WEST POINTE BANCORP INC
Business of the Holding Company       West Pointe Bancorp, Inc., referred to herein as "West Pointe", the "Company", "we", or "us", was incorporated in 1997 under the Illinois Business Corporation Act of 1983, as amended. We are registered as a bank holding company under the Illinois Bank Holding Company Act of 1957, as amended, and the federal Bank Holding Company Act of 1956, as amended. We function as the holder of the capital stock of West Pointe Bank And Trust Company (the "Bank"), our wholly-owned subsidiary. Subject to constraints under the 1956 Act, the Company may acquire or develop other financially oriented businesses in the future, although it has no present commitments for any such acquisition or development. Under Illinois and federal law, the Company may acquire additional banks or engage in other permitted activities which are closely related to banking; however, the Company has no present commitments for any such bank acquisitions or for engaging in other banking related activities. Any such acquisitions of banks or organizations engaged in permitted activities could be made for stock, cash or debt obligations of the Company.                                           4         At the present time, except as mentioned below, West Pointe has no material assets, liabilities or operations other than those of the Bank, does not own or lease any property and has no paid employees. We utilize the premises and services of the employees of the Bank. As described in our financial statements, West Pointe had a revolving $5 million line of credit with an unaffiliated bank which matured on January 7, 2006. As of December 31, 2005, there was no advance on this line of credit. The principal executive offices of West Pointe are located at 5701 West Main Street, Belleville, Illinois 62226.  Bank Products and Services       The Bank was established in 1990 under the Illinois Banking Act, and operates in the financial services segment. Since its establishment, it has conducted a general banking business embracing the customary functions of commercial banking, including residential real estate, commercial, industrial and consumer lending, collections, safe deposit operations, and other services tailored to individual customer needs. On April 8, 1997, the Bank became a wholly-owned subsidiary of the Company pursuant to the Plan of Reorganization and Exchange dated as of February 12, 1997. In March of 1997, West Pointe launched its website at www.westpointebank.com, providing customers with full-service Internet banking and bill payment capabilities. At December 31, 2005, the Company had total assets of $477,391,032, total deposits of $401,996,154 and total loans (net of allowance for loan losses of $2,002,059) of $253,697,470. For information relating to our results of operations and other financial data see our Management's Discussion and Analysis of Financial Condition and Results of Operations in Item 7 of this report.  Market Area       The Company's primary geographic market areas consist of St. Clair, Monroe and Madison counties in Illinois and St. Louis City and St. Louis County in Missouri. Our five branch locations in East and West Belleville, Columbia, Dupo and Swansea, Illinois and 27 ATMs serve to meet the convenience and financial needs of our customers. The Company believes that the area is experiencing growth in both the commercial and residential populations serviced by the Company. Our strategy is to operate as an independent, retail oriented financial institution dedicated to serving the needs of customers in our market areas. Our commitment is to provide a broad range of personalized products and services to meet the needs of our customers.  Lending Activities       The Bank makes and services both secured and unsecured loans to individuals, firms and corporations. The Bank's loan portfolio is composed of loans in the following categories: commercial, financial and agricultural; commercial real estate; real estate construction; consumer residential real estate; and other consumer loans. The percent of loans for the various areas of business of the Bank as of December 31, 2005, based on principal amount, were 25.7% commercial, 20.2% residential real estate, 50.5%                                           5    commercial and other real estate, 1.9% automobile and 1.7% other consumer loans. As of December 31, 2005, the Bank had approximately 3,955 loans outstanding in the aggregate amount of $255,699,529.       The commercial, financial and agricultural loan portfolio is diversified and includes loans secured by non-real estate collateral to manufacturers, retailers, distributors, service providers and investors. Emphasis is generally placed upon middle-market and community businesses with financial stability and known local management. Underlying collateral for commercial, financial and agricultural loans includes, but is not limited to, inventory, equipment, vehicles and accounts receivable. In the case of corporations, the Bank may obtain personal guarantees from principal shareholders and/or officers.       The commercial real estate loan portfolio consists largely of mortgage loans secured by commercial properties located in the communities served by West Pointe's banking centers. A significant portion of the commercial real estate portfolio is comprised of traditional commercial loans with real estate taken as additional collateral. These loans are made to fund the acquisition of buildings and real estate for commercial, industrial, office and retail use. The maximum loan-to-value ratio applicable to improved commercial properties is 85%. Prior approval of the Bank's Loan and Discount Committee is required for new loans with loan-to-value ratios exceeding this limit.       The real estate construction loan portfolio consists of loans made to finance land development preparatory to erecting new structures or the on-site construction of 1-4 family residences, commercial properties, retail centers, medical and business offices, warehouse facilities and multi-family residential developments. The maximum loan-to-value ratio applicable to loans made for the purpose of land development activities is 75%. The maximum loan-to-value ratios applicable to commercial/multi-family and 1-4 family residential construction loans are 80% and 85%, respectively.       The 1-4 family residential real estate portfolio is predominantly comprised of loans extended for owner-occupied residential properties. These loans typically are secured by first mortgages on the properties financed and generally have a maximum loan-to-value ratio of 85%. The amortization periods for these loans generally do not exceed twenty years with interest being calculated on a fixed or floating rate basis. The 1-4 family residential real estate category also includes home equity lines of credit and closed-end second mortgage loans. Closed-end second mortgage loans generally bear a fixed rate of interest over a three to five year term with a five to fifteen year amortization, while home equity lines of credit generally have an interest rate indexed to the prime rate. Home equity loans generally have a maximum loan-to-value ratio of 85%.       The consumer loan portfolio consists of both secured and unsecured loans to individuals for household, family, and other personal expenditures such as automobile financing, home improvements and recreational and educational purposes. Consumer loans are typically structured with fixed rates of interest and full amortization of principal and interest within three to five years. The maximum loan-to-value ratio applicable to                                           6    consumer loans is generally 80%. This category of loans also includes revolving credit products such as checking overdraft protection and MasterCard and VISA credit cards. Consumer loans are either unsecured or are secured with various forms of collateral, other than real estate.       The Bank's asset quality management program, particularly with regard to loans, is designed to analyze potential risk elements and to support the growth of a profitable and high quality loan portfolio. The Bank employs the use of a loan rating system to monitor the loan portfolio and to determine the adequacy of the allowance for loan losses. The Bank's lending philosophy is to invest in loans in the communities served by its banking centers so it can effectively monitor and control credit risk. The majority of the loan portfolio is comprised of retail loans and loans to small-to-midsized businesses. A periodic review of selected credits (based on loan size) is conducted to identify loans with heightened risks or inherent losses. Factors which could contribute to increased risk in the loan portfolio include, but are not limited to, changes in interest rates, general economic conditions and reduced collateral values. The Bank is not engaged in making loans to foreign countries.       As of December 31, 2005, and effective January 30, 2006, the statutory legal lending limit amount for the Bank to loan to one customer was $9,441,015.  Deposit Activities       The Bank offers similar types of deposit accounts to those offered by other financial institutions. The categories of deposit accounts within the Bank's portfolio include non-interest bearing demand deposits, interest bearing demand deposits, savings and money market deposits, time deposits of $100,000 and more, and time deposits of less than $100,000. On December 31, 2005, the Bank had approximately 26,442 deposit accounts representing $401,996,154 in deposits.       Core deposits originating within the communities served by our banking locations continue to be the Bank's most reliable and most important source of funds. Deposit products are offered to individuals, partnerships, corporations, public entities and not-for-profit organizations. Within each deposit category, customers have a variety of product options to choose from, each of which may have characteristics specifically suited to their needs. These product options may have variations in service fees, minimum balance requirements and interest rates. In the case of time deposits, the Bank offers a wide variety of products with varying maturity terms and rates. The Bank operates in a highly competitive market place for deposits and strives to price its deposit products accordingly. The Bank has no brokered deposits. No material portion of the Bank's deposits has been obtained from a single customer or customers (including federal, state, and local governments and agencies) the loss of any one or more of which would have a materially adverse effect on the Bank, nor is a material portion of the Bank's deposits concentrated within a single industry or group of related industries.                                           7    Investment Activities       The Bank invests a portion of its assets in U.S. Treasury and U.S. agencies, mortgage-backed securities, state, county and municipal obligations and equity securities. The Bank's investments are managed in relation to loan demand and deposit growth, and are generally used to provide for the investment of excess funds at yields and risks relative to yields and risks of the loan portfolio, while providing liquidity to fund increases in loan demand or to offset fluctuations in deposits. The Bank does not engage in hedging activities.       The Bank classifies investment securities as available for sale or held to maturity. Available for sale investment securities are held with the option of their disposal in the foreseeable future to meet investment objectives or for other operational needs. Held to maturity investment securities generally provide a relatively stable source of income. As of December 31, 2005, the Bank had no investment securities classified as held to maturity.       Available for sale investment securities are recorded at fair value. As of December 31, 2005, all of the investment securities held in the Bank's investment portfolio are classified as available for sale. At December 31, 2005, the Bank's available for sale portion of the investment securities portfolio reflected a fair value of $167,905,905 and an amortized cost of $170,156,176. The U.S. government agencies portion of the available for sale portfolio is comprised of restricted securities issued by the Federal Home Loan Bank. Available for sale mortgage-backed securities are comprised of securities issued by the Federal Home Loan Mortgage Corporation, the Federal National Mortgage Association and the Government National Mortgage Association. Over 74% of the obligations of states and political subdivisions portion of the available for sale portfolio is rated by either Moody's Rating Service or Standard and Poor's Rating Service as "AAA."       In addition to available for sale investment securities, the Bank holds equity securities in the form of Federal Home Loan Bank stock.       In the foreseeable future, the Bank intends to purchase investment securities with characteristics similar to those currently held in the portfolio.  