UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Form 10-K

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

For the fiscal year ended December 31, 2004

or

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

Commission File Number 000-49929

Access National Corporation

1800 Robert Fulton Drive, Suite 310, Reston, Virginia 20191

(703) 871-2100

Common Stock $1.67 par value

(Title of class)

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 by checkmark if disclosure of delinquent filers in response to Item 405 of Regulation S-K 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 o

Indicate by checkmark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Act). o Yes þ No

The aggregate market value of the voting and non-voting held by non-affiliates of the registrant, computed by reference to the price at which the stock was last sold as of the last business day of the registrant’s most recently completed second fiscal quarter was approximately $41,827,000.

As of March 23, 2005, there were 3,959,324 shares of Common Stock, par value $1.67 per share of Access National Corporation issued and outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the Registrant’s Proxy Statement for the Corporation’s Annual Meeting of Shareholders to be held on May 24, 2005, are incorporated by reference in Part III of this Form 10K.

Access National Corporation
FORM 10-K
INDEX

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PART I

In addition to historical information, the following report contains forward looking statements that are subject to risks and uncertainties that could cause the Corporation’s actual results to differ materially from those anticipated. Readers are cautioned not to place undue reliance on these forward-looking statements, which reflect management’s analysis only as of the date of the Report.

ITEM 1 – BUSINESS

Access National Corporation, (the “Corporation”) was organized April 17, 2002 under the laws of Virginia to operate as a bank holding company. The Corporation has three wholly owned subsidiaries: Access National Bank, Access Capital Trust I and Access Capital Trust II. Effective June 15, 2002, pursuant to an Agreement and Plan of Reorganization dated April 18, 2002 between the Corporation and Access National Bank (the “Bank”), the Corporation acquired all of the outstanding stock of the Bank in a statutory share exchange transaction. The Corporation does not have any significant operations and serves primarily as the parent company for the Bank. The Corporation provides a strong capital base that can be used to engage in bank related businesses as provided under the Bank Holding Company Act of 1956, as amended or down streamed to the Bank for future growth. The Corporation has no present plans to engage in any bank related businesses at this time. Access Capital Trust I and Access Capital Trust II were formed for the purpose of issuing redeemable capital securities.

Access National Bank is the primary operating business of the Corporation. The Bank provides commercial credit, deposit and mortgage services to the middle market businesses and associated professionals, primarily in the greater Washington, D.C. area. The Bank was organized under federal law as a national banking association to engage in a general banking business to serve the communities in and around Northern Virginia. The Bank opened for business on December 1, 1999 at 14006 Lee-Jackson Memorial Highway in Chantilly, Virginia. The headquarters for the Corporation, Bank and Access National Mortgage Corporation (the “Mortgage Corporation”) is located at 1800 Robert Fulton Drive, Reston, Virginia. Deposits with the Bank are insured to the maximum amount provided by the Federal Deposit Insurance Corporation. The Bank offers a comprehensive range of financial services and products and specializes in providing customized financial services to small and medium sized businesses, professionals, and associated individuals. The Bank provides its customers with personal customized service utilizing the latest technology and delivery channels.

Revenues are derived from interest and fees received in connection with loans, deposits and investments. Interest paid on deposits and borrowings are the major expenses followed by administrative and operating expenses.

The economy, interest rates, monetary and fiscal policies of the federal government and regulatory policies have a significant influence on the banking industry.

The Bank has experienced consistent growth and profitability since inception. Our goal is to become a leading provider of financial services to small to medium sized businesses, and professionals in Northern Virginia. Our strategy is to know the needs of our clients and to deliver the corresponding financial services. We employ highly qualified personnel and emphasize the use of the latest technology in operations and the services we provide. Our marketing efforts are directed to prospective clients that value high quality service and that are, or have the potential to become highly profitable.

Assets at year end totaled over $420.0 million and net income amounted to $3.3 million. The Bank operates from three banking centers located in Chantilly, Tysons Corner and Reston, Virginia and online at www.accessnationalbank.com. Additional offices may be added from time to time based upon management’s constant analysis of the market and opportunities

On December 1, 1999, the Bank acquired Access National Mortgage Corporation, formerly known as Mortgage Investment Corporation. Access National Mortgage Corporation is headquartered in Reston, Virginia. Access National Mortgage Corporation specializes in the origination of conforming and non-conforming residential mortgages primarily in the greater Washington, D.C. Metropolitan Area and the surrounding areas of its branch locations. Access National Mortgage Corporation has established offices throughout Virginia, in Roanoke, Richmond, Reston, Fredericksburg, Staunton and Vienna. Offices outside the state of Virginia include Westminster and Crofton in Maryland, Sunrise in Florida, Nashville in Tennessee and Denver in Colorado.

On April 10, 2002 the Bank acquired Access National Leasing Corporation (the “Leasing Corporation”), formerly known as Commercial Finance Corporation. The Leasing Corporation is presently inactive. However commercial and industrial lease financing is offered through and managed by the bank.

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On May 19, 2003 the Bank formed Access Real Estate LLC (“Access Real Estate”). The sole purpose of forming Access Real Estate was to acquire and hold title to real estate for the Corporation. On July 10, 2003, Access Real Estate acquired a 45,000 square foot, three story office building located at 1800 Robert Fulton Drive in Reston, Virginia at a cost of approximately $7.1 million that serves as the corporate headquarters for the Corporation, Bank, and Mortgage Corporation.

On July 19, 2004, the Corporation’s common stock commenced trading on the NASDAQ National Market system under the ticker symbol “ANCX”.

On August 17, 2004, the Bank acquired 100% of the common stock in United First Mortgage Corporation (“UFM”) from Community First Bank N.A of Bluefield, Virginia in a stock purchase transaction. The transaction resulted in the Bank recognizing extraordinary income during the third quarter in the amount $330 thousand, net of income taxes. The operations of United First Mortgage Corporation have been merged into that of the Mortgage Corporation and the corporate entity acquired is now inactive.

Our Strategy – historical and prospective

We consider our business to be a young and emerging enterprise that is well positioned to be an effective competitor in the financial services industry over the long term. Our view of the financial services market place is that community banks must be effective in select market niches that are under-served and stay clear of competing with large national competitors on a head to head basis for broad based consumer business. We started by organizing a de novo national bank in 1999. The focus of the bank was and is serving the small to middle market businesses and their associated professionals in the greater Washington D.C Metropolitan Area. We find that large national competitors are ineffective at addressing this market as it is difficult to distinguish where business’s financial needs stop and the personal financial needs of that business’s professionals start. Emerging businesses and the finances of their owners are best served hand-in-hand.

Our core competency is judgmental discipline of commercial lending based upon personnel and practices that help our clients strategize and grow their businesses from a financial perspective. As financial success takes hold in the business, personal goals and wealth objectives of the business owners become increasingly important. Our second competency is a derivative of the first. We have the personnel and know how to provide private banking services, the skills and strategy that assist our individual clients to acquire assets, build wealth and manage their resources. Mortgage banking and the related activities in our model goes hand-in-hand with supplying effective private banking services. Unlike most banking companies, the heart of our Mortgage Corporation is ingrained into our commercial bank, serving the same clients side-by-side in a coordinated and seamless fashion. Lending is not enough in today’s environment. The credit services must be backed up by competitive deposit and cash management products and operational excellence. We have made significant investments in skilled personnel and the latest technology to ensure we can deliver on these promises.

The acquisition of our Mortgage Corporation in 1999 provided two key benefits to our strategy: 1) it solidified our second competency from a personnel and operational perspective, that would have taken years to replicate with organic growth alone; and 2) it provided a fee income and, overhead base from which to launch a new banking business. Strong profits and cash flow from the Mortgage Corporation in the early years subsidized the growth and development of the Bank and allowed for the acceleration of its growth plans and, in time, the profitability.

The long term goal was and is to generate 70-80% of the Corporation’s earnings from the core business bank, with the rest of our consolidated earnings to be generated from related fee income activities. At the present time, the sole related activity remains our Mortgage Corporation. We will consider entering other related fee income businesses that serve our target market as opportunities, market conditions and our capacity dictate. A detailed review of the “Segment Reporting” elements of the financial statements and analysis readily reveal that contribution from our Banking Segment has grown steadily.

The acquisition of United First Mortgage Corporation in 2004 allowed us to acquire mortgage offices and skilled professionals that are more consistent with our core bank strategy while jettisoning other offices that no longer fit strategically. This strategic acquisition has helped us more closely align the activity of our two key business segments.

We expect to grow our business bank by continuing to hire skilled personnel, train our own and provide a sound infrastructure that facilitates the success of businesses, their owners and key personnel, not only today but tomorrow and on into the ensuing decades.

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Lending Activities

The Bank’s lending activities involve commercial loans, commercial real estate loans, commercial and residential real estate construction loans, residential mortgage loans, home equity loans, and consumer loans. These lending activities provide access to credit to small businesses, professionals and consumers in the greater Washington, D.C. Metropolitan Area. Loans originated by the Bank are classified as loans held for investment. The Mortgage Corporation originates residential mortgages and home equity loans that are only held temporarily pending their sale to third parties and in some cases the Bank. The Mortgage Corporation also brokers loans that do not conform to existing products offered. Each of our principal loan types are described below.

At December 31, 2004 loans held for investment totaled $292.6 million compared to $189.3 million at year end 2003. The increase in loans is attributable to additional lending officers and the purchase of $24.1 million in first trust mortgage loans from our mortgage subsidiary. The Bank is predominantly a secured lender. Secured loans comprise over 99% of the total loan portfolio. Table 4, Loan Portfolio, reflects the composition of loans held for investment.

