recorded $286,000 in operating losses ($189,000 after taxes) from the partnership. However, the partnership also provided tax credits totaling $233,000, reducing our tax provision by the same amount in 2005. Fees from our international trade finance services grew 27.6% in 2005 from 2004 levels and 5.0% in 2004 from 2003 levels due to increased transaction volume from new and existing business. This increase excludes a 210% increase in 2005 in bankers acceptance discount income which has been reclassified from noninterest income to interest income. See Note 1 in the Notes to Consolidated Financial Statements.

Our continued decline in deposit account service charges since 2003 is a result of marketing efforts to bring in additional noninterest-bearing deposits. To entice customers to this product, we have offered certain services for free, recognizing that the use of these additional funds out-weighs the loss of service charge income. Due in part to this campaign, average noninterest-bearing demand deposits increased 10.2% in 2004 and 19.3% in 2005.

Noninterest Expense

Total noninterest expense for 2005 was $15.6 million, compared to $13.7 million in 2004 and $12.2 million in 2003. The following table presents the principal components of noninterest expenses for the years ended December 31, 2005, 2004 and 2003.

Noninterest Expense

	2005		2004		2003
	(Dollar amounts in thousands)
Salaries and employee benefits	$	8,003	$	7,161	$	6,528
Net occupancy		1,698		1,375		1,139
Equipment		1,359		1,082		941
Professional services		997		705		686
Data/item processing		508		517		456
Other non-credit losses		304		465		71
Marketing and community relations		461		388		300
Postage and courier		406		361		326
Telephone		409		353		316
Insurance		180		178		151
Office supplies		185		174		170
Directors’ fees		230		167		143
Travel		114		162		157
Other banks’ charges		126		123		117
Dues and memberships		111		112		100
Property and business taxes		106		80		88
Expenses on other real estate and repossessions		2		13		212
Other		384		321		310
Total noninterest expenses	$	15,583	$	13,737	$	12,211

7

The increase in noninterest expense is largely due to our personnel costs. Salaries and employee benefits expense increased 11.8% in 2005 and 9.7% in 2004. This increase is primarily related to branch expansion and additions to our risk management, credit administration and compliance areas during the course of 2004, with the full annual cost of these additional positions being recognized in 2005. These improvements have strengthened the infrastructure of the organization in preparation for future growth, whether organic or through acquisition. In 2004, we also began our documentation of all significant processes in order to comply with the internal controls reporting and audit requirements of the Sarbanes-Oxley Act. We added one full-time position to assist in this implementation. The number of average full-time equivalent employees has grown from 114 in 2003 to 125 in 2004 and 132 in 2005. In addition to a larger work force, increased employee benefit, incentive and temporary staffing costs have contributed to the increases since 2003.

The increase in occupancy and equipment expense in 2004 and 2005 is primarily a result of our branch expansions. During 2004, we added a limited-service facility in southern Atlanta, Georgia and a representative office in Shanghai, China for business development. We also relocated our San Jose, California full-service branch to a more visible facility. During 2005, we opened an additional full-service branch in Gwinnett County, Georgia. Since relocating the branch in San Jose in 2004, we continued to maintain our deposit and loan operational functions in the original facility until January 2006. We have now consolidated these functions in the new full-service branch facility and the lease on the old operations facility will expire in March 2006, which will reduce occupancy costs. However, the acquisition of Concord Bank and the January 2006 opening of our loan production office in San Diego, California will result in a net increase in occupancy costs.

Other loss expense fell $161,000 in 2005 after increasing $394,000 in 2004. The volatility is directly related to a customer check fraud loss that initially occurred late in 2004. A total of $350,000 of check fraud loss expense was recorded in the fourth quarter of 2004; however additional claims surfaced in 2005 resulting in an additional charge to earnings of $452,000 in the second quarter of 2005. In the fourth quarter of 2005, a court resolved the case in our favor, and we recovered $243,000. Barring unforeseen events, we expect other loss expense in 2006 to return to levels comparable to those experienced in 2003. The check fraud loss, in addition to additional legal and training costs associated with strengthening our regulatory compliance functions, particularly compliance with the Bank Secrecy Act, contributed to the increase in our professional fees expense.

The increases in overhead, including the fraud loss, contributed to a higher operating efficiency ratio, measured as noninterest expense as a percentage of net interest income and noninterest income. In 2005, our operating efficiency was 63.3%, compared to 61.8% in 2004 and 60.4% in 2003.

Income Taxes

We incurred income tax expense of $2.4 million in 2005, $2.4 million in 2004 and $2.1 million in 2003, for effective tax rates of 28.1%, 31.6% and 30.3%, respectively. The decline in our effective tax rate in 2005 was directly attributable to the $233,000 of federal income tax credits recorded for the low income housing tax credit investment mentioned previously.

STATEMENT OF FINANCIAL CONDITION

We ended 2005 with $525.9 million in assets, down from $547.7 million at the end of 2004. Asset growth for the year was flat since the asset total at the end of 2004 included approximately $20.0 million in temporary deposits. Excluding the effects of those temporary deposits, deposit growth was 5.7% and loan growth was 5.5% from year end 2004 to year end 2005. The growth was offset by our strategy to de-leverage the balance sheet as the yield curve flattened. Short-term investments and investment securities were reduced $42.7 million and borrowings were reduced $31.7 million since the end of last year. Total loans grew $18.8 million to $357.9 million at the end of 2005, primarily due to growth in commercial loans. This growth is slower than the growth realized in the past few years, because of higher than historical attrition and early loan pay-offs as opposed to fewer loan originations. However, throughout the year, we concentrated on maintaining a high quality, fairly priced, primarily floating rate loan portfolio. The investment portfolio, including other investments that consisted mainly of Federal Reserve Bank Stock and Federal Home Loan Bank of Atlanta (“FHLB”) stock, decreased 17.6% to $125.2 million in 2005 as part of the repositioning of our balance sheet. Deposits grew $3.7 million during 2005 to a total of $438.2 million, although average deposit growth for the year was $33.1 million, or 8.4%. Total noninterest-bearing deposit accounts remained very strong and increased to 24.8% of total deposits at December 31, 2005.

8

Loan Portfolio

Our loan portfolio grew during 2005, although not at the pace of previous years. Our primary lending focus is to provide credit services to small and medium-sized businesses, resulting in a loan portfolio that is predominantly comprised of commercial loans. We place less emphasis on the generation of consumer loans, although we address personal needs while in the process of providing credit services to business owners for assistance in their businesses. Loans are expected to produce higher yields than investment securities and other interest-earning assets. Therefore, the absolute volume of loans and the volume as a percentage of total earning assets are important determinants of our net interest margin. Average loan growth during 2005 was 3.5% while actual loan growth from December 31, 2004 to December 31, 2005 was 5.5% reflecting larger growth in the second half of the year. With 73% of our loans at floating rates, the weighted average yield on our portfolio increased from 6.40% in 2004 to 7.39% in 2005 as the prime rate increased eight times in 2005.

Total loans were $358.0 million at December 31, 2005 compared to $339.2 million at December 31, 2004. We originated approximately $110 million in gross new loans in 2005, compared to $115 million in 2004. While the origination volume remained robust in 2005, our attrition rate on existing loans was higher due to early payoffs and customers selling their small businesses. In 2005, loans secured by business assets recorded a growth rate of $3.1 million, or 3.7%; loans secured by real estate grew by $6.2 million, or 2.5%; and construction loans grew by $9.2 million, or 85.2%. Consumer loans increased from $680,000 at December 31, 2004 to $969,000 at December 31, 2005. Our Small Business Administration (“SBA”) loan portfolio remained unchanged for the year.

The following table presents the composition our loan portfolio at the end of each of the five years ended December 31, 2005.

Loans Outstanding

	2005					2004					2003					2002					2001
	Amount			% of Loans		Amount			% of Loans		Amount			% of Loans		Amount			% of Loans		Amount			% of Loans
	(Dollar amounts in thousands)
Commercial, financial, and agricultural	$	86,051		24.0	%	$	82,953		24.5	%	$	66,727		21.0	%	$	65,626		25.4	%	$	60,084		27.3	%
Real estate – construction		20,019		5.6			10,812		3.2			15,569		4.9			3,531		1.4			1,526		0.7
Real estate – mortgage		251,989		70.4			245,836		72.5			234,653		74.0			189,318		73.2			156,998		71.4
Installment loans to individuals		969		0.3			680		0.2			1,294		0.4			1,301		0.5			2,298		1.0
Lease financings		—		—			—		—			—		—			—		—			—		—
Less: unearned income		(1,042	)	(0.3	)		(1,076	)	(0.4	)		(1,171	)	(0.3	)		(1,053	)	(0.5	)		(1,162	)	(0.4	)
Total loans, net of unearned income		357,986		100	%		339,205		100	%		317,072		100	%		258,723		100	%		219,744		100	%
Less: allowance for loan losses		(4,555	)				(4,549	)				(4,047	)				(3,435	)				(3,234	)
Net loans	$	353,431				$	334,656				$	313,025				$	255,288				$	216,510

The following table presents a maturity analysis of our loan portfolio segregated by loan category and between loans with predetermined interest rates and loans with floating or adjustable rates at December 31, 2005.

9

Loans by Maturity

	Loans Maturing
	1 Year or Less			After one 1 Year through 5 Years			After 5 Years			Total
	(Dollar amounts in thousands)
Loan Category
Commercial, financial and agricultural	$	31,577		$	35,170		$	19,304		$	86,051
Real estate – construction		5,893			6,166			7,960			20,019
Real estate mortgage – primarily commercial	$	29,383		$	129,350		$	93,256		$	251,989
Installment loans to individuals		210			759			—			969
Unearned income		(335	)		(415	)		(292	)		(1,042	)
Total loans	$	66,728		$	171,030		$	120,228		$	357,986
Interest Rate Type
Predetermined interest rates	$	13,675		$	65,345		$	17,841		$	96,861
Floating or adjustable rates		53,053			105,685			102,387			261,125
Total loans	$	66,728		$	171,030		$	120,228		$	357,986

At December 31, 2005, our largest concentrations were retail trade loans (convenience stores, restaurants, food stores and liquor stores) which totaled approximately $128.1 million, or 35.8% of total loans, commercial real estate loans which totaled approximately $125.8 million, or 35.1% of total loans, and loans to service providers (financial, health, hotel and dry cleaners) which totaled approximately $43.0 million, or 12.0% of total loans. These concentrations are all within established policy limits. Currently we have not identified any specific industry weakness that may negatively impact the loan portfolio.

Allowance for Loan Losses

The allowance for loan losses represents a reserve for probable losses in our loan portfolio. The adequacy of our allowance for loan losses is evaluated periodically based on a review of all significant loans, with particular emphasis on impaired, non-accruing, past due and other loans that we believe require special attention. The determination of the allowance for loan losses is subjective and considered a critical accounting estimate.

When reviewing the allowance for loan losses, it is important to understand to whom we lend. Our loan portfolio is primarily comprised of loans to small businesses. In particular, we have developed lending niches in a number of industries, the most prevalent of which include restaurants, convenience stores, retail merchants, and strip shopping centers. These types of businesses are generally more vulnerable to changes in local economic conditions. We attempt to mitigate the risk to these types of borrowers in several ways. First, approximately 15% of our loans are supported by U.S. Government guarantees obtained from the SBA. These guarantees typically cover up to 75% of the loan amount. Second, the majority of our loans are secured with marketable real estate. Third, we regularly perform in-depth economic analyses on these industries in order to remain abreast of current trends and conditions.

We have established a multifaceted methodology to analyze the adequacy of our allowance for loan losses. This methodology includes consideration of our credit risk rating system, historical charge-offs, loan impairment as defined by Financial Accounting Standards Board (“FASB”) Statement No. 114, loss ratios on criticized and classified loans, effect of SBA loan guarantees and adjustments related to various qualitative factors that may change the risk profile of all or portions of the portfolio. The analysis is used to arrive at a recommended allowance for loan losses.

A general allowance for losses is calculated based on estimates of inherent losses which probably exist as of the evaluation date, taking into account the loans as they are impacted by the above factors. The general allowance for losses on problem loans in the criticized/classified categories is based on a review and evaluation of these loans, taking into consideration financial condition and strengths of the borrower, related collateral, cash flows available for debt repayment, and known and expected economic trends and conditions. General loss percentages for the smaller problem loans are determined based upon historical loss experience and regulatory guidelines. General allowances for SBA guaranteed loans vary depending on the percentage of coverage and other factors mentioned above. For problem loans in excess of $100,000 and for loans considered impaired, specific allowances are provided in the event that the specific collateral analysis on each loan indicates that probable loss would occur upon liquidation of collateral based on the estimated value of the collateral;

10

or, for impaired loans that are not collateral dependent, if the present value of expected future cash flows are less than the loan balance. In addition to these allocated reserves, we have established an unallocated reserve of $198,000 and $218,000 at December 31, 2005 and 2004, respectively. The basis for the unallocated reserve is due to a number of qualitative factors including migration trends in the portfolio, portfolio volume trends, the risk identification process, changes in the outlook for local and regional economic conditions and concentrations of credit.

Our allowance for loan losses was 1.27% of total loans at December 31, 2005 compared to 1.34% at December 31, 2004. This decrease was primarily due to a decrease of $264,000 in allocated reserves for classified loans from December 31, 2005 to December 31, 2004. The determination of the allowance for loan losses depends upon our judgment about factors affecting loan quality, assumptions about the economy, and other factors such as the percentage of our loan portfolio that is backed by SBA guarantees. Our judgment is based upon a number of assumptions, which management believes to be reasonable, but which may or may not prove valid. Thus, there can be no assurance that charge-offs in future periods will not exceed the allowance for loan losses or that additional increases in the allowance for loan losses will not be required. In addition, various regulatory agencies, as an integral part of their examination process, periodically review our allowance for loan losses. Such agencies may require us to recognize additions to the allowance based on their judgments about information available to them at the time of their examination.

The following table represents an analysis of our allowance for loan losses, including the provision for loan losses and net loan charge-offs, for each of the years in the five years ended December 31, 2005.

