SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Commission file number 000-24478.

DEARBORN BANCORP, INC.

(313) 565-5700

N/A

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 þ No o

Indicate the number of shares outstanding for each of the issuer’s classes of common stock, as of April 30, 2005.

Indicate by check mark whether the registrant is an accelerated filer (as defined in rule 12b-2 of the 1934 Securities and Exchange Act).

Yes o No þ

DEARBORN BANCORP, INC.
INDEX

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Board of Directors and Shareholders
Dearborn Bancorp, Inc.
Dearborn, Michigan

We have reviewed the consolidated balance sheets of Dearborn Bancorp, Inc. as of March 31, 2005 and the related consolidated statements of income and comprehensive income and the related consolidated statements of cash flows for the three month periods ended March 31, 2005 and 2004. These financial statements are the responsibility of the company’s management.

We conducted our review in accordance with standards established by the Public Company Accounting Oversight Board (United States). A review of interim financial information consists principally of applying analytical procedures to financial data and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with the standards of the Public Company Accounting Oversight Board. Accordingly, we do not express such an opinion.

Based on our review, we are not aware of any material modifications that should be made to the financial statements referred to above for them to be in conformity with accounting principles generally accepted in the United States of America.

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DEARBORN BANCORP, INC. AND SUBSIDIARY

CONSOLIDATED BALANCE SHEETS (unaudited)

The accompanying notes are an integral part of these consolidated statements.

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DEARBORN BANCORP, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF INCOME (unaudited)

The accompanying notes are an integral part of these consolidated statements.

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DEARBORN BANCORP, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (unaudited)

The accompanying notes are an integral part of these consolidated statements.

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DEARBORN BANCORP, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)

The accompanying notes are an integral part of these consolidated financial statements.

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DEARBORN BANCORP, INC.
FORM 10-Q (continued)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

A.	Accounting and Reporting Policies

The consolidated financial statements of Dearborn Bancorp, Inc. (the “Corporation”) include the consolidation of its only subsidiary, Community Bank of Dearborn (the “Bank”). The accounting and reporting policies of the Corporation are in accordance with accounting principles generally accepted in the United States of America and conform to practice within the banking industry.

The consolidated financial statements of the Corporation as of March 31, 2005 and 2004, and December 31, 2004 and for the three month periods ended March 31, 2005 and 2004 reflect all adjustments, consisting of normal recurring items which are in the opinion of management, necessary for a fair presentation of the results for the interim period. The operating results for the quarter are not necessarily indicative of results of operations for the entire year.

The consolidated financial statements as of March 31, 2005 and 2004, and for the three months ended March 31, 2005 and 2004 included herein have been prepared by the Corporation, without an audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in interim financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted pursuant to such rules and regulations. These financial statements should be read in conjunction with the financial statements and notes thereon included in the Corporation’s 2004 Annual Report to Stockholders on Form 10-K.

Certain of the Corporation’s accounting policies are important to the portrayal of the Corporation’s financial condition, since they require management to make difficult, complex or subjective judgments, some of which may relate to matters that are inherently uncertain. Estimates associated with these policies are susceptible to material changes as a result of changes in facts and circumstances. Facts and circumstances which could affect these material judgments include, but without limitation, changes in interest rates, in the performance of the economy or in the financial condition of borrowers. Management believes that its critical accounting policies include determining the allowance for loan losses and determining the fair value of securities and other financial instruments and assessing other than temporary impairments of securities.

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A.	Accounting and Reporting Policies (continued)

Employee compensation expense under stock option plans is reported using the intrinsic value method. No stock-based compensation cost is reflected in net income, as all options granted had an exercise price equal to or greater than the market price of the underlying common stock at date of grant. The following table illustrates the effect on net income and earnings per share if expense was measured using the fair value recognition provisions of FASB Statement No. 123, Accounting for Stock-based Compensation (in thousands, except share and per share data).

Stock options vest after a six month period from date of grant. No options were granted in 2004 or 2005.