The Bank’s lending activities are subject to a variety of lending limits imposed by federal law. While differing limits apply in certain circumstances based on the type of loan, in general, the Bank’s lending limit to any one borrower on loans that are not fully secured by readily marketable or other permissible collateral is equal to 15% of the Bank’s capital and surplus. The Bank has established relationships with correspondent banks to participate in loans when loan amounts exceed the Bank’s legal lending limits or internal lending policies.

We have an established credit policy that includes procedures for underwriting each type of loan and lending personnel have been assigned specific authorities based upon their experience. Loans in excess of an individual loan officer’s authority are presented to our Loan Committee for approval. Our Loan Committee meets weekly to facilitate a timely approval process for our clients. Loans are approved based on the borrower’s capacity for credit, collateral and sources of repayment. Loans are actively monitored to detect any potential performance issues. We manage our loans within the context of a risk grading system developed by management based upon extensive experience in administering loan portfolios in our market. Payment performance is carefully monitored for all loans. When loan repayment is dependent upon an operating business or investment real estate, periodic financial reports, site visits and select asset verification procedures are used to ensure that we accurately rate the relative risk of our assets. Based upon criteria that are established by management and the Board of Directors, the degree of monitoring is escalated or relaxed for any given borrower based upon our assessment of the future repayment risk.

Loan Portfolio – Loans Held for Investment. The composition of Loans Held for Investment is summarized in Table 4. The table and numbers discussed in this section do not reflect information regarding Loans Held for Sale.

Commercial Loans: Commercial Loans represent 16.6% of our held for investment portfolio. These loans are to businesses or individuals within our target market for business purposes. Typically the loan proceeds are used to support working capital and the acquisition of fixed assets of an operating business. These loans are underwritten based upon our assessment of the obligor(s)’ ability to generate operating cash flow in the future necessary to repay the loan. To address the risks associated with the uncertainties of future cash flow, these loans are generally well secured by assets owned by the business or its principal shareholders and the principal shareholders are typically required to guarantee the loan.

Real Estate Construction Loans: Real Estate Construction Loans, also known as construction and land development loans, comprise 11.3% of our held for investment loan portfolio. These loans generally fall into one of three circumstances: first, loans to individuals that are ultimately used to acquire property and construct an owner occupied residence; second, loans to builders for the purpose of acquiring property and constructing homes for sale to consumers; and third, loans to developers for the purpose of acquiring land that is developed into finished lots for the ultimate construction of residential or commercial buildings. Loans of these types are generally secured by the subject property within limits established by the Board of Directors based upon an assessment of market conditions and up-dated from time to time. The loans typically carry recourse to principal owners. In addition to the repayment risk associated with loans to individuals and businesses, loans in this category carry construction completion risk. To address this additional risk, loans of this type are subject to additional administration procedures designed to verify and ensure progress of the project in accordance with allocated funding, project specifications and time frames.

Commercial Real Estate Loans: Also known as “Commercial Mortgages”, loans in this category represent 33.1% of our loan portfolio held for investment. These loans generally fall into one of three situations in order of magnitude: first, loans supporting an owner occupied commercial property; second, properties used by non-profit organizations such as churches or

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schools where repayment is dependent upon the cash flow of the non-profit organizations; and third, loans supporting a commercial property leased to third parties for investment. Commercial Real Estate Loans are secured by the subject property and underwritten to policy standards. Policy standards approved by the Board of Directors from time to time set forth, among other considerations, loan to value limits, cash flow coverage ratios, and the general creditworthiness of the obligors.

Residential Real Estate Loans: This category includes loans secured by first or second mortgages on one to four family residential properties and represent 38.8% of the portfolio. Of this amount, the following sub-categories exist as a percentage of the whole Residential Real Estate Loan portfolio: Home Equity Lines of Credit 19.6%; First Trust Mortgage Loans 76.3%; Loans Secured by a Junior Trust 1.3%; Multi-family loans and loans secured by Farmland 2.8%.

Home Equity Loans: are extended to borrowers in our target market. Real estate equity is the largest component of consumer wealth in our marketplace. Once approved, this consumer finance tool allows the borrower to access the equity in their home or investment property and use the proceeds for virtually any purpose. Home Equity Loans are most frequently secured by a second lien on residential property. 1-4 Family Residential First Trust Loan, or “First Mortgage Loan,” proceeds are used to acquire or refinance the primary financing on owner occupied and residential investment properties. Junior Trust Loans, or “Loans Secured by a Second Trust Loans,” are to consumers wherein the proceeds have been used for a stated consumer purpose. Examples of consumer purposes are education, refinancing debt, or purchasing consumer goods. The loans are generally extended in a single disbursement and repaid over a specified period of time.

Loans in the Residential Real Estate portfolio are underwritten to standards within a traditional consumer framework that is periodically reviewed and up-dated by our management and Board of Directors: repayment source and capacity, value of the underlying property, credit history, savings pattern and stability.

Consumer Loans: Consumer Loans make up less than 1% of our loan portfolio. Most loans are well secured with assets other than real estate, such as marketable securities or automobiles. Very few loans are unsecured. As a matter of operation, management discourages unsecured lending. Loans in this category are underwritten to standards within a traditional consumer framework that is periodically reviewed and up-dated by our management and Board of Directors: repayment capacity, collateral value, savings pattern, credit history and stability.

Loans Held for Sale (LHFS) Loans Held for Sale are originated by Access National Mortgage Corporation, a wholly owned subsidiary of Access National Bank. Loans of these types are residential mortgage loans extended to consumers underwritten in accordance with standards set forth by an institutional investor to whom we expect to sell the loan for a profit. Loan proceeds are used for the purchase or refinance of the property securing the loan. Loans are sold with the servicing released to the investor.

The LHFS loans are closed in our name and carried on our books until the loan is delivered to and purchased by an investor. In 2004, we originated $598 million of loans processed in this manner. Repayment risk of this activity is minimal since the loans are on the books for a short time period. Loans are sold without recourse and subject to industry standard representations and warranties. The risks associated with this activity center around borrower fraud and failure of our investors to purchase the loans. These risks are addressed by the on-going maintenance of an extensive quality control program, an internal audit and verification program, and a selective approval process for investors. To date we have been able to absorb the financial impact of these risks without material impact on our operating performance. At December 31, 2004 loans held for sale totaled $36.2 million compared to $29.8 million at year end 2003. The increase in loans held for sale at year end 2004 is due to the expansion in our bulk loan sale initiative. This initiative entails accumulating loans, the interest rate for which has not been locked with an investor, and then obtaining bids on a large pool of loans. During the accumulation period the interest rate risk is managed by issuing forward commitments.

Broker Loans

Brokered loans are underwritten and closed by a third party lender. We are paid a fee for procuring and packaging brokered loans. In 2004, we originated a total volume of $182 million in residential mortgage loans under these types of delivery methods. Brokered loans accounted for 23.4% of the total loan volume of Access National Mortgage Corporation.

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Deposits

Deposits, the primary funding source for loans, totaled $317.4 million at December 31, 2004 and were comprised of Non-interest bearing demand deposits in the amount of $94.1 million, Savings and Interest Bearing deposits in the amount of $103.3 million and Time deposits in the amount of $120.0 million. Total deposits increased $119.2 million or 60% over December 31, 2003 and provided funds for the increased loan volume. We offer a variety of deposit accounts that have varying rates and terms. Our deposits are primarily from our local market. We utilize professional loan officers as our direct sales force in marketing both loans and deposits. Our primary focus with respect to core deposit activities is upon the business deposits in our market. Our goal is to expand the deposit base by adding personnel, opening new offices, direct marketing and traditional media advertising. Our customer service focus is mainly on our business and professional customers, which usually generate more referrals for additional new business than do retail account holders. Growth in deposits from 2003 to 2004 is attributable to the above efforts. Deposit growth is expected to continue at a rapid yet lesser percentage of growth as the Bank continues to expand its customer base and build name recognition. We use Wholesale deposits for specific funding requirements and to support the short term loans held for sale program. Table 7, Average Deposits and Average Rates Paid, details the composition of deposits.

Time Deposits represent 37.8% of total deposits on December 31, 2004, as compared to 55.22% on December 31, 2003. Time deposits increased by 9.66% over December 31, 2003.

Non-Interest Bearing Deposits represent 29.7% of the total deposits. Most of this activity relates to the operating accounts of businesses within our target market. There is a high degree of cross-over between these accounts and our clients who are commercial loan customers or who anticipate becoming loan customers.

Savings and Interest Bearing Deposits represent 32.5% of the total deposits and generally belong to businesses and professionals in the target market. Many of these depositors are also borrowers.

Interest bearing demand deposits represent 2.8% of total deposits and are mostly from individuals, professionals and non-profit organizations within the target market.

Brokered or “Wholesale” deposits account for 17.0% ($53.9 million) of total deposits. Wholesale depositors are outside of the target market and place their deposit with us solely due to the interest rate paid. Together with other funding sources, we use these types of deposits to fund the short term cash needs associated with the Loans Held For Sale program discussed under “Loans” as well as to carry long term investments such as “Mortgage Loans Held for Investment” and our real estate.