Supervision and Regulation  General       As a bank holding company, we are primarily regulated by the Board of Governors of the Federal Reserve System under the Bank Holding Company Act of 1956 (the "BHC Act"). Under the BHC Act, the Federal Reserve Board's prior approval is required if we propose to acquire all or substantially all of the assets of any bank, acquire direct or indirect ownership or control of more than 5% of the voting shares of any bank, or merge or consolidate with any other bank holding company. The BHC Act also                                           8    prohibits us, with certain exceptions, from acquiring direct or indirect ownership or control of more than 5% of any class of voting shares of any non-banking company. Under the BHC Act, we may not engage in any business other than managing and controlling banks or furnishing certain specified services to subsidiaries and may not acquire voting control of non-banking companies unless the Federal Reserve Board determines such businesses and services to be closely related to banking. When reviewing bank acquisition applications for approval, the Federal Reserve Board considers, among other things, each subsidiary bank's record in meeting the credit needs of the communities it serves in accordance with the Community Reinvestment Act of 1977, as amended (the "CRA").       We are required to file with the Federal Reserve Board various reports and such additional information as the Federal Reserve Board may require. The Bank is also subject to regulation by the Federal Deposit Insurance Corporation. In addition, there are numerous other federal and state laws and regulations which control the activities of us and our bank subsidiary, including requirements and limitations relating to capital and reserve requirements, permissible investments and lines of business, transactions with affiliates, loan limits, mergers and acquisitions, issuance of securities, dividend payments and extensions of credit. This regulatory framework is intended primarily for the protection of depositors and the preservation of the federal deposit insurance funds, and not for the protection of security holders. Statutory and regulatory controls increase a bank holding company's cost of doing business and limit the options of its management to employ assets and maximize income.       In addition to its regulatory powers, the Federal Reserve impacts the conditions under which we operate by its influence over the national supply of bank credit. The Federal Reserve Board employs open market operations in U.S. Government securities, changes in the discount rate on bank borrowings, changes in the federal funds rate on overnight inter-bank borrowings, and changes in reserve requirements on bank deposits in implementing its monetary policy objectives. These instruments are used in varying combinations to influence the overall level of the interest rates charged on loans and paid for deposits, the price of the dollar in foreign exchange markets and the level of inflation. The monetary policies of the Federal Reserve have had a significant effect on the operating results of financial institutions in the past, most notably the low interest rate environment in 2003 and the first six months of 2004 and the subsequent rising rate environment during the last six months of 2004 and throughout 2005. In view of changing conditions in the national economy and in the money markets, as well as the effect of credit policies of monetary and fiscal authorities, no prediction can be made as to possible future changes in interest rates, deposit levels or loan demand, or their effect on our financial performance.       Under Federal Reserve policy, we are expected to act as a source of financial strength to our bank subsidiary and to commit resources to support our bank subsidiary in circumstances when it might not otherwise do so. The Federal Reserve Board may prohibit the payment of dividends by bank holding companies if their actions constitute unsafe or unsound practices. The payment of dividends by the Bank also may be affected                                           9    by factors such as the maintenance of adequate capital. At December 31, 2005, the Bank was "well-capitalized" under regulatory capital adequacy standards.  Illinois Regulation       West Pointe is subject to additional regulation under the Illinois Bank Holding Company Act of 1957, as amended. As an Illinois bank holding company, we are subject to examination by the State of Illinois Department of Financial and Professional Regulation (the "IDFPR"). The Bank is organized under the laws of the State of Illinois and as such is also subject to IDFPR supervision. The IDFPR requires all state banks to file a full and accurate statement of their affairs annually, and IDFPR examiners conduct periodic examinations of state banks.       The IDFPR has the right to promulgate rules and regulations necessary for the supervision and regulation of Illinois banks under its jurisdiction and for the protection of the public investing in such institutions. The regulatory authority of the IDFPR includes, but is not limited to, the establishment of reserve requirements; the regulation of the payment of dividends; the regulation of stock repurchases; the regulation of incorporators, shareholders, directors, officers and employees; the establishment of permitted types of withdrawal accounts and types of contracts for savings programs, loans and investments; the regulation of the conduct and management of banks, chartering and branching of institutions, mergers, conversions; and, limitations on investments in and loans to affiliates.  Competition       West Pointe encounters strong competition both in making loans and in attracting deposits. The deregulation of the banking industry and the widespread enactment of state laws permitting multi-bank holding companies, as well as an increasing level of interstate banking have created a highly competitive environment for commercial banking. In various aspects of its business, the Bank competes with other commercial banks, savings and loan associations, credit unions, finance companies, mutual funds, insurance companies, brokerage and investment banking companies, and other financial intermediaries. Most of these competitors, some of which are affiliated with bank holding companies, have substantially greater resources and lending limits, and may offer certain services that the Bank does not currently provide. In addition, many of the Bank's non-bank competitors are not subject to the same extensive federal regulations that govern bank holding companies and federally insured banks. The potential for competition among financial institutions of all types has increased significantly. We believe that we compete with approximately 22 financial institutions in our geographic market.       To compete effectively, the Bank relies upon specialized services, responsive handling of customer needs, and personal contacts by its officers, directors, and employees. Large multi-branch banking competitors tend to compete primarily by rate and the number and location of branches, while smaller, independent institutions like the Bank tend to compete primarily by rate and personal service.                                          10   Employees       As of December 31, 2005, the Bank employed 111 full-time employees and 14 part-time employees. The Company does not have any employees and, as needed, utilizes the services of the employees retained by the Bank. No collective bargaining unit represents the employees. The Company and the Bank consider relations with their employees to be good.  Website Address       We file our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, proxy statements and various other filings with the SEC. These filings are available on the website of the SEC at "www.sec.gov." Our website address is "www.westpointebank.com." We make available free of charge on our website access to our SEC filings as soon as reasonably practicable after we file such reports. The reference to our website does not constitute incorporation by reference of the information contained in the website and should not be considered part of this document.
Competition With Other Financial Institutions and Consolidation Within the Banking Industry Could Adversely Affect Our Profitability.       We face substantial competition for loans and deposits. Competition for loans comes principally from other banks, savings institutions, mortgage banking companies and other lenders. Some of our competitors enjoy advantages over us, including greater financial resources, a wider geographic presence or more accessible branch office locations, the ability to offer a wider array of services, or more favorable pricing alternatives and lower origination and operating costs. This competition could decrease the number and size of loans which we make and the interest rate which we receive on these loans.       We compete for deposits with other depository institutions such as banks, savings institutions, and credit unions, as well as institutions offering uninsured investment alternatives, such as money market funds and mutual funds. These competitors may offer higher interest rates than we do, which could decrease the deposits that we attract or require us to increase our rates to attract new deposits. Increased deposit competition could increase our cost of funds and adversely affect our ability to generate the funds necessary for our lending operations.       In recent years, our and other market areas have experienced consolidation of the banking industry as locally-based institutions have been acquired by large regional and nationally-based financial institutions. We may be subject to being acquired by competing banks and we may lose customers with little or no notice as a result.  A Loss of Our Senior Executives Could Adversely Affect Us.                                          11         We depend heavily on a few key executive officers. Many of our customers bank with us because they have developed confidence in our senior executives over many years. If we lost these individuals, a substantial loss of business could occur.  Unpredictable Economic Conditions May Have an Adverse Effect on the Quality of Our Loan Portfolio and Our Financial Performance.       Economic recession over a prolonged period or other economic problems in our market areas could have a material adverse impact on the quality of our loan portfolio and the demand for our products and services generally. Our success depends significantly on economic conditions. The banking industry in our geographic area is affected by general conditions such as inflation, recession, unemployment and other factors beyond our control.  We Could Suffer Loan Losses From a Decline in Credit Quality.       We could sustain losses if borrowers, guarantors and related parties fail to perform in accordance with the terms of their loans.  Government Regulation Significantly Affects Our Business.       The banking industry is extensively regulated. Banking regulations are intended primarily to protect depositors and the federal deposit insurance funds, not shareholders. West Pointe and the Bank are subject to regulations and supervision by both Illinois state and federal banking regulatory agencies. Regulatory requirements affect our lending practices, capital level, investment practices, dividend policy and growth. Our failure to meet minimum capital requirements could result in actions by our regulators that could adversely affect our ability to pay dividends or otherwise adversely affect our operations.  Absence of a Public Market for Our Common Stock.       There is no established public market for our common stock, and an active trading market is not expected to develop. Holders of our common stock may have difficulty reselling their shares.  Changes in Interest Rates May Decrease our Net Interest Income and Adversely Affect our Profitability.       If we cannot manage interest rate fluctuations, our net interest income could decrease materially. Our operations depend substantially on our net interest income, which is the difference between the interest income earned on our interest-earning assets and the interest expense paid on our interest-bearing liabilities. Like most depository institutions, our earnings and net interest income are affected by changes in market interest rates and other economic factors that are beyond our control. While we take measures to guard against interest rate risk, these measures may not be effective in minimizing our exposure to interest rate risk.                                          12         During 2003 and the early part of 2004, interest rates were at historically low levels. However, since June 2004, the U.S. Federal Reserve has increased its target for the federal funds rate from 1.00% to 4.25%. While these short-term market interest rates (which are used as a guide to price our deposits) have increased, longer-term market interest rates (which are used as a guide to price our longer-term loans) have not. This recent "flattening" of the market yield curve has had a negative impact on our interest rate spread and net interest margin to date, and if short-term interest rates continue to rise, and if rates on the Bank's deposits and borrowings continue to reprice upwards faster than the rates on our long-term loans and investments, we would experience further compression of our interest rate spread and net interest margin, which would have a negative effect on our profitability.
