Deadline comes and goes, work goes on and on

Meeting deadlines seems to have disappeared from the BBMP lexicon. The underpass work at Puttenahalli and Kadirenahalli that started in March 2008 was supposed to have been completed by February 9, 2009. But work is still going on.

"While progress has been made onstabilizing the financial industry, signs of stress are still evident and manyinstitutions have reduced or eliminated dividends and curtailed growthinitiatives. This deposit growth funded the expansion ofinterest earning assets and the low cost of the funds contributed to the robustmargin. Average demand deposits for the second quarter of 2009 were $196.5million, an increase of $13.3 million over the first quarter 2009 average of$183.2 million.Stockholders' equity continues to grow, totaling $59.0 million at June 30, 2009,reflecting earnings growth, and a positive market valuation on our investmentsecurities. O'Connor.Deposits ended the quarter at $699.7 million, a 13% increase over June 30, 2008,as the expanded branch network coupled with a more directed sales effortincreased core deposit growth. Thisrepresents a ratio of allowance to total loans of 1.12% at June 30, 2009compared to .83%, at June 30, 2008. "We continually assess our loan quality,including non-performing assets and overall reserve levels. This quarter,mindful of the potential impact of the slowing economy and the lengthyforeclosure process, we sold a large non-performing asset.

We believe thistimely disposition was the most effective resolution, and our strategy remainsto prudently assess each situation and seek an appropriate course of action forevery potential problem asset. We continue to build reserves, anticipating thenegative impact the economy may have, even on sound consumers and companies,"commented Mr. The provision for loan losses of $1.4 million, net of charge-offsof $.9 million, increased the allowance for loan losses to $5.0 million. Net loan growth was approximately $45.1million, and securities increased by $54.4 million. Loans, underwritten toconservative standards, are all within our identified geographic footprint andretained on our balance sheet.Despite the overall weak economy, asset quality measures remain relativelystrong with non accrual assets of $2.3 million, an increase from the $0.8million reported at June 2008, but lower than the $3.1 million reported in theprior quarter.

Our strong margin, along with the management of oursecurities portfolio partially offset declining fee income, the FDIC specialassessment and prudent additions to our loan loss reserves," commented Mr.O'Connor.Balance Sheet and Asset QualityTotal assets of $793.2 million at June 30, 2009, represent a 12% increase overthe prior June level of $710.2 million. Non interest income increased assecurities gains, recognized as part of an initiative to minimize certaininterest rate exposures, offset lower transactional fees and declining title feerevenue. As previously noted, operating expenses were higher due to the FDICspecial assessment, coupled with an additional $237 thousand increase inrecurring FDIC insurance premiums."The favorable trends in net interest income continued as deposits expanded, andwe judiciously increased our loan portfolio, providing credit to localbusinesses and consumers. This earning asset increase reflects loan growthand increases in securities holdings funded principally by core deposits. The$1.4 million provision for loan losses increased significantly over the $325thousand recorded in the same period last year, reflecting the current economicchallenges and a cautious future outlook. Net income,excluding this cost, would have been $.37 per share, consistent with last year,as the positive effects of higher earning assets and net interest margins,combined with gains on sales of securities, offset increased credit andoperating costs.