Market Area

Access National Corporation, Access National Bank, and Access National Mortgage Corporation are headquartered in Fairfax County and serve the Northern Virginia region. Fairfax County is a diverse and thriving urban county. As the most populous jurisdiction in both Virginia and the Washington D.C. Metropolitan Area, the County’s population exceeds that of seven states. The median household income of Fairfax County is one of the highest in the nation. Northern Virginia had a population of 2.16 million according to the 2000 Census. The proximity to Washington, D.C. and the influence of the federal government and its spending provides somewhat of a recession shelter.

Competition

The Bank competes with virtually all banks and financial institutions, which offer services in its market area. Much of this competition comes from large financial institutions headquartered outside the state of Virginia, each of which has greater financial and other resources to conduct large advertising campaigns and offer incentives. To attract business in this competitive environment, the Bank relies on personal contact by its officers and directors, local promotional activities, and the ability to provide personalized custom services to small businesses and professionals. In addition to providing full service banking, the Bank offers and promotes alternative and modern conveniences such as internet banking, automated clearinghouse transactions and offers courier services for commercial clients.

Employees

At December 31, 2004 the Corporation and its subsidiaries had 220 employees. The Bank recruits experienced and motivated personnel and emphasizes the use of technology. Employee relations have been good.

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Supervision and Regulation

Set forth below is a brief description of the material laws and regulations that affect the Corporation. The description of these statutes and regulations is only a summary and does not purport to be complete. This discussion is qualified in its entirety by reference to the statutes and regulations summarized below. No assurance can be given that these statutes or regulations will not change in the future.

General. The Corporation is subject to the periodic reporting requirements of the Securities and Exchange Act of 1934, as amended (the “Exchange Act”), which include, but are not limited to, the filing of annual, quarterly and other reports with the Securities and Exchange Commission (the “SEC”). As an Exchange Act reporting company, the Corporation is directly affected by the Sarbanes-Oxley Act of 2002 (the “SOX”), which aimed at improving corporate governance and reporting procedures and requires expanded disclosure of the Corporation’s corporate operations and internal controls. The Corporation is already complying with new SEC and other rules and regulations implemented pursuant to the SOX and intends to comply with any applicable rules and regulations implemented in the future. Although the Corporation anticipates that it will incur additional expense in complying with the provisions of the SOX and the resulting regulations, management does not expect that such compliance will have a material impact on the Corporation’s financial condition or results of operations.

The Corporation is a bank holding company within the meaning of the Bank Holding Company Act of 1956, and is registered as such with, and subject to the supervision of, the Board of Governors of the Federal Reserve System and the Federal Reserve Bank of Richmond (the “FRB”). Generally, a bank holding company is required to obtain the approval of the FRB before it may acquire all or substantially all of the assets of any bank, and before it may acquire ownership or control of the voting shares of any bank if, after giving effect to the acquisition, the bank holding company would own or control more than 5% of the voting shares of such bank. The FRB’s approval is also required for the merger or consolidation of bank holding companies.

The Corporation is required to file periodic reports with the FRB and provide any additional information as the FRB may require. The FRB also has the authority to examine the Corporation and the Bank, as well as any arrangements between the Corporation and the Bank, with the cost of any such examinations to be borne by the Corporation.

Banking subsidiaries of bank holding companies are also subject to certain restrictions imposed by Federal law in dealings with their holding companies and other affiliates. Subject to certain restrictions set forth in the Federal Reserve Act, a bank can loan or extend credit to an affiliate, purchase or invest in the securities of an affiliate, purchase assets from an affiliate or issue a guarantee, acceptance or letter of credit on behalf of an affiliate, as long as the aggregate amount of such transactions of a bank and its subsidiaries with its affiliates does not exceed 10% of the capital stock and surplus of the bank on a per affiliate basis or 20% of the capital stock and surplus of the bank on an aggregate affiliate basis. In addition, such transactions must be on terms and conditions that are consistent with safe and sound banking practices. In particular, a bank and its subsidiaries generally may not purchase from an affiliate a low-quality asset, as defined in the Federal Reserve Act. These restrictions also prevent a bank holding company and its other affiliates from borrowing from a banking subsidiary of the bank holding company unless the loans are secured by marketable collateral of designated amounts. Additionally, the Corporation and its subsidiary are prohibited from engaging in certain tie-in arrangements in connection with any extension of credit, sale or lease of property or furnishing of services.

A bank holding company is prohibited from engaging in or acquiring direct or indirect ownership or control of more than 5% of the voting shares of any company engaged in non-banking activities. A bank holding company may, however, engage in or acquire an interest in a company that engages in activities which the FRB has determined by regulation or order are so closely related to banking as to be a proper incident to banking. In making these determinations, the FRB considers whether the performance of such activities by a bank holding company would offer advantages to the public that outweigh possible adverse effects.

As a national bank, the Bank is subject to regulation, supervision and regular examination by the Office of the Comptroller of the Currency (the “Comptroller”). Each depositor’s account with the Bank is insured by the Federal Deposit Insurance Corporation (the “FDIC”) to the maximum amount permitted by law, which is currently $100,000 for each depositor. The Bank is also subject to certain regulations promulgated by the FRB and applicable provisions of Virginia law, insofar as they do not conflict with or are not preempted by Federal banking law.

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The regulations of the FDIC, the Comptroller and FRB govern most aspects of the Corporation’s business, including deposit reserve requirements, investments, loans, certain check clearing activities, issuance of securities, payment of dividends, branching, deposit interest rate ceilings and numerous other matters. As a consequence of the extensive regulation of commercial banking activities in the United States, the Corporation’s business is particularly susceptible to changes in state and Federal legislation and regulations, which may have the effect of increasing the cost of doing business, limiting permissible activities or increasing competition.

Governmental Policies and Legislation. Banking is a business that depends primarily on interest rate differentials. In general, the difference between the interest rates paid by the Bank on its deposits and its other borrowings and the interest rates received by the Bank on loans extended to its customers and securities held in its portfolio, comprise the major portion of the Corporation’s earnings. These rates are highly sensitive to many factors that are beyond the Corporation’s control. Accordingly, the Corporation’s growth and earnings are subject to the influence of domestic and foreign economic conditions, including inflation, recession and unemployment.

The commercial banking business is affected not only by general economic conditions, but is also influenced by the monetary and fiscal policies of the Federal government and the policies of its regulatory agencies, particularly the FRB. The FRB implements national monetary policies (with objectives such as curbing inflation and combating recession) by its open-market operations in U.S. Government securities, by adjusting the required level of reserves for financial institutions subject to its reserve requirements and by varying the discount rates applicable to borrowings by depository institutions. The actions of the FRB in these areas influence the growth of bank loans, investments and deposits, and also affect interest rates charged on loans and paid on deposits. The nature and impact of any future changes in monetary policies cannot be predicted.

From time to time, legislation is enacted which has the effect of increasing the cost of doing business, limiting or expanding permissible activities or affecting the competitive balance between banks and other financial institutions. Proposals to change the laws and regulations governing the operations and taxation of bank holding companies, banks and other financial institutions are frequently made in Congress, in the Virginia Legislature and brought before various bank holding company and bank regulatory agencies. The likelihood of any major changes and the impact such changes might have are impossible to predict. Certain of the potentially significant changes that have been enacted recently by Congress or various regulatory or professional agencies are discussed below.

Dividends. There are regulatory restrictions on dividend payments by both the Bank and the Corporation that may affect the Corporation’s ability to pay dividends on its Common Stock. See “Item 5 — Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.”

Capital Requirements. The FRB, the Comptroller and the FDIC have adopted risk-based capital adequacy guidelines for bank holding companies and banks. These capital adequacy regulations are based upon a risk-based capital determination, whereby a bank holding company’s capital adequacy is determined in light of the risk, both on- and off-balance sheet, contained in the company’s assets. Different categories of assets are assigned risk weightings and are counted at a percentage of their book value.

The regulations divide capital between Tier 1 capital (core capital) and Tier 2 capital. For a bank holding company, Tier 1 capital consists primarily of common stock, related surplus, non-cumulative perpetual preferred stock, minority interests in consolidated subsidiaries and a limited amount of qualifying cumulative preferred securities. Goodwill and certain other intangibles are excluded from Tier 1 capital. Tier 2 capital consists of an amount equal to the allowance for loan and lease losses up to a maximum of 1.25% of risk weighted assets, limited other types of preferred stock not included in Tier 1 capital, hybrid capital instruments and term subordinated debt. Investments in and loans to unconsolidated banking and finance subsidiaries that constitute capital of those subsidiaries are excluded from capital. The sum of Tier 1 and Tier 2 capital constitutes qualifying total capital. The guidelines generally require banks to maintain a total qualifying capital to weighted risk assets level of 8% (the “Risk-based Capital Ratio”). Of the total 8%, at least 4% of the total qualifying capital to weighted risk assets (the “Tier 1 Risk-based Capital Ratio”) must be Tier 1 capital.

The FRB, the Comptroller and the FDIC have adopted leverage requirements that apply in addition to the risk-based capital requirements. Banks and bank holding companies are required to maintain a minimum leverage ratio of Tier 1 capital to average total consolidated assets (the “Leverage Ratio”) of at least 3.0% for the most highly-rated, financially sound banks and bank holding companies and a minimum Leverage Ratio of at least 4.0% for all other banks. The FDIC and the FRB define Tier 1 capital for banks in the same manner for both the Leverage Ratio and the Risk-based Capital Ratio. However, the FRB defines Tier 1 capital for bank holding companies in a slightly different manner. An institution may be required to maintain

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Tier 1 capital of at least 4% or 5%, or possibly higher, depending upon the activities, risks, rate of growth, and other factors deemed material by regulatory authorities. As of December 31, 2004, the Corporation and Bank both met all applicable capital requirements imposed by regulation.