Analysis of the Allowance for Loan Losses

	Years Ended December 31,
	2005			2004			2003			2002			2001
	(Dollar amounts in thousands)
Allowance for loan losses at beginning of year	$	4,549		$	4,047		$	3,435		$	3,234		$	3,141
Charge-offs:
Commercial, financial, and agricultural		828			986			748			1,050			737
Real estate		37			5			—			—			204
Installment loans to individuals		6			14			22			26			42
Total		871			1,005			770			1,076			983
Recoveries:
Commercial, financial, and agricultural		330			413			176			77			143
Real estate		—			—			—			70			168
Installment loans to individuals		8			4			7			—			10
Total		338			417			183			147			321
Net charge-offs		533			588			587			929			662
Provision for loan losses		539			1,090			1,199			1,130			755
Allowance for loan losses at end of year	$	4,555		$	4,549		$	4,047		$	3,435		$	3,234
Allowance for loan losses to average loans outstanding		1.33	%		1.38	%		1.42	%		1.42	%		1.60	%
Net charge offs to average loans		0.16	%		0.18	%		0.21	%		0.38	%		0.33	%
Allowance for loan losses to net charge offs		8.5	x		7.7	x		6.9	x		3.7	x		4.9	x

The amounts and percentages of such components of the allowance for loan losses at the end of each of the five years ended December 31, 2005 and the percentage of loans in each category to total loans are presented in the table below.

11

Allocation of the Allowance for Loan Losses

	2005						2004						2003						2002						2001
	Allowance				% of Loans		Allowance				% of Loans		Allowance				% of Loans		Allowance				% of Loans		Allowance				% of Loans
	($)		(%)				($)		(%)				($)		(%)				($)		(%)				($)		(%)
	(Dollar amounts in thousands)
Commercial, financial, and agricultural	$	1,146	25	%	24	%	$	1,295	28	%	24	%	$	845	21	%	21	%	$	860	25	%	25	%	$	1,170	36	%	27	%
Real estate		3,202	71	%	76	%		3,028	67	%	76	%		3,003	74	%	79	%		2,276	66	%	74	%		1,830	57	%	72	%
Installment loans to individuals		9	—		—			8	—		—			16	—		—			17	1	%	1	%		34	1	%	1	%
Unallocated		198	4	%	—			218	5	%	—			183	5	%	—			282	8	%	—			200	6	%	—
Total	$	4,555	100	%	100	%	$	4,549	100	%	100	%	$	4,047	100	%	100	%	$	3,435	100	%	100	%	$	3,234	100	%	100	%

Non-Performing Assets

As a result of our ongoing review of the loan portfolio, loans are classified as non-accrual when reasonable doubt exists as to the full or timely collection of interest or principal, or when a loan becomes contractually past due by 90 days or more with respect to interest or principal. These loans are classified as non-accrual, even though in some cases the presence of collateral or the borrower’s financial strength may be sufficient to provide for ultimate repayment. When a loan is placed on non-accrual status, all interest previously accrued but not collected is reversed against current period interest income. Interest on non-accrual loans is recognized only when received. The additional amount of interest that would have been recorded during 2005, 2004 and 2003 had such loans classified as non-accrual been current in accordance with their original terms, amounted to $95,000, $55,000 and $57,000, respectively.

Non-performing assets are defined as non-accrual loans, renegotiated loans and other real estate acquired by foreclosure. Our non-performing assets decreased significantly to $1.2 million at December 31, 2005 from $2.8 million at December 31, 2004, largely as a result of the liquidation in 2005 of $1.5 million in other real estate owned that we obtained by foreclosure in 2004. The liquidation resulted in the recognition of a gain of $88,000 in the second quarter of 2005. The ratio of nonperforming assets to loans and other real estate declined from 0.84% at December 31, 2004 to 0.33% at December 31, 2005. In addition, $578,000 of the non-performing assets at December 31, 2005 consisted of five fully guaranteed SBA loans. The remaining balance of the nonperforming assets at year end consisted of one non-accrual loan. At December 31, 2004, nine fully-guaranteed SBA loans totaling $958,000 were included in non-performing assets. We had allocated reserves totaling $30,000 and $157,000 for all non-performing loans as of December 31, 2005 and 2004, respectively.

The following table presents an analysis of our non-performing assets as of the end of each of the five years ended December 31, 2005.

Nonperforming Assets

	December 31,
	2005			2004			2003			2002			2001
	(Dollar amounts in thousands)
Loans on non-accrual	$	1,183		$	1,295		$	392		$	865		$	463
Accruing loans 90 days more past due		—			—			—			—			—
Troubled debt restructurings		—			—			—			—			—
Other real estate owned		—			1,544			—			141			—
Total non-performing assets	$	1,183		$	2,839		$	392		$	1,006		$	463
Total non-performing assets as a percentage of total loans and other real estate		0.33	%		0.84	%		0.12	%		0.39	%		0.21	%

Impaired loans are defined as those loans as to which we believe it is probable that we will be unable to collect all principal or interest according to the contractual terms of the note agreement. At December 31, 2005 and 2004, we had loans totaling $1.2 million and $1.3 million, respectively, that were considered impaired. Impaired loans at December 31, 2005 and 2004 included all non-accrual loans. At December 31, 2005, impaired loans and total nonperforming assets were equivalent and included $578,000 of fully guaranteed SBA loans.

12

Total delinquent loans were $2.1 million, or 0.58% of total loans, at December 31, 2005, compared to $1.9 million, or 0.57% of total loans, at December 31, 2004. Delinquent loans primarily consisted of commercial loans, and include all of the impaired loans discussed above.

We consider all loans categorized as criticized or classified by Summit Bank’s internal rating system potential problem loans. The loans categorized as criticized or classified (loans rated as special mention, substandard, doubtful or loss), which includes loans on non-accrual as set forth above, decreased this year to $4.8 million, or 1.35% of total loans, at December 31, 2005, compared to $5.2 million, or 1.53% of total loans, at December 31, 2004. Our criticized/classified loans at December 31, 2005 consisted of $1.3 million of special mention loans and $3.5 million of substandard loans. We downgraded two loans totaling $4.3 million to substandard in January 2006 as a result of declining financial condition of the borrower. These loans are adequately collateralized and no loss is anticipated. Following the loan downgrades, we reassessed our allowance for loan losses and determined that no additional loan loss reserve should be allocated as of December 31, 2005 for these two loans.

We are not aware of any loans classified for regulatory purposes as loss, doubtful, substandard or special mention that have not been disclosed which (1) represent or result from trends or uncertainties, which we reasonably expect will materially impact future operating results, liquidity or capital resources, or (2) represent material credits about which we are aware of any information which causes us to have serious doubts as to the ability of such borrowers to comply with the loan repayment terms.

Investment Securities

We typically invest in lower yielding investment security instruments when we have excess funds available, we have a need for additional collateral for government or other regulatory agency deposits or for leveraging purposes to lock in interest rate spreads on borrowed funds. Most of the securities owned at December 31, 2005 were classified as available for sale; however, several obligations of municipalities were classified as held to maturity. Securities are classified as “available for sale” or “held to maturity” at the time of purchase. Securities held to maturity are recorded at cost with no adjustments to the carrying value for market pricing fluctuations unless the value becomes other than temporarily impaired. Securities classified as available for sale are recorded at cost, but the values are adjusted monthly to reflect fluctuations in the market value of these securities. Increases or decreases in the market value of available for sale securities are reflected through an adjustment to the unrealized gain or loss on securities component in shareholders’ equity. Municipal securities obligations have the added benefit of tax exemption characteristics at the federal and/or state level.

At December 31, 2005, our total investment security portfolio was $122.2 million, compared to $148.8 million at December 31, 2004. This decrease was largely due to the maturities and paydowns on investment securities available for sale, primarily mortgage-backed securities. Due to our focus on improving the net interest margin by repositioning our balance sheet, the proceeds of the maturities and paydowns were utilized to reduce borrowings. A portion of the total portfolio, approximately 35.3% at December 31, 2005, was pledged for various purposes.

13

The following table presents maturity distribution and yields of investment securities available for sale. Yields on non-taxable investments have not been tax-effected.

Investment Securities Available For Sale

	December 31, 2005						December 31, 2004				December 31, 2003
	Book Value		Fair Value		Year-end Weighted Avg. Yield		Book Value		Fair Value		Book Value]		Fair Value
	(Dollar amounts in thousands)
U.S. Government Agencies
One year or less	$	5,003	$	5,021	5.14	%	$	5,901	$	5,933	$	—	$	—
Over one through five years		37,885		36,622	3.31	%		42,871		42,510		50,803		50,920
Over five years		—		—	—			—		—		3,100		3,114
Total U.S. Government Agencies		42,888		41,643	3.52	%		48,772		48,443		53,903		54,034
Mortgage-backed securities
One year or less		—		—	—			—		—		43		43
Over one through five years		1,614		1,572	3.90	%		338		354		455		471
Over five through ten years		19,799		19,400	4.46	%		26,228		26,303		8,063		8,453
Over ten years		39,627		38,869	4.71	%		52,612		52,759		42,521		43,024
Total mortgage-backed securities		61,040		59,841	4.55	%		79,178		79,416		51,082		51,991
Tax-exempt municipal securities
Over one through five years		750		767	4.10	%		500		529		250		267
Over five through ten years		768		800	4.38	%		770		820		1,020		1,090
Over ten years		3,284		3,365	4.61	%		3,535		3,648		3,538		3,620
Total tax-exempt municipal securities		4,802		4,932	4.50	%		4,805		4,997		4,808		4,977
Total investment securities available for sale	$	108,730	$	106,416	4.14	%	$	132,755	$	132,856	$	109,793	$	111,002

The following table presents maturity distribution and yields of investment securities held to maturity.

Investment Securities Held to Maturity

	December 31, 2005						December 31, 2004				December 31, 2003
	Book Value		Fair Value		Year-end Weighted Avg. Yield		Book Value		Fair Value		Book Value		Fair Value
	(Dollar amounts in thousands)
Mortgage-backed Securities
Over ten years	$	—	$	—	—	%	$	—	$	—	$	1,016	$	1,105
Total mortgage-backed securities		—		—	—	%		—		—		1,016		1,105
Tax-exempt municipal securities
Over one through five years		1,384		1,366	3.97	%		1,637		1,636		1,442		1,446
Over five through ten years		1,210		1,260	4.68	%		—		—		445		453
Over ten years		13,162		13,733	4.89	%		14,301		15,066		9,550		10,041
Total tax-exempt municipal securities		15,756		16,359	4.79	%		15,938		16,702		11,437		11,940
Total investment securities held to maturity	$	15,756	$	16,359	4.79	%	$	15,938	$	16,702	$	12,453	$	13,045

As of December 31, 2005, we owned securities from issuers in which the aggregate book value from such issuers exceeded 10% of our shareholders’ equity. As of December 31, 2005, the book value and fair value of the securities from each such issuer are as follows:

	Book Value		Fair Value
	(Dollar amounts in thousands)
Federal Home Loan Bank	$	24,040	$	23,244
Federal Home Loan Mortgage Corporation		40,915		39,774
Federal National Mortgage Association		31,944		31,222
Government National Mortgage Association		6,170		6,210
Total	$	103,069	$	100,450

Deposits

The primary source for funding our asset growth is deposits. Our deposits increased from $434.5 million at December 31, 2004 to $438.2 million at December 31, 2005, a 0.9% increase. However, our deposits at December 31,

14

2004 included approximately $20 million in temporary deposits. Our average deposits increased from $396.4 million in 2004 to $429.6 million in 2005, an increase of 8.4%. Because we primarily target small businesses and commercial relationships, we typically retain a strong percentage of noninterest-bearing deposits to total deposits, thereby reducing our overall cost of funds. At December 31, 2005, noninterest-bearing demand deposits represented 24.8% of total deposits, up from 24.0% at the end of 2004. Our noninterest-bearing deposits grew 4.4%, from December 31, 2004 to December 31, 2005.

Our time deposits grew 6.5% from December 31, 2004 to December 31, 2005. We use time deposits from the State of Georgia Office of Treasury and Fiscal Services, as well as national market time deposits, when liquidity needs warrant. Our State of Georgia Office of Treasury and Fiscal Services time deposits are typically six-month instruments and have attractive interest rates, although we also provide collateral in the form of U.S. agency securities. National market time deposits have various maturity dates and typically come from credit unions. Each credit union typically invests approximately $100,000 to stay within the FDIC insurance limits on deposits. Total national market time deposits at December 31, 2005 were $12.4 million.

The following table presents the average amount outstanding and the average rate we paid on deposits for the years ended December 31, 2005, 2004 and 2003.

Deposits

	2005				2004				2003
	Average Balance		Average Rate		Average Balance		Average Rate		Average Balance		Average Rate
	(Dollar amounts in thousands)
Noninterest-bearing deposits	$	105,228	—	%	$	88,210	—	%	$	80,076	—	%
Interest-bearing deposits:
NOW accounts		21,253	0.30	%		19,071	0.11	%		17,274	0.16	%
Money market accounts		68,468	1.35	%		53,652	0.67	%		56,792	0.72	%
Savings deposits		12,018	0.83	%		14,121	0.25	%		11,951	0.38	%
Other time deposits		222,592	3.16	%		221,388	2.81	%		183,347	3.15	%
Total	$	429,559	1.89	%	$	396,442	1.67	%	$	349,440	1.79	%

The following table presents the maturity of our time deposits of $100,000 or more at December 31, 2005.

Maturity of Time Deposits of $100,000 or More

	Time certificates of deposits $100,000 or more		Other time deposits of $100,000 or more		Total
		(Dollar amounts in thousands)
Months to maturity:
3 or less	$	43,613	$	539	$	44,152
Over 3 through 6		20,760		—		20,760
Over 6 through 12		38,887		—		38,887
Over 12		27,374		—		27,374
Total	$	130,634	$	539	$	131,173

Other Borrowed Funds

We are an active member of the FHLB and had two advances totaling $20.0 million outstanding at December 31, 2005. One $5.0 million advance matured and was repaid in 2005. These advances are fully collateralized by our investment securities and are primarily used to fund additional loan growth at times when loan growth outpaces deposit growth. The weighted-average rate for these borrowings at December 31, 2005 was 4.37%, and the advances matured in February 2006. The following table presents additional information for these borrowings.

15

FHLB Borrowings

	2005			2004			2003
Federal Home Loan Bank Advances outstanding at year-end	$	20,000		$	25,000		$	25,000
Weighted average borrowing rate at year-end		4.37	%		3.03	%		1.82	%
Weighted average borrowing rate during the year		3.54	%		2.54	%		2.13	%
Average daily balance during the year		24,384			25,000			24,260
Maximum month-end balance during the year	$	25,000		$	25,000		$	25,000

We also utilize the purchase of federal funds and two types of short-term security repurchase arrangements to meet short-term liquidity needs. The first type of overnight repurchase agreement is with our commercial customers, and the second is short-term repurchase agreements with our correspondent banks. At December 31, 2005, the total of these agreements, collateralized with securities, and federal funds purchased was $8.7 million, compared to $35.4 million at December 31, 2004. The reduction of federal funds purchased and short-term repurchase agreements was part of the repositioning of our balance sheet in 2005. The weighted-average rate for these borrowings in 2005 was 2.63%, compared to 1.28% in 2004.

