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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

For the quarterly period ended June 30, 2002

For the transition period from ________ to ________

Commission File Number 000-24503

WASHINGTON BANKING COMPANY
(Exact name of registrant as specified in its charter)

450 SW Bayshore Drive
Oak Harbor, Washington 98277
(Address of principal executive offices) (Zip Code)

(360) 679-3121
(Issuer’s telephone number, including area code)

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the issuer: (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   [   ]

     The number of shares of the issuer’s Common Stock outstanding at August 9, 2002 was 4,077,750.

Table of Contents

Table of Contents

				Page
PART I
Item 1.		Financial Statements
		Condensed Consolidated Statements of Financial Condition — June 30, 2002 and December 31, 2001		1
		Condensed Consolidated Statements of Income — Three and Six Months Ended June 30, 2002 and 2001		2
		Condensed Consolidated Statements of Shareholders’ Equity and Comprehensive Income — Six Months Ended June 30, 2002 and 2001		3
		Condensed Consolidated Statements of Cash Flows — Six Months Ended June 30, 2002 and 2001		4
		Notes to Condensed Consolidated Financial Statements		5
Item 2.		Management’s Discussion and Analysis of Financial Condition and Results of Operations		8
Item 3.		Quantitative and Qualitative Disclosures about Market Risk		16
PART II
Item 4.		Submission of Matters to a Vote of Security Holders		17
Item 6.		Exhibits and Reports on Form 8-K		17
		Signatures

Table of Contents

PART I

Item 1. Financial Statements

WASHINGTON BANKING COMPANY
AND SUBSIDIARY
Condensed Consolidated Statements of Financial Condition
June 30, 2002 and December 31, 2001
(Dollars in thousands, except per share data)

						June 30,				December 31,
						2002				2001
						(unaudited)				(audited)
Assets
Cash and due from banks ($943 and $4,096, respectively, are restricted)						$	18,252			$	16,838
Interest-earning deposits							9,122				427
Federal funds sold							2,000				2,500
	Total cash and cash equivalents						29,374				19,765
Federal Home Loan Bank stock							2,090				2,029
Deferred compensation plan							233				132
Investment securities available for sale							2,634				4,145
Investment securities held to maturity							16,971				18,401
	Total investment securities						21,928				24,707
Loans receivable, net							413,585				373,198
Premises and equipment, net							15,679				15,647
Other real estate owned							409				473
Deferred tax assets							834				812
Other assets							3,374				3,084
				Total assets		$	485,183			$	437,686
Liabilities and Shareholders’ Equity
Liabilities:
	Deposits					$	408,535			$	367,175
	Other borrowed funds						22,500				32,500
	Deferred compensation plan						233				132
	Other liabilities						1,597				2,902
	Trust preferred securities						15,000				—
				Total liabilities			447,865				402,709
Commitments and contingencies							—				—
Shareholders’ equity:
	Preferred stock, no par value. Authorized 20,000 shares: no shares issued or outstanding						—				—
	Common stock, no par value. Authorized 10,000,000 shares: issued and outstanding 4,077,750 and 4,055,250 shares at June 30, 2002 and December 31, 2001, respectively						16,191				16,124
	Retained earnings						21,084				18,782
	Accumulated other comprehensive income, net						43				71
				Total shareholders’ equity			37,318				34,977
				Total liabilities and shareholders’ equity		$	485,183			$	437,686

See accompanying notes to condensed consolidated financial statements.

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WASHINGTON BANKING COMPANY
AND SUBSIDIARY
Condensed Consolidated Statements of Income
Three and six months ended June 30, 2002 and 2001 (unaudited)
(Dollars in thousands, except per share data)