Not applicable.
The Company and the Bank both operate out of the Bank's headquarters office, four branch offices and two office space locations, all of which are owned with the exception of one branch office. The following is a brief description of the properties owned and leased by the Company:          Location             Size        Description     Owned/Leased       --------         -----------   ---------------   ------------     Belleville, Illinois   23,500 s.f.   Headquarters          Owned Belleville, Illinois   15,600 s.f.   Branch Office         Owned Swansea, Illinois       7,200 s.f.   Branch Office         Owned Columbia, Illinois      3,200 s.f.   Branch Office         Leased Dupo, Illinois          2,900 s.f.   Branch Office         Owned Belleville, Illinois   21,700 s.f.   Office Space(1)       Owned Belleville, Illinois    8,000 s.f.   Office Space(2)       Owned   (1)  West Pointe uses a portion of this property for record retention purposes      only; the remaining portion of the property is leased to third parties on      an interim basis.  (2)  West Pointe acquired this property in the fourth quarter of 2004 and      intended to use it for various administrative functions. This property was      sold in March 2006.
The Company is not a party to any material pending legal proceedings before any court, administrative agency or tribunal, nor is the Company aware of any litigation threatened against it in any court, administrative agency or other tribunal. The Company's wholly-owned subsidiary, the Bank, is subject to various claims, lawsuits and administrative proceedings arising in the ordinary course of business from time to time. The Bank management is of the opinion, based upon present information, including evaluations by outside counsel, that the Bank's financial condition, results of operations                                          13    or cash flows will not be materially affected by the ultimate resolution of pending or threatened legal proceedings.
During the fourth quarter of 2005, the Company did not submit any matters to the vote of security holders through the solicitation of proxies or otherwise.  Executive Officers of the Registrant       Information regarding executive officers is contained in Item 10 of Part III of this report and is hereby incorporated by reference.                                       PART II
The section of our 2005 Annual Report entitled "Common Stock and Related Matters" is hereby incorporated by reference.       For information regarding securities issued under our equity compensation plans, see "Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters."       We did not sell any unregistered equity securities during 2005. We did not repurchase any equity securities during 2005.
The section of our 2005 Annual Report entitled "Selected Consolidated Financial Information" is hereby incorporated by reference.
The section of our 2005 Annual Report entitled "Management's Discussion and Analysis of Financial Condition and Results of Operations" is hereby incorporated by reference.
The section of our 2005 Annual Report entitled "Capital Resources and Asset/Liability Management" of the section "Management's Discussion and Analysis of Financial Condition and Results of Operations" is hereby incorporated by reference.                                          14
The sections of our 2005 Annual Report entitled "Quarterly Financial Information (unaudited)," "Report of Independent Registered Public Accounting Firm", "West Pointe Bancorp, Inc. and Subsidiary Consolidated Balance Sheets," "West Pointe Bancorp, Inc. and Subsidiary Consolidated Statements of Income," "West Pointe Bancorp, Inc. and Subsidiary Consolidated Statements of Comprehensive Income," "West Pointe Bancorp, Inc. and Subsidiary Consolidated Statements of Stockholders' Equity," "West Pointe Bancorp, Inc. and Subsidiary Consolidated Statements of Cash Flows," and "West Pointe Bancorp, Inc. and Subsidiary Notes to Consolidated Financial Statements" are hereby incorporated by reference.
Not applicable.
Evaluation of Disclosure Controls and Procedures       As of the end of the period covered by this report, the Company's principal executive officer and principal financial officer carried out an evaluation, with the participation of the Company's other management, of the effectiveness of the Company's disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended (the "Exchange Act")). Based upon this evaluation, the principal executive officer and principal financial officer have concluded that the Company's disclosure controls and procedures are effective in ensuring that information required to be disclosed by the Company in reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms. It should be noted that the design of the Company's internal controls and procedures is based in part upon certain reasonable assumptions about the likelihood of future events, and there can be no reasonable assurance that any design of disclosure controls and procedures will succeed in achieving its stated goals under all potential future conditions, regardless of how remote. However, the Company's principal executive officer and principal financial officer have concluded that the Company's disclosure controls and procedures are, in fact, effective at a reasonable assurance level.                                          15    Changes in Internal Controls       In addition, there have been no changes in the Company's internal control over financial reporting identified in connection with the evaluation described in the above paragraph that occurred during the Company's last fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting.       The Company will be required by the Sarbanes-Oxley Act of 2002 to include an assessment of its internal control over financial reporting and attestation from an independent registered public accounting firm in its Annual Report on Form 10-K beginning with its filing for the first fiscal year ending after July 15, 2007.
Not applicable.                                      PART III
Information regarding directors and executive officers appearing under "Information About West Pointe's Board of Directors" on pages 3-5, the section entitled "Compensation of Directors" on page 7, and "Certain Other Information Regarding Management--Section 16(a) Beneficial Ownership Reporting Compliance" on page 25 of the 2006 Proxy Statement is hereby incorporated by reference. The following information with respect to the executive officers of the Company on February 28, 2006 is included pursuant to Instruction 3 of Item 401(b) of Regulation S-K.       Bruce A. Bone, 51, has served as Chief Financial Officer of the Company since 1999 and Executive Vice President and Chief Financial Officer since January 2001.       Anthony T. Holdener, Jr., 56, has served as Senior Vice President of the Bank since April 2004 and Senior Vice President and Senior Lending Officer since September 2004. Prior to joining the Company, Mr. Holdener was employed by Union Planters Bank and its predecessors, from 1968 until March 2004.       Albert A. Miller, 66, has served as the Senior Vice President of Operations of the Bank since 1998.       Bonnie M. Hettenhausen, 61, has served as Senior Vice President of the Bank since 2004. Prior to 2004, Ms. Hettenhausen served as a First Vice President and Vice President with the Bank since 1992.       The section entitled "Audit Committee" of the section "Board Meetings and Committees" included in our 2006 Proxy Statement is hereby incorporated by reference.                                          16         In the past fiscal year, there have not been any material changes, including the adoption of any written statement, to the procedures by which shareholders may recommend nominees to the registrant's board of directors. The section of the 2006 Proxy Statement entitled "Board Meetings and Committees" (excluding the sections within "Board Meetings and Committees" of the 2006 Proxy Statement entitled "Executive Committee" and "Audit Committee") is hereby incorporated by reference.       We have a Code of Ethics that applies to our Chief Executive and Chief Financial Officers. The Code of Ethics is available at our website, www.westpointebank.com.
The sections of the 2006 Proxy Statement entitled "Compensation of Directors", "Executive Compensation" (excluding the section within "Executive Compensation" of the 2006 Proxy Statement entitled "Report of the Compensation Committee on Executive Compensation"), and "Compensation Committee Interlocks and Insider Participation" within the section entitled "Certain Other Information Regarding Management" are hereby incorporated by reference.
