exv99

EXHIBIT 99

To our shareholders,

We are pleased to report record quarterly net income in the second quarter of $12,880,000, or $1.59 per diluted share, compared to $12,572,000, or $1.58 per diluted share, in second quarter 2004. Return on average equity was 16.51% in second quarter 2005 compared to 17.52% in second quarter 2004, return on average assets was 1.22% versus 1.28%, and efficiency ratio was 64.11% versus 59.35%.

Quarterly Results

Net interest income of $40,872,000 in second quarter 2005 was $3,819,000 more than second quarter 2004. The net interest margin of 4.41% increased 5 basis points over the same period last year. Compared to first quarter 2005, net interest margin increased 2 basis points. Second quarter 2005 average loans grew $212,139,000, or 8%, while quarterly average deposits grew $127,648,000, or 4%, over the same period last year. Improved credit quality also contributed to the earnings growth in second quarter 2005. With improving loan quality, the provision for loan loss of $1,365,000 was $1,176,000, or 46%, lower than second quarter 2004.

Noninterest income of $17,840,000 was $571,000, or 3%, higher than second quarter 2004. The increase was driven by debit card income and technology services revenue increases of $355,000 and $245,000, respectively. Second quarter 2005 noninterest income included a $446,000 loss on the sale of approximately $40,000,000 of U.S. agency securities which were replaced with higher yielding securities. Excluding the loss on securities, nonin-terest income increased 6% from second quarter 2004.

Noninterest expense of $37,643,000 was $5,341,000, or 17%, higher than the comparable quarter in 2004. The increase can be attributed to increases in salary and benefits of $1,498,000 and furniture, equipment and occupancy of $993,000. Additionally, in second quarter 2005, we recorded a $150,000 mortgage servicing impairment compared to a $2,106,000 impairment reversal for the second quarter of 2004. Without the effect of mortgage servicing impairment, noninterest expense would have been $3,085,000 or 9% higher than last year.

Last quarter we announced our strategic decision to exit Wal-Mart locations. Expenses of $364,000, in addition to $533,000 recognized in the first quarter, were recognized directly as a result of preparing to close these locations. On June 30, 2005, we discontinued operation of five of the nine Wal-Mart locations. The remaining four Wal-Mart locations are expected to be closed within the next year.

On July 8, 2005, the Company paid a $.48 dividend per common share.

Year to Date

On a year to date basis, net income of $24,839,000, or $3.06 per diluted share, was $2,549,000, or 11.4%, higher than net income in the first two quarters of 2004 of $22,290,000, or $2.80 per diluted share. Return on average equity was 16.03% in the first two quarters of June 2005 compared to 15.88% last year, return on average assets was 1.19% versus 1.15%, and efficiency ratio was 64.39% versus 63.21%.

When comparing the year to date performance of 2005 to 2004, there are some significant items that affect comparability. One such item is a decrease in the expense for provision for loan losses. Due to improving credit quality, the provision for loan losses in 2005 is $2,990,000 as compared to the 2004 provision expense of $4,959,000, a difference of $1,969,000. Also, in 2005 we recorded

impairment reversal income of $313,000 related to our mortgage servicing rights, as compared to 2004 when we recorded income from the reversal of a previous impairment of $1,076,000. Additional expenses related to the closure of Wal-Mart branches total $897,000 in the first two quarters of 2005.

We have made good progress towards improving the Company’s return on assets, and although the numbers do not yet reflect it, good progress towards improving the efficiency of the Company. Excluding the losses on the sale of investments and costs of closing the Wal-Mart locations and considering new processes and systems becoming fully functional, there are positive signs of improvement. We, however, remain focused on becoming a more productive and competitive company over the next several quarters.

We continue to be led by our community banking strategy as well as our Company values. Our employees’, officers’ and advisory directors’ commitment to our goals has produced another record in quarterly earnings. Thank you.