Federal Deposit Insurance Corporation Improvement Act of 1991 (“FDICIA”). There are five capital categories applicable to insured institutions, each with specific regulatory consequences. If the appropriate Federal banking agency determines, after notice and an opportunity for hearing, that an insured institution is in an unsafe or unsound condition, it may reclassify the institution to the next lower capital category (other than critically undercapitalized) and require the submission of a plan to correct the unsafe or unsound condition. The Comptroller has issued regulations to implement these provisions. Under these regulations, the categories are:

     a. Well Capitalized — The institution exceeds the required minimum level for each relevant capital measure. A well capitalized institution is one (i) having a Risk-based Capital Ratio of 10% or greater, (ii) having a Tier 1 Risk-based Capital Ratio of 6% or greater, (iii) having a Leverage Ratio of 5% or greater and (iv) that is not subject to any order or written directive to meet and maintain a specific capital level for any capital measure.

     b. Adequately Capitalized — The institution meets the required minimum level for each relevant capital measure. No capital distribution may be made that would result in the institution becoming undercapitalized. An adequately capitalized institution is one (i) having a Risk-based Capital Ratio of 8% or greater, (ii) having a Tier 1 Risk-based Capital Ratio of 4% or greater and (iii) having a Leverage Ratio of 4% or greater or a Leverage Ratio of 3% or greater if the institution is rated composite 1 under the CAMELS (Capital, Assets, Management, Earnings, Liquidity and Sensitivity to market risk) rating system.

     c. Undercapitalized — The institution fails to meet the required minimum level for any relevant capital measure. An undercapitalized institution is one (i) having a Risk-based Capital Ratio of less than 8% or (ii) having a Tier 1 Risk-based Capital Ratio of less than 4% or (iii) having a Leverage Ratio of less than 4%, or if the institution is rated a composite 1 under the CAMEL rating system, a Leverage Ratio of less than 3%.

     d. Significantly Undercapitalized — The institution is significantly below the required minimum level for any relevant capital measure. A significantly undercapitalized institution is one (i) having a Risk-based Capital Ratio of less than 6% or (ii) having a Tier 1 Risk-based Capital Ratio of less than 3% or (iii) having a Leverage Ratio of less than 3%.

     e. Critically Undercapitalized — The institution fails to meet a critical capital level set by the appropriate federal banking agency. A critically undercapitalized institution is one having a ratio of tangible equity to total assets that is equal to or less than 2%.

An institution which is less than adequately capitalized must adopt an acceptable capital restoration plan, is subject to increased regulatory oversight, and is increasingly restricted in the scope of its permissible activities. Each company having control over an undercapitalized institution must provide a limited guarantee that the institution will comply with its capital restoration plan. Except under limited circumstances consistent with an accepted capital restoration plan, an undercapitalized institution may not grow. An undercapitalized institution may not acquire another institution, establish additional branch offices or engage in any new line of business unless determined by the appropriate Federal banking agency to be consistent with an accepted capital restoration plan, or unless the FDIC determines that the proposed action will further the purpose of prompt corrective action. The appropriate Federal banking agency may take any action authorized for a significantly undercapitalized institution if an undercapitalized institution fails to submit an acceptable capital restoration plan or fails in any material respect to implement a plan accepted by the agency. A critically undercapitalized institution is subject to having a receiver or conservator appointed to manage its affairs and for loss of its charter to conduct banking activities.

An insured depository institution may not pay a management fee to a bank holding company controlling that institution or any other person having control of the institution if, after making the payment, the institution, would be undercapitalized. In addition, an institution cannot make a capital distribution, such as a dividend or other distribution that is in substance a distribution of capital to the owners of the institution if following such a distribution the institution would be undercapitalized. Thus, if payment of such a management fee or the making of such would cause the Bank to become undercapitalized, it could not pay a management fee or dividend to the Corporation.

As of December 31, 2004, both the Corporation and the Bank were considered “well capitalized.”

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Deposit Insurance Assessments. FDICIA also requires the FDIC to implement a risk-based assessment system in which the insurance premium relates to the probability that the deposit insurance fund will incur a loss and directs the FDIC to set semi-annual assessments in an amount necessary to increase the reserve ratio of the Bank Insurance Fund to at least 1.25% of insured deposits or a higher percentage as determined to be justified by the FDIC.

The FDIC has promulgated implementing regulations that base an institution’s risk category partly upon whether the institution is well capitalized (“1”), adequately capitalized (“2”) or less than adequately capitalized (“3”), as defined under the Prompt Corrective Action Regulations described above. In addition, each insured depository institution is assigned to one of three “supervisory subgroups.” Subgroup “A” institutions are financially sound institutions with few minor weaknesses, subgroup “B” institutions demonstrate weaknesses which, if not corrected, could result in significant deterioration, and subgroup “C” institutions are those as to which there is a substantial probability that the FDIC will suffer a loss in connection with the institution unless effective action is taken to correct the areas of weakness. Based on the current capital levels the Corporation is categorized as a well-capitalized institution.

Gramm-Leach-Bliley Act of 1999. The Gramm-Leach-Bliley Act of 1999 (the “GLBA”) implemented major changes to the statutory framework for providing banking and other financial services in the United States. The GLBA, among other things, eliminated many of the restrictions on affiliations among banks and securities firms, insurance firms and other financial service providers. A bank holding company that qualifies as a financial holding company will be permitted to engage in activities that are financial in nature or incidental or complimentary to financial activities. The activities that the GLBA expressly lists as financial in nature include insurance underwriting, sales and brokerage activities, providing financial and investment advisory services, underwriting services and limited merchant banking activities.

To become eligible for these expanded activities, a bank holding company must qualify as a financial holding company. To qualify as a financial holding company, each insured depository institution controlled by the bank holding company must be well-capitalized, well-managed and have at least a satisfactory rating under the CRA (discussed below). In addition, the bank holding company must file with the Federal Reserve a declaration of its intention to become a financial holding company. While the Corporation satisfies these requirements, the Corporation has not elected for various reasons to be treated as a financial holding company under the GLBA.

We do not believe that the GLBA has had a material adverse impact on the Corporation’s or the Bank’s operations. To the extent that it allows banks, securities firms and insurance firms to affiliate, the financial services industry may experience further consolidation. The GLBA may have the result of increasing competition that we face from larger institutions and other companies offering financial products and services, many of which may have substantially greater financial resources.

The GLBA and certain other regulations issued by federal banking agencies also provide new protections against the transfer and use by financial institutions of consumer nonpublic personal information. A financial institution must provide to its customers, at the beginning of the customer relationship and annually thereafter, the institution’s policies and procedures regarding the handling of customers’ nonpublic personal financial information. These privacy provisions generally prohibit a financial institution from providing a customer’s personal financial information to unaffiliated third parties unless the institution discloses to the customer that the information may be so provided and the customer is given the opportunity to opt out of such disclosure.

Community Reinvestment Act. The Bank is subject to the requirements of the Community Reinvestment Act (the “CRA”). The CRA imposes on financial institutions an affirmative and ongoing obligation to meet the credit needs of their local communities, including low and moderate-income neighborhoods, consistent with the safe and sound operation of those institutions. A financial institution’s efforts in meeting community credit needs currently are evaluated as part of the examination process pursuant to twelve assessment factors. These factors also are considered in evaluating mergers, acquisitions and applications to open a branch or facility.

Federal Home Loan Bank (FHLB) of Atlanta. The Bank is a member of the FHLB of Atlanta, which is one of twelve regional FHLBS that provide funding to their members for making housing loans as well as for affordable housing and community development lending. Each FHLB serves as a reserve or central bank for its members within its assigned region. It is funded primarily from proceeds derived from the sale of consolidated obligations of the FHLB System. It makes loans to members (i.e., advances) in accordance with policies and procedures established by the Board of Directors of the FHLB. As a member the Bank is required to purchase and maintain stock in the FHLB in an amount equal to at least 5% of the aggregate outstanding advances made by the FHLB to the Bank.

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Mortgage Banking Regulation. The Bank’s mortgage banking subsidiary is subject to the rules and regulations of, and examination by the Department of Housing and Urban Development (“HUD”), the Federal Housing Administration, the Veterans Administration and state regulatory authorities with respect to originating, processing and selling mortgage loans. Those rules and regulations, among other things, establish standards for loan origination, prohibit discrimination, provide for inspections and appraisals of property, require credit reports on prospective borrowers and, in some cases, restrict certain loan features, and fix maximum interest rates and fees. In addition to other federal laws, mortgage origination activities are subject to the Equal Credit Opportunity Act, Truth-in-Lending Act, Home Mortgage Disclosure Act, Real Estate Settlement Procedures Act, and Home Ownership Equity Protection Act, and the regulations promulgated there under. These laws prohibit discrimination, require the disclosure of certain basic information to mortgagors concerning credit and settlement costs, limit payment for settlement services to the reasonable value of the services rendered and require the maintenance and disclosure of information regarding the disposition of mortgage applications based on race, gender, geographical distribution and income level.