In 2003, we issued $12.0 million of trust preferred securities. We injected $9.0 million as a capital contribution to our subsidiary bank to support growth plans and retained $3.0 million for future use at the holding company level. The related $12.0 million of 30-year debentures have a floating rate of LIBOR plus 3.1%, which was approximately 7.12% at December 31, 2005, compared to approximately 5.08% at December 31, 2004.

Liquidity and Interest Rate Sensitivity

Liquidity represents our ability to provide steady sources of funds for loan commitments and investment activities, as well as to provide sufficient funds to cover deposit withdrawals and payment of debt, off-balance sheet obligations and operating obligations. These funds can be obtained by converting assets to cash or by attracting new deposits. We also have lines of credit available from other funding sources to provide additional funds as needed. These sources include the FHLB and other correspondent banks.

In 2005, assets, loans and deposits declined slightly in the first half of the year, and short-term funding remained constant. In the second half of 2005, modest loan and deposit growth returned with deposit growth slightly stronger. The deposit growth coupled with investment security maturities and paydowns enabled us to reduce our short-term and long-term funding significantly as discussed above. Our average loan to deposit ratio in 2005 was 79.6%, down from an average ratio of 83.4% in 2004, reflecting slightly stronger average deposit growth over average loan growth. We monitor and assess the adequacy of our liquidity position on a monthly basis to ensure that sufficient sources of liquidity are maintained and available. In 2005, insufficient liquidity was not a factor for us.

Interest rate sensitivity refers to the responsiveness of interest-bearing assets and liabilities to changes in market interest rates. The rate-sensitive position, or gap, is the difference in the volume of rate-sensitive assets and liabilities, at a given interval. The general objective of gap management is to actively manage rate-sensitive assets and liabilities to reduce the impact of interest rate fluctuations on the net interest margin. With the assistance of our Asset/Liability Committee, we generally attempt to maintain a balance between rate-sensitive assets and liabilities as the exposure period is lengthened, to minimize the overall interest rate risk to us. The asset mix of the balance sheet is continually evaluated in terms of several variables: yield, credit quality, appropriate funding sources and liquidity. Our focus in managing the liability mix of our balance sheet has been on expanding the various funding sources.

As discussed above, we have several funding sources on which to draw, should liquidity needs warrant. The FHLB is an available source for funding, provided that we have sufficient assets, investment securities or loans, for collateral. The total line with the FHLB at December 31, 2005 was $80.1 million. Of this total, we had outstanding advances totaling $20.0 million at December 31, 2005. Unsecured federal funds lines with various correspondent financial institutions totaled $23.0 million at December 31, 2005. We closely monitor the number of consecutive days we have purchased federal funds to adhere to relevant restrictions. Our balance of federal funds purchased was $5.0 million at December 31, 2005. Other wholesale funding used in 2005 included short-term repurchase agreements with correspondent institutions, as well as overnight repurchase agreements with our corporate customers, collateralized with U.S. agency securities. The balance of

16

repurchase agreements at December 31, 2005 was $3.7 million. Additional funding sources include institutional time deposits, typically of $100,000 increments. The total institutional time deposits held at December 31, 2005 was $12.4 million.

From time to time, we also place bids on the State of Georgia Office of Treasury and Fiscal Services time deposits. While these funds also require collateral above the limits of FDIC insurance, the rates have typically been attractive to us and cost-competitive considering the multi-million dollar funding source. At December 31, 2005, Summit Bank had no time deposits from the State of Georgia Office of Treasury and Fiscal Services.

Our interest rate sensitivity position at December 31, 2005 is presented in the table below.

Interest Rate Sensitivity

	Assets and liabilities repricing within											Over 5 Years		Total
	3 Months or Less			4 to 6 Months			7 to 12 Months			1-5 Years
	(Dollar amounts in thousands)
Interest-earning assets:
Loans	$	268,330		$	3,419		$	8,342		$	64,075	$	13,820	$	357,986
Interest rate swap		(25,000	)		—			—			25,000		—
Investment securities		5,852			3,000			11,021			53,287		52,027		125,187
Interest-bearing deposits with other banks		581			—			—			—		—		581
Total interest-earning assets	$	249,763		$	6,419		$	19,363		$	142,362	$	65,847	$	483,754
Interest-bearing liabilities:
Deposits	$	105,072		$	46,079		$	91,762		$	86,586	$	133	$	329,632
Federal Home Loan Bank advances		20,000			—			—			—		—		20,000
Other borrowed funds		8,717			—			—			—		—		8,717
Long-term debentures		—			—			—			—		12,000		12,000
Total interest-bearing liabilities	$	133,789		$	46,079		$	91,762		$	86,586	$	12,113	$	370,349
Interest sensitivity gap	$	115,974		$	(39,660	)	$	(72,399	)	$	55,776	$	53,714	$	113,405
Cumulative interest sensitivity gap	$	115,974		$	76,314		$	3,915		$	59,691	$	113,405	$	113,405
(Cumulative interest-earning assets to cumulative interest-bearing liabilities)		1.87			1.42			1.01			1.17		1.31		1.31

Over the past year, our strategy has been to remain asset-sensitive due to the nature of the primarily-floating rate loan portfolio and the rising rate environment. Comparing our interest-earning assets to interest-bearing liabilities over the next five years, we are in an asset-sensitive position, which suggests that our net interest income could be negatively impacted by decreases in market rates. Since all interest rates and yields do not adjust at the same velocity, the gap is only a general indicator of rate sensitivity. For purposes of the above repricing presentation, all interest-bearing demand and savings deposits are considered not highly volatile and therefore are classified with 50% of the balances repricing in the one-year or less periods and 50% in the over-one-year periods. Time deposits are presented based on their contractual terms. Our policy is to maintain a one-year gap position in the 0.8 to 1.2 range, and our position was 1.01 at December 31, 2005. We closely monitor our position, and, if rates should change in either direction, we will take steps to reposition our interest-earning assets and interest-bearing liabilities to minimize the impact of gap exposure.

17

The following table reflects a summary of our commitments to extend credit, commitments under contractual leases, as well as our contractual obligations, consisting of deposits, FHLB advances and borrowed funds, by contractual maturity date.

Contractual Obligations

	Payment due by period
	Total		Less than 1 year		1-3 years		3-5 years		More than 5 years
	(Dollar amounts in thousands)
Demand and savings deposits	$	203,175	$	203,175	$	—	$	—	$	—
Time deposits		235,057		195,625		34,160		5,139		133
Federal Home Loan Bank advances		20,000		20,000		—		—		—
Other borrowed funds		8,717		8,717		—		—		—
Long-term debentures		12,000		—		—		—		12,000
Commitments to customers under lines of credit		46,022		46,022		—		—		—
Commitments under lease agreements		7,310		1,354		2,114		1,683		2,159
Total	$	532,281	$	474,893	$	36,274	$	6,822	$	14,292

We entered into a Post-Retirement Compensation Agreement with our CEO in 2004 that provides for 15 annual payments of $24,000 each, beginning six months after her retirement and no earlier than February 27, 2007. At December 31, 2005, we had an accrued liability balance of $146,000 for this agreement.

Off-Balance Sheet Arrangements

We have commitments to our customers under lines of credit, in addition to our contractual obligations such as deposits, FHLB advances and other borrowed funds. The total of these line of credit commitments at December 31, 2005 was approximately $46.0 million. The lines include conventional revolving lines of credit providing commercial working capital lines and international lines supporting letters of credit, both of which typically renew annually. There are also commitments under non-revolving lines of credit that are used by customers for specific purposes and various types of consumer lines of credit. These include lines secured by mortgages on residential real estate and unsecured revolving credit lines. Although we regularly monitor the balance of outstanding commitments to ensure funding availability should the need arise, historical records indicate that the total of outstanding commitments is a very consistent amount, and the risk of all customers fully drawing on all these lines at the same time is remote.

Our exposure to credit loss is represented by the contractual amounts of these commitments. We follow the same credit policies in making commitments as we do for on-balance sheet instruments.

Our maximum exposure to credit risk for unfunded lines of credit as of December 31, 2005, 2004 and 2003 was as follows:

	December 31,
	2005		2004		2003
	(Dollar amounts in thousands)
Lines of Credit	$	46,022	$	39,395	$	30,349

Market Risk

Market risk reflects the risk of economic loss resulting from adverse changes in market prices and interest rates. This risk of loss can be reflected in either diminished current market values or reduced potential net interest income in future periods. Like the majority of financial institutions, our primary market risk exposure is the interest rate risk inherent in our lending and deposit taking activities. The structure of our loan and deposit portfolios is such that a significant decline in the prime rate may adversely impact net market values and interest income. We manage our interest rate risk through various tools, including managing the composition and size of the investment portfolio so as to reduce the interest rate risk in the deposit and loan portfolios, at the same time maximizing the yield generated by the portfolio. We also use derivatives such as interest rate swaps and floors to reduce interest rate exposure.

18

The table below presents the contractual balances and the estimated fair value of our financial instruments at their expected maturity dates as of December 31, 2005. The expected maturity categories for investment securities take into consideration historical prepayment experience, as well as our expectations based on the interest rate environment as of December 31, 2005. For core deposits without contractual maturity (such as interest-bearing checking, savings and money market accounts), the table presents principal cash flows based on our judgment concerning their most likely runoff or repricing behaviors. Weighted average variable rates are based on implied forward rates in the yield curve as of December 31, 2005.

Financial Instruments

	Expected Maturity Date																		Total			Fair Value
	2006			2007			2008			2009			2010			Thereafter
	(Dollar amounts in thousands)
Assets
Investment Securities
Fixed rate	$	5,021		$	963		$	33,814		$	3,880		$	1,689		$	64,117		$	109,484		$	110,087
Average interest rate		5.14	%		2.47	%		3.31	%		3.87	%		3.79	%		4.88	%		4.33	%
Variable rate		—			—			—			—			—			12,688			12,688			12,688
Average interest rate		—			—			—			—			—			3.71	%		3.71	%
Loans
Fixed rate		13,675			13,533			22,301			11,029			18,482			17,841			96,861			94,149
Average interest rate		6.72	%		7.16	%		6.64	%		6.33	%		7.16	%		6.87	%		6.83	%
Variable rate		53,053			12,480			25,719			37,476			30,010			102,387			261,125			257,321
Average interest rate		8.18	%		8.39	%		8.23	%		8.13	%		8.38	%		8.46	%		8.34	%
Interest-bearing deposits with other banks
Variable rate		581			—			—			—			—			—			581			581
Average interest rate		3.57	%		—			—			—			—			—			3.57	%
Liabilities
Interest-bearing deposits and savings		47,289			15,762			15,762			15,762			—			—			94,575			94,575
Average interest rate		1.07	%		1.07	%		1.07	%		1.07	%		—			—			1.07	%
Time deposits Fixed rate		195,625			31,478			2,682			2,413			2,726			133			235,057			233,600
Average interest rate		3.66	%		3.81	%		3.37	%		3.99	%		4.70	%		4.74	%		3.69	%
Variable rate short- term borrowings		8,717			—			—			—			—			—			8,717			8,717
Average interest rate		1.74	%		—			—			—			—			—			1.74	%
Variable rate long- term borrowings		20,000			—			—			—			—			12,000			32,000			32,000
Average interest rate		4.43	%		—			—			—			—			7.12	%		5.44	%

Capital Adequacy

There are various primary measures of capital adequacy for banks and bank holding companies, such as risk-based capital guidelines and the leverage capital ratio.

Minimum capital requirements for adequacy purposes consist of a total capital to risk-weighted assets ratio of 8%, and Tier I capital to risk-weighted assets and Tier I leverage ratios of 4%. As of December 31, 2005, we and our subsidiary bank exceeded all required levels of capital and were considered well-capitalized by regulatory standards. Our capital ratios are as follows:

Ratio	Summit Bank Corporation		Summit Bank
Tier I capital to risk-weighted assets	12.91	%	12.63	%
Total capital to risk-weighted assets	14.12	%	13.84	%
Tier I leverage ratio	9.37	%	9.16	%

19

In September 2003, we issued $12.0 million of trust preferred securities and contributed $9.0 million of the proceeds to our subsidiary bank as a capital injection. According to current Federal Reserve Board guidelines, trust preferred securities can be included as Tier I capital in our capital ratios, with certain restrictions. As of December 31, 2005, all $12.0 million of these securities qualified as Tier I capital.

By repositioning our balance sheet, maintaining the same dividend payout and increasing our earnings, we increased our equity to asset ratio at December 31, 2005 to 7.0% from 6.3% at December 31, 2004. We believe that we have sufficient capital to continue growing organically and are well positioned for the proposed Concord Bank acquisition.

Return on Equity and Assets

The following table shows our returns on assets (net income divided by average assets), returns on equity (net income divided by average equity), dividend payout ratio (dividends declared per share divided by net income per share) and equity to assets ratio (average equity divided by average total assets) for the years ended December 31, 2005, 2004 and 2003.

Return on Equity and Assets

	Year ended December 31,
	2005		2004		2003
Return on assets	1.16	%	1.03	%	1.11	%
Return on equity	17.36	%	15.29	%	15.09	%
Dividend payout ratio	37.26	%	44.15	%	40.63	%
Equity to asset ratio	6.66	%	6.72	%	7.38	%

Our returns on assets and equity both increased from 2003 to 2005. The greater growth in return on equity compared to return on assets over the past three years is due to greater asset growth than equity growth as evidenced by the decrease in our asset to equity ratio from 2003 to 2005. Maintaining the dividend rate of $0.40 for both 2004 and 2005 resulted in the decline of the dividend payout ratio.

Effects of Inflation

Inflation has an important impact on the growth of total assets in the banking industry and causes a need to increase equity capital at higher than normal rates in order to maintain an appropriate equity to assets ratio. We have been able to maintain an adequate level of equity, as previously mentioned, and, though inflation has not been a material factor during the last several years, we intend to address any future effects of inflation by managing our interest rate sensitivity gap position through our asset/liability management processes and by periodically adjusting our pricing of services and banking products to take into consideration current costs.

Business Segment Information

We are managed and operated as one segment, banking. Over 95% of our assets are comprised of cash, investments and loans.