Lyle R. Knight		Terrill R. Moore
President		Chief Financial Officer
Chief Executive Officer

Financial Highlights
Three Months ended June 30


(unaudited)	2005		2004		% Change

(in thousands except per share data)

OPERATING RESULTS
Net income	$	12,880	$	12,572		2.5	%
Diluted earnings per share		1.59		1.58		0.6	%
Dividends per share		0.48		0.40		20	%

PERIOD END BALANCES
Assets		4,277,610		4,002,056		6.9	%
Loans		2,891,674		2,660,375		8.7	%
Investment Securities		895,456		791,412		13.1	%
Deposits		3,310,372		3,228,765		2.5	%
Common Stockholders’ Equity		326,120		281,714		15.8	%
Common Shares Outstanding		7,981		7,887		1.2	%

QUARTERLY AVERAGES
Assets		4,250,589		3,951,500		7.6	%
Loans		2,830,362		2,618,223		8.1	%
Investment Securities		864,639		841,359		2.8	%
Deposits		3,294,110		3,166,462		4.0	%
Common Stockholders’ Equity		312,917		288,586		8.4	%
Common Shares Outstanding		7,964		7,891		1.0	%

Second Quarter 2005

Condensed Consolidated Statements of Income


	Three Months Ended				Six Months Ended
	June 30				June 30
(unaudited)	2005		2004		2005		2004

(in thousands, except per share data)

Total interest income	$	55,544	$	47,046	$	107,511	$	93,613
Total interest expense		14,672		9,993		27,306		20,077

Net interest income		40,872		37,053		80,205		73,536

Provision for loan losses		1,365		2,541		2,990		4,959

Net interest income after provision for loan losses		39,507		34,512		77,215		68,577
Noninterest income		17,840		17,269		34,789		33,751
Noninterest expense		37,643		32,302		74,039		67,871

Income before taxes		19,704		19,479		37,965		34,457
Income taxes		6,824		6,907		13,126		12,167

Net income	$	12,880	$	12,572	$	24,839	$	22,290


COMMON SHARE DATA:
Diluted EPS		1.59		1.58		3.06		2.80
Dividends		0.48		0.40		.90		.74
Book value						40.86		35.72
Tangible book value						36.18		30.95
Appraised value						*		54.50

*Currently not available, $63.50 as of March 31, 2005

Selected Ratios


	Three Months Ended						Six Months Ended
	June 30						June 30
(unaudited)	2005			2004			2005			2004


PERFORMANCE
Return on avg common equity		16.51	%		17.52	%		16.03	%		15.88	%
Return on avg common equity excl. market adj of securities		16.02	%		17.79	%		15.73	%		15.95	%
Return on avg assets		1.22	%		1.28	%		1.19	%		1.15	%
Net interest margin, FTE		4.41	%		4.36	%		4.40	%		4.38	%
Efficiency ratio		64.11	%		59.35	%		64.39	%		63.21	%

CREDIT QUALITY (Period End)
Annualized provision for loan losses to average loans								0.22	%		0.39	%
Annualized net charge offs to average loans								0.13	%		0.21	%
Allowance for loan losses to loans								1.50	%		1.55	%
Allowance for loan losses to non-accruing loans								223.04	%		189.76	%

CAPITAL ADEQUACY & LIQUIDITY
Leverage capital ratio								7.69	%		7.29	%
Avg loans to avg deposits								85.12	%		82.52	%

Condensed Consolidated Balance Sheet


	June 30
(unaudited)	2005		2004

(In thousands)

ASSETS

Cash and due from banks	$	199,645	$	256,809
Federal funds sold		32,000		41,040
Interest bearing deposits		4,136		3,879
Investment securities		895,456		791,412
Loans		2,891,674		2,660,375
Less: allowance for loan losses		43,368		41,174

Net loans		2,848,306		2,619,201
Premises & equipment, net		118,157		117,495
Accrued interest receivable		23,944		20,535
Goodwill and core deposit intangibles		39,100		40,497
Mortgage servicing rights		18,473		16,978
Bank owned life insurance		61,473		59,549
Other assets		36,920		34,661

Total Assets	$	4,277,610	$	4,002,056


LIABILITIES AND STOCKHOLDERS’ EQUITY

Deposits	$	3,310,372	$	3,228,765
Securities sold under repurchase agreements		499,404		366,358
Other liabilities		33,228		32,718
Other borrowed funds		7,568		8,266
Long — term debt		59,680		42,997
Subordinated debenture		41,238		41,238

Total Liabilities		3,951,490		3,720,342
Common stockholders’ equity		326,120		281,714

Total Liabilities and Stockholders’ Equity	$	4,277,610	$	4,002,056