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B.	Securities Available For Sale

The amortized cost and estimated market value of securities available for sale are as follows (in thousands):

The amortized cost and estimated market value of securities available for sale at March 31, 2005 by contractual maturity are shown below (in thousands):

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The entire portfolio has a net unrealized loss of $669,000 at March 31, 2005. Securities with unrealized losses at March 31, 2005, aggregated by investment category and the length of time that the securities have been in a continuous loss position, are as follows:

The Bank holds a floating rate issue of the preferred stock of the Federal Home Loan Mortgage Corporation (FHLMC) that has an unrealized loss of $580,000. The unrealized loss on FHLMC preferred stock has not been recognized into income because the issuer of this security is of high credit quality, management has the intent and ability to hold this security for the foreseeable future, and the decline in fair value is believed largely due to changes in interest rates and reported business issues not related to the underlying operations of the organization. Management believes that the fair value will recover as the security’s interest rate increases and the reported business issues are fully resolved.

The Corporation does not hold any securities in the “Held to Maturity” category nor does the Corporation hold or utilize derivatives.

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C.	Stock Option Plan

Options to buy common stock are granted to officers and employees under a Stock Option Plan which provides for issue of up to 738,729 shares. Exercise price is the market price at date of grant. The maximum option term is ten years, and options vest fully after six months from the date of grant. If an option expires or terminates without having been exercised, such option becomes available for future grant under the Plan.

A summary of the option activity for the three months ended March 31, 2005 is as follows:

For the options outstanding at March 31, 2005, the range of exercise prices was $4.61 to $17.80 per share with a weighted-average remaining contractual term of 6.0 years. At March 31, 2005, 503,289 options were exercisable at weighted average exercise price of $9.33 per share. There were no antidilutive shares for the quarters ended March 31, 2005 and 2004.

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D.	Acquisition

On October 29, 2004, the Corporation acquired the Bank of Washtenaw (“Washtenaw”), a wholly owned subsidiary of Pavillion Bancorp, Inc. for $15,100,000 in cash. The assets and liabilities of the Bank of Washtenaw at acquisition and net income derived from those assets and liabilities since the acquisition have been consolidated into the Bank. Washtenaw, which was founded in January 2001, has its main office in Saline, Michigan with a branch office and a regional lending center in Ann Arbor, Michigan. As of October 29, 2004, Washtenaw had total assets of $85,500,000, gross loans of $67,100,000 and total deposits of $66,100,000.

The acquisition has been accounted for using the purchase method of accounting, and accordingly, the purchase price has been allocated to the tangible and identified intangible assets purchased and the liabilities assumed based upon the estimated fair values at the date of acquisition. There are refinements in the process of allocating the purchase price that have not been entirely completed. Identified intangible assets and purchase accounting fair value adjustments are being amortized under various methods over the expected lives of the corresponding assets and liabilities. Goodwill will not be amortized, but will be reviewed for impairment on an annual basis. Goodwill and other intangible assets are tax deductible over 15 years. Currently, identified intangible assets subject to amortization are $863,000. Goodwill aggregates to $7,042,000.

The consolidated statements of income reflect the operating results of Washtenaw since the effective date of the acquisition. The following table presents pro forma information for the Corporation including the acquisition of Bank of Washtenaw for the quarter ended March 31, 2004, as if the acquisition had occurred at the beginning of 2004.

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PART I — FINANCIAL INFORMATION

ITEM 2. — MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis are intended to address significant factors affecting the financial condition and results of operations of the Corporation. The discussion provides a more comprehensive review of the financial position and operating results than can be obtained from a reading of the financial statements and footnotes presented elsewhere in this report.

Management’s Discussion and Analysis of Financial Condition and Results of Operations contains forward-looking statements that are based on management’s beliefs, assumptions, current expectations, estimates and projections about the financial services industry, the economy, and about the Corporation and Bank. Words such as “anticipates”, “believes”, “estimates”, “expects”, “forecasts”, “intends”, “is likely”, “plans”, “projects”, variations of such words and similar expressions are intended to identify such forward- looking statements. These statements are not guarantees of future performance and involve certain risks, uncertainties and assumptions (“Future Factors”) that are difficult to predict with regard to timing, extent, likelihood and degree of occurrence. Therefore, actual results and outcomes may materially differ from what may be expressed or forecasted in such forward-looking statements. The Corporation undertakes no obligation to update, amend or clarify forward-looking statements, whether as a result of new information, future events (whether anticipated or unanticipated), or otherwise.