				Three Months Ended June 30,								Six Months Ended June 30,
				2002				2001				2002				2001
Interest income:
	Interest and fees on loans			$	8,453			$	7,900			$	16,582			$	15,340
	Interest on taxable investment securities				68				115				150				245
	Interest on tax-exempt investment securities				187				198				379				398
	Other				33				49				67				113
		Total interest income			8,741				8,262				17,178				16,096
Interest expense:
	Interest deposits				2,569				3,593				5,151				7,351
	Interest trust preferred securities				7				—				7				—
		Total interest expense			2,576				3,593				5,158				7,351
		Net interest income			6,165				4,669				12,020				8,745
Provision for loan losses					(889	)			(655	)			(1,878	)			(1,060	)
		Net interest income after provision for loan losses			5,276				4,014				10,142				7,685
Noninterest income:
	Service charges and fees				423				437				852				841
	Other				451				548				1,279				996
		Total noninterest income			874				985				2,131				1,837
Noninterest expense:
	Salaries and benefits				2,403				2,004				4,722				4,046
	Occupancy				684				678				1,395				1,335
	Office supplies and printing				127				138				247				263
	Data processing				92				81				180				163
	Consulting and professional fees				65				67				121				122
	Other				711				547				1,343				1,011
		Total noninterest expense			4,082				3,515				8,008				6,940
		Income before income taxes			2,068				1,484				4,265				2,582
Provision for income taxes					(676	)			(400	)			(1,436	)			(697	)
		Net income		$	1,392			$	1,084			$	2,829			$	1,885
Net income per share, basic				$	0.34			$	0.27			$	0.70			$	0.47
Net income per share, diluted				$	0.32			$	0.26			$	0.66			$	0.45
Average number of shares outstanding, basic					4,061,185				4,047,097				4,058,233				4,040,043
Average number of shares outstanding, diluted					4,339,417				4,233,794				4,314,634				4,223,131

See accompanying notes to condensed consolidated financial statements.

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WASHINGTON BANKING COMPANY
AND SUBSIDIARY
Condensed Consolidated Statements of Shareholders’ Equity
and Comprehensive Income
Six months ended June 30, 2002 and 2001 (unaudited)
(Dollars in thousands, except per share data)

																Accumulated
				Common stock												other				Total
												Retained				comprehensive				shareholders'
				Shares				Amount				earnings				gain (loss), net				equity
Balances at December 31, 2000					4,033			$	16,058			$	15,470			$	(27	)		$	31,501
Comprehensive income:
	Net income				—				—				1,885				—				1,885
	Net change in unrealized gain (loss) on securities available for sale, net of tax of $42				—				—				—				82				82
		Total comprehensive income (1)																			1,967
Cash dividend, $0.12 per share					—				—				(485	)			—				(485	)
Stock options exercised					22				66				—				—				66
Balances at June 30, 2001					4,055			$	16,124			$	16,870			$	55			$	33,049
Balances at December 31, 2001					4,055			$	16,124			$	18,782			$	71			$	34,977
Comprehensive income:
	Net income				—				—				2,829				—				2,829
	Net change in unrealized gain (loss) on securities available for sale, net of tax of $14				—				—				—				(28	)			(28	)
		Total comprehensive income (1)																			2,801
Cash dividend, $0.13 per share					—				—				(527	)			—				(527	)
Stock options exercised					23				67				—				—				67
Balances at June 30, 2002					4,078			$	16,191			$	21,084			$	43			$	37,318

(1)

Comprehensive income for the three months ended June 30, 2002 and 2001 was $1,388 and $1,097, respectively.

See accompanying notes to condensed consolidated financial statements.

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WASHINGTON BANKING COMPANY
AND SUBSIDIARY
Condensed Consolidated Statements of Cash Flows
Six months ended June 30, 2002 and 2001 (unaudited)
(Dollars in thousands)

					Six Months Ended June 30,
					2002				2001
Cash flows from operating activities:
	Net income				$	2,829			$	1,885
	Adjustments to reconcile net income to net cash provided by operating activities:
		Federal Home Loan Bank stock dividends				(61	)			(28	)
		Deferred income tax expense				(8	)			—
		Amortization of investment premiums, net				(21	)			16
		Provision for loan losses				1,878				1,060
		Depreciation of premises and equipment				625				600
		Net gains on sale of premises and equipment and real estate				(197	)			(32	)
		Net (increase) decrease in other assets				(290	)			22
		Net decrease in other liabilities				(1,305	)			(386	)
			Net cash provided by operating activities			3,450				3,137
Cash flows from investing activities:
	Purchases of investment securities available for sale					(500	)			—
	Maturities of investment securities available for sale					2,000				1,500
	Maturities of investment securities held to maturity					1,420				800
	Net increase in loans					(42,265	)			(46,834	)
	Purchases of premises and equipment					(831	)			(704	)
	Proceeds from the sale of premises, equipment and real estate					435				97
			Net cash used in investing activities			(39,741	)			(45,141	)
Cash flows from financing activities:
	Net increase in deposits					41,360				27,299
	Net decrease in Federal Home Loan Bank advances					(10,000	)			—
	Net increase in federal funds purchased					—				16,000
	Proceed from trust preferred securities					15,000				—
	Dividends paid on common stock					(527	)			(485	)
	Proceeds from stock options exercised					67				66
			Net cash provided by financing activities			45,900				42,880
			Net increase in cash and cash equivalents			9,609				876
Cash and cash equivalents at beginning of period						19,765				17,179
Cash and cash equivalents at end of period					$	29,374			$	18,055
Supplemental information:
	Cash paid for interest				$	5,205			$	8,949
	Cash paid for taxes					2,251				925