Recent Accounting Pronouncements

Please see Note 1, Section (p) in the Notes to Consolidated Financial Statements for a discussion of recent accounting pronouncements.

20

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

	Page
Report of Independent Registered Public Accounting Firm	F-2
Consolidated Balance Sheets as of December 31, 2005 and 2004	F-3
Consolidated Statements of Income for the Years Ended December 31, 2005, 2004, and 2003	F-4
Consolidated Statements of Shareholders’ Equity and Comprehensive Income for the Years Ended December 31, 2005, 2004, and 2003	F-5
Consolidated Statements of Cash Flows for the Years Ended December 31, 2005, 2004, and 2003	F-6
Notes to Consolidated Financial Statements	F-7

F-1

Report of Independent Registered Public Accounting Firm

The Board of Directors and Shareholders

Summit Bank Corporation:

We have audited the accompanying consolidated balance sheets of Summit Bank Corporation and subsidiaries (the Company) as of December 31, 2005 and 2004, and the related consolidated statements of income, shareholders’ equity and comprehensive income, and cash flows for each of the years in the three-year period ended December 31, 2005. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated 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 consolidated financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall consolidated 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 Summit Bank Corporation and subsidiaries as of December 31, 2005 and 2004, and the results of their operations and their cash flows for each of the years in the three-year period ended December 31, 2005 in conformity with U.S. generally accepted accounting principles.

/s/    KPMG LLP

Atlanta, Georgia

February 17, 2006

F-2

SUMMIT BANK CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share amounts)

	December 31,
	2005			2004
ASSETS
Cash and due from banks (note 9)	$	18,194		$	20,810
Interest-bearing deposits with other banks		581			249
Federal funds sold		—			16,000
Cash and cash equivalents		18,775			37,059
Investment securities available for sale (notes 2, 11, and 12)		106,416			132,856
Investment securities held to maturity (estimated fair value of $16,359 and $16,702 in 2005 and 2004, respectively)—(note 3)		15,756			15,938
Other investments (note 4)		3,015			3,097
Loans, net of unearned income of $1,042 and $1,076 in 2005 and 2004, respectively		357,986			339,205
Less allowance for loan losses		(4,555	)		(4,549	)
Net loans (note 6)		353,431			334,656
Premises and equipment, net (note 7)		4,606			4,312
Customers’ acceptance liability		3,769			3,223
Deferred income taxes (note 14)		3,448			2,449
Goodwill, net		1,530			1,530
Bank-owned life insurance		7,939			7,478
Other real estate owned		—			1,544
Other assets (note 8)		7,237			3,566
TOTAL ASSETS	$	525,922		$	547,708
LIABILITIES AND SHAREHOLDERS’ EQUITY
Liabilities:
Deposits (note 10):
Noninterest-bearing demand	$	108,600		$	104,055
Interest-bearing:
Demand		84,032			97,836
Savings		10,543			11,748
Time, $100,000 and over		131,173			130,686
Other time		103,884			90,128
Total deposits		438,232			434,453
Acceptances outstanding		3,769			3,223
Federal Home Loan Bank advances (note 12)		20,000			25,000
Other borrowed funds (note 11)		8,717			35,394
Long-term debentures (note 13)		12,000			12,000
Other liabilities		6,565			3,009
Total liabilities		489,283			513,079
Shareholders’ Equity (notes 16, 18, and 22):
Common stock, $0.01 par value. Authorized 100,000,000 shares; issued and outstanding 5,694,604 shares in 2005 and 5,690,104 shares in 2004		57			57
Additional paid-in capital		17,504			17,445
Accumulated other comprehensive loss		(1,991	)		(108	)
Retained earnings		21,069			17,235
Total shareholders’ equity		36,639			34,629
Commitments and contingencies (note 15)
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	525,922		$	547,708

See accompanying notes to consolidated financial statements.

F-3

SUMMIT BANK CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

(In thousands, except share and per share amounts)

	Years ended December 31,
	2005			2004		2003
INTEREST INCOME:
Loans, including fees	$	25,255		$	21,154	$	18,495
Federal funds sold		167			24		26
Interest-bearing deposits with other banks		37			7		6
Taxable securities		4,672			4,644		4,366
Tax-exempt securities		977			885		677
Other investments		153			114		78
Total interest income		31,261			26,828		23,648
INTEREST EXPENSE:
Time deposits, $100,000 and over		4,019			3,818		3,187
Other deposits		4,109			2,805		3,073
Federal Home Loan Bank advances		862			636		516
Other borrowings		1,284			1,001		369
Total interest expense		10,274			8,260		7,145
NET INTEREST INCOME		20,987			18,568		16,503
Provision for loan losses (note 6)		539			1,090		1,199
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES		20,448			17,478		15,304
NONINTEREST INCOME:
Fees for international trade finance services		1,511			1,184		1,128
SBA loan servicing fees		97			72		95
Overdraft charges		822			927		913
Service charge income		539			633		734
Income from bank-owned life insurance		461			437		436
Partnership loss in low income housing investment		(286	)		—		—
Net gain on sales of securities available for sale (note 2)		3			143		100
Other		486			394		423
Total noninterest income		3,633			3,790		3,829
NONINTEREST EXPENSES:
Salaries and employee benefits (note 17)		8,003			7,161		6,528
Equipment		1,359			1,082		941
Net occupancy		1,698			1,375		1,139
Other (note 21)		4,523			4,119		3,603
Total noninterest expenses		15,583			13,737		12,211
INCOME BEFORE INCOME TAXES		8,498			7,531		6,922
Income tax expense (note 14)		2,386			2,378		2,100
NET INCOME	$	6,112		$	5,153	$	4,822
Net income per share—basic	$	1.07		$	0.91	$	0.85
Net income per share—diluted	$	1.07		$	0.91	$	0.85
Weighted average number of common shares outstanding		5,694,222			5,686,563		5,652,604
Weighted average number of common and common equivalent shares outstanding		5,695,765			5,687,303		5,672,007

See accompanying notes to consolidated financial statements.

F-4

SUMMIT BANK CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY AND

COMPREHENSIVE INCOME

Years ended December 31, 2005, 2004, and 2003

(In thousands, except share and per share amounts)

	Comprehensive Income			Common Stock			Additional Paid-In Capital		Accumulated Other Comprehensive Income (Loss)			Retained Earnings			Total Shareholders’ Equity
				Shares	Amount
BALANCES, December 31, 2002				5,652,604	$	57	$	17,258	$	2,366		$	11,495		$	31,176
Comprehensive income:
Net income	$	4,822		—		—		—		—			4,822			4,822
Net unrealized losses on investment securities available for sale, net of tax effect and reclassification adjustment (note 22)		(912	)	—		—		—		(912	)		—			(912	)
Net unrealized losses on interest rate swap agreements, net of tax effect and reclassification adjustment (note 22)		(390	)	—		—		—		(390	)		—			(390	)
Total comprehensive income	$	3,520
Cash dividends declared, $0.35 per share				—		—		—		—			(1,960	)		(1,960	)
BALANCES, December 31, 2003				5,652,604		57		17,258		1,064			14,357			32,736
Comprehensive income:
Net income	$	5,153		—		—		—		—			5,153			5,153
Net unrealized losses on investment securities available for sale, net of tax effect and reclassification adjustment (note 22)		(710	)	—		—		—		(710	)		—			(710	)
Net unrealized losses on interest rate swap agreements, net of tax effect and reclassification adjustment (note 22)		(462	)	—		—		—		(462	)		—			(462	)
Total comprehensive income	$	3,981
Issuance of common stock				37,500		—		187		—			—			187
Cash dividends declared, $0.40 per share				—		—		—		—			(2,275	)		(2,275	)
BALANCES, December 31, 2004				5,690,104		57		17,445		(108	)		17,235			34,629
Comprehensive income:
Net income	$	6,112		—		—		—		—			6,112			6,112
Net unrealized losses on investment securities available for sale, net of tax effect and reclassification adjustment (note 22)		(1,485	)	—		—		—		(1,485	)		—			(1,485	)
Net unrealized losses on interest rate swap agreements, net of tax effect and reclassification adjustment (note 22)		(398	)	—		—		—		(398	)		—			(398	)
Total comprehensive income	$	4,229
Issuance of common stock				4,500		—		59		—			—			59
Cash dividends declared, $0.40 per share				—		—		—		—			(2,278	)		(2,278	)
BALANCES, December 31, 2005				5,694,604	$	57	$	17,504	$	(1,991	)	$	21,069		$	36,639

See accompanying notes to consolidated financial statements.

F-5

SUMMIT BANK CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

	Years ended December 31,
	2005			2004			2003
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	6,112		$	5,153		$	4,822
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization of premises and equipment		1,078			832			722
Deferred tax expense (benefit)		180			(312	)		(5	)
Net amortization of premiums/discounts on investment securities		470			461			339
Amortization of servicing assets		55			125			174
Proceeds from termination of interest rate swap		—			46			—
Amortization of deferred gain on termination of interest rate swap		(15	)		(13	)		—
Partnership loss in low income housing investment		286			—			—
Income from bank-owned life insurance		(461	)		(437	)		(436	)
Provision for loan losses		539			1,090			1,199
Earnings from split-dollar life insurance		(20	)		—			(45	)
Net gains on sales of investment securities		(3	)		(143	)		(100	)
(Gains) losses on disposal of other real estate		(88	)		—			212
Changes in other assets and liabilities:
Increase in other assets		(1,613	)		(309	)		(616	)
Increase in other liabilities		2,187			1,072			389
Net cash provided by operating activities		8,707			7,565			6,655
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from maturities, sales and collections of investment securities available for sale		26,308			38,321			57,186
Proceeds from maturities and collections of investment securities held to maturity		6,020			1,010			10
Purchases of investment securities available for sale and other investments		(8,506	)		(62,232	)		(71,503	)
Purchases of investment securities held to maturity		—			(4,692	)		(349	)
Loans made to customers, net of principal collected on loans		(18,116	)		(24,265	)		(59,633	)
Proceeds from sale of other real estate		434			—			—
Purchase of partnership interest in low income housing investment		(1,642	)		—			—
Purchases of premises and equipment		(1,372	)		(1,091	)		(1,371	)
Liquidation of other investment		—			2			—
Net cash provided by (used in) investing activities		3,126			(52,947	)		(75,660	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net (decrease) increase in demand and savings deposits		(10,464	)		51,570			11,809
Net increase in time deposits		14,243			14,284			39,364
(Repayment of) proceeds from Federal Home Loan Bank advances		(5,000	)		—			5,000
Net increase (decrease) in other borrowed funds		(26,677	)		437			4,232
Proceeds from issuance of long-term debentures		—			—			12,000
Issuance of common stock		59			187			—
Dividends paid		(2,278	)		(2,275	)		(1,960	)
Net cash (used in) provided by financing activities		(30,117	)		64,203			70,445
Net (decrease) increase in cash and cash equivalents		(18,284	)		18,821			1,440
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR		37,059			18,238			16,798
CASH AND CASH EQUIVALENTS AT END OF YEAR	$	18,775		$	37,059		$	18,238
SUPPLEMENTAL DISCLOSURES OF CASH PAID DURING THE YEAR:
Interest	$	9,654		$	7,977		$	7,175
Income taxes		2,044			2,287			1,916
SUPPLEMENTAL DISCLOSURES OF NONCASH INVESTING ACTIVITIES:
Transfer of foreclosed loans to other real estate		—			1,544			697
Loan to facilitate sale of other real estate		1,198			—			—

See accompanying notes to consolidated financial statements.

F-6

SUMMIT BANK CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(a) GENERAL

Summit Bank Corporation (the Company) was organized on October 15, 1986 for the purpose of becoming a bank holding company. The Company was approved to become a bank holding company by the Federal Reserve Bank of Atlanta on September 11, 1987. On March 4, 1988, the Company acquired 100% of the stock of The Summit National Bank (the Bank). The organizers received final approval for the charter of the Bank from the Office of the Comptroller of the Currency on March 10, 1988, and the Bank began operations on that date.

In 2003, the Company created a wholly owned subsidiary, Summit Bank Corporation Capital Trust I, for the purpose of issuing $12 million of 30-year trust preferred securities to a third party. Proceeds from this issuance were loaned to the parent company which then contributed $9 million to the Bank. Refer to Footnote 13.

(b) BUSINESS

The Company operates through one segment, providing a full range of banking services to individual and corporate customers through its subsidiary bank. The Company is subject to competition from other financial institutions. The Company is subject to the regulations of certain State and Federal agencies and undergoes periodic examinations by those regulatory authorities.

(c) BASIS OF PRESENTATION

The consolidated financial statements include the accounts of Summit Bank Corporation and its subsidiaries, after elimination of all significant intercompany balances and transactions.

In preparing the consolidated financial statements in conformity 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 date of the balance sheet and revenues and expenses for the period. Actual results could differ significantly from those estimates. A material estimate that is particularly susceptible to significant change in the near term relates to the determination of the allowance for loan losses. In connection with the determination of the allowance for loan losses, Management obtains independent appraisals for significant properties. A substantial portion of the Company’s loans are secured by real estate in the metropolitan area of Atlanta, Georgia and the San Francisco South Bay area of California. The Company also opened a loan production office in San Diego, California in January, 2006. Accordingly, the ultimate collectibility of a substantial portion of the Company’s loan portfolio is susceptible to changes in the real estate market conditions of these market areas.

Certain 2004 and 2003 amounts have been reclassified to conform to the 2005 presentation. Bankers acceptance discount income of $138,000 and $100,000 for the years 2004 and 2003, respectively, has been reclassified from international fee income to interest income as the income relates to interest earning assets.

(d) CASH AND CASH EQUIVALENTS

Cash and cash equivalents include cash and due from banks, interest-bearing deposits with other banks with original maturities less than 90 days, and federal funds sold. Federal funds are generally sold for one-day periods.

F-7

SUMMIT BANK CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(e) INVESTMENT SECURITIES

The Company classifies its investment securities into one of three categories: available for sale, held to maturity, or trading. Investment securities at December 31, 2005 and 2004 consist of obligations of U.S. Government agencies, tax-exempt municipal securities, mortgage-backed securities, and equity securities.

Investment securities classified as available for sale securities are reported at fair value. Unrealized holding gains or losses, net of the related tax effect, on available for sale securities are excluded from income and are reported as a separate component of shareholders’ equity until realized.

Investment securities classified as held to maturity are stated at cost, adjusted for amortization of premiums and accretion of discounts. The Company has the intent and ability to hold these investment securities to maturity.