USA PATRIOT Act. The USA PATRIOT Act became effective on October 26, 2001 and provides for the facilitation of information sharing among governmental entities and financial institutions for the purpose of combating terrorism and money laundering. Among other provisions, the USA PATRIOT Act permits financial institutions, upon providing notice to the United States Treasury, to share information with one another in order to better identify and report to the federal government concerning activities that may involve money laundering or terrorists’ activities. The USA PATRIOT Act is considered a significant banking law in terms of information disclosure regarding certain customer transactions. Although it does create a reporting obligation, the Bank does not expect the USA PATRIOT Act to materially affect its products, services or other business activities.

Reporting Terrorist Activities. The Federal Bureau of Investigation (“FBI”) has sent, and will send, our banking regulatory agencies lists of the names of persons suspected of involvement in terrorist activities. The Bank has been requested, and will be requested, to search its records for any relationships or transactions with persons on those lists. If the Bank finds any relationships or transactions, it must file a suspicious activity report and contact the FBI.

The Office of Foreign Assets Control (“OFAC”), which is a division of the Department of the Treasury is responsible for helping to insure that United States entities do not engage in transactions with “enemies” of the United States, as defined by various Executive Orders and Acts of Congress. OFAC has sent, and will send, our banking regulatory agencies lists of names of persons and organizations suspected of aiding, harboring or engaging in terrorist acts. If the Bank finds a name on any transaction, account or wire transfer that is on an OFAC list, it must freeze such account, file a suspicious activity report and notify the FBI. The Bank has appointed an OFAC compliance officer to oversee the inspection of its accounts and the filing of any notifications. The Bank actively checks high-risk OFAC areas such as new accounts, wire transfers and customer files. The Bank performs these checks utilizing software, which is updated each time a modification is made to the lists provided by OFAC and other agencies of Specially Designated Nationals and Blocked Persons.

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ITEM 2 — PROPERTIES

The Bank and the Mortgage Corporation leases offices that are used in the normal course of business. The principal executive office of the Corporation, Bank and Mortgage Corporation is owned by Access Real Estate LLC, a subsidiary of the Bank and is located at 1800 Robert Fulton Drive, Reston, Virginia. The Bank leases offices in Chantilly and Vienna, Virginia. The Mortgage Corporation leases offices in Vienna, Richmond, Fredericksburg, Roanoke and Staunton, Virginia. The Mortgage Corporation leases two offices in Maryland located at Crofton and Westminster in addition to the offices in Florida, Tennessee and Colorado.

ITEM 3 – LEGAL PROCEEDINGS

The Bank is a party to legal proceedings arising in the ordinary course of business. Management is of the opinion that these legal proceedings will not have a material adverse effect on the Corporations’ financial condition or results of operations. From time to time the Bank may initiate legal actions against borrowers in connection with collecting defaulted loans. Such actions are not considered material by management unless otherwise disclosed.

ITEM 4 — SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

There were no matters submitted to a vote of security holders during the quarter ended December 31, 2004.

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PART II

ITEM 5 – MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

In July 2004, Access National Corporations’ common stock became listed on the National Association of Securities Dealers, Inc. Automated Quotations (“NASDAQ”) national market system and is quoted under the symbol of “ANCX”

Set forth below is certain financial information relating to the Corporation’s common stock price history. Prices for the third and fourth quarter of 2004 reflect transactions executed on NASDAQ. The stock prices prior to the third quarter of 2004 reflect the prices paid in the indicated periods in the actual private trades of which the Corporation is aware. There may have been other transactions of which the Corporation is unaware. Due to the limited volume of trading in the Corporation’s common stock, these transactions do not necessarily reflect the intrinsic or market value of the stock at the time they were completed.

As of March 23, 2005, the Corporation had 3,959,324 outstanding shares of Common Stock, par value $1.67 per share, held by approximately 400 shareholders of record.

The Corporation has not declared any cash dividends. Payment of dividends is at the discretion of the Corporation’s Board of Directors, is subject to various federal and state, regulatory limitations, and is dependent upon the overall performance and capital requirements of the Corporation.

On April 10, 2002 the Bank issued 7,500 restricted shares (22,500 adjusted) of common stock (with a market value of approximately $150,000) in exchange for 100% of the shares of Commercial Finance Corporation (now known as Access National Leasing Corporation). These shares of common stock were exempt from registration pursuant to Section 3(a)(2) of the Securities Act of 1933 due to the Bank’s status as a National Bank. These shares were subsequently cancelled.

On April 15, 2002 the Bank sold 162,500 (487,500 adjusted, 3,000 of which were subsequently forfeited) shares of its common stock under a rights offering to existing shareholders and employees at a price of $18.00 per share and a par value of $5.00 ($6.00 and $1.67 adjusted). The total offering price was $2,925,000. The offering was not underwritten and there were no underwriters’ discounts or commissions. A Series B warrant to purchase one share of common stock accompanied each share purchased, for a total of 162,500 (487,500 adjusted) Series B warrants issued in this rights offering. The Series B warrants were exercisable immediately at an exercise price of $20.00 per share at any time to and including June 4, 2004. In June 2004, 97% of the Series B Warrants were exercised that resulted in proceeds to the Corporation of $3.1 million. Both the shares of common stock and the Series B warrants were exempt from registration pursuant to Section 3(a)(2) of the Securities Act of 1933 due to the Bank’s status as a National Bank.

On July 30, 2002, Access National Capital Trust I, a Delaware business trust and a wholly-owned subsidiary of Access National Corporation, issued $4.0 million of Floating Rate Capital Securities in a private placement transaction with an accredited investor (in reliance upon Section 4(2) of the Securities Act of 1933, as amended) and $125,000 of Floating Rate Common Securities to Access National Corporation. Proceeds from the issuance of both the Floating Rate Capital Securities and the Floating Rate Common Securities were immediately used by Access National Capital Trust I to purchase $4.125

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million of Floating Rate Junior Subordinated Deferrable Interest Debentures maturing on September 30, 2032 from Access National Corporation. Access National Corporation paid commissions of $120,000 in connection with the sale of the Floating Rate Capital Securities.

On September 30, 2003, Access National Capital Trust II, a Delaware business trust and a wholly-owned subsidiary of Access National Corporation, issued $6.0 million of Floating Rate Capital Securities in a private placement transaction with an accredited investor (in reliance upon Section 4(2) of the Securities Act of 1933, as amended) and $186,000 of Floating Rate Common Securities to Access National Corporation. Proceeds from the issuance of both the Floating Rate Capital Securities and the Floating Rate Common Securities were immediately used by Access National Capital Trust II to purchase $6.186 million of Floating Rate Junior Subordinated Deferrable Interest Debentures maturing on December 31, 2033 from Access National Corporation. Access National Corporation paid commissions of $144,000 in connection with the sale of the Floating Rate Capital Securities.

At December 31, 2004 there are 524,610 outstanding Series A warrants. The Series A warrants were issued by the Bank in December 1999 to th e organizing shareholders of the Bank (in conjunction with the organization of the Bank) and the shareholders of Mortgage Investment Company (in conjunction with the acquisition by the Bank of Mortgage Investment Company). Each Series A warrant is exercisable for one share of common stock at an exercise price of $3.33. As of December 31, 2004, 524,610 of the Series A warrants had vested and were exercisable.

On June 1, 2003, the Corporation issued a 3 for 1 stock split. The authorized shares of common stock increased from 10,000,000 to 30,000,000 and par value decreased from $5.00 to $1.67.

On June 13, 2003, the Corporation exchanged all of its shares in Commercial Finance Corporation for the return of 7,500 shares of Access National Corporation’s common stock issued in connection with the April 10, 2002 transaction listed above.

On June 4, 2004, 473,253 shares were issued at a par value of $1.67. These shares represent the exercise of warrants issued in conjunction with the April 15, 2002 rights offering. This resulted in a capital injection to the Corporation of $3.1 million.

Issuer Purchases of Equity Securities
For the Quarter Ended December 31, 2004

During the fourth quarter of 2004 the Corporation repurchased 5,617 shares of restricted stock from former employees. The Corporation also repurchased 18,370 shares of unrestricted stock from a former employee. These transactions were executed at the existing market price.

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ITEM 6 – SELECTED FINANCIAL DATA

Information relating to selected financial data is in Table 1.

ITEM 7 — MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis is intended to provide an overview of the significant factors affecting the financial condition and the results of operations of Access National Corporation and subsidiary (the “Corporation”) for the twelve months ended December 31, 2004 and 2003. The consolidated financial statements and accompanying notes should be read in conjunction with this discussion and analysis.

Forward-Looking Statements

In addition to historical information, this Annual Report on Form 10-K may contain forward-looking statements. For this purpose, any statements contained herein, including documents incorporated by reference, that are not statements of historical fact may be deemed to be forward-looking statements. Examples of forward-looking statements include discussions as to our expectations, beliefs, plans, goals, objectives and future financial or other performance or assumptions concerning matters discussed in this document. Forward-looking statements often use words such as “believes,” “expects,” “plans,” “may,” “will,” “should,” “projects,” “contemplates,” “ anticipates,” “forecasts,” “intends” or other words of similar meaning. You can also identify them by the fact that they do not relate strictly to historical or current facts. Forward-looking statements are subject to numerous assumptions, risks and uncertainties, and actual results could differ materially from historical results or those anticipated by such statements. Factors that could have a material adverse effect on the operations and future prospects of the Corporation include, but are not limited to, changes in: interest rates, general economic conditions, monetary and fiscal policies of the U.S. Government, including policies of the Office of the Comptroller of the Currency, U.S. Treasury and the FRB, the economy of Northern Virginia, including governmental spending and real estate markets, the quality or composition of the loan or investment portfolios, demand for loan products, deposit flows, competition, and accounting principles, policies and guidelines. These risks and uncertainties should be considered in evaluating the forward-looking statements contained herein, and readers are cautioned not to place undue reliance on such statements. Any forward-looking statement speaks only as of the date on which it is made, and we undertake no obligation to update any forward-looking statement to reflect events or circumstances after the date on which it is made.