See accompanying notes to condensed consolidated financial statements.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Six months ended June 30, 2002 and 2001 (unaudited)
(Dollars in thousands, except per share data)

(1)

Description of Business and Summary of Significant Accounting Policies

     (a)  Description of Business

Washington Banking Company (“WBCO”), a Washington State bank holding company was formed on April 30, 1996. Whidbey Island Bank (the “Bank”), the principal subsidiary of WBCO, is a Washington state-chartered commercial bank. The business of the Bank, which is focused in the northern area of Western Washington, consists primarily of attracting deposits from the general public and originating loans. Although the Bank has a diversified loan portfolio, a substantial portion of its borrowers’ ability to repay their loans is dependent upon the economic conditions affecting this area related to the retail and service trades, tourism, agricultural and manufacturing industries, and the large military base presence in Oak Harbor, Washington. The Bank also offers nondeposit investment products for sale through its subsidiary, WIB Financial Services, Inc. which are not FDIC insured.

Effective June 23, 1998, WBCO sold 1,380,000 shares of its common stock at a price of $12 per share, resulting in net proceeds to the Company of $14,893.

Washington Banking Capital Trust I (the “Trust”), the second subsidiary of WBCO, was formed in June 2002 for the exclusive purpose of issuing Trust Preferred Securities and common securities and using the $15.0 million in proceeds to acquire junior subordinated debentures issued by WBCO.

     (b)  Basis of Presentation

The accompanying interim condensed consolidated financial statements include the accounts of WBCO and its subsidiaries (together, “the Company”). The accompanying interim condensed consolidated financial statements have been prepared, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. These condensed consolidated financial statements should be read in conjunction with the December 31, 2001 audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K. In management’s opinion, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included. Operating results for the six months ended June 30, 2002 are not necessarily indicative of the results that may be expected for the year ending December 31, 2002. In preparing the consolidated financial statements, estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses are required. Actual results could differ from those estimates.

     (c)  Recently Issued Accounting Pronouncements

In July 2001, Financial Accounting Standard Board (“FASB”) issued Statement of Financial Accounting Standards (“SFAS”) 141, “Business Combinations” and SFAS 142, “Goodwill and Other Intangible Assets.” SFAS 141 requires business combinations initiated after June 30, 2001 to be accounted for using the purchase method of accounting, and broadens the criteria for recording intangible assets separate from goodwill. Recorded goodwill and intangibles will be evaluated against this new criteria and may result in certain intangibles being subsumed into goodwill, or alternatively, amounts initially recorded as goodwill may be separately identified and recognized apart from goodwill. SFAS 142 requires the use of a nonamortization approach to account for purchased goodwill and certain intangibles. Under this nonamortization approach, goodwill and certain intangibles will not be amortized into results of operations, but instead will be reviewed for impairment and written down and charged to results of operations only in the periods in which the recorded value of goodwill and certain intangibles is more than this fair value. The Company adopted the provisions of SFAS 142 on January 1, 2002 and it had no material effect on its results of operations or financial position.