Investments in stock of the Federal Home Loan Bank of Atlanta and Federal Reserve Bank of Atlanta are restricted stocks, as defined in Statement of Financial Accounting Standards (SFAS) No. 115, Accounting for Certain Investments in Debt and Equity Securities; accordingly, the provisions of SFAS No. 115 are not applicable to these stocks. Both stocks are reported in the consolidated financial statements at cost.

Purchase premiums and discounts on investment securities are amortized and accreted to interest income using the level yield method. In establishing the accretion of discounts and amortization of premiums, the Company utilizes market-based prepayment assumptions. Interest and dividend income are recognized when earned. Realized gains and losses for securities sold are included in income and are derived using the specific identification method for determining the costs of securities sold.

A decline in the fair value of any security below cost that is deemed other than temporary is charged to income resulting in the establishment of a new cost basis for the security.

(f) LOANS

Loans are stated at the amount of unpaid principal, reduced by unearned income and the allowance for loan losses. Unearned income, primarily arising from discount basis installment loans, deferred gains on the sale of the Small Business Administration (SBA) guaranteed portion of loans and deferred loan fees, is recognized as interest income over the terms of the loans using the interest method. Interest on loans is recorded by using the simple interest method on the daily balance of the principal amount outstanding.

Accrual of interest on loans is discontinued either when reasonable doubt exists as to the full or timely collection of interest or principal or when a loan becomes contractually past due by 90 days or more with respect to interest or principal. When a loan is placed on nonaccrual status, all interest previously accrued but not collected is reversed against current period interest income. Income on such loans is then recognized only to the extent that cash is received and where the future collection of principal is probable. Loans are returned to accruing status only when they are brought fully current with respect to interest and principal and when, in the judgment of Management, the loans are estimated to be fully collectible as to both principal and interest.

Loan fees, net of certain origination costs, are deferred and amortized over the lives of the underlying loans using a method which approximates a level yield.

Impaired loans are measured based on the present value of expected future cash flows, discounted at the loan’s effective interest rate, or at the loan’s observable fair value, or the fair value of the collateral if the loan is

F-8

SUMMIT BANK CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

collateral dependent. Loans that are determined to be impaired require a valuation allowance equivalent to the amount of the impairment. The valuation allowance is established through the provision for loan losses.

A loan is considered impaired when, based on current information and events, it is probable that the Company will be unable to collect all amounts due according to the contractual terms of the note agreement. Cash receipts on impaired loans which are accruing interest are applied to principal and interest under the contractual terms of the loan agreement. Cash receipts on impaired loans for which the accrual of interest has been discontinued are applied to reduce the principal amount of such loans until the principal has been recovered and are recognized as interest income thereafter.

(g) ALLOWANCE FOR LOAN LOSSES

The allowance for loan losses is established through provisions for loan losses charged to operations. Loans are charged against the allowance for loan losses when Management believes that the collection of the principal is not probable. Subsequent recoveries are added to the allowance. The allowance is an amount that Management believes will be adequate, determined through use of its allowance for loan losses methodology, to absorb losses on existing loans. The allowance is established through consideration of such factors as changes in the nature and volume of the loan portfolio, overall portfolio quality, review of specific problem loans, the underlying value of the collateral, and current economic conditions that may affect the borrowers’ ability to pay.

Management believes that the allowance for loan losses is adequate. While Management uses available information to recognize losses on loans, future additions to the allowance may be necessary based on changes in economic conditions, the financial condition of borrowers and other factors. In addition, various regulatory agencies, as an integral part of their examination process, periodically review the Company’s allowance for loan losses. Such agencies may require the Company to recognize additions to the allowance based on their judgments about information available to them at the time of their examination.

(h) PREMISES AND EQUIPMENT

Premises and equipment are stated at cost, less accumulated depreciation and amortization. Depreciation is computed on a straight-line basis over the estimated useful lives of the assets, which are from 3 to 25 years. Leasehold improvements are amortized over the shorter of the estimated useful lives of the improvements or the term of the related lease using the straight-line method.

(i) OTHER REAL ESTATE

Other real estate, consisting of properties obtained through foreclosure proceedings or acceptance of a deed in lieu of foreclosure, is reported on an individual asset basis at the lower of cost (carrying value at date of foreclosure) or fair value less disposal costs. Fair value is determined on the basis of current appraisals, comparable sales, and other estimates of value obtained principally from independent sources. When properties are acquired through foreclosure, any excess of the loan balance at the time of foreclosure over the fair value of the real estate held as collateral is recognized as a loss and charged to the allowance for loan losses. Subsequent write-downs are charged to operations. Costs of improvements to other real estate are capitalized, while costs associated with holding other real estate are charged to operations.

(j) DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

In accordance with SFAS No. 133 and SFAS No. 138, all derivatives are recognized on the balance sheet at their fair value. On the date the derivative contract is entered into, the Company designates the derivative as

F-9

SUMMIT BANK CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

either a hedge of the fair value of a recognized asset or liability or of an unrecognized firm commitment (fair value hedge), a hedge of a forecasted transaction or the variability of cash flows to be received or paid related to a recognized asset or liability (cash flow hedge), or a derivative trading instrument. The Company formally documents all relationships between hedging instruments and hedged items, as well as its risk-management objective and strategy for undertaking various hedge transactions. This process includes linking all derivatives that are designated as fair value or cash flow hedges to specific assets and liabilities on the balance sheet or to specific firm commitments or forecasted transactions. The Company also formally assesses, both at the hedge’s inception and on an ongoing basis, whether the derivatives that are used in hedging transactions are highly effective in offsetting changes in fair values or cash flows of hedged items. When it is determined that a derivative is not highly effective as a hedge or that it has ceased to be a highly effective hedge, the Company discontinues hedge accounting prospectively.

Changes in the fair value of a derivative that is highly effective and that is designated and qualifies as a fair value hedge, along with the loss or gain on the hedged asset or liability or unrecognized firm commitment of the hedged item that is attributable to the hedged risk are recorded in earnings. Changes in the fair value of a derivative that is highly effective and that is designated and qualifies as a cash flow hedge are recorded as an adjustment to accumulated other comprehensive income (loss) to the extent that the hedge ultimately has been effective. Changes in the fair value of derivative trading instruments are reported in current-period earnings.

The Company discontinues hedge accounting prospectively when it is determined that the derivative is no longer effective in offsetting changes in the fair value or cash flows of the hedged item, the derivative expires or is sold, terminated, or exercised, the derivative is no longer designated as a hedging instrument, because it is unlikely that a forecasted transaction will occur, a hedged firm commitment no longer meets the definition of a firm commitment, or Management determines that designation of the derivatives as a hedging instrument is no longer appropriate.

When hedge accounting is discontinued because it is determined that the derivative no longer qualifies as an effective fair value hedge, the Company continues to carry the derivative on the balance sheet at its fair value, and no longer adjusts the hedged asset or liability for changes in fair value. The adjustment of the carrying amount of the hedged asset or liability is accounted for in the same manner as other components of the carrying amount of that asset or liability. When hedge accounting is discontinued because the hedged item no longer meets the definition of a firm commitment, the Company continues to carry the derivative on the balance sheet at its fair value, removes any asset or liability that was recorded pursuant to recognition of the firm commitment from the balance sheet and recognizes any gain or loss in earnings. When hedge accounting is discontinued because it is probable that a forecasted transaction will not occur, the Company continues to carry the derivative on the balance sheet at its fair value, and gains and losses that were accumulated in other comprehensive income are recognized immediately in earnings. In all other situations in which hedge accounting is discontinued, the Company continues to carry the derivative at its fair value on the balance sheet, and recognizes any changes in its fair value in earnings.

(k) INCOME TAXES

Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.

F-10

SUMMIT BANK CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(l) LOAN SERVICING ASSETS

When the Company sells the guaranteed portions of SBA loans, the servicing is generally retained. At the time of sale, a servicing asset is recorded if expected servicing revenues exceed an amount approximating adequate servicing compensation. The servicing asset is initially recorded based on its fair value relative to the fair values of the portions of the loan sold and retained. The servicing asset, included in other assets, is amortized on a method which approximates a level yield over the estimated life of the serviced loans considering assumed prepayment patterns.

The carrying value of the servicing asset is periodically evaluated for impairment if the Company experiences unanticipated principal prepayments which cause the present value of future net servicing fee revenue to be less than the carrying value. If the servicing asset is determined to be impaired, a valuation allowance is recorded equivalent to the amount of the impairment. The valuation allowance is established through a charge to earnings.

(m) GOODWILL

The Company accounts for goodwill in accordance with SFAS No. 142, Goodwill and Other Intangible Assets, which eliminates amortization of goodwill and intangible assets that have indefinite useful lives and requires annual tests of impairments of those assets. SFAS No. 142 also provides specific guidance about how to determine and measure goodwill and intangible asset impairments, and requires additional disclosures of information about goodwill and other intangible assets.

In accordance with the provisions of SFAS No. 142, the Company tested its goodwill for impairment. To accomplish this, the Company identified its reporting units and determined the carrying value of each reporting unit by assigning the assets and liabilities, including the existing goodwill and intangible assets, to those reporting units as of the date of adoption. The Company evaluates goodwill for impairment annually. At December 31, 2005 and 2004, the Company had net unamortized goodwill of approximately $1,530,000, which on those dates is not considered impaired.

(n) NET INCOME PER SHARE

Basic net income per share excludes dilution and is computed by dividing net income by weighted average shares outstanding. Diluted net income per share is computed by dividing net income by weighted average shares outstanding plus common stock equivalents resulting from dilutive stock options.

(o) STOCK-BASED COMPENSATION

In December 2002, the Financial Accounting Standards Board (FASB) issued SFAS No. 148, Accounting for Stock-Based Compensation—Transition and Disclosure an amendment of FASB Statement No. 123. SFAS No. 148 amends SFAS No. 123, Accounting for Stock-Based Compensation, to provide alternative methods of transition for an entity that voluntarily changes to the fair value based method of accounting for stock-based employee compensation. It also amends the disclosure provisions of SFAS No. 123 to require prominent disclosure about the effects on reported net income of an entity’s accounting policy decisions with respect to stock-based employee compensation. Finally, SFAS No. 148 also amends Accounting Principles Board (APB) Opinion No. 28, Interim Financial Reporting, to require disclosure about those effects in the interim financial information.

The Company applies APB Opinion No. 25, Accounting for Stock Issued to Employees, and related interpretations in accounting for its stock option plans. Accordingly, compensation cost is measured as the

F-11

SUMMIT BANK CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

excess, if any, of the quoted market price of the Company’s stock at the date of grant over the amount an employee must pay to acquire the stock. Compensation cost was not recorded for the year ended December 31, 2005, as the quoted market price on the date of grant equaled the exercise price. Compensation cost determined under SFAS No. 123 would have reduced net income and income per share for the years ended December 31, 2005 and 2004 to the pro forma amounts indicated below (in thousands, except per share amounts):

	2005			2004
Net income	$	6,112		$	5,153
Deduct total stock-based compensation expense determined under fair value based method, net of related tax effect		(371	)		(25	)
Pro forma net income	$	5,741		$	5,128
Net income per common share:
Basic and diluted:
As reported	$	1.07			0.91
Pro forma		1.01			0.90

Compensation cost determined under SFAS No. 123 did not differ from the compensation cost determined under APB Opinion No. 25 for the year ended December 31, 2003 as no stock options or other stock-based compensation was granted in that year.

(p) RECENT ACCOUNTING PRONOUNCEMENTS

In December 2003, the AICPA issued Statement of Position (SOP) 03-3, Accounting for Certain Loans or Debt Securities acquired in a Transfer. This statement addresses accounting for differences between contractual cash flows and cash flows expected to be collected from an investor’s initial investment in loans or debt securities (loans) acquired in a transfer if those differences are attributable, at least in part, to credit quality. It includes such loans acquired in purchase business combinations. This SOP does not apply to loans originated by the entity. This SOP limits the yield that may be accreted (accretable yield) to the excess of the investor’s estimate of undiscounted expected principal, interest, and other cash flows (cash flows expected at acquisition to be collected) over the investor’s initial investment in the loan. This SOP requires that the excess of contractual cash flows over cash flows expected to be collected (nonaccretable difference) not be recognized as an adjustment of yield, loss accrual, or valuation allowance. This SOP prohibits investors from displaying accretable yield and nonaccretable difference in the balance sheet. Subsequent increases in cash flows expected to be collected generally should be recognized prospectively through adjustment of the loan’s yield over its remaining life. Decreases in cash flows expected to be collected should be recognized as impairment. The Company will follow the requirements of this statement in any future acquisition of loans or debt securities. Loans acquired in the proposed acquisition of Concord Bank, National Association (see Note 23) will be subject to the requirements of this SOP.

In July 2005, the FASB issued a FASB Staff Position (FSP) (entitled FSP FAS 115-1, The Meaning of Other-Than-Temporary Impairment and Its Application to Certain Investments) which supersedes Emerging Issues Task Force (EITF) Issue No. 03-1 and replaces the guidance set forth in paragraphs 10-18 of the issue with references to existing other than temporary impairment guidance, such as SFAS No. 115, Securities and Exchange Commission (SEC) Staff Accounting Bulletin 59, Accounting for Noncurrent Marketable Equity Securities, and APB Opinion No. 18, The Equity Method of Accounting for Investments in Common Stock. FSP FAS 115-1 codifies the guidance set forth in EITF Topic D-44, (“Recognition of Other-Than-Temporary Impairment upon the Planned Sale of a Security Whose Cost Exceeds Fair Value”) and clarifies that an investor

F-12

SUMMIT BANK CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

should recognize an impairment loss no later than when the impairment is deemed other-than-temporary, even if a decision to sell has not been made. In September 2005, the FASB decided to include in the final FSP FAS 115-1 guidance similar to that provided in EITF Issue No. 03-1 regarding the accounting for debt securities subsequent to an other-than-temporary impairment. In addition, the FASB decided that FSP FAS 115-1 would be applied prospectively for reporting periods beginning after December 15, 2005. FSP FAS 115-1 nullifies certain requirements of EITF Issue 03-1 and supersedes EITF Topic D-44. The Company does not consider the adoption of FSP FAS 115-1 or its implementation guidance to have a material impact on the Company’s financial position or results of operations given the nature of the Company’s investments.