The section of the 2006 Proxy Statement entitled "Stock Ownership of Management and Certain Beneficial Owners" is hereby incorporated by reference.                        Equity Compensation Plan Information       The following table sets forth aggregate information regarding the West Pointe Bancorp, Inc. 1998 Stock Option Plan, the Company's only equity compensation plan, as of December 31, 2005:                                                                 (B)             (C) NUMBER OF SECURITIES                                                        WEIGHTED-AVERAGE   REMAINING AVAILABLE FOR FUTURE                           (A) NUMBER OF SECURITIES    EXERCISE PRICE OF        ISSUANCE UNDER EQUITY                          TO BE ISSUED UPON EXERCISE      OUTSTANDING       COMPENSATION PLANS (EXCLUDING                            OF OUTSTANDING OPTIONS,    OPTIONS, WARRANTS       SECURITIES REFLECTED IN PLAN CATEGORY                WARRANTS AND RIGHTS          AND RIGHTS                COLUMN (A)) - -------------            --------------------------   -----------------   ------------------------------     Equity compensation                214,000                  $31.35                    36,000    plans approved by    security holders Equity compensation    plans not approved    by security holders                  --                      --                        --                                    =======                  ======                    ====== TOTAL                              214,000                  $31.35                    36,000                                           17         Information regarding the West Pointe Bancorp, Inc. 1998 Stock Option Plan set forth in Notes 1-3 under "Aggregate Option Exercises in Last Fiscal Year and Fiscal Year-End Option Values" and Notes 1-3 under "Option Grants in Last Fiscal Year" of the section "Executive Compensation" included in our 2006 Proxy Statement and in the section of 2005 Annual Report entitled "West Pointe Bancorp, Inc. and Subsidiary Notes to Consolidated Financial Statements--Note 14. Stock Option Plan" is hereby incorporated by reference.
The section of the 2006 Proxy Statement entitled "Transactions and Relationships; Indebtedness of Management" of the section "Certain Other Information Regarding Management" is hereby incorporated by reference.
The section of the 2006 Proxy Statement entitled "Fees Paid to Crowe Chizek" is hereby incorporated by reference.                                       PART IV
(a)(1) Financial Statements       The following information appearing in the Company's 2005 Annual Report is hereby incorporated by reference as Exhibit 13.1 to this Annual Report on Form 10-K.                                                                  Annual Report Page                                                               ------------------   Report of Independent Registered Public Accounting Firm                33  West Pointe Bancorp, Inc. and Subsidiary Consolidated Balance Sheets as of December 31, 2005 and 2004           34  West Pointe Bancorp, Inc. and Subsidiary Consolidated Statements of Income for the years ended December 31, 2005, 2004 and 2003                                       35  West Pointe Bancorp, Inc. and Subsidiary Consolidated Statements of Comprehensive Income for the years ended December 31, 2005, 2004 and 2003                           36  West Pointe Bancorp, Inc. and Subsidiary Consolidated Statements of Stockholders' Equity for the years ended December 31, 2005, 2004 and 2003                           37                                           18      West Pointe Bancorp, Inc. and Subsidiary Consolidated Statements of Cash Flows for the years ended December 31, 2005, 2004 and 2003                           38  Notes to Consolidated Financial Statements                           39-59   (a)(2) No additional Financial Statement Schedules are filed as part of this report pursuant to Item 8 and Item 15(d).  (a)(3) See Exhibit Index beginning at page 22 of this report.  (b),(c) The registrant hereby files herewith or incorporates herein by reference (except to the extent otherwise indicated in this report) the exhibits identified on the Exhibit Index beginning on page 22 of this report.                                          19                                      SIGNATURES       Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.                                          West Pointe Bancorp, Inc.   Date: March 29, 2006                    By /s/ Terry W. Schaefer                                            -------------------------------------                                            Terry W. Schaefer                                            President, Chief Executive Officer,                                            and Director       Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.   Date: March 29, 2006                    By /s/ Harry E. Cruncleton                                            -------------------------------------                                            Harry E. Cruncleton                                            Chairman of the Board and Director   Date: March 29, 2006                    By /s/ Terry W. Schaefer                                            -------------------------------------                                            Terry W. Schaefer                                            President, Chief Executive Officer,                                            and Director   Date: March 29, 2006                    By /s/ Bruce A. Bone                                            -----------------------------------                                            Bruce A. Bone                                            Executive Vice President and Chief                                            Financial Officer (Principal                                            Accounting Officer and Principal                                            Financial Officer)   Date: March 29, 2006                    By /s/ William C. Allison                                            -------------------------------------                                            William C. Allison                                            Director   Date: March 29, 2006                    By /s/ David G. Embry                                            -------------------------------------                                            David G. Embry                                            Director   Date: March 29, 2006                    By /s/ Jack B. Haydon                                            -------------------------------------                                            Jack B. Haydon                                            Director                                          20     Date: March 29, 2006                    By /s/ Charles G. Kurrus, III                                            -------------------------------------                                            Charles G. Kurrus, III                                            Director   Date: March 29, 2006                    By /s/ Edward J. Szewczyk                                            -------------------------------------                                            Edward J. Szewczyk                                            Director   Date: March 29, 2006                    By /s/ Wayne W. Weeke                                            -------------------------------------                                            Wayne W. Weeke                                            Director                                          21                                      EXHIBIT INDEX    Exhibit  Number   Document - -------   --------   3.1       Articles of Incorporation(1)  3.2       Amendment to Articles of Incorporation(2)  3.2       Bylaws of West Pointe Bancorp, Inc.(1)  4.1       Junior Subordinated Indenture dated December 15, 2004(3)  4.2       Guarantee Agreement with Wilmington Trust Company dated December 15,           2004(3)  4.3       Amended and Restated Declaration of Trust dated December 15, 2004(3)  10.1      West Pointe Bancorp, Inc. 1998 Stock Option Plan(1)  10.2      Split Dollar Agreement with Harry E. Cruncleton(1)*  10.3      Employment Agreement with Harry E. Cruncleton(1)*  10.4      Director's Deferred Compensation Plan(1)  10.5      Salary Continuation Agreement with Terry W. Schaefer(4)*  10.6      Split Dollar Insurance Agreement with Terry W. Schaefer(4)*  10.7      Salary Continuation Agreement with Glennon A. Albers(5)*  10.8      Salary Continuation Agreement with Bruce A. Bone(5)*  10.9      Salary Continuation Agreement with Robert G. Cady(5)*  10.10     Salary Continuation Agreement with Bonnie M. Hettenhausen(5)*  10.11     Salary Continuation Agreement with Dale A. Hoepfinger(5)*  10.12     Salary Continuation Agreement with William M. Metzger(5)*  10.13     Salary Continuation Agreement with Albert A. Miller(5)*  10.14     Amendment to Salary Continuation Agreement with Terry W. Schaefer(6)*  10.15     Amendment to Split Dollar Insurance Agreement with Terry W.           Schaefer(6)*  10.16     Amendment to Salary Continuation Agreement with Glennon A. Albers(6)*  10.17     Amendment to Salary Continuation Agreement with Bruce A. Bone(6)*  10.18     Amendment to Salary Continuation Agreement with Robert G. Cady(6)*  10.19     Amendment to Salary Continuation Agreement with Bonnie M.           Hettenhausen(6)*  10.20     Amendment to Salary Continuation Agreement with Dale A. Hoepfinger(6)*                                           22      10.21     Amendment to Salary Continuation Agreement with William M. Metzger(6)*  10.22     Amendment to Salary Continuation Agreement with Albert A. Miller(6)*  10.23     Second Amendment to Salary Continuation Agreement with Bonnie M.           Hettenhausen, incorporated by reference to Exhibit 10.1 to the           Company's Current Report on Form 8-K filed October 6, 2004*  10.24     Salary Continuation Agreement with Anthony Holdener, Jr., incorporated           by reference to Exhibit 10.2 to the Company's Current Report on Form           8-K filed October 6, 2004*  10.25     Second Amendment to Salary Continuation Agreement with Bruce A. Bone,           incorporated by reference to Exhibit 10.1 to the Company's Current           Report on Form 8-K filed December 20, 2004*  10.26     Split Dollar Agreement with Glennon A. Albers(7)*  10.27     Split Dollar Agreement with Bruce A. Bone(7)*  10.28     Split Dollar Agreement with Robert G. Cady(7)*  10.29     Split Dollar Agreement with Bonnie M. Hettenhausen(7)*  10.30     Split Dollar Agreement with Dale A. Hoepfinger(7)*  10.31     Split Dollar Agreement with Albert A. Miller(7)*  10.32     Split Dollar Agreement with Melvin M. Embrich(7)*  10.33     First Amendment to Director's Deferred Compensation Plan, incorporated           by reference to Exhibit 10.1 to the Company's Current Report on Form           8-K filed January 1, 2006*  10.34     Salary Continuation Agreement with Ramona Lupe Gebauer, incorporated           by reference to Exhibit 10.2 to the Company's Current Report on Form           8-K filed January 1, 2006*  10.35     Supplemental Life Insurance Agreement with Ramona Lupe Gebauer,           incorporated by reference to Exhibit 10.3 to the Company's Current           Report on Form 8-K filed January 1, 2006*  10.36     Salary Continuation Agreement with Kory A. Kunze, incorporated by           reference to Exhibit 10.4 to the Company's Current Report on Form 8-K           filed January 1, 2006*  10.37     Supplemental Life Insurance Agreement with Kory A. Kunze, incorporated           by reference to Exhibit 10.5 to the Company's Current Report on Form           8-K filed January 1, 2006*  10.38     Supplemental Life Insurance Agreement with Sharon L. Cleveland,           incorporated by reference to Exhibit 10.6 to the Company's Current           Report on Form 8-K filed January 1, 2006*  10.39     Amended and Restated Employment, Consulting and Non-Compete                                           23                Agreement with Harry E. Cruncleton, incorporated by reference to           Exhibit 10.1 to the Company's Current Report on Form 8-K filed March           24, 2006*  10.40     Amendment and Restatement of Split Dollar Agreement with Harry E.           