CRITICAL ACCOUNTING POLICIES

General

The Corporation’s financial statements are prepared in accordance with accounting principles generally accepted in the United States (GAAP). The financial information contained within our statements is, to a significant extent, financial information that is based on measures of the financial effects of transactions and events that have already occurred. A variety of factors could affect the ultimate value that is obtained either when earning income, recognizing an expense, recovering an asset or relieving a liability. Actual losses could differ significantly from the historical factors that we monitor. Additionally, GAAP itself may change from one previously acceptable method to another method. Although the economics of our transactions would be the same, the timing of events that would impact our transactions could change.

Allowance for Loan Losses

The allowance for loan losses is an estimate of the losses that may be sustained in our loan portfolio. The allowance is based on two basic principals of accounting: (i) SFAS 5 Accounting for Contingencies, which requires that losses be accrued when they are probable of occurring and estimatable and (ii) SFAS 114, Accounting by Creditors for Impairment of a Loan, which requires that losses be accrued based on the differences between the value of collateral, present value of future cash flows or values that are observable in the secondary market and the loan balance.

An allowance for loan losses is established through a provision for loan losses based upon industry standards, known risk characteristics, management’s evaluation of the risk inherent in the loan portfolio and changes in the nature and volume of loan activity. Such evaluation considers among other factors, the estimated market value of the underlying collateral, and current economic conditions. . For further information about our practices with respect to allowance for loan losses, please see the subsection “Loans” below.

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Derivative Financial Instruments
Access National Mortgage Corporation carries all derivative instruments at fair value as either assets or liabilities in the consolidated balance sheets. Statement of Financial Accounting Standards No. 133, “Accounting for Derivative Instruments and Hedging Activities” as amended (“Statement 133”), provides specific accounting provisions for derivative instruments that qualify for hedge accounting. The Mortgage Corporation has not elected to apply hedge accounting to its derivative instruments as provided in Statement 133.

See Notes 1, 10 and 11 to the financial statements for additional information on Derivatives.

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FINANCIAL CONDITION

Asset Summary

The Corporation completed its fifth year of operation continuing its trend of significant growth in assets. Total assets at December 31, 2004 were $420.0 million, an increase of $162.7 million. The growth in assets is comprised of a $103.3 million increase in loans held for investment, a $6.5 million increase in loans held for sale, a $28.2 million increase in investment securities and a $24.4 million increase in cash and interest bearing balances. Total assets averaged $341.1 in 2004, approximately $77.7 million higher than total average assets for 2003.

The growth in assets was funded by a $33.9 million increase in non interest bearing deposits, a $74.7 million increase in savings and interest bearing deposits and a $10.6 million increase in time deposits. Short term borrowings increased $26.0 million and long term borrowings increased $12.0 million. Shareholders equity increased $6.2 million resulting from net income of $3.3 million, the exercise of warrants and options net of stock repurchased amounting to $3.3 million less the unrealized holdings loss relating to investments available for sale of $0.1 million.

Management plans to pursue continued growth in our asset base through the productivity of our existing Loan Officers and Client Service personnel that we employ to establish and maintain banking relationships with clients and prospects in our target market. Management also plans to expand its Loan officer and Client Service personnel to further drive growth. Successful expansion of these relationships increases the volume of loans and deposits on our books and creates mortgage origination / fee income opportunities.

The following discussions by major categories explain the changes in financial condition in more detail.

Cash and Cash Equivalents

Cash and cash equivalents consisting of cash and due from banks and interest bearing deposits in other banks totaled $30.5 million at December 31, 2004 compared to $6.1 million in 2003, an increase of $24.4 million. The increase was due in part to an increase in deposits associated with business operating accounts and the receipt of funds from the sale of loans.

Investment Securities

The Corporation’s securities portfolio is comprised of U.S. Treasury securities, U.S. Government Agency securities, mortgage backed securities, Federal Reserve and Federal Home Loan Bank stock. At December 31, 2004 the securities portfolio totaled $51.4 million, up from $23.2 million in 2003. The increase in investments is due to the increase in deposits. All securities were classified as available for sale. The Financial Accounting Standards Board requires that securities classified as available for sale be accounted for at fair market value. Unrealized gains and losses are recorded directly to a separate component of stockholders’ equity. The Corporation’s securities classified as available for sale had an unrealized loss net of deferred taxes of $7 thousand on December 31, 2004. Table 3, Securities Available for Sale presents the types, amounts and maturity distribution of the securities portfolio.

Loans

Loans held for investment increased approximately $103.3 million to $292.6 million. Commercial loans grew by approximately $16.7 million, a 52.5% increase over last year. Loans secured by commercial real estate loans increased $27.8 million, a 40.2% increase over 2003. The growth in commercial loan products reflects the Corporations commitment to serving the needs of the business and professional community. Our commercial loan officers have established professional relationships with our clients and we are responsive to their credit and other financial needs. This relationship with our clients is responsible for generating new referrals and provides the basis for continued growth. Real estate construction loans increased $19.3 million over last year representing an increase of 140.3%. This loan category is comprised of construction and land development loans, primarily for one to four family residences. The growth is reflective of the current housing environment in our market. Residential real estate loans increased $39.6 million, a 53.6% increase over 2003. This increase is largely attributable to management’s decision to increase the Bank’s variable rate mortgage portfolio and consists of adjustable rate mortgage loans originated by and purchased from the Mortgage Corporation. Consumer loans decreased from $821 thousand to $723 thousand in 2004 as a result of payoffs. The Bank concentrates on providing banking services to the small to medium sized businesses and professionals in our market area. The Bank also offers a complete line of consumer lending products, primarily as a service to the affiliates of our commercial and professional clients. The Bank does not, however, actively market its consumer products at this time, which accounts for the nominal amount of consumer type loans.

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Loans held for sale totaled $36.2 million at December 31, 2004 compared to $29.8 million in 2003, an increase of $6.4 million. The increase in loans held for sale is attributable to a change in the way the Mortgage Corporation markets its loans. In 2003 loans were being delivered to investors on a loan by loan basis whereas in 2004 loans are being accumulated, sold and delivered as a pool of loans. This process improves the pricing on the loans. Overall, volume of loan originations was down from 2003 by 37%. Contributing to the decline in loan origination was the closure of four branches as a result of restructuring the branch network. The Mortgage Corporation expects to increase its local presence in 2005.

Management is optimistic that the Bank will experience continued growth in 2005 as a result of continued expansion of the lending staff, a larger business base, better name recognition and a growing reputation for being able to serve the needs of the small to medium size businesses and professionals in our community. We expect that in 2005, the Mortgage Corporation will increase its loan production as a result of increasing its presence in the local area.

Table 4, The Loan Portfolio, presents the major classifications and maturity distribution of loans held for investment at December 31, 2004, 2003 and 2002.

Allowance for Loan Losses

For the year ended December 31, 2004, the allowance for loan loss was $4.0 million, an increase of 56.7% over the $2.6 million at the prior year-end. The increase is attributed to the 54.5% increase in the Loan Portfolio as well as a detailed analysis of risk and loss potential within the portfolio as a whole. Although actual loan losses have been insignificant, our senior credit management, with over 60 years in collective experience in managing similar portfolios in our marketplace, concluded the amount of our reserve and the methodology applied to arrive at the amount of the reserve is justified and appropriate due to the lack of seasoning of the portfolio, the relatively large dollar amount of a relatively small number of loans, portfolio growth, staffing changes and trend analysis. Outside of our own analysis, our reserve adequacy and methodology are reviewed on a regular basis by, internal audit program, and bank regulators and such reviews have not resulted in any material adjustment to the reserve.

The Bank, after five years of operations, does not have a meaningful history of charge offs with which to establish trends in loan losses by loan classifications. As of December 31, 2004 the total net charge offs for the five years was less than $19 thousand dollars. The overall allowance for loan losses is equivalent to approximately 1.37% of total loans held for investment. The schedule in Table 6, Allocation of the Allowance for Loan Losses, reflects the allocation by the different loan types. The methodology as to how the allowance was derived is a combination of specific allocations and percentages allocation of the unallocated portion of the allowance for loan losses, as discussed below. The Bank has developed a comprehensive risk weighting system based on individual loan characteristics that enables the Bank to allocate the composition of the allowance for loan losses by types of loans.

The allowance for loan losses increased $1.5 million in 2004 or approximately 56.7% over 2003. Total loans increased $103.3 million in 2004, an increase of 54.5%. The allowance for loan losses at December 31, 2004 was 1.37 % of total loans compared to 1.35% in 2003. The allowance for Commercial loans as a percent of the total Commercial loans amounted to 3.0%, compared to 1.6% in 2003. The allowance for Commercial Real Estate loans was 1.27% of total Commercial Real Estate loans in 2003 compared to 1.52% in 2003. The allowance for Residential Real Estate loans as a percent of total Residential Real Estate loans was 0.76% in 2004 compared to 1.05% in 2003. Net charge offs from inception through December 31 2004 have totaled less than $19 thousand. Since the bank does not have a meaningful charge off experience, changes in the composition of the allowance for loan losses are due to volume and changes in individual risk ratings on new loans.