Future Factors include changes in interest rates and interest rate relationships; demand for products and services; the degree of competition by traditional and non-traditional competitors; changes in banking regulation; changes in tax laws; changes in prices, levies and assessments; the impact of technological advances; governmental and regulatory policy changes; the outcomes of contingencies; trends in customer behavior as well as their ability to repay loans; and changes in the national and local economy. These are representative of the Future Factors that could cause a difference between an ultimate actual outcome and a preceding forward-looking statement.

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General

The Corporation was formed in 1992 and the Bank was formed in 1993. Subsequently, the Bank has opened offices in several communities in Southeastern Michigan. The Corporation acquired the Bank of Washtenaw on October 29, 2004. The three branches, previously operated by the Bank of Washtenaw have been consolidated into the operations of the Bank. The date opened, branch location and branch type of each branch is listed below:

The Bank has also formed three subsidiaries that offer additional or specialized services to the Bank’s customers. The Bank’s subsidiaries, their formation date and the type of services offered are listed below:

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Results of Operations

The Corporation reported net income of $1,765,000 for the three month period ended March 31, 2005, compared to net income of $1,174,000 for the three month period ended March 31, 2004 an increase of $591,000 or 50%. The increase in net income was primarily due to the improvement in net interest income. The improvement in net interest income was primarily due to the increase in the commercial real estate loan and other commercial loan portfolios during the period. The increase in loans was partially funded with short term investments such as interest bearing deposits with banks, federal funds sold and floating rate securities, which carry a lower yield than loans.

Net Interest Income

2005 Compared to 2004. As noted on the two charts on the following pages, net interest income for the three month period ended March 31, 2005 was $6,580,000, compared to $4,484,000 for the same period ended March 31, 2004, an increase of $2,096,000 or 47%. This increase was caused primarily by the volume of interest earning assets and interest bearing liabilities. The Corporation’s interest rate spread was 3.76% for the three month period ended March 31, 2005, compared to 3.85% for the same period in 2004. The Corporation’s interest rate margin was 4.21% for the three month period ended March 31, 2005, compared to 4.13% for the same period in 2004.

Average Balances, Interest Rates and Yields. Net interest income is affected by the difference (“interest rate spread”) between rates of interest earned on interest-earning assets and rates of interest paid on interest-bearing liabilities and the relative amounts of interest-bearing liabilities and interest-earning assets. When the total of interest-earning assets approximates or exceeds the total of interest-bearing liabilities, any positive interest rate spread will generate net interest income. Financial institutions have traditionally used interest rate spreads as a measure of net interest income. Another indication of an institution’s net interest income is its “net yield on interest-earning assets” or “net interest margin,” which is net interest income divided by average interest-earning assets.

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The following table sets forth certain information relating to the Corporation’s consolidated average interest-earning assets and interest-bearing liabilities and reflects the average yield on assets and average cost of liabilities for the periods indicated. Such yields and costs are derived by dividing income or expense by the average daily balance of assets or liabilities, respectively, for the periods presented. During the periods indicated, non-accruing loans, if any, are included in the loan category.

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Rate/Volume Analysis. The following table analyzes net interest income in terms of changes in the volume of interest-earning assets and interest-bearing liabilities and changes in yields and rates. The table reflects the extent to which changes in the interest income and interest expense are attributable to changes in volume (changes in volume multiplied by prior year rate) and changes in rate (changes in rate multiplied by prior year volume). Changes attributable to the combined impact of volume and rate have been allocated proportionately to changes due to volume and changes due to rate.

Provision for Loan Losses

2005 Compared to 2004. The provision for loan losses was $464,000 for the three month period ended March 31, 2005, compared to $224,000 for the same period in 2004, an increase of $240,000 or 107%. The provision for loan losses for the three month period ended March 31, 2005 is based on the internal analysis of the adequacy of the allowance for loan losses. The provision for loan losses was based upon management’s assessment of relevant factors, including types and amounts of non-performing loans, historical loss experience on such types of loans, and current economic conditions. The increase in provision during 2005 was driven by changes in loan growth and the fact that during the first quarter of 2004, the company recorded net recoveries of $94,000 verses net chargeoffs of $60,000 in the first quarter of 2005.