Cruncleton, incorporated by reference to Exhibit 10.2 to the Company's           Current Report on Form 8-K filed March 24, 2006*  13.1      Annual Report to Shareholders for Fiscal Year ended December 31, 2004  21.1      Subsidiary of the Registrant(1)  23.1      Consent of Crowe Chizek and Company LLC  31.1      Rule 13a-14(a) Certification of Chief Executive Officer  31.2      Rule 13a-14(a) Certification of Chief Financial Officer  32.1      Certification of Chief Executive Officer pursuant to 18 U.S.C. Section           1350  32.2      Certification of Chief Financial Officer pursuant to 18 U.S.C. Section           1350   (1)  Incorporated by reference to the Company's Registration Statement on Form      10 (file no. 000-30505) at the corresponding exhibit; incorporated by      reference in accordance with Item 601 of Regulation S-K.  (2)  Incorporated by reference to the Company's Registration Statement on Form      S-3 (file no. 333-68800) at Exhibit 4.2; incorporated by reference in      accordance with Item 601 of Regulation S-K.  (3)  Incorporated by reference to the Company's Current Report on Form 8-K dated      December 20, 2004 at the corresponding exhibit; incorporated by reference      in accordance with Item 601 of Regulation S-K.  (4)  Incorporated by reference to the Company's Annual Report on Form 10-K for      the fiscal year ending December 31, 2000 at the corresponding exhibit;      incorporated by reference in accordance with Item 601 of Regulation S-K.  (5)  Incorporated by reference to the Company's Annual Report on Form 10-K for      the fiscal year ending December 31, 2002 at the corresponding exhibit;      incorporated by reference in accordance with Item 601of Regulation S-K.  (6)  Incorporated by reference to the Company's Annual Report on Form 10-K for      the fiscal year ending December 31, 2003 at the corresponding exhibit;      incorporated by reference in accordance with Item 601of Regulation S-K.  (7)  Incorporated by reference to the Company's Annual Report on Form 10-K for      the fiscal year ending December 31, 2004 at the corresponding exhibit;      incorporated by reference in accordance with Item 601of Regulation S-K.  *    Management contracts or compensation plans or arrangements.                                          24    EX-13.1 2 c03802exv13w1.txt ANNUAL REPORT TO SHAREHOLDERS                                                                                  .                                                                                .                                                                                .                          (WEST POINTE BANCORP, INC. LOGO)  TABLE OF CONTENTS - --------------------------------------------------------------------------------                                                                                        Page                                                                                     ----   Common Stock and Related Matters                                                      1 Message To Our Shareholders                                                           3 Selected Consolidated Financial Information                                           4 Management's Discussion and Analysis of Financial Condition   and Results of Operations                                                           5 Report of Independent Registered Public Accounting Firm                              33 Consolidated Financial Statements                                                    34 Notes To Consolidated Financial Statements                                           39 Stockholder Information                                                           Inside                                                                               Back Cover   COMMON STOCK AND RELATED MATTERS - --------------------------------------------------------------------------------      There is no established public trading market for the common stock of West Pointe Bancorp, Inc. ("West Pointe"). Accordingly, there is no comprehensive record of trades or the prices of any such trades. The following table reflects sale prices for West Pointe's common stock to the extent such information is available to management of West Pointe, and the dividends declared with respect thereto during the past three years.                                                                                        Cash                                                                High      Low      Dividends - -------------------------------------------------------------------------------------------     2005 First Quarter                                                 $45.00    $43.75      $.18 Second Quarter                                                 46.00     45.00       .18 Third Quarter                                                  46.75     46.00       .19 Fourth Quarter                                                 48.00     46.75       .19 2004 First Quarter                                                 $41.00    $39.75      $.14 Second Quarter                                                 41.75     41.00       .15 Third Quarter                                                  42.75     41.75       .16 Fourth Quarter                                                 43.75     42.75       .17 2003 First Quarter                                                 $36.75    $35.75      $.12 Second Quarter                                                 37.75     36.75       .14 Third Quarter                                                  38.75     37.75       .14 Fourth Quarter                                                 39.75     38.75       .14        The shareholders of West Pointe's common stock are entitled to dividends when, as and if declared by the Board of Directors, subject to the restrictions imposed by law. The Federal Reserve Board ("FRB") generally prohibits a bank holding company from declaring or paying a cash dividend that would impose undue pressure on the capital of subsidiary banks or would be funded only through borrowing or other arrangements that might adversely affect a bank holding company's financial position. The FRB's policy is that a bank holding company should not initiate or continue cash dividends on its common stock unless its net income is sufficient to fully fund each dividend and its prospective rate of earnings retention appears consistent with its capital needs, asset quality and overall financial condition. A bank holding company is expected to act as a source of financial strength for each of its subsidiary banks and to commit resources to support its banks in circumstances when it might not do so in the absence of such policy. There are no contractual restrictions that currently limit West Pointe's ability to pay dividends or that West Pointe reasonably believes are likely to limit materially the future payment of dividends on West Pointe's common stock.       As of March 1, 2006, West Pointe had 629 registered shareholders of record for its common stock.                                          1                                  EXECUTIVE OFFICERS                                      [PHOTO]  SEATED, LEFT TO RIGHT:      Harry E. Cruncleton, Chairman of the Board      Terry W. Schaefer, President and Chief Executive Officer  STANDING:       Bruce A. Bone, Executive Vice President and Chief Financial Officer                                          2   MESSAGE TO OUR SHAREHOLDERS - --------------------------------------------------------------------------------  TO OUR FELLOW SHAREHOLDERS,       The accompanying Annual Report details the financial accomplishments for 2005, our fifteenth year of operation.       During 2005 we focused our efforts in several areas to increase the value of your investment in West Pointe Bancorp, Inc. Following your review of the Annual Report, we hope you will agree that 2005 was another successful year.       We are pleased to report that in addition to a 19.4% increase in dividends paid during 2005 compared to 2004, an appreciation in our per share value of 9.7% was also realized.       During 2005 we experienced improved economic conditions which contributed to a 7.1% increase in deposits over those of 2004. Among the numerous improved economic conditions that occurred during 2005, the most significant was the U.S. Department of Defense Base Realignment and Closure Commission decision to maintain and provide for future growth for the operations at Scott Air Force Base. The economic impact of the Scott Air Force Base operations could exceed $2 billion annually to our local economy.       During 2005 we were actively engaged in 15 local residential developments as primary financial provider for subdivision developers. To this extent, we provided twice the amount of the funding as our two closest competitors combined.       Throughout 2005 we experienced enhanced loan productivity resulting in a 6.2% increase in outstanding loans while improving our asset quality. Non-performing assets decreased 54.9% in 2005 compared to 2004, the lowest level in several years. We are pleased with this latter accomplishment as we recognize the negative impact on earnings that result from loan losses as well as other non-performing assets.       In 2005 we continued to experience increased competition from other financial providers who have entered our market area. We recognize that a certain amount of deposit erosion will result from added financial providers in our market. We believe the strongest counter measure to added competition is to continue to provide consistent advice and excellent personalized services to our customer base. Our commitment to friendly and comprehensive customer care in 2005 once again earned West Pointe Bank And Trust Company, our only subsidiary, the Belleville News Democrat Reader's Choice Award as the Best Financial Institution. We are proud to have once again received this community recognition. Since the bank's formation in 1990, we have worked diligently to build our institution on trust and integrity.       On behalf of our Board of Directors, our management team, and our entire staff, we thank you for your continued support throughout 2005. We encourage your attendance at our Annual Meeting scheduled for April 19, 2006, 9:30 AM, St. Clair Country Club.       Sincerely,           /S/ HARRY E.         /S/ TERRY W. SCHAEFER       CRUNCLETON              President and    Chairman of the           Chief Executive         Board                    Officer                                           3   SELECTED CONSOLIDATED FINANCIAL INFORMATION - --------------------------------------------------------------------------------       The following Selected Consolidated Financial Information for West Pointe Bancorp, Inc. should be read in conjunction with the Consolidated Financial Statements and the accompanying Notes to Consolidated Financial Statements and with Management's Discussion and Analysis of Financial Condition and Results of Operations, provided herein. The Selected Consolidated Financial Information as of and for each of the five years ended December 31, 2005 is primarily derived from the audited financial statements.                                                              