The loss risk of each loan within a particular classification, however, is not the same. The methodology for arriving at the allowance is not dictated by loan classification. The methodology as to how the allowance was derived is detailed below. Unallocated amounts included in the allowance for loan losses have been applied to the loan classifications on a percentage basis.

Adequacy of the reserve is assessed, and appropriate expense and charge offs are taken, no less frequently than at the close of each fiscal quarter end. The methodology by which we systematically determine the amount of our reserve is set forth by the Board of Directors in our Credit Policy. Under this Policy, our Chief Credit Officer is charged with ensuring that each loan is individually evaluated and the portfolio characteristics are evaluated to arrive at an appropriate aggregate reserve. The results of the analysis are documented, reviewed and approved by the Board of Directors no less than quarterly. The following

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elements are considered in this analysis: loss estimates on specific problem credits (the “Specific Reserve”) , individual loan risk ratings, lending staff changes, loan review and board oversight, loan policies and procedures, portfolio trends with respect to volume, delinquency, composition/concentrations of credit, risk rating migration, levels of classified credit, off-balance sheet credit exposure, any other factors considered relevant from time to time (the “General Reserve”) and, finally, an “Unallocated Reserve” to cover any unforeseen factors not considered above in the appropriate magnitude. Each of the reserve components, General, Specific and Unallocated are discussed in further detail below.

With respect to the General Reserve, all loans are graded or “Risk Rated” individually for loss potential at the time of origination and as warranted thereafter, but no less frequently than quarterly. Loss potential factors are applied based upon a blend of the following criteria: our own direct experience at this bank; our collective management experience in administering similar loan portfolios in the market for over 60 years; and peer data contained in statistical releases issued by both the Office of the Comptroller of the Currency and the Federal Deposit Insurance Corporation. Although looking only at peer data and the bank’s historically low write-offs would suggest a lower loan loss allowance, our management’s experience with similar portfolios in the same market combined with the fact that our portfolio is relatively unseasoned, justify a conservative approach in contemplating external statistical resources. Accordingly, management’s collective experience at this bank and other banks is the most heavily weighted criterion, and the weighting is subjective and varies by loan type, amount, collateral, structure, and repayment terms. Prevailing economic condition generally and within each individual borrower’s business sector are considered, as well as any changes in the borrower’s own financial position and, in the case of commercial loans, management structure and business operations. As of December 31, 2004 our evaluation of these factors supported approximately 86.4% of the total loss reserve. As our portfolio ages and we gain more direct experience, the direct experience will weigh more heavily in our evaluation.

When deterioration develops in an individual credit, the loan is placed on a “Watch List” and the loan is monitored more closely. All loans on the watch list are evaluated for specific loss potential based upon either an evaluation of the liquidated value of the collateral or cash flow deficiencies. If management believes that, with respect to a specific loan, an impaired source of repayment, collateral impairment or a change in a debtor’s financial condition presents a heightened risk of non-performance of a particular loan, a portion of the reserve may be specifically allocated to that individual loan. The aggregation of this loan by loan loss analysis comprises the “Specific Reserve” and accounted for approximately 22.1% of the total loss reserve. For 2004, this Specific Reserve relates to five loans totaling $2.2 million as of December 31, 2004 that were assigned additional reserves based on an evaluation of the established primary and secondary sources of repayment, which suggested a potential degradation in those sources of repayment.

The Unallocated Reserve is maintained to absorb risk factors outside of the General and Specific Allocations. Maximum and minimum target limits are established by us on a quarterly basis for the Unallocated Reserve. As of December 31, 2004 the threshold range for this component was 0.02% to 0.75% of the total loan portfolio and accounted for approximately 13.6% of the total loss reserve.

Nonperforming Loans And Past Due

At December 31, 2004 there were five loans in non accrual status totaling $2.2 million. Subsequent to December 31, 2004 one loan in the amount of $542 thousand was paid in full. Non accrual loans are carefully monitored and specific reserves established as necessary to ensure any estimated loss can be absorbed by the designated reserve. Over $888 thousand of the loss reserve was dedicated as specific reserve to these non-performing loans. In management’s estimate the specific reserve for these loans will be adequate to absorb reasonably foreseeable losses. Management actively works with the borrowers to maximize potential for repayment and reports on the status of the same to the Board of Directors, no less than on a monthly basis.

As of December 31, 2004 no accruing loans were past due more than 90 day.

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Deposits

Deposits are the primary source of funding loan growth. Average deposits totaled $235.4 million, a 15.48% increase over 2003. Deposits totaled $317.4 million on December 31, 2004, compared to $198.2 million on December 31, 2003, an increase of $119.2 million. Table 7, Average Deposits and Average Rates Paid, reflects the composition of deposits and interest rates.

Deposits have grown as a result of our increasing client base. Most of our core depositors are borrowers or accounts related to borrowers. Based upon FDIC statistical data, our core deposits expanded to 55.9% of the total deposit base at year end 2004, compared to 53.6% at year end 2003. In an effort to further expand reach to local depositors and further diversify funding sources, we embarked on a promotional program by offering attractive rates on Money Market accounts in the fourth quarter of 2004. As of December 31, 2004, Money Market account balances comprised 29.5% of total deposits, compared to 10.6% at year end 2003. We expect to continue this program but will adjust or discontinue it at any time based upon our constant monitoring of the economic environment, activity in other core account categories and other alternative and proven funding.

Borrowings

Borrowed funds consist of advances from the Federal Home Loan Bank of Atlanta, subordinated debentures (trust preferred), securities sold under agreement to repurchase, federal funds purchased and commercial paper. At December 31, 2004 borrowed funds totaled $74.4 million compared to $36.3 million in 2003. Federal Home Loan Bank advances increased $34.0 million from 2003. The Corporation utilizes short term advances for supplementing the Mortgage Corporation’s funding requirements. Long term advances are used to match fundings and to lock in spreads on Bank term loans. Table 10 provides a break down of all borrowed funds.

Shareholders’ Equity

Shareholders’ equity increased $6.2 million during 2004, primarily due to an increase in retained earnings as a result of current year net income of $3.3 million and the issuance of 479,714 shares of common stock net of shares retired. Of this amount 473,253 shares were issued as a result of warrants from the 2002 rights offering being exercised. A strong capital position is vital to the continued profitability of the Corporation. It also promotes depositor and investor confidence and provides a solid foundation for the future growth of the organization.

Banking regulators have defined minimum regulatory capital ratio that the Corporation and the Bank are required to maintain. These risk based capital guidelines take into consideration risk factors, as defined by the banking regulators, associated with various categories of assets, both on and off the balance sheet. Both the Corporation and Bank are classified as Well Capitalized, which is the highest rating. Table 11 Risk Based Capital Analysis, outlines the regulatory components of capital and risk based capital ratios.

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RESULTS OF OPERATIONS

Summary

Net income for the year ended December 31, 2004 totaled $3.3 million and includes extraordinary income of $330 thousand, net of taxes. The extraordinary income resulted from the excess of the fair value of net assets acquired over the purchase price of United First Mortgage Inc. Net income compared to 2003 was down 13.1%, primarily due to a 37% decline in mortgage loan originations. Assets totaled $420.0 million on December 31, 2004, up from $257.4 million in 2003, an increase of approximately 63.2%. Total deposits grew by $119.2 million to $317.4 million at December 31, 2004. Loans held for investment totaled $292.6 million at December 31, 2004 compared to $189.3 million in 2003, an increase of approximately 54.5%. The growth in loans was funded by deposit growth and borrowed funds. Return on average assets decreased from 1.45% in 2003 to 0.97% in 2004 due to the larger average asset base. Return on average equity decreased to 14.48% in 2004 from 20.48% in 2003 reflecting the increased number of shares. Diluted earnings per share for 2004 were $.72 down from the $.87 reported last year. See Table 1 Summary Financial Data.

Net Interest Income

Net interest income, the principal source of bank earnings, is the amount of income generated by earning assets (primarily loans and investment securities) less the interest expense incurred on interest bearing liabilities (primarily deposits) used to fund earning assets. During 2004 our net interest margin increased 6 basis points from 3.58% in 2003 to 3.64% in 2004. Table 2 Yield on Average Earning Assets and Rates on Average Interest Bearing Liabilities summarizes the major components of net interest income for the past three years and also provides yields and average balances.

Net interest income increased in 2004 to $11.7 million compared to $9.1 million in 2003. Net interest income depends upon the volume of earning assets and interest bearing liabilities and the associated rates. Average interest earning assets increased $65.8 million over the $255.5 million in 2003. The increase is primarily due to the growth in average loans which increased $62.2 million. The yield on earning assets increased from 5.50% in 2003 to 5.67% in 2004 reflecting an increase in yield on all earning asset categories and reflects the current rate environment. See Table 2A Volume and Rate Analysis for the past three years.

Total interest expense increased $1.6 million over the total of $4.9 million in 2003 as a result of increases in interest bearing deposits and increased interest expense on borrowings. Total interest bearing deposits averaged $159.5 million in 2004 compared to $143.3 million in 2003. Borrowed funds averaged $79.7 million in 2004 compared to $36.0 million in 2003. The increase in deposits and borrowings funded the growth in earning assets. The average cost of interest bearing liabilities was 2.73% in 2004 and 2003.