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Non-interest Income

2005 Compared to 2004. Non-interest income was $401,000 for the three month period ended March 31, 2005, compared to $306,000 for the same period in 2004, an increase of $95,000 or 31% for period. The increase was primarily due to the increase in the gain on the sale of real estate during the period. This gain was the result of the sale of the commercial building that secured one commercial mortgage loan.

Non-interest Expense

2005 Compared to 2004. Non-interest expense was $3,843,000 for the three month period ended March 31, 2005, compared to $2,791,000 for the same period in 2004, an increase of $1,052,000 or 38% for the period. The largest component of non-interest expense was salaries and employee benefits which amounted to $2,307,000 for the three month period ended March 31, 2005, compared to $1,817,000 for the same period in 2004. The primary factors for the increase in salaries and benefits expense were the acquisition of the Bank of Washtenaw in October of 2004 and the expansion of the commercial lending and retail banking departments. As of March 31, 2005, the number of full time equivalent employees was 148 compared to 113 as of March 31, 2004. Salaries and employee benefits will continue to increase as a result of general staff increases.

The second largest component of non-interest expense was occupancy and equipment expense. Occupancy and equipment expense amounted to $634,000 for the three month period ended March 31, 2005, compared to $359,000 for the same period in 2004, an increase of $275,000 or 77%. The primary factor in the increase in occupancy and equipment expense was the opening of the Operations Center in Allen Park, Michigan and the relocation of the commercial lending department to the Administrative Building in Dearborn, Michigan during the fourth quarter of 2004.

Income Tax Provision

2005 Compared to 2004. The income tax expense was $909,000 for the three month period ended March 31, 2005, compared to $601,000 for the same period in 2004, an increase of $308,000 or 51% for the period. The increase was primarily a result of increased pre-tax income.

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Comparison of Financial Condition at March 31, 2005 and December 31, 2004

Assets. Total assets at March 31, 2005 were $677,037,000 compared to $652,662,000 at December 31, 2004, an increase of $24,375,000 or 4%. The increase was primarily due to the increase in loans during the period.

Federal Funds Sold. Total federal funds sold at March 31, 2005 were $7,214,000 compared to $12,640,000 at December 31, 2004, a decrease of $5,426,000 or 43%. The decrease was primarily due to the deployment of available funds into loans.

Interest bearing deposits with banks. Total interest bearing deposits with banks at March 31, 2005 were $412,000 compared to $2,283,000 at December 31, 2004, a decrease of $1,871,000 or 82%. The decrease was primarily due to the deployment of available funds into loans. This investment was established to provide the Corporation with an alternate short term investment option. This short term investment is a variable-rate certificate of deposit with the Federal Home Loan Bank of Indianapolis that carries a similar rate of return to federal funds sold.

Mortgage Loans Held for Sale. Total mortgage loans held for sale at March 31, 2005 were $4,458,000 compared to $1,692,000 at December 31, 2004, an increase of $2,766,000 or 163%. This increase was a result of the increase in the level of residential real estate mortgage loans waiting to be purchased by mortgage correspondents.

Securities — Available for Sale. Total securities, available for sale, at March 31, 2005 were $19,652,000 compared to $21,075,000 at December 31, 2004, a decrease of $1,423,000 or 7%. The decrease was due to the sale of securities, available for sale during 2004. The funds from the sale of these securities were utilized to fund loan volume.

Please refer to Note B of the Notes to Consolidated Financial Statements for the amortized cost and estimated market value of securities, available for sale. The entire portfolio has a net unrealized loss of $669,000. The unrealized loss is reflected by an adjustment to stockholders’ equity.

The unrealized loss in the Bank’s securities portfolio is primarily related to the unrealized loss of a single security. This security has an unrealized loss of $580,000. This security is an issue of 80,000 shares of FHLMC preferred stock with a par value of $50 per share. The Bank purchased this equity security in March of 2001. The security carried an initial interest rate of 4.50% until March 31, 2002. Thereafter, the interest rate reprices annually on April 1 of each year to a rate equal to the 12 month LIBOR minus 20 basis points. Additionally, the dividend on this security is 70% tax deductible. This feature increases the effective yield significantly. As interest rates declined in 2002 and 2003, the yield on this security also declined.