AS OF AND FOR THE YEAR ENDED DECEMBER 31,                                            ------------------------------------------------------------------------                                                2005           2004           2003           2002           2001 - -------------------------------------------------------------------------------------------------------------------       SUMMARY OF OPERATIONS Interest and fee income                    $ 22,519,228   $ 20,083,246   $ 20,580,488   $ 22,055,046   $ 24,030,281 Interest expense                              9,115,282      6,538,078      7,164,220      9,168,905     13,643,178 Net interest income                          13,403,946     13,545,168     13,416,268     12,886,141     10,387,103 Provision for loan losses                         2,000        658,000      1,213,000        600,000        630,000 Net interest income after provision for   loan losses                                13,401,946     12,887,168     12,203,268     12,286,141      9,757,103 Noninterest income                            4,387,151      4,392,973      4,945,426      4,166,842      3,681,537 Noninterest expense                          13,114,649     12,571,337     12,589,157     11,239,150      9,822,244 Net income                                    3,548,248      3,569,404      3,475,937      3,773,433      2,709,296 PER SHARE DATA Net income:   Basic                                    $       3.50   $       3.58   $       3.54   $       3.87   $       2.76   Diluted                                          3.32           3.43           3.42           3.79           2.73 Dividends declared                                  .74            .62            .54            .44            .36 Book value(1)                              $      34.78   $      33.31   $      31.01   $      29.18   $      23.78 Weighted average shares outstanding:   Basic                                       1,013,315        997,506        983,281        974,424        980,513   Diluted                                     1,068,145      1,041,743      1,017,693        994,402        992,183 SELECTED ACTUAL YEAR-END BALANCES Total assets                               $477,391,032   $444,021,124   $425,150,441   $411,818,589   $366,713,993 Loans(2)                                    256,032,529    240,841,300    217,093,718    221,581,298    200,403,739 Allowance for loan losses                     2,002,059      2,692,903      2,697,139      2,409,446      2,224,352 Securities(3)                               181,868,873    167,689,311    179,220,703    146,751,455    128,728,724 Deposits                                    401,996,154    375,244,420    360,920,884    350,989,837    322,100,723 Borrowings                                   35,502,276     31,346,973     29,822,967     28,229,378     18,724,629 Stockholders' equity                         35,616,201     33,517,619     30,731,413     28,539,703     23,387,722 SELECTED AVERAGE BALANCES Assets                                     $452,316,301   $435,058,917   $419,792,504   $386,756,592   $355,436,082 Deposits                                    378,945,835    370,734,447    358,825,143    332,575,791    312,201,804 Stockholders' equity                         34,716,270     32,073,636     29,447,616     25,944,619     22,460,275 FINANCIAL RATIOS Return on average assets                            .78%           .82%           .83%           .98%           .76% Return on average equity                          10.22          11.13          11.80          14.54          12.06 Average equity to average assets                   7.68           7.37           7.01           6.71           6.32 Dividend payout ratio(4)                          21.14          17.32          15.25          11.37          13.04 ===================================================================================================================   (1) Book value is determined by dividing total stockholders' equity at     period-end by the number of shares of common stock outstanding at     period-end.  (2) Includes loans held for sale.  (3) Includes equity securities.  (4) Dividend payout ratio is determined by dividing dividends declared per     common share by basic net income per common share.                                          4   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - --------------------------------------------------------------------------------  INTRODUCTION       The primary business of West Pointe Bancorp, Inc. and its sole subsidiary (together, "West Pointe" or the "Company") consists of providing a diversified range of financial services in the communities in which it operates including consumer and commercial lending, retail banking and other ancillary financial services traditionally offered by full-service financial institutions. Additional services offered include mortgage origination and servicing, investment management and trust services, the issuance of debit cards, full-service brokerage and the sale of annuities. West Pointe operates from five banking locations and 27 automated teller machines located in St. Clair, Madison and Monroe counties in Illinois.       The following provides a narrative discussion and analysis of the major trends affecting West Pointe's results of operations, financial condition, asset quality, and capital resources and asset/liability management during the three year period ended December 31, 2005. Throughout this discussion, certain prior year amounts have been reclassified to conform to the current year presentation. This discussion should be read in conjunction with the Consolidated Financial Statements of West Pointe and the accompanying Notes to Consolidated Financial Statements, which are included elsewhere in this report.  FORWARD-LOOKING STATEMENTS       Management's discussion and analysis of financial condition and results of operations contains certain forward-looking statements with respect to the financial condition, results of operations and business of West Pointe. These forward-looking statements are not based on historical information, but rather are based on assumptions and describe future plans, strategies, projections and expectations of West Pointe and are generally identified by use of the terms "believe", "expect", "intend", "anticipate", "estimate", "project", or similar words. West Pointe's ability to predict results or the actual effect of future plans or strategies is uncertain. Factors which could have a material adverse effect on West Pointe's operations include, but are not limited to, changes in interest rates, general economic conditions, legislative/regulatory changes, monetary and fiscal policies of the U.S. Government, including policies of the U.S. Treasury and the Board of Governors of the Federal Reserve System, the quality or composition of the loan or investment portfolios, demand for loan products, deposit flows, competition, demand for financial services in West Pointe's market areas and accounting principles and guidelines. Additionally, the policies of the Federal Deposit Insurance Corporation (FDIC), the State of Illinois Department of Financial and Professional Regulation, the Financial Accounting Standards Board (FASB), the Public Company Accounting Oversight Board (PCAOB) and the Securities and Exchange Commission (SEC) could cause actual results to differ from those currently anticipated. All of these uncertainties, as well as others, are present in a banking operation and stockholders are cautioned that management's view of the future on which it prices its products, evaluates collateral, sets loan reserves and estimates costs of operation and regulation may prove to be other than as anticipated. West Pointe assumes no obligation to update any forward-looking statements that are made from time to time.  FINANCIAL OVERVIEW       Net income for the year ended December 31, 2005, was $3,548,248 compared with $3,569,404 for the year ended December 31, 2004, and $3,475,937 for the year ended December 31, 2003.                                          5   Return on average assets was .78% for the year ended December 31, 2005, .82% for the year ended December 31, 2004 and .83% for the year ended December 31, 2003. Return on average equity was 10.22% for the year ended December 31, 2005, 11.13% for the year ended December 31, 2004 and 11.80% for the year ended December 31, 2003.       Basic net income per share for the year ended December 31, 2005 decreased slightly to $3.50 per share from $3.58 for the year ended December 31, 2004. Basic net income per share totaled $3.54 for the year ended December 31, 2003. Diluted net income per share for the year ended December 31, 2005 decreased to $3.32 per share from $3.43 for the year ended December 31, 2004. Diluted net income per share totaled $3.42 for the year ended December 31, 2003.       The modest decrease in net income for the year ended December 31, 2005 compared to the year ended December 31, 2004 was primarily the result of a modest decrease in net interest income and an increase in noninterest expense, partially offset by a decrease in the provision for loan losses. During 2005, management of West Pointe continued its resolve to improve the quality of the loan portfolio, the outcome of which resulted in a substantial reduction in the provision for loan losses. Nonperforming loans decreased significantly from December 31, 2004 to December 31, 2005. This decrease was primarily attributable to the liquidation of loans to two borrowers. The modest increase in net income for the year ended December 31, 2004 compared to the year ended December 31, 2003 was primarily the result of an increase in net interest income, a decrease in the provision for loan losses offset by a decrease in noninterest income.       At December 31, 2005, West Pointe reported total assets of $477,391,032, an increase of 7.5% from $444,021,124 at December 31, 2004. This increase resulted primarily from growth in loans and an increase in the volume of securities. The growth in these areas was funded primarily by increases in deposits and repurchase agreements.  RESULTS OF OPERATIONS    NET INTEREST INCOME       Net interest income is comprised of interest income and loan-related fees less interest expense. Net interest income is affected by a number of factors including: the level, pricing, mix and maturity of earning assets and interest bearing liabilities; interest rate fluctuations; and asset quality. Net interest income as presented below is on a "tax-equivalent" basis, which adjusts tax- exempt income to an amount that would yield the same after-tax income had the income been subject to taxation at the federal statutory rate, currently 34% for West Pointe. Reference is made to the following two tables, which present West Pointe's average balance sheet and volume and rate change analysis for each of the three years ended December 31, 2005, 2004 and 2003.       