In December 2004, the FASB issued SFAS No. 123R Share-Based Payment which requires companies to recognize, in the statement of income, the grant-date fair value of stock options and other equity-based compensation issued to employees. On April 14, 2005, the SEC amended Rule 4-01(a) of Regulation S-X that amended the compliance date for SFAS No. 123R. The SEC’s new rule allows companies to implement SFAS No. 123R at the beginning of their next fiscal year, instead of the next reporting period that begins after June 15, 2005. The Company adopted SFAS No. 123R on January 1, 2006. On March 29, 2005, the SEC issued Staff Accounting Bulletin No. 107 (SAB 107). SAB 107 expresses the views of the SEC staff regarding the interaction between SFAS No. 123R and certain SEC rules and regulations, provides the staff’s views regarding the valuation of share-based payments by public companies, and provides guidance regarding share-based payments with non-employees. Based on the Company’s historically limited grants of stock options to its employees, the Company does not expect the adoption of SFAS No. 123R to have a significant effect on its results of operations.

(2) INVESTMENT SECURITIES AVAILABLE FOR SALE

Amortized cost, estimated fair values, and gross unrealized gains and losses of investment securities available for sale are as follows:

			Gross		Gross
	Amortized		Unrealized		Unrealized		Estimated
	Cost		Gains		Losses		Fair Value
	(In thousands)
December 31, 2005:
Obligations of U.S. government agencies	$	42,888	$	18	$	1,263	$	41,643
Tax-exempt municipal securities		4,802		130		—		4,932
Mortgage-backed securities		61,040		273		1,472		59,841
Total	$	108,730	$	421	$	2,735	$	106,416
December 31, 2004:
Obligations of U.S. government agencies	$	48,772	$	188	$	517	$	48,443
Tax-exempt municipal securities		4,805		192		—		4,997
Mortgage-backed securities		79,178		740		502		79,416
Total	$	132,755	$	1,120	$	1,019	$	132,856

Proceeds from the sales of investment securities available for sale during 2005, 2004, and 2003 were $9,924,000, $18,454,000, and $19,873,000, respectively. Gross gains of $5,000, $167,000, and $100,000, and gross losses of $2,000, $24,000, and $0, were realized on those sales in 2005, 2004, and 2003, respectively.

F-13

SUMMIT BANK CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Investment securities available for sale with aggregate carrying amounts of approximately $41,051,000 and $105,987,000 at December 31, 2005 and 2004, respectively, were pledged to secure public deposits, FHLB advances, and for other purposes required or permitted by law.

The amortized costs and estimated fair values of investment securities available for sale at December 31, 2005, by contractual maturity, are shown below. Expected 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		Estimated
	Cost		Fair Value
	(In thousands)
Due in less than one year	$	5,003	$	5,021
Due after one year through five years		38,635		37,389
Due after five years through ten years		768		800
Due after ten years		3,284		3,365
Mortgage-backed securities		61,040		59,841
Total	$	108,730	$	106,416

The following investments available for sale have unrealized losses as of December 31, 2005 and 2004 for which an other than temporary impairment has not been recognized:

	Estimated		Unrealized
	Fair Value		Losses
	(In thousands)
December 31, 2005:
Obligations of U.S. government agencies:
With an unrealized loss for more than 12 months	$	36,622	$	1,263
Mortgage-backed securities:
With an unrealized loss for less than 12 months		16,384		207
With an unrealized loss for more than 12 months		35,201		1,265
	$	88,207	$	2,735
December 31, 2004:
Obligations of U.S. government agencies:
With an unrealized loss for less than 12 months	$	32,192	$	421
With an unrealized loss for more than 12 months		5,154		96
Mortgage-backed securities:
With an unrealized loss for less than 12 months		50,320		393
With an unrealized loss for more than 12 months		5,915		109
	$	93,581	$	1,019

At December 31, 2005, there were five mortgage-backed securities with unrealized losses for less than 12 months and seven obligations of U.S. government agencies and eleven mortgage-backed securities with unrealized losses for more than 12 months. The total estimated fair value of the securities with unrealized losses at December 31, 2005 represented 97% of the amortized cost; therefore, the impairment is not considered severe and is due to increases in interest rates rather than credit quality.

F-14

SUMMIT BANK CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(3) INVESTMENT SECURITIES HELD TO MATURITY

Amortized cost, estimated fair values, and gross unrealized gains and losses of investment securities held to maturity at December 31, 2005 and 2004 are as follows:

			Gross		Gross		Estimated
	Amortized		Unrealized		Unrealized		Fair
	Cost		Gains		Losses		Value
	(In thousands)
December 31, 2005:
Tax-exempt municipal securities	$	15,756	$	621	$	18	$	16,359
December 31, 2004:
Tax-exempt municipal securities	$	15,938	$	771	$	7	$	16,702

There were no investment securities held to maturity at December 31, 2005 or 2004 pledged to secure public deposits or for other purposes required or permitted by law.

The amortized costs and estimated fair values of investment securities held to maturity at December 31, 2005, by contractual maturity, are shown below. Expected 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		Estimated
	Cost		Fair Value
	(In thousands)
Due after one year through five years	$	1,384	$	1,366
Due after five years through ten years		1,210		1,260
Due after ten years		13,162		13,733
Total	$	15,756	$	16,359

The following investments held to maturity had unrealized losses as of December 31, 2005 and 2004 for which an other than temporary impairment has not been recognized:

	Estimated		Unrealized
	Fair Value		Losses
	(In thousands)
December 31, 2005:
Tax-exempt municipal security with an unrealized loss for less than 12 months	$	475	$	3
Tax-exempt municipal security with an unrealized loss for more than 12 months		891		15
Total	$	1,366	$	18
December 31, 2004:
Tax-exempt municipal security with an unrealized loss for less than 12 months	$	1,168	$	7

Two securities held to maturity had unrealized losses at December 31, 2005. These municipal securities were purchased prior to 2003. The unrealized losses are considered immaterial to the consolidated financial statements.

F-15

SUMMIT BANK CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(4) OTHER INVESTMENTS

Other investments at December 31, 2005 and 2004 are summarized as follows:

	2005		2004
	(In thousands)
Federal Home Loan Bank stock	$	1,997	$	2,079
Federal Reserve Bank stock		656		656
Other		362		362
Total	$	3,015	$	3,097

(5) INTEREST RATE SWAP AND FLOOR AGREEMENTS

Interest rate swap transactions generally involve the exchange of fixed and floating rate interest rate obligations without the exchange of underlying principal amounts. Entering into interest rate contracts involves not only interest rate risk, but also the risk of counterparties’ failure to fulfill their legal obligation. Notional principal amounts often are used to express the volume of these transactions, but the amounts potentially subject to credit risk are much smaller.

During the year ended December 31, 2003, the Company entered into two interest rate swaps with notional amounts of $25,000,000 each. These swaps were designated as hedges of certain variable cash flows in a portion of the loan portfolio. Because these qualified as hedging instruments, changes in fair value resulting from these interest rate swaps were recorded in accumulated other comprehensive income. In March 2004, the Company terminated one of these swap instruments, receiving proceeds of $46,000. At the date of termination, the remaining term of the swap was 36 months. The gain from termination is included in accumulated other comprehensive income and is being recognized over the remaining original term of the swap.

The outstanding interest rate swap contract at December 31, 2005 and 2004 is as follows:

	Notional		Prime		Rate		Maturity	Fair Value
	Amount		Rate Paid		Received		Date	Asset (Liability)
	(In thousands)
December 31, 2005:
Receive fixed rate swap	$	25,000	7.25	%	6.135	%	July 2008	$	(941	)
December 31, 2004:
Receive fixed rate swap	$	25,000	5.25	%	6.135	%	July 2008	$	(309	)

In October 2005, the Company entered into a five year interest rate floor contract at a cost of $246,000. The nominal value of the floor is $25 million and the Bank is paid if the prime rate falls below 6%. The interest rate floor was determined to not qualify for hedge accounting as a cash flow hedge; therefore, the change in value of the instrument is recorded through earnings. Due to a prime rate increase late in the year, the value of the floor declined $89,000 and that loss was recognized in the income statement in the fourth quarter of 2005.

F-16

SUMMIT BANK CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(6) LOANS

A summary of loans at December 31, 2005 and 2004 is as follows:

	2005			2004
	(In thousands)
Commercial, financial, and agricultural	$	86,051		$	82,953
Real estate—construction		20,019			10,812
Real estate—mortgage		251,989			245,836
Installment loans to individuals		969			680
Less unearned income		(1,042	)		(1,076	)
Loans, net of unearned income		357,986			339,205
Less allowance for loan losses		(4,555	)		(4,549	)
Net loans	$	353,431		$	334,656

Activity in the allowance for loan losses for the years ended December 31, 2005, 2004, and 2003 was as follows:

	2005			2004			2003
	(In thousands)
Balance, beginning of year	$	4,549		$	4,047		$	3,435
Provision for loan losses		539			1,090			1,199
Loans charged off		(871	)		(1,005	)		(770	)
Recoveries		338			417			183
Balance, end of year	$	4,555		$	4,549		$	4,047

Impaired loans and related amounts included in the allowance for loan losses at December 31, 2005 and 2004 are as follows:

	2005				2004
	Balance		Allowance		Balance		Allowance
	(In thousands)
Impaired loans, with a related allowance	$	605	$	30	$	337	$	157
Impaired loans, without allowance		578		—		958		—

The allowance for impaired loans was primarily determined based on the fair value of the respective loans’ collateral. Impaired loans of $578,000 and $958,000 at December 31, 2005 and 2004, respectively, did not have a related allowance because these loans were fully guaranteed by the SBA. The average recorded investment in impaired loans for the years ended December 31, 2005, 2004, and 2003 was $1,043,000, $1,088,000 and $938,000, respectively. Interest income recognized on impaired loans for the years ended December 31, 2005, 2004, and 2003 was approximately $94,000, $85,000 and $17,000, respectively.

Nonaccrual loans amounted to approximately $1,183,000 and $1,295,000 at December 31, 2005 and 2004, respectively. Interest income on nonaccrual loans at December 31, 2005, 2004, and 2003, which would have been reported, if on an accrual basis, in 2005, 2004, and 2003, amounted to approximately $95,000, $55,000 and $57,000, respectively.

At December 31, 2005 and 2004, the Company was servicing loans for others with aggregate principal balances of approximately $9,905,000 and $14,476,000, respectively.

F-17

SUMMIT BANK CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(7) PREMISES AND EQUIPMENT

Premises and equipment at December 31, 2005 and 2004 consisted of the following:

	2005			2004
	(In thousands)
Land	$	685		$	685
Building		1,416			1,416
Furniture and equipment		6,604			5,548
Leasehold improvements		1,885			1,584
		10,590			9,233
Less accumulated depreciation and amortization		(5,984	)		(4,921	)
Premises and equipment, net	$	4,606		$	4,312

(8) INTANGIBLE ASSETS

The following is a summary of activity with respect to loan servicing assets included in other assets at December 31, 2005, 2004, and 2003:

	2005			2004			2003
	(In thousands)
Balance at beginning of year	$	94		$	219		$	393
Amortization of servicing assets		(55	)		(125	)		(174	)
Balance at end of year	$	39		$	94		$	219

The results of the Company’s impairment analysis have not identified any significant impairment in the recorded servicing assets. Accordingly, the Company has no valuation allowance for impairment at December 31, 2005 and 2004.

(9) RESERVE REQUIREMENTS

At December 31, 2005 and 2004, the Federal Reserve Bank required that the Bank maintain a reserve balance of $697,000 and $472,000, respectively.

(10) DEPOSITS

A summary of time deposits by maturity as of December 31, 2005 follows:

	(In thousands)
Time to maturity:
One year or less	$	195,625
Over one year through two years		31,478
Over two years through three years		2,682
Over three years through four years		2,413
Over four years through five years		2,726
Over five years		133
	$	235,057

F-18

SUMMIT BANK CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

At December 31, 2005, the Company had approximately $922,000 in deposits from its directors, executive officers, and principal shareholders and their affiliates.

(11) OTHER BORROWED FUNDS

Other borrowed funds at December 31, 2005 and 2004 include federal funds purchased and securities sold under agreements to repurchase totaling $8,717,000 and $35,394,000, respectively. The securities sold under agreements to repurchase at December 31, 2005 and 2004 were secured by certain U.S. government agency securities and mortgage-backed securities with an aggregate carrying value of approximately $14,548,000 and $44,298,000, respectively. All securities sold under the agreements to repurchase were under the Bank’s control. The repurchase agreements at December 31, 2005 and 2004 have maturities of less than 90 days.

The following summarizes pertinent data related to other borrowed funds for the years ended December 31, 2005, 2004, and 2003:

	2005			2004			2003
Weighted average borrowing rate at year-end		3.15	%		2.11	%		1.01	%
Weighted average borrowing rate during the year		2.63	%		1.28	%		1.00	%
Average daily balance during the year	$	18,815,000		$	28,462,000		$	17,805,000
Maximum month-end balance during the year	$	38,026,000		$	36,548,000		$	34,957,000

During 2005 and 2004, the Company had available under a line of credit with SunTrust Bank of Atlanta approximately $3,000,000. Upon renewal as of January 1, 2006, the line of credit was increased to $6,000,000 and bears interest at LIBOR plus 1.65% and will expire on December 31, 2006. The Company has pledged 4,000 shares (27% of the outstanding shares) of the Bank’s common stock as collateral under this line of credit. At December 31, 2005 and 2004, the Company had no borrowings outstanding under this credit line.

(12) FEDERAL HOME LOAN BANK ADVANCES

At December 31, 2005 and 2004, the Bank had available line of credit commitments with the Federal Home Loan Bank of Atlanta totaling $80,070,000 and $57,480,000, respectively, of which $20,000,000 and $25,000,000, respectively, had been advanced. At December 31, 2005, an advance of $10,000,000 bears interest at a fixed rate of 4.47% and matures on February 13, 2006. The other advance of $10,000,000 bears interest at a floating rate of 4.26% which changes with three-month LIBOR on a quarterly basis and matures on February 3, 2006. The Bank has pledged approximately $22,926,000 and $30,588,000, respectively, in U.S. government agency and mortgage-backed securities as collateral for advances under this line of credit at December 31, 2005 and 2004.