In June 2001, the FASB issued SFAS 143, “Accounting for Asset Retirement Obligations,” which addresses financial accounting and reporting for obligations associated with the retirement of tangible long-lived assets and the associated asset retirement costs. The standard applies to legal obligations associated with the retirement of long-lived assets that result from the acquisition, construction, development and (or) normal use of the asset. SFAS 143

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Six months ended June 30, 2002 and 2001 (unaudited)
(Dollars in thousands, except per share data)

requires that the fair value of a liability for an asset retirement obligation be recognized in the period in which it is incurred if a reasonable estimate of fair value can be made. The fair value of the liability is added to the carrying amount of the associated asset and this additional carrying amount is depreciated over the life of the asset.

The liability is accreted at the end of each period through charges to operating expense. If the obligation is settled for other than the carrying amount of the liability, the Company will recognize a gain or loss on settlement. The Company is required and plans to adopt the provisions of SFAS 143 for the quarter ending March 31, 2003. The Company is currently evaluating the impact that this statement will have on their financial position and results of operations, however, they do not expect such impact to be material.

On October 3, 2001, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standards (“SFAS”) 144, “Accounting for the Impairment or Disposal of Long-Lived Assets,” which addresses financial accounting and reporting for the impairment or disposal of long-lived assets. While SFAS 144 supersedes SFAS 121, “Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of,” it retains many of the fundamental provisions in that SFAS 144 also supersedes the accounting and reporting provisions of APB Opinion No. 30, “Reporting the Results of Operations—Reporting the Effects of Disposal of a Segment of a Business, and Extraordinary, Unusual and Infrequently Occurring Events and Transactions,” for the disposal of a segment of a business. However, it retains the requirement in Opinion No. 30 to report separately discontinued operations and extends that reporting to a component of an entity that either has been disposed of (by sale, abandonment, or in a distribution to owners) or is classified as held for sale. The Company adopted the provisions of SFAS 144 on January 1, 2002 and it had no material effect on its results of operations or financial position.

(2) Trust Preferred Securities

On June 27, 2002 Washington Banking Capital Trust I issued $15.0 million of trust preferred securities with a 30-year maturity, callable after the fifth year, at an initial rate of 5.51%. The rate adjusts quarterly based on LIBOR (London Inter Bank Offered Rate). These securities are considered Tier I capital for the purposes of regulatory capital requirements. The Trust, a wholly-owned subsidiary of WBCO, is a statutory business trust created for the exclusive purposes of issuing and selling capital securities and utilizing sale proceeds to acquire junior subordinated debt issued by Washington Banking Company. Accordingly, the junior subordinated debentures are the sole assets of the Trust, and payments under the junior subordinated debentures will be the sole revenues of the Trust. All of the common securities of the Trust are owned by WBCO. Washington Banking Company has fully and unconditionally guaranteed the capital securities along with all obligations of the Trust under the trust agreements. The trust preferred securities are included with borrowings as a separate line item in the consolidated balance sheet and distributions payable are treated as interest expense in the consolidated statement of operations.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Six months ended June 30, 2002 and 2001 (unaudited)
(Dollars in thousands, except per share data)

(3) Earnings Per Share

The following illustrates the reconciliation of the numerators and denominators of the basic and diluted earnings per share (“EPS”) computations:

At June 30, 2002 and 2001 there were options to purchase 448,737 and 406,800 shares of common stock outstanding, respectively. For the quarters ended June 30, 2002 and 2001, options to purchase 0 and 98,550 shares of common stock, respectively, were antidilutive and, therefore, not included in computation of diluted net income per share. For the six months ended June 30, 2002 and 2001, options to purchase 0 and 98,550 shares of common stock, respectively, were antidilutive and, therefore, not included in computation of diluted net income per share.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Six months ended June 30, 2002 and 2001 (unaudited)
(Dollars in thousands, except per share data)