Net interest income for the year ended December 31, 2005 was $14,169,124 compared to $14,282,273 for the year ended December 31, 2004. Net interest income for the year ended December 31, 2003, was $14,144,228. During 2003 and the first half of 2004, the Federal Reserve Bank continued its trend, initiated in 2001, of reducing the federal funds rate in an effort to stimulate the economy. The year 2003 ended with a federal fund rate of 1.00%. These declines in interest rates brought about increased prepayments on both loans and securities. In addition, the interest rates on variable rate loans were reset to the lower market interest rates. These factors combined to cause a reduction in interest income, which was more than offset by the decline in interest expense. This expense reduction primarily resulted from repayment of higher-cost deposits. During the last half of 2004, the Federal Reserve Bank began to increase the federal funds rate. By year-end 2004, the federal funds rate reached a level of 2.25%, an increase of 125 basis points over the year-end 2003 level. During 2005, the Federal Reserve Bank continued its trend, initiated in 2004, of increasing the federal funds rate. By year-end 2005, the federal funds rate reached a level of 4.25%, an increase of 200 basis points over the year-end 2004 level. The increases in interest rates have decreased prepayments on loans and securities and have contributed to reduced levels of loan refinancing activities. Further increases in the federal funds                                          6   rate during 2006 may be dependent upon several factors including, but not limited to, the level of inflation and its impact on the U.S. economy. During the year ended December 31, 2005 compared to the year ended December 31, 2004, net interest income decreased $871,457 as a result of the interest rate environment. This decrease occurred as the interest rates earned on interest earning assets increased at a slower pace than the interest rates paid on interest bearing liabilities. During the year ended December 31, 2004 compared to the year ended December 31, 2003, net interest income decreased $636,111 as a result of the interest rate environment. This decrease occurred as the interest rates earned on interest earning assets declined at a faster pace than the interest rates paid on interest bearing liabilities.       During the year ended December 31, 2005, the average balance of interest earning assets increased $16,163,457 compared to the year ended December 31, 2004, which resulted in an increase in tax-equivalent interest income of $1,293,499. The increase in the average balance of interest earning assets was principally attributable to increases in the volume of loans, non-taxable securities and interest earning due from bank balances. These increases were partially offset by a decrease in taxable securities. Changes in yields on interest earning assets increased tax-equivalent interest income by $1,170,556. The yield on the loan portfolio increased 37 basis points for the year ended December 31, 2005, compared to the year ended December 31, 2004. This increase occurred as a result of changes in the prime lending rate, which increased from 5.25% at December 31, 2004 to 7.25% at December 31, 2005. While certain loans in the commercial and real estate loan portfolios reprice as the prime rate changes, the timing of this repricing does not always occur simultaneously with the prime rate change. Loans that reprice with changes in the prime rate generally reprice to the same extent. The yield on taxable securities increased 16 basis points during the year ended December 31, 2005, compared to the year ended December 31, 2004. During 2005, West Pointe continued to receive prepayments on those securities. The proceeds from certain of those prepayments, along with proceeds from certain taxable securities sold or matured were reinvested at slightly higher interest rates. As the overall interest rate environment began to increase during the latter part of 2004 and continued to increase throughout 2005, West Pointe management continued to analyze potential interest rate risk in the investment portfolio that could occur in a rising rate environment. This potential interest rate risk could result in a net unrealized loss in the portfolio that exceeds West Pointe's acceptable level. In an effort to limit this potential interest rate risk exposure, management continued, in 2005, to purchase securities with shorter average lives. The yield on tax-exempt securities decreased 22 basis points during the year ended December 31, 2005 compared to the year ended December 31, 2004. This decrease was primarily the result of sales of tax-exempt securities with higher rates.       During the year ended December 31, 2004, the average balance of interest earning assets increased $14,866,435 compared to the year ended December 31, 2003, which resulted in an increase in tax-equivalent interest income of $961,049. The increase in the average balance of interest earning assets was principally attributable to increases in the volume of loans and securities. Changes in yields on interest earning assets decreased tax-equivalent interest income by $1,449,146. The yield on the loan portfolio decreased 59 basis points for the year ended December 31, 2004 compared to the year ended December 31, 2003. This decrease occurred despite the fact that the prime lending rate increased from 4.00% at December 31, 2003 to 5.25% at December 31, 2004. The yield on taxable securities remained stable during the year ended December 31, 2004 compared to the year ended December 31, 2003. However, West Pointe continued to receive prepayments on those securities. The proceeds from those prepayments, along with proceeds from taxable securities called for redemption, sold or matured were reinvested at comparable interest rates. The yield on tax-exempt securities decreased 36 basis points during the year ended December 31, 2004 compared to the year ended December 31, 2003. This decrease was primarily the result of purchases of tax-exempt securities at lower rates.       The average balance of interest bearing liabilities increased $10,892,087 for the year ended December 31, 2005 compared to the year ended December 31, 2004. This increase included an                                          7   increase of $4,591,357 in average interest bearing deposits. The majority of this increase was attributable to an increase in the average balance of savings and money market deposits. Average savings and money market deposits increased $17,898,015 for the year ended December 31, 2005 compared to the year ended December 31, 2004. This increase was partially offset by a decrease in the average balance of interest bearing demand deposits of $14,274,834 at December 31, 2005 compared to December 31, 2004. The increase in the average balance of savings and money market deposits and the decrease in the average balance of interest bearing demand deposits was due, in part, to the daily transfer of certain account balances from interest bearing demand deposits to savings deposits, which is discussed further under "Deposits." The increase in the average balance of interest bearing liabilities from the year ended December 31, 2004 to the year ended December 31, 2005 also includes an increase of $6,300,730 in average borrowings. Average borrowings for the year ended December 31, 2005 included other short-term borrowings, Federal Home Loan Bank advances and subordinated debentures. The increase in average borrowings is discussed under "Borrowings." The increase in the average balance of interest bearing liabilities for the year ended December 31, 2005, compared to the year ended December 31, 2004, resulted in an increase in interest expense of $535,191. The average rate paid on total interest bearing liabilities increased 64 basis points for the year ended December 31, 2005, compared to the year ended December 31, 2004. This increase resulted in an increase in interest expense of $2,042,013.       The average balance of interest bearing liabilities increased $6,921,540 for the year ended December 31, 2004 compared to the year ended December 31, 2003. This increase included an increase of $6,415,434 in average interest bearing deposits. The majority of this increase was attributable to increases in the average balance of interest bearing demand deposits and time deposits. Average interest bearing demand deposits and time deposits increased $2,105,370 and $5,276,636, respectively, for the year ended December 31, 2004 compared to the year ended December 31, 2003. Management believes that continued skepticism surrounding the performance of the stock market, evident during 2004 as well as the past few years, resulted in customers desiring to retain funds in more liquid accounts. Additional deposit information is discussed further under "Deposits." The increase in the average balance of interest bearing liabilities from the year ended December 31, 2003 to the year ended December 31, 2004 also includes an increase of $506,106 in average borrowings. Average borrowings for the year ended December 31, 2004 included other short-term borrowings, Federal Home Loan Bank advances and subordinated debentures. The increase in average borrowings is discussed under "Borrowings." The increase in the average balance of interest bearing liabilities for the year ended December 31, 2004, compared to the year ended December 31, 2003, resulted in an increase in interest expense of $186,893. The average rate paid on total interest bearing liabilities decreased 21 basis points for the year ended December 31, 2004, compared to the year ended December 31, 2003. This decrease resulted in a decrease in interest expense of $813,035.       During 2005, West Pointe's net interest margin was 3.38% compared to 3.55% and 3.65% in 2004 and 2003, respectively. The interest rate spread was 3.08% for 2005, which compares to 3.33% and 3.45% for 2004 and 2003, respectively. Interest rate trends had a significant impact on West Pointe's yields and costs during the period from 2003 through 2005. The continuing compression in the net interest margin during 2005, compared to 2004 and 2003, occurred as the cost of interest bearing liabilities increased at a faster pace than the yields on interest earning assets. In addition to the higher interest rate environment experienced in 2005, competitive pricing for both loans and deposits continues to directly impact the net interest margin.                                          8        The following table sets forth West Pointe's average balance sheets for the last three years, the interest income and expense associated with such categories of interest earning assets and interest bearing liabilities, and the average yields and rates on such categories.           DISTRIBUTION OF AVERAGE ASSETS, LIABILITIES AND STOCKHOLDERS'                       EQUITY AND INTEREST RATE INFORMATION                                                             2005                                   2004                                           ---------------------------------------------------------------------------                                                                        AVERAGE                                AVERAGE                                             AVERAGE                    YIELD/      AVERAGE                    YIELD/                                             BALANCE       INTEREST      COST       BALANCE       INTEREST      COST - ---------------------------------------------------------------------------------------------------------------------        ASSETS Interest earning assets:  Interest bearing due from banks          $  8,234,147   $   272,498    3.31%    $  5,221,053   $    67,207    1.29%  Loans(1)(2)(3)                            250,625,438    16,399,033    6.54      227,023,334    13,996,939    6.17  Taxable securities(4)(5)                  117,989,363     4,251,695    3.60      133,069,241     4,573,127    3.44  Non-taxable securities(4)(6)               41,943,311     2,361,180    5.63       37,315,174     2,183,078    5.85 - ---------------------------------------------------------------------------------------------------------------------     Total interest earning assets          418,792,259    23,284,406    5.56      402,628,802    20,820,351    5.17 ===================================================================================================================== Noninterest earning assets:  Cash and due from banks                     9,955,974                             10,261,971  Bank premises and equipment                12,122,280                             12,040,217  Other assets                               13,890,985                             13,003,528  Allowance for loan