(13) LONG-TERM DEBENTURES

In September 2003, the Company formed a wholly owned subsidiary, Summit Bank Corporation Capital Trust I (the Trust). During 2003, the Trust completed a private placement of $12,000,000 of Company-obligated mandatorily redeemable securities of a subsidiary holding solely parent debentures (trust preferred securities) to an institutional buyer. The proceeds from the sale were invested in floating rate junior subordinated notes (long-term debentures) issued by the Company, and the Company issued a limited, irrevocable guarantee of the Trust’s obligations relating to the trust preferred securities. The long-term debentures have a 30-year term and have a floating rate equal to three-month LIBOR plus 3.1%, which adjusts quarterly (7.12% at December 31, 2005). The long-term debentures and the trust preferred securities are callable by the Company or the Trust, as applicable, at

F-19

SUMMIT BANK CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

its option after five years, or sooner in certain specific events, subject in all cases to prior approval by the Federal Reserve Board, to the extent required. In each case, redemption will be made at a price of 100% of the face amount of the trust preferred securities, plus the accrued interest thereon through the redemption date. In addition, the Company and the Trust have the ability to defer interest and redemption date.

Pursuant to both FASB Interpretation No. 46, Consolidation of Variable Interest Entities and Interpretation of ARB No. 51 (FIN 46) and FASB Interpretation No. 46 (revised December 2003)—(FIN 46R), the Trust is considered a variable interest entity as its activities are so restricted and predetermined that the equity holders lack the direct or indirect ability to make decisions about the Trust’s activities through voting rights or similar rights. Additionally, the common stock equity held by the Company is not considered at risk and, therefore, the common stock equity does not meet the definition of a variable interest. As the Company does not have a variable interest in the Trust, it cannot be the primary beneficiary of the Trust and, therefore, on December 31, 2003, the Company deconsolidated the Trust.

Financial information for the Trust, including the balance sheet and the income statement for the years ended December 31, 2005 and 2004, respectively, is as follows:

	2005			2004
	(In thousands)
Assets:
Cash	$	—		$	156
Notes receivable		12,380			12,000
Other assets		—			225
Total assets	$	12,380		$	12,381
Liabilities—Company obligated mandatorily redeemable securities of subsidiary holding solely parent debentures	$	12,000		$	12,000
Equity		380			381
Total liabilities and equity	$	12,380		$	12,381
Interest income	$	788			568
Interest expense		789			567
Net (loss) income	$	(1	)	$	1

(14) INCOME TAXES

Income tax expense (benefit) attributable to income before income taxes for the years ended December 31, 2005, 2004, and 2003 consists of:

	2005		2004			2003
	(In thousands)
Federal—current	$	2,000	$	2,367		$	1,922
State—current		206		323			183
Federal—deferred		68		(241	)		33
State—deferred		112		(71	)		(38	)
Total	$	2,386	$	2,378		$	2,100

F-20

SUMMIT BANK CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Income tax expense attributable to income before income taxes for the years ended December 31, 2005, 2004, and 2003 differed from the amount computed by applying the U.S. Federal income tax rate of 34% to income before income taxes as follows:

	2005			2004			2003
	(In thousands)
Computed “expected” income tax expense	$	2,889		$	2,561		$	2,353
Increase (decrease) resulting from:
State income taxes, net of Federal tax benefit		210			166			96
Meals and entertainment expenses		12			19			17
Income from bank-owned life insurance		(164	)		(148	)		(164	)
Tax-exempt interest		(274	)		(253	)		(197	)
Low income housing tax credits		(233	)		—			—
Other		(54	)		33			(5	)
Total	$	2,386		$	2,378		$	2,100

The tax effects of temporary differences that give rise to significant portions of deferred tax assets and liabilities at December 31, 2005 and 2004 are presented below:

	2005			2004
	(In thousands)
Deferred tax assets (liabilities):
Loans, principally due to allowance for loan losses	$	1,480		$	1,398
Premises and equipment, principally due to differences in depreciation		(51	)		(31	)
Net Federal and State operating loss carryforwards		2,882			3,492
Net unrealized losses on investment securities available for sale and interest rate swaps		1,246			67
Other		27			124
Total deferred tax assets		5,584			5,050
Less valuation allowance		(2,136	)		(2,601	)
Deferred tax assets, net of valuation allowance	$	3,448		$	2,449

In assessing the realizability of deferred tax assets, Management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income, and tax planning strategies in making this assessment. Based upon the level of historical taxable income and projections; for future taxable income over the periods which the temporary differences resulting in the deferred tax assets are deductible, Management believes it is more likely than not that the Company will realize the benefits of these deductible differences, net of the existing valuation allowance, at December 31, 2005.

At December 31, 2005 and 2004, the Company had net operating loss carryforwards of approximately $7,948,000 and $9,418,000, respectively, for Federal income tax purposes and approximately $5,677,000 and $11,038,000, respectively, for state income tax purposes which are available to offset future Federal and state taxable income, subject to certain annual maximum limitations. The net operating loss carryforwards expire at

F-21

SUMMIT BANK CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

various amounts through 2012, with annual limitations on their utilization. Due to these limitations, certain of these net operating losses will not be used, and the Company has recorded a valuation allowance on the related deferred tax asset.

(15) COMMITMENTS AND CONTINGENCIES

On January 17, 2006, the Bank consented to the issuance of a consent order (the “Order”) from the Office of the Comptroller of the Currency (“OCC”) pursuant to which the Bank is required to improve its compliance and operations infrastructure with respect to the Bank Secrecy Act and related anti-money laundering laws (collectively, “BSA”). The Order was based on the OCC’s findings during its examination of the Bank during February and March of 2005. The OCC did not impose any fine or civil money penalty in connection with this action.

As part of the Order, the Bank has agreed to strengthen its BSA internal controls, including the development and implementation of enhanced policies and procedures for BSA compliance; to enhance its programs and controls for customer identification and Suspicious Activity Reporting; to enhance its BSA audit functions; and to improve employee training relating to the detection and prevention of money laundering. Prior to its receipt of the Order, the Bank had already taken significant steps to strengthen its compliance policies and procedures and operations infrastructure in areas related to those specified in the Order, as well as in other respects and management continues to be committed to ensuring that all of the requirements of the Order are met.

Management does not expect the actions to have a material impact on the financial condition or results of operations of the Bank or Summit Bank Corporation. However, the Bank has incurred approximately $70,000 in additional expenses related to making the improvements necessary to strengthen its BSA operations and compliance and expects that similar expenses in connection with these regulatory actions may be incurred in the future.

In August 1995, the Company’s board of directors entered into agreements with three executive officers of the Bank. The agreements basically provide that in the event of involuntary termination or a change in the executive’s position or compensation resulting from a change in the control of the Company due to a merger, consolidation or reorganization, each executive would be entitled to receive an amount equal to 100% of the executive’s base salary. These agreements have continuing three-year terms. The board of directors entered into the same agreement in May, 2005 with a fourth executive officer in conjunction with his employment at the Bank.

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. These instruments involve, to varying degrees, elements of credit and interest rate risk in excess of the amount recognized in the consolidated balance sheets.

The Company’s exposure to credit loss in the event of nonperformance by the counterparty to the financial instrument for commitments to extend credit is represented by the contractual amount of these instruments. The Company uses the same credit policies in making commitments and conditional obligations as it does for on-balance sheet instruments. The Company does not anticipate any material losses as a result of these commitments and conditional obligations.

Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination

F-22

SUMMIT BANK CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

clauses and may require payment of a fee. Since many of the commitments are expected to expire without being funded, the total commitment amounts do not necessarily represent future liquidity requirements. The Company evaluates each customer’s creditworthiness on a case-by-case basis. The amount of collateral obtained, if deemed necessary by the Company upon extension of credit, is based on Management’s credit evaluation of the counterparty. Collateral held varies, but may include accounts receivable, inventory, property, plant, and equipment, residential real estate, income producing properties, and cash on deposit. At December 31, 2005, the Company had outstanding loan commitments totaling $46,022,000 primarily at floating rates of interest with terms of less than one year.

Standby and commercial letters of credit are conditional commitments issued by the Bank guaranteeing the performance of a customer to a third party. These guarantees are primarily issued to support public and private borrowing arrangements. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loan facilities to customers. The Company holds collateral supporting these commitments, as deemed necessary. At December 31, 2005, commitments under standby and commercial letters of credit and guarantees aggregated $8,708,000.

The Company has several noncancelable operating leases, primarily for banking offices. Rental expense for operating leases (except those with lease terms of a month or less that were not renewed) during 2005, 2004, and 2003 was approximately $931,000, $1,163,000 and $922,000, respectively.

Future minimum lease payments under noncancelable operating leases (with initial or remaining lease terms in excess of one year) as of December 31, 2005 are:

	(In thousands)
Year ending December 31:
2006	$	1,354
2007		1,258
2008		856
2009		882
2010		801
Thereafter		2,159
Total minimum lease payments	$	7,310

The Company is involved in various claims and legal actions arising in the ordinary course of business. In the opinion of Management, the ultimate disposition of these matters will not have a material adverse effect on the Company’s consolidated financial position, results of operations, or liquidity.

(16) SHAREHOLDERS’ EQUITY

The Company is authorized to issue up to 20,000,000 shares of special stock, with no par value. Liquidation preferences and other such items are subject to future determination by the Company’s Board of Directors. To date, no special stock has been issued.

On January 26, 2004, the Company’s board of directors approved a 3-for-2 stock split in the form of a 50% stock dividend payable on February 17, 2004, to shareholders of record on February 9, 2004.

F-23

SUMMIT BANK CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(17) EMPLOYEE BENEFIT PLANS

The Company has a Stock Incentive Plan (the Plan). The exercise price for incentive options issued under the Plan is determined by the Board of Directors or Stock Option Committee as of the date the option is granted. The period for the exercise of options does not exceed the earlier of ten years from the date of grant or expiration of the Plan. The Company has reserved 679,408 shares of common stock for the Plan.

Stock option activity during the years ended December 31, 2005, 2004, and 2003 is as follows:

	2005				2004				2003
			Weighted				Weighted			Weighted
			Average				Average			Average
			Exercise Price				Exercise Price			Exercise Price
	Shares		Per Share		Shares		Per Share		Shares	Per Share
Options outstanding at beginning of year	4,500		$	12.99	36,000		$	4.65	36,000	$	4.65
Options granted	90,000			15.04	6,000			12.99	—		—
Options exercised	(4,500	)		12.99	(37,500	)		4.98	—		—
Options outstanding at end of year	90,000		$	15.04	4,500		$	12.99	36,000	$	4.65

All options outstanding for each of the years are exercisable. Of the options outstanding at December 31, 2005, 75,000 had an exercise price of $15.01 and 15,000 had an exercise price of $15.15, and a contractual maturity of nine years.

The per share weighted average fair value of stock options granted with an exercise price equal to market during 2005 was $6.22, using the Black Scholes option-pricing model with the following weighted average assumptions: expected life of three years; expected annual dividend rate of 4.14%; risk-free interest rate of 3.75%; and expected volatility of 73%. The per share weighted average fair value of stock options granted with an exercise price equal to market during 2004 was $6.31, using the Black Scholes option-pricing model with the following weighted average assumptions: expected life of five years; expected annual dividend rate of 4.14%; risk-free interest rate of 3.00%; and expected volatility of 77%. There were no stock options granted during 2003. The stock options granted in 2005 and 2004 vested immediately.

The Company has a savings plan (the Savings Plan) administered under the provisions of the Internal Revenue Code Section 401(k). During 2005, 2004, and 2003, the Company and Bank made contributions totaling $111,545, $103,205 and $83,679, respectively, to the Savings Plan. In 2005, 2004, and 2003, the Company computed contributions based on the matching of 50% of employee contributions up to 5% of the employee’s compensation. Effective January 1, 2006, the Company matches 100% of employee contributions up to 3% of their compensation, then matches 50% of the employee contribution up to the next 2% of their compensation contributed.

The Company entered into a Post-Retirement Compensation Agreement with its CEO in 2004 that provides for 15 annual payments of $24,000 each, beginning six months after her retirement from the Company and no earlier than February 27, 2007. The Company recorded compensation expense of $73,217 in each of 2005 and 2004 relating to this agreement.

(18) REGULATORY MATTERS

The Company and the Bank are subject to various regulatory capital requirements administered by federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory—and possibly

F-24

SUMMIT BANK CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

additional discretionary—actions by regulators that, if undertaken, could have a direct material effect on the consolidated financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Company and the Bank must meet specific capital guidelines that involve quantitative measures of the assets, liabilities, and certain off-balance-sheet items as calculated under regulatory accounting practices. The capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings, and other factors.

Quantitative measures established by regulation to ensure capital adequacy require the Company and the Bank to maintain minimum amounts and ratios (set forth in the table below) of total and Tier 1 capital (as defined in the regulations) to risk-weighted assets (as defined), and of Tier 1 capital (as defined) to average assets (as defined). Management believes, as of December 31, 2005 and 2004, that the Company and the Bank met all capital adequacy requirements to which they are subject.

As of December 31, 2005, the most recent notification from the Office of the Comptroller of the Currency categorized the Bank as well capitalized under the regulatory framework for prompt corrective action. To be categorized as well capitalized, the Bank must maintain minimum total risk-based, Tier 1 risk-based, and Tier 1 leverage ratios as set forth in the table below. There are no conditions or events since that notification that Management believes have changed the Bank’s capital category.

The actual capital amounts and ratios are also presented in the table below (dollars in thousands):

	Actual				Minimum for Capital Adequacy Purposes				Minimum to be Well Capitalized Under Prompt Corrective Action Provisions
	Amount		Ratio		Amount		Ratio		Amount		Ratio
As of December 31, 2005:
Total capital—risk-based (to risk-weighted assets):
Bank	$	52,492	13.84	%	$	30,343	8.0	%	$	37,929	10.0	%
Consolidated		53,677	14.12			30,419	8.0			N/A	N/A
Tier 1 capital—risk-based (to risk-weighted assets):
Bank		47,911	12.63			15,171	4.0			22,758	6.0
Consolidated		49,096	12.91			15,209	4.0			N/A	N/A
Tier 1 capital—leverage (to average assets):
Bank		47,911	9.16			20,919	4.0			26,149	5.0
Consolidated		49,096	9.37			20,956	4.0			N/A	N/A
As of December 31, 2004:
Total capital—risk-based (to risk-weighted assets):
Bank	$	46,712	13.12	%	$	28,476	8.0	%	$	35,585	10.0	%
Consolidated		49,647	13.92			28,531	8.0			N/A	N/A
Tier 1 capital—risk-based
(to risk-weighted assets):
Bank		42,263	11.87			14,238	4.0			21,351	6.0
Consolidated		44,264	12.41			14,266	4.0			N/A	N/A
Tier 1 capital—leverage (to average assets):
Bank		42,263	8.19			20,653	4.0			25,087	5.0
Consolidated		44,264	8.56			20,076	4.0			N/A	N/A

F-25

SUMMIT BANK CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(19) FAIR VALUES OF FINANCIAL INSTRUMENTS

SFAS No. 107, Disclosures about Fair Value of Financial Instruments, requires disclosure of fair value information about financial instruments, whether or not recognized in the balance sheet, for which it is practicable to estimate that value. In cases where quoted market prices are not available, fair values are based on estimates using present value or other valuation techniques. Those techniques are significantly affected by the assumptions used, including the discount rate and estimates of future cash flows. In that regard, the derived fair value estimates cannot be substantiated by comparison to independent markets and, in many cases, could not be realized in immediate settlement of the instrument. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and, therefore, cannot be determined with precision. Changes in assumptions would significantly affect the estimates. SFAS No. 107 excludes certain financial instruments and all nonfinancial instruments from its disclosure requirements.