(4) Subsequent Event

On July 18, 2002, the Board of Directors declared a cash dividend of $0.065 per share to shareholders of record as of July 30, 2002 and payable on August 14, 2002.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Note Regarding Forward-Looking Statements: This Form 10-Q includes forward-looking statements, which management believes are a benefit to shareholders. These forward-looking statements describe Washington Banking Company’s management’s expectations regarding future events and developments such as future operating results, growth in loans and deposits, continued success of the Company’s business plan and the strength of the local economy. The words “will,” “believe,” “expect,” “should,” “anticipate” and words of similar construction are intended in part to help identify forward-looking statements. Future events are difficult to predict, and the expectations described below are necessarily subject to risk and uncertainty that may cause actual results to differ materially and adversely. In addition to discussions about risks and uncertainties set forth from time to time in the Company’s filings with the SEC, factors that may cause actual results to differ materially from those contemplated in such forward-looking statements include, among others, the following possibilities: (1) local and national general and economic conditions, including the impact of the events of September 11, 2001 and any further similar events, are less favorable than expected or have a more direct and pronounced effect on the Company than expected and adversely affect the Company’s ability to continue its internal growth at historical rates and maintain the quality of its earning assets; (2) changes in interest rates reduce interest margins more than expected and negatively affect funding sources; (3) projected business increases following strategic expansion or opening or acquiring new branches are lower than expected; (4) costs or difficulties related to the integration of acquisitions are greater than expected; (5) competitive pressure among financial institutions increases significantly; (6) legislation or regulatory requirements or changes adversely affect the banking and financial services sector; and (7) Washington Banking Company’s ability to realize the efficiencies it expects to receive from its investment in personnel and infrastructure.

Overview

Washington Banking Company (the “Company”) is a registered bank holding company with two wholly-owned subsidiaries — Whidbey Island Bank (the “Bank”), the Company’s principal subsidiary, and Washington Banking Capital Trust I (the “Trust”). The Bank, is a Washington state-chartered bank that conducts a full-service community commercial banking business. It’s business includes commercial loan, real estate loan and construction loan portfolios, and is active in the consumer banking field, providing personal and consumer-oriented loan programs. The Bank also provides a wide range of deposit services, insured by the FDIC, for individuals and businesses including checking and savings accounts as well as money market accounts, certificates of deposit, individual retirement accounts, safe deposit boxes and other consumer and business related financial services. The Company also offers nondeposit investment products for sale through the Bank’s subsidiary, WIB Financial Services, Inc., which are not FDIC insured.

The Trust was formed in June 2002 for the exclusive purpose of issuing trust preferred securities to acquire junior subordinated debentures issued by the Company. Those debentures are the sole assets of the Trust and payments on the debt will be the sole revenues of the Trust. The Company has fully and unconditionally guaranteed all obligations of the Trust.

Headquartered in Oak Harbor, the Company’s primary market area is located in northwestern Washington state between Seattle and the Canadian border. In recent years, the region has experienced strong population growth and economic diversification. The region’s economy has evolved from one that was once heavily dependent upon forestry, fishing and farming to an economy with a much more diverse blend of industries including retail trade, services, manufacturing, tourism and a large military base presence.

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The Company’s strategy is one of value-added growth. Management believes that qualitative and sustainable growth of the Company, coupled with maintaining profitability, is currently the most appropriate path to providing good value for its shareholders. To date, the Company’s growth has been achieved organically and it attributes its reputation for focusing on customer service and satisfaction as one of the cornerstones to the Company’s success. The Company’s primary objectives are to improve profitability and operating efficiencies, increase market penetration in areas currently served, and to continue an expansion strategy in appropriate market areas.

Continuing the strategy of expanding into appropriate market areas, the Company plans to open two new full-service branches and a Loan Production Office (LPO), and to relocate its Camano Island branch during 2002. Construction of two buildings is currently underway for the relocation of the Camano branch and the new branch in Stanwood. Office space will be leased for the new full-service branch in the Fairhaven neighborhood of Bellingham as well as the LPO in Smokey Point/Arlington. The addition of these new offices will extend the company into its fourth county, Snohomish. Management believes these locations will enhance customer service by providing easier branch access and more convenient availability of services to new and existing Bank customers.

Financial Condition

Total Assets. Total assets increased to $485.2 million at June 30, 2002 from $437.7 million at December 31, 2001, an increase of 10.9%. This increase resulted primarily from growth in the loan portfolio, which was funded by deposit growth, investment maturities, borrowings and the proceeds from a non-dilutive private placement of trust preferred securities in June 2002.

Loans. Net loans totaled $413.6 million at June 30, 2002, an increase of 10.8%, from $373.2 million at December 31, 2001. The Company increased its allowance for loan losses to $5.6 million at June 30, 2002 representing 1.33% of total loans, from $4.3 million or 1.14% at December 31, 2001, in an effort to remain conservative and improve coverage. See “Lending Activities — Provision and Allowance for Loan Losses,” below.