Provision for Loan Losses

The provision for loan losses charged to operating expense was $1.5 million in 2004 compared to $526 thousand in 2003. The 178% increase in expense is a result of the 54.5% increase in Loans Held for Investment as well as the quarterly application of the credit risk rating system used to assess the adequacy of the loss reserve explained previously in detail under “Allowance for Loan Losses. Management believes the allowance for loan losses is adequate to absorb inherent losses in the loan portfolio based on the evaluation as of December 31, 2004. In general, we expect the base level of provision for loan loss expense to be commensurate with the increase in the Loans Held for Investment, tempered more or less with our assessment of the underlying credit risk in the portfolio as explained previously in detail.

Non Interest Income

Non-interest income consists of revenue generated from a broad range of financial services and activities. The Mortgage Corporation provides the most significant contributions towards non-interest income. Total non interest income was $26.0 million in 2004 compared to $33.8 million in 2003, a decrease of $7.8 million. Gains on the sale of loans originated by the Mortgage Corporation totaled $20.0 million in 2004, compared to $27.8 million in 2003. Mortgage broker fees amounted to $4.6 million in 2004 and $4.9 million in 2003. The decreases are primarily due to changes in the general market conditions. 2003 was a record year for the overall mortgage industry as a result of unprecedented refinancing activity fueled by record low levels of interest rates.

We do not expect the level of activity in the near future to return to the levels experienced in 2003. We view the 2004 non-interest income as a more normal level of activity. The volume of our Mortgage Corporation is subject to many cyclical risks

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against which we actively manage. Volume and the accompanying non-interest income are subject to the risks associated with the general interest rate environment as well as the new home and resale activity of the residential real estate market in the communities we serve.

Non Interest Expense

Non interest expense totaled $31.6 million in 2004 compared to $36.4 million in 2003, a decrease of $4.8 million or 13.2% over 2003. Salaries and benefits total $18.6 million and comprise 59.0% of total non operating expense. Salaries and benefits decreased approximately $2.8 million, a 12.9% decrease from 2003. This decrease is due the decrease in commissions and salaries at the Mortgage Corporation and reflects the decrease in loan originations and the closure of four offices. 78.6% of the total salaries expense is attributable to the Mortgage Corporation and 21.4% attributable to bank. The majority of compensation expense for the Mortgage Corporation is variable with loan origination volume. Mortgage loan originations decreased from $1.240 billion in 2003 to $780 million in 2004, a 37% decrease.

Other operating expense decreased approximately $2.4 million from $12.9 million in 2003 to $10.5 million in 2004, an 18.1% decrease. The decrease is likewise attributable to the Mortgage Corporation and reflects the decrease in loan volumes. A significant portion of the other operating expense of the Mortgage Corporation is variable with loan origination volume. Other operating expense is comprised of advertising, investor fees, management fees, other settlement fees, and other marketing expense.

As noted above, we view the mortgage origination volume and resultant non-interest income of 2004 more representative of normal activity over 2003, which was unusually high. The future of related non-interest expense will behave accordingly.

Income Taxes

Income tax expense decreased $510 thousand, or 23.9%, over last year primarily as a result of decrease in net income. Note 8 to the financial statements show the components of Federal Income tax.

We expect to continue to accrue and pay taxes in accordance with all applicable tax laws and regulations. Many of our competitors, primarily federal and state credit unions, are exempt from the taxation against which we are subjected. The corporation’s effective tax rate was 35% in 2004 compared to 36% in 2003.

Quarterly Results

The quarterly financial data detailed in Table 1A is helpful in illustrating our strategy outlined under the description of our business. On a macro basis, earnings of the bank segment has been on a steadily increasing trend over the last several years while contribution from the mortgage segment has varied based upon the cyclical factors described previously. The segment reporting chart in the financial statements reveals the banking segment accounting for 70% of pre-tax income in 2004, compared to 40% in 2003 and 15% in 2002. This overall trend in the context of our strategy needs to be considered when evaluating the quarterly activity.

Liquidity Management

Liquidity is the ability of the Corporation to convert assets into cash or cash equivalents without significant loss and to raise additional funds by increasing liabilities. Liquidity management involves maintaining the Corporation’s ability to meet the daily cash flow requirements of both depositors and borrowers.

Asset and liability management functions not only serve to assure adequate liquidity in order to meet the needs of the Corporation’s customers, but also to maintain an appropriate balance between interest sensitive assets and interest sensitive liabilities so that the Corporation can earn an appropriate return for its shareholders.

The asset portion of the balance sheet provides liquidity primarily through loan principal repayments and maturities of investment securities. Other short-term investments such as Federal Funds sold and maturing interest bearing deposits with other banks are additional sources of liquidity funding. At December 31, 2004, overnight interest bearing balances totaled $19.5 million and securities available for sale totaled $51.4 million.

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The liability portion of the balance sheet provides liquidity through various interest bearing and non interest bearing deposit accounts, Federal Funds purchased, securities sold under agreement to repurchase and other short-term borrowings. At December 31, 2004, the Corporation had a line of credit with the Federal Home Loan Bank of Atlanta totaling $116.9 million and outstanding variable rate loans of $27.0 million, and an additional $27.0 million in term loans at fixed rates ranging from 2.70% to 4.97% leaving $62.9 million available on the line. In addition to the line of credit at the Federal Home Loan Bank, the Bank and its mortgage bank subsidiary also issue repurchase agreements and commercial paper. As of December 31, 2004, outstanding repurchase agreements totaled $2.8 million and commercial paper issued amounted to $7.2 million. The interest rate on these instruments is variable and subject to change daily. The Bank also maintains Federal Funds lines of credit with its correspondent banks and, at December 31, 2004, these lines amounted to $16.6 million. The Corporation also has $10.3 million in subordinated debentures to support the growth of the organization. The table below presents the Corporation’s contractual obligation and scheduled payment amounts due at various intervals over the next three years and beyond, as of December 31, 2004. Table 10, Borrowed Funds Distribution, outlines the composition of borrowed funds for 2004, 2003 and 2002.

Contractual Obligations

The Corporation funded the growth in interest earning assets through a combination of non-interest bearing deposits, interest bearing deposits, retention of earnings and borrowed funds. The Corporation expects its short and long term sources of liquidity and capital to remain adequate to support expected growth. The Bank relies on a variety of short and long term resources for liquidity from a variety of sources that substantially reduces reliance upon any single provider.

Off Balance Sheet Items

During the ordinary course of business, the Bank issues commitments to extend credit and, at December 31, 2004, these commitments amounted to $15.3 million. These commitments do not necessarily represent cash requirements, since many commitments are expected to expire without being drawn on.

At December 31, 2004 the Bank had approximately $45.3 million in unfunded lines of credit. These lines of credit, if drawn upon, would be funded from routine cash flows. Cash flows from financing activities, which includes deposit growth and borrowing, generated over $160.3 million.

Recent Accounting Pronouncements

In December 2003, the FASB issued FASB Interpretation No.46 (revised December 2003) Consolidation of Variable Interest Entities (FIN 46R), which addresses how a business enterprise should evaluate whether it has a controlling financial interest in an entity. Access National Corporation has determined that the provisions of FIN 46R required the de-consolidation of the subsidiary trusts which issued guaranteed preferred beneficial interests in subordinated debentures (Trust Preferred Securities). Prior to the adoption of FIN 46R the Corporation consolidated the trusts and the balance sheet included the guaranteed beneficial interest in the subordinated debentures of the trusts. At the adoption of FIN 46R, the trusts were de-consolidated and the junior subordinated debentures of Access National Corporation owned by the subsidiary trusts were recorded. Application of FIN 46R to its investment in subsidiary trusts did not materially impact the financial statements of the Corporation

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On March 9, 2004, the Securities and Exchange Commission (“SEC”) issued Staff Accounting Bulletin (“SAB”) No. 105, Application of Accounting Principles to Loan Commitments. SAB No. 105 requires that when a company is recognizing and valuing a loan commitment at fair value, only differences between the guaranteed interest rate in the loan commitment and a market interest rate should be included. Any expected future cash flows related to the customer relationships or loan servicing should be excluded from the fair value measurement. The expected future cash flows that are excluded from the fair value determination include anticipated fees for servicing the funded loan, late-payment charges, other ancillary fees, or other cash flows from servicing rights. The guidance in SAB No. 105 is effective for mortgage loan commitments that are accounted for as derivatives and are entered into after March 31, 2004. The adoption of this standard did not have an impact on the financial condition or the results of operations of the Company.

On December 15, 2004, the FASB issued SFAS 123R, Share-Based Payments. SFAS 123R requires that the cost resulting from all share-based payment transactions be recognized in the financial statements. This Statement establishes the fair value method for measurement and requires all entities to apply this fair value method in accounting for share-based payment transactions. The provisions of the SFAS 123R are effective for all share-based awards granted after July 1, 2005 and to share-based awards modified, repurchased, or cancelled after that date. Management does not believe the results of the adoption of this standard will differ materially from the previously disclosed pro-forma information.

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Statistical Information
The following statistical information is provided pursuant to the requirements of Guide 3, promulgated by the Securities Act of 1933:

Table # 1

Summary Financial Data

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Table # 1A

The following is a summary of the results of operations for each quarter of 2004 and 2003

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Table # 2

Yield on Average Earning Assets and Rates on Average Interest-Bearing Liabilities

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Table # 2A

Volume and Rate Analysis

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Table # 3

Investment Securities Available for Sale

Table # 3A

Investment Securities Available for Sale

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Table # 4

Loan Portfolio

Table # 4A

Loan Maturity Distribution

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Table # 5

Allowance for Loan Losses