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During 2004, the market value of this security was negatively impacted for two primary factors. The first factor was the declining interest rate environment. Short term interest rates declined during 2002 and 2003 and began to increase during 2004. The yield on this security does not react immediately to shifts in interest rates because of the annual adjustment feature. The coupon on this security did not benefit from the rise in short term interest rates during 2004 due to the timing of the coupon reset date. As the next coupon reset date has approached, the market value of this security has reacted positively. A repricing and market value table for selected dates is listed below:

The coupon rate reset on April 1, 2005 will be 3.64%. Based on the tax deductibility of the dividend, the tax equivalent yield of this security on the reset date of April 1, 2005 will be 4.95%. Based on the current level of short term interest rates and the rising interest rate environment, management expects the market value of this security to continue its upward trend.

The second factor in the market value of this security has been the discovery of certain accounting irregularities at FHLMC and FNMA that have raised questions about the credit quality of these organizations. The timing of the decline in the market value of the security also coincides with the public announcements of these accounting irregularities that occurred.

According to SFAS 115 – Accounting for Certain Investments in Debt and Equity Securities, the characterization of a security with an other than temporary impairment is subjective but generally exists when an investor is unlikely to be able to collect all amounts due according to the contractual terms of the security. Other factors that suggest other than temporary impairment of a security would be the downgrading of the security by a rating agency or the deterioration of the financial condition of the issuer.

Management expects the market value of this security will continue to improve during 2005 as the market factors in the impact of the recent significant increase in the coupon of this security and market interest rates continue to increase. Additionally, management expects the market value of this security will improve as the investment community considers the impact of changes made by the Board of FHLMC, such as changes in leadership and auditors, designed to improve the quality of financial reporting at FHLMC. Furthermore, management possesses the intent and the ability to hold this security for a period of time sufficient to allow for the recovery of this security’s fair value.

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Federal Home Loan Bank Stock. Federal Home Loan Bank stock was valued at $1,134,000 at March 31, 2005, compared to $1,122,000 at December 31, 2004, an increase of $12,000 or 1%.

Loans. Total loans at March 31, 2005 were $612,472,000 compared to $587,562,000 at December 31, 2004, an increase of $24,910,000 or 4%. The increase was primarily due to the continued expansion of the commercial lending department during the past twelve months. This expansion included the addition of two experienced loan officers during the last twelve months. Major categories of loans included in the loan portfolio are as follows (in thousands):

The following is a summary of non-performing assets and problems loans (in thousands):

Non-accrual loans at March 31, 2005 were $1,868,000. The distribution of non-accrual loans by loan type is as follows:

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Allowance for Loan Losses. The allowance for loan losses was $6,288,000 at March 31, 2005 compared to $5,884,000 at December 31, 2004, an increase of $404,000 or 7%. The increase resulted primarily from provisions less net charge-offs recorded during the quarter. The allowance for loan losses was based upon management’s assessment of relevant factors, including loan growth, types and amounts of non-performing loans, historical and anticipated loss experience on such types of loans, and current economic conditions.

The following is an analysis of the allowance for loan losses (in thousands):

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Premises and Equipment. Bank premises and equipment at March 31, 2005 were $14,017,000 compared to $13,124,000 at December 31, 2004, an increase of $893,000 or 7%. The increase in premises and equipment was primarily due to the renovation at the Bank’s Operations Center in Allen Park, Michigan and the updating of equipment at several locations.

Real estate owned. Real estate owned at March 31, 2005 was $146,000 compared to $138,000 at December 31, 2004, an increase of $8,000 or 6%. Real estate owned at March 31, 2005 is comprised of two residential properties with an appraised value of $182,000. The Bank expects to realize a gain as a result of the sale of these properties during 2005.

Goodwill and other intangible assets. Goodwill and other intangible assets were $7,905,000 at March 31, 2005 compared to $7,982,000 at December 31, 2004. The Bank has intangible assets for the estimated value of core deposit accounts acquired in the acquisition of the Bank of Washtenaw. The intangible values represent the present value of the net revenue streams attributable to these intangibles. The core deposit intangible amounted to $929,000 and is being amortized over ten years.