Fair value estimates are based on existing on- and off-balance-sheet financial instruments and other recorded assets and liabilities without attempting to estimate the value of anticipated future business. In addition, tax ramifications related to the realization of unrealized gains and losses can have a significant effect on fair value estimates and have not been considered in any of the estimates. Accordingly, the aggregate fair value amounts presented do not represent the underlying value of the Company.

The following methods and assumptions were used by the Company in estimating its fair value disclosures for financial instruments and certain other assets and liabilities:

Cash and due from banks: The carrying amounts of cash and due from banks approximate those assets’ fair values.

Federal funds sold: The carrying amounts of federal funds sold approximate their fair value.

Interest-bearing deposits with other banks: The carrying amounts of interest-bearing deposits with other banks approximate their fair value.

Investment securities: Fair values for investment securities are based on quoted market prices, where available. If quoted market prices are not available, fair values are based on quoted market prices of comparable instruments.

Other investments: The carrying amounts of other investments approximate their fair value.

Interest rate swaps and floors: Fair values for the interest rate swap and floor are based on quoted market prices.

Loans: For variable-rate loans that reprice frequently and with no significant change in credit risk, fair values are based on carrying values. The fair values for all other loans are estimated based upon a discounted cash flow analysis, using interest rates currently being offered for loans with similar terms to borrowers of similar credit quality.

Off-balance-sheet instruments: Fair values for the Company’s off-balance-sheet instruments are based on a comparison with terms, including interest rate and commitment period, currently prevailing to enter into similar agreements, taking into account credit standings. The carrying and fair values of off-balance-sheet instruments at December 31, 2005 and 2004 were not material.

Deposits: Fair values for fixed-rate time deposits are estimated using a discounted cash flow analysis that applies interest rates currently being offered on deposits of similar terms of maturity. The carrying amounts of all other deposits, due to their short-term nature, approximate their fair values.

F-26

SUMMIT BANK CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Federal Home Loan Bank advances: The fair value for the fixed rate Federal Home Loan Bank advances is estimated using a discounted cash flow analysis that applies interest rates currently being offered on advances of similar terms of maturity. For the variable rate Federal Home Loan Bank advances, fair value approximates carrying value.

Other borrowed funds: The carrying amounts of other borrowed funds, due to their short-term nature, approximate their fair values.

Long-term debentures: The fair value of the long-term debentures approximates carrying value due to the variable rate nature of the debentures.

The estimated fair value of the Company’s financial instruments as of December 31, 2005 and 2004 are as follows:

	2005				2004
	Carrying Value		Fair Value		Carrying Value		Fair Value
	(In thousands)
Assets:
Cash and due from banks	$	18,194	$	18,194	$	20,810	$	20,810
Interest-bearing deposits with other banks		581		581		249		249
Federal funds sold		—		—		16,000		16,000
Investment securities available for sale		106,416		106,416		132,856		132,856
Investment securities held to maturity		15,756		16,359		15,938		16,702
Interest rate floor		158		158		—		—
Other investments		3,015		3,015		3,097		3,097
Loans, net		353,431		346,150		334,656		336,363
Liabilities:
Deposits:
Noninterest-bearing	$	108,600	$	108,600	$	104,055	$	104,055
Interest-bearing demand and savings		94,575		94,575		109,584		109,584
Time deposits		235,057		233,600		220,814		221,256
Federal Home Loan Bank advances		20,000		20,000		25,000		25,091
Other borrowed funds		8,717		8,717		35,394		35,394
Interest rate swap		941		941		309		309
Long-term debentures		12,000		12,000		12,000		12,000

F-27

SUMMIT BANK CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(20) CONDENSED FINANCIAL INFORMATION OF SUMMIT BANK CORPORATION (PARENT COMPANY ONLY)

CONDENSED BALANCE SHEETS

	December 31
	2005			2004
	(In thousands except share amounts)
ASSETS
Cash and due from Bank	$	258		$	2,242
Investment in the Bank, at equity		47,454			43,695
Investment securities		22			22
Investment in nonbank subsidiaries		—			380
Other assets		930			300
Total assets	$	48,664		$	46,639
LIABILITIES AND SHAREHOLDERS’ EQUITY
Accrued liabilities	$	25		$	10
Long-term debentures		12,000			12,000
Total liabilities		12,025			12,010
Shareholders’ equity:
Common stock, $0.01 par value. Authorized 100,000,000 shares; issued and outstanding 5,694,604 shares in 2005 and 5,690,104 shares in 2004		57			57
Additional paid-in capital		17,504			17,445
Accumulated other comprehensive loss		(1,991	)		(108	)
Retained earnings		21,069			17,235
Total shareholders’ equity		36,639			34,629
Total liabilities and shareholders’ equity	$	48,664		$	46,639

CONDENSED STATEMENTS OF INCOME

	Years ended December 31
	2005		2004		2003
	(In thousands)
INCOME:
Dividend income received from Bank	$	1,175	$	2,800	$	1,425
EXPENSE:
Interest expense		788		568		133
Operating expenses		281		248		174
Total expense		1,069		816		307
Income before income taxes and equity in undistributed net income of subsidiaries		106		1,984		1,118
Income tax benefit		364		253		100
Income before equity in undistributed net income of subsidiaries		470		2,237		1,218
Equity in undistributed net income of subsidiaries		5,642		2,916		3,604
Net income	$	6,112	$	5,153	$	4,822

F-28

SUMMIT BANK CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

CONDENSED STATEMENTS OF CASH FLOWS

	Years ended December 31
	2005			2004			2003
	(In thousands)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	6,112		$	5,153		$	4,822
Adjustments to reconcile net income to net cash (used in) provided by operating activities:
Equity in undistributed net income of subsidiaries		(5,642	)		(2,916	)		(3,604	)
Increase in other assets		(630	)		(250	)		(15	)
(Decrease) increase in other liabilities		15			(20	)		(101	)
Net cash (used in) provided by operating activities		(145	)		1,967			1,132
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of investment securities		—			—			(22	)
Contribution to bank subsidiary		—			—			(9,000	)
Contribution to nonbank subsidiary		—			—			(380	)
Net cash used in investing activities		—			—			(9,402	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of long-term debentures		—			—			12,000
Proceeds from loan from subsidiary		380			—			—
Dividends paid to shareholders		(2,278	)		(2,275	)		(1,960	)
Issuance of common stock		59			187			—
Net cash (used in) provided by financing activities		(1,839	)		(2,088	)		10,040
Net (decrease) increase in cash and cash equivalents		(1,984	)		(121	)		1,770
CASH AND CASH EQUIVALENTS at beginning of year		2,242			2,363			593
CASH AND CASH EQUIVALENTS at end of year	$	258		$	2,242		$	2,363
SUPPLEMENTAL DISCLOSURE OF CASH PAID DURING THE YEAR:
Income taxes	$	2,044		$	2,287		$	1,916
Interest		788			568			133
SUPPLEMENTAL NON-CASH ACTIVITY—forgiveness of amount due from nonbank subsidiary upon its dissolution	$	—			165			—

The primary source of funds available to the Parent Company to pay shareholder dividends and other expenses is from the Bank. The Office of the Comptroller of the Currency requires its prior approval for a bank to pay dividends in excess of the bank’s net profits to date for that year combined with its retained net profits for the preceding two years. The amount of cash dividends available from the bank subsidiary for payment in 2005 is approximately $8,558,000 plus earnings in 2006, if any. At December 31, 2005, approximately $38,896,000 of the Company’s investment in the bank subsidiary is restricted as to dividend payments from the bank subsidiary to the Parent Company.

F-29

SUMMIT BANK CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(21) SUPPLEMENTAL FINANCIAL DATA

Components of other noninterest expenses in excess of 1% of total interest and noninterest income for any of the respective years are as follows:

	Years ended December 31
	2005		2004		2003
	(In thousands)
Data/item processing	$	508	$	517	$	456
Marketing and community relations		461		388		300
Postage and courier		406		361		326
Telephone		409		353		316
Legal fees		398		240		175
Other professional services		599		465		511
Other non-credit losses		304		465		71

(22) COMPREHENSIVE INCOME

Comprehensive income includes net income and other comprehensive income (loss) which includes the effect of unrealized gains and losses on investment securities available for sale and interest rate swaps in shareholders’ equity. The following table sets forth the amounts of other comprehensive income (loss) included in shareholders’ equity along with the related tax effect for the years ended December 31, 2005, 2004, and 2003.

	Pretax			Tax (Expense)			Net of Tax
	Amount			Benefit			Amount
	(In thousands)
2005:
Net unrealized losses on investment securities available for sale	$	(2,412	)	$	929		$	(1,483	)
Net unrealized losses on interest rate swaps		(632	)		243			(389	)
Less reclassification adjustment for net gains realized in net income		18			(7	)		11
Other comprehensive loss	$	(3,062	)	$	1,179		$	(1,883	)
2004:
Net unrealized losses on investment securities available for sale	$	(965	)	$	343		$	(622	)
Net unrealized losses on interest rate swaps		(573	)		119			(454	)
Less reclassification adjustment for net gains realized in net income		156			(60	)		96
Other comprehensive loss	$	(1,694	)	$	522		$	(1,172	)
2003:
Net unrealized losses on investment securities available for sale	$	(1,515	)	$	662		$	(853	)
Net unrealized losses on interest rate swaps		(616	)		226			(390	)
Less reclassification adjustment for net gains realized in net income		100			(41	)		59
Other comprehensive loss	$	(2,231	)	$	929		$	(1,302	)

F-30

SUMMIT BANK CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(23) PROPOSED ACQUISITION

On December 12, 2005, the Company announced that it had entered into an Agreement and Plan of Merger (the Agreement) with Concord Bank, National Association (Concord) whereby the Company will acquire all of the outstanding shares of Concord for a cash purchase price of $23.7 million. The Agreement is subject to Concord shareholders’ approval. As of December 31, 2005, total assets of Concord were approximately $116.0 million (unaudited) and shareholders’ equity was approximately $11.7 million (unaudited).

(24) QUARTERLY FINANCIAL DATA (UNAUDITED)

The supplemental quarterly financial data is as follows:

	Quarters ended
	March 31,		June 30,		September 30,		December 31,
	2005		2005		2005		2005
	(In thousands)
Interest income	$	7,336	$	7,575	$	8,015	$	8,335
Interest expense		2,300		2,440		2,715		2,819
Net interest income		5,036		5,135		5,300		5,516
Provision for loan losses		264		200		50		25
Net income		1,306		1,351		1,582		1,873
Net income per share—basic		.23		.24		.27		.33
Net income per share—diluted		.23		.24		.27		.33

	Quarters ended
	March 31,		June 30,		September 30,		December 31,
	2004		2004		2004		2004
	(In thousands)
Interest income	$	6,544	$	6,476	$	6,703	$	7,105
Interest expense		1,927		2,016		2,096		2,221
Net interest income		4,617		4,460		4,607		4,884
Provision for loan losses		464		201		250		175
Net income		1,321		1,291		1,337		1,204
Net income per share—basic		0.23		0.23		0.23		0.22
Net income per share—diluted		0.23		0.23		0.23		0.22

F-31

EX-21.1

Exhibit 21.1

Subsidiaries of Summit Bank Corporation

Subsidiary	Jurisdiction of Organization
The Summit National Bank	National bank organized under the laws of the United States of America
SBGA California Investments, Inc. (subsidiary of The Summit National Bank)	California
SBGA Investments, Inc. (subsidiary of SBGA California Investments, Inc.)	Georgia

EX-23.1

Exhibit 23.1

Consent of Independent Registered Public Accounting Firm

The Board of Directors

Summit Bank Corporation:

We consent to incorporation by reference in the registration statements (Nos. 333-92925 and 333-29199) on Form S-8 of Summit Bank Corporation of our report dated February 17, 2006, relating to the consolidated balance sheets of Summit Bank Corporation and subsidiaries as of December 31, 2005 and 2004, and the related consolidated statements of income, shareholders’ equity and comprehensive income, and cash flows for each of the years in the three-year period ended December 31, 2005, which report is incorporated by reference in the December 31, 2005 annual report on Form 10-K of Summit Bank Corporation.

                /s/ KPMG LLP

Atlanta, Georgia

March 8, 2006

EX-31.1

Exhibit 31.1

Certification

I, Pin Pin Chau, Chief Executive Officer of Summit Bank Corporation, certify that:

1. I have reviewed the annual report on Form 10-K of Summit Bank Corporation;

2. Based on my knowledge, the annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report;

3. Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this annual report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared;

(b) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation;

(c) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting.

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s Board of Directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: March 8, 2006

/s/ Pin Pin Chau

Pin Pin Chau

Chief Executive Officer

EX-31.2

Exhibit 31.2

Certification

I, Thomas Flournoy, Chief Financial Officer of Summit Bank Corporation, certify that:

1. I have reviewed the annual report on Form 10-K of Summit Bank Corporation;

2. Based on my knowledge, the annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report;

3. Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this annual report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and I have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared;

(b) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation;

(c) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting.

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s Board of Directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: March 8, 2006

/s/ Thomas Flournoy

Thomas Flournoy

Chief Financial Officer

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350 AS ADOPTED PURSUANT TO SECTION 906 OF

THE SARBANES-OXLEY ACT OF 2002

The undersigned hereby certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that this Annual Report on Form 10-K for the year ended December 31, 2005 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, and the information contained in such report fairly presents, in all material respects, the financial condition and results of operations of the Company.

This 8^th day of March, 2006.

/s/ Pin Pin Chau

Chief Executive Officer

This 8^th day of March, 2006.

/s/ Thomas J. Flournoy

Chief Financial Officer