Total Investment Securities. Total investment securities were $21.7 million and $24.6 million at June 30, 2002 and December 2001, respectively. The decrease of 11.7% was due to the maturity of investments. The availability of excess funds for long-term investment purchases was significantly reduced by the need for funding the loan demand. Management plans to use a portion of the proceeds of the trust preferred securities to purchase additional securities that reflect the Company’s investment policy guidelines and that help achieve the business plan of the Company.

Premises and Equipment. Premises and equipment, net, were $15.7 million and $15.6 million at June 30, 2002 and December 31, 2001, respectively. The balance remained fairly flat due to the construction of new branch offices and related furniture and fixtures, offset by the sale of the North Whidbey branch property during first quarter 2002. However, the minor net change to Premises and Equipment is not an indication of future expectations as the Company continues its strategy of increasing market penetration and expansion. Acquisition of banks or branches may also be used as a means of expansion if appropriate opportunities arise.

Deposits. Deposits grew 11.3 % to $408.5 million at June 30, 2002 from $367.2 million at December 31, 2001. The Company’s philosophy is to develop long-term customer relationships. Management believes that the best way to establish customer loyalty is by placing emphasis on meeting the customers’ financial needs and providing exceptional service. The Company attributes its successful deposit growth to its continuing efforts to meet these objectives through various deposit promotions, cross-sales efforts, financial planning and other means. Average noninterest-bearing deposits increased 23.3%, at June 30, 2002 from June 30, 2001, while average interest-bearing deposits increased 13.5%, compared to the like period a year ago. See ” — Deposits,” below.

Shareholders’ Equity. The Company’s shareholders’ equity increased 6.7% to $37.3 million at June 30, 2002 from $35.0 million at December 31, 2001. The increase reflects earnings and proceeds from stock options exercised, offset by the payment of cash dividends and the decrease in unrealized gain on available-for-sale securities, net of tax, during the first six months of 2002.

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Consolidated Average Balance Sheet and Analysis of Net Interest Income and Expense

The following table sets forth at the dates indicated the Company’s consolidated average balance sheet and analysis of net interest income and expense:

					Three Months Ended June 30, 2002												Three Months Ended June 30, 2001
									Interest												Interest
					Average				earned/				Average				Average				earned/				Average
(Dollars in thousands)					balance				paid				yield (1)				balance				paid				yield (1)
			Assets
Loans (2)					$	413,443			$	8,453				8.18	%		$	337,524			$	7,900				9.36	%
Federal funds sold						209				1				1.91	%			1,244				17				5.47	%
Interest-earning cash						396				1				1.01	%			1,618				18				4.45	%
Investments:
	Taxable					7,036				99				5.63	%			8,637				130				6.02	%
	Non-taxable (3)					15,971				251				6.29	%			16,927				265				6.26	%
Deferred comp plan						232				—				—				92				—				—
Interest-earning assets						437,287				8,805				8.05	%			366,042				8,330				9.10	%
Noninterest-earning assets						31,894												30,516
	Total assets				$	469,181											$	396,558
		Liabilities and Shareholders’ equity
Deposits:
	Interest demand and money market				$	138,433			$	601				1.74	%		$	108,068			$	741				2.74	%
	Savings					28,399				106				1.49	%			24,958				123				1.97	%
	CDs					176,677				1,625				3.68	%			169,638				2,570				6.06	%
Interest-bearing deposits						343,509				2,332				2.72	%			302,664				3,434				4.54	%
Federal funds purchased						12,303				66				2.15	%			8,131				90				4.43	%
Trust preferred securities						495				7				5.66	%			—				—				—
Borrowings & other interest-bearing liabilities						21,557				171				3.17	%			6,799				69				4.06	%
Interest-bearing liabilities						377,864				2,576				2.73	%			317,594				3,593				4.53	%
Noninterest-bearing deposits						52,759												42,788
Other noninterest-bearing liabilities						1,935												2,272
Total liabilities						432,558												362,654
Shareholders’ equity						36,623												33,904
	Total liabilities and shareholders’ equity				$	469,181											$	396,558
Net interest income (3)									$	6,229											$	4,737
Net interest spread (1)														5.32	%											4.57	%
Net interest margin (1)														5.70	%											5.18	%