The balance of the acquisition price in excess of the fair market value of the assets and liabilities acquired, including intangible assets, was recorded as goodwill and totaled $7.0 million. Goodwill is defined as an intangible asset with an indefinite useful life, and as such, is not amortized, but is required to be tested annually for impairment of the value. If impaired, an impairment loss must be recorded for the value equal to the excess of the asset’s carrying value over its fair value.

Accrued Interest Receivable. Accrued interest receivable at March 31, 2005 was $2,017,000 compared to $1,889,000 at December 31, 2004, an increase of $128,000 or 7%. The increase was primarily due to the increase in the Bank’s loan portfolio.

Other Assets. Other assets at March 31, 2005 were $2,965,000 compared to $3,093,000 at December 31, 2004, a decrease of $128,000 or 4%. The decrease was primarily due to changes in deferred tax assets.

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Deposits. Total deposits at March 31, 2005 were $547,807,000 compared to $540,880,000 at December 31, 2004, an increase of $6,927,000 or 1%. The following is a summary of the distribution of deposits (in thousands):

Management continues to implement a strategy to change the mix of the deposit portfolio by focusing more heavily on savings and institutional deposits. The increase in deposits was primarily due to normal business development, marketing, telemarketing, referral programs and growth strategies which included a weeklong celebration in March 2005 that highlighted the Bank’s Anniversary. Management expects deposits to grow at an increasing rate during he remainder of 2005.

The Bank has enacted a strategy to utilize public funds to a higher degree. The Bank will also utilize brokered deposits. The Bank has designated a public funds officer to coordinate and manage these efforts. Public funds consist of interest checking and time deposits of local governmental units. They are the result of strong relationships between the Bank and the communities in the Bank’s marketing area and are considered by the Bank to be core deposits. The following is a summary of the distribution of municipal deposits (in thousands):

Brokered deposits are included in the Time, $100,000 and over category. Brokered deposits were $19,390,000, $19,190,000 and $2,380,000 at March 31, 2005, December 31, 2004 and March 31, 2004, respectively.

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Federal Funds Purchased. Federal funds purchased at March 31, 2005 were $16,060,000 compared to $0 at December 31, 2004. The Bank maintains federal funds purchase credit facilities with several financial institutions as additional sources of funds that the Bank may utilize for short-term liquidity purposes.

Securities Sold Under Agreement to Repurchase. Securities sold under agreements to repurchase at March 31, 2005 were $3,083,000 compared to $4,115,000 at December 31, 2004, a decrease of $1,032,000 or 25%. These Repurchase agreements are secured by securities held by the Bank.

Federal Home Loan Bank Advances. Federal Home Loan Bank advances were $20,614,000 at March 31, 2005 and December 31, 2004.

Accrued Interest Payable. Accrued interest payable at March 31, 2005 was $1,339,000 compared to $1,107,000 at December 31, 2004, an increase of $232,000 or 21%. The increase was primarily due to the increasing amount of interest bearing deposits during the period.

Other Liabilities. Other liabilities at March 31, 2005 were $1,187,000 compared to $1,342,000 at December 31, 2004, a decrease of $155,000 or 12%. The decrease was primarily due to the decrease in expenses payable during the period.

Subordinated Debentures. Subordinated debentures were $10,000,000 at March 31, 2005 and December 31, 2004. On December 19, 2002, the Corporation issued $10,000,000 of floating rate obligated mandatory redeemable securities through a special purpose entity as part of a pooled offering. The securities have a term of thirty years. The Corporation may redeem the securities after five years at face value. They are considered to be Tier 1 capital for regulatory capital purposes. The funds from the issue of these securities were invested into securities available for sale until they can be invested into the Bank subsidiary to allow for additional growth. Debt issue costs of $300,000 have been capitalized and are being amortized over the term of the securities. Unamortized debt issuance costs were $277,000 at March 31, 2005.

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Capital

Stockholders’ equity at March 31, 2005 was $76,947,000 compared to $74,604,000 as of December 31, 2004, an increase of $2,343,000 or 3%.

The following is a presentation of the Corporation’s and Bank’s regulatory capital ratios (in thousands):