losses                  (2,445,197)                            (2,875,601) - ---------------------------------------------------------------------------------------------------------------------     Total Assets                          $452,316,301                           $435,058,917 ===================================================================================================================== LIABILITIES AND  STOCKHOLDERS' EQUITY Interest bearing liabilities:  Interest bearing demand deposits         $ 21,149,415   $   180,153     .85%    $ 35,424,249   $   136,501     .39%  Savings and money market deposits         133,924,966     1,745,630    1.30      116,026,951     1,115,744     .96  Time deposits                             177,553,256     5,913,088    3.33      176,585,080     4,618,677    2.62  Other short-term borrowings                23,532,974       684,242    2.91       22,049,194       363,044    1.65  Federal Home Loan Bank advances               450,625        13,875    3.08        5,464,795       281,229    5.15  Subordinated debentures                    10,310,000       578,294    5.61          478,880        22,883    4.78 - ---------------------------------------------------------------------------------------------------------------------     Total interest bearing liabilities     366,921,236     9,115,282    2.48      356,029,149     6,538,078    1.84 - --------------------------------------------------------------------------------------------------------------------- Noninterest bearing liabilities:  Demand deposits                            46,318,198                             42,698,167  Other liabilities                           4,360,597                              4,257,965 - ---------------------------------------------------------------------------------------------------------------------     Total Liabilities                      417,600,031                            402,985,281  Stockholders' equity                       34,716,270                             32,073,636 - ---------------------------------------------------------------------------------------------------------------------     Total Liabilities and Stockholders'       Equity                              $452,316,301                           $435,058,917 ===================================================================================================================== Net interest income                                      $14,169,124                            $14,282,273 ===================================================================================================================== Interest rate spread                                                    3.08%                                  3.33% ===================================================================================================================== Net interest margin                                                     3.38%                                  3.55% =====================================================================================================================                                                             2003                                           ------------------------------------                                                                        AVERAGE                                             AVERAGE                    YIELD/                                             BALANCE       INTEREST      COST - ------------------------------------------------------------------------------     ASSETS Interest earning assets:  Interest bearing due from banks          $  9,864,786   $    96,984     .98%  Loans(1)(2)(3)                            218,459,617    14,775,809    6.76  Taxable securities(4)(5)                  125,078,434     4,303,341    3.44  Non-taxable securities(4)(6)               34,359,530     2,132,314    6.21 - ------------------------------------------------------------------------------     Total interest earning assets          387,762,367    21,308,448    5.50 ============================================================================== Noninterest earning assets:  Cash and due from banks                     9,557,400  Bank premises and equipment                12,030,971  Other assets                               13,156,962  Allowance for loan losses                  (2,715,196) - ------------------------------------------------------------------------------     Total Assets                          $419,792,504 ============================================================================== LIABILITIES AND  STOCKHOLDERS' EQUITY Interest bearing liabilities:  Interest bearing demand deposits         $ 33,318,879   $   156,706     .47%  Savings and money market deposits         116,993,523     1,260,031    1.08  Time deposits                             171,308,444     5,095,907    2.97  Other short-term borrowings                22,324,845       364,094    1.63  Federal Home Loan Bank advances             5,161,918       287,482    5.57  Subordinated debentures                            --            --      -- - ------------------------------------------------------------------------------     Total interest bearing liabilities     349,107,609     7,164,220    2.05 - ------------------------------------------------------------------------------ Noninterest bearing liabilities:  Demand deposits                            37,204,297  Other liabilities                           4,032,982 - ------------------------------------------------------------------------------     Total Liabilities                      390,344,888  Stockholders' equity                       29,447,616 - ------------------------------------------------------------------------------     Total Liabilities and Stockholders'       Equity                              $419,792,504 ============================================================================== Net interest income                                      $14,144,228 ============================================================================== Interest rate spread                                                    3.45% ============================================================================== Net interest margin                                                     3.65% ==============================================================================   (1) For purposes of these computations, nonaccrual loans are included in the     daily average loan amounts outstanding; interest on nonaccrual loans is     recorded when received.  (2) Includes loans held for sale.  (3) Information presented on a tax-equivalent basis assuming a tax rate of 34%     and reduced by disallowed interest expense pursuant to Internal Revenue Code     Section 291. The disallowed interest expense amounted to $34,768, $18,729     and $11,787 for 2005, 2004 and 2003, respectively. The tax-equivalent     adjustment amounted to $69,587, $68,292 and $79,843 for 2005, 2004 and 2003,     respectively.  (4) Yields are calculated on historical cost and exclude the impact of the     unrealized gain (loss) on available for sale securities.  (5) Includes Federal Home Loan Bank stock.  (6) Information presented on a tax-equivalent basis assuming a tax rate of 34%     and reduced by disallowed interest expense pursuant to Internal Revenue Code     Section 291. The disallowed interest expense amounted to $162,437, $111,261     and $116,467 for 2005, 2004 and 2003, respectively. The tax-equivalent     adjustment amounted to $695,591, $668,813 and $648,117 for 2005, 2004 and     2003, respectively.                                          9        The following table sets forth the volume and rate variances that affected net interest income.                                                    2005 COMPARED WITH 2004                  2004 Compared With 2003                                              INCREASE (DECREASE) DUE TO(1)            Increase (Decrease) Due to(1)                                          ------------------------------------------------------------------------------                                            VOLUME         RATE          NET         VOLUME        RATE           NET - -----------------------------------------------------------------------------------------------------------------------        Interest earned on:   Interest bearing due from banks        $   55,155    $  150,136    $  205,291    $(54,176)   $    24,399    $ (29,777)   Loans(2)                                1,511,273       890,821     2,402,094     563,486     (1,342,356)    (778,870)   Taxable securities                       (535,854)      214,422      (321,432)    274,622         (4,836)     269,786   Non-taxable securities(3)                 262,925       (84,823)      178,102     177,117       (126,353)      50,764 - -----------------------------------------------------------------------------------------------------------------------       Total interest earning assets       1,293,499     1,170,556     2,464,055     961,049     (1,449,146)    (488,097) - ----------------------------------------------------------------------------------------------------------------------- Interest paid on:   Interest bearing demand deposits          (71,635)      115,287        43,652       9,438        (29,643)     (20,205)   Savings and money market deposits         190,626       439,260       629,886     (10,330)      (133,957)    (144,287)   Time deposits                              25,459     1,268,952     1,294,411     153,112       (630,342)    (477,230)   Short-term borrowings                      25,942       295,256       321,198      (4,520)         3,470       (1,050)   Federal Home Loan Bank advances          (185,949)      (81,405)     (267,354)     16,310        (22,563)      (6,253)   Subordinated debentures                   550,748         4,663       555,411      22,883             --       22,883 - -----------------------------------------------------------------------------------------------------------------------       Total interest bearing         liabilities                         535,191     2,042,013     2,577,204     186,893       (813,035)    (626,142) - ----------------------------------------------------------------------------------------------------------------------- Net interest income                      $  758,308    $ (871,457)   $ (113,149)   $774,156    $  (636,111)   $ 138,045 =======================================================================================================================   (1) The change in interest due to both rate and volume has been allocated to     rate and volume changes in proportion to the relationship of the absolute     dollar amounts of the change in each.  (2) Presented on a tax-equivalent basis assuming a tax rate of 34%. The     tax-equivalent adjustment relating to the change in interest income was an     increase of $1,295 for 2005 compared with 2004 and a decrease of $11,551 for     2004 compared with 2003.  (3) Presented on a tax-equivalent basis assuming a tax rate of 34%. The     tax-equivalent adjustment relating to the change in interest income was an     increase of $26,778 for 2005 compared with 2004 and an increase of $20,696     for 2004 compared with 2003.    PROVISION FOR LOAN LOSSES       The provision for loan losses is the charge to earnings that management determines to be necessary to maintain the adequacy of the allowance for loan losses. Factors which influence management's determination of the provision for loan losses, include, among other things, a review of individual loans, size and quality of the loan portfolio, current and projected economic conditions, regulatory guidelines, and historical loan loss experience. The provision for loan losses charged to expense in the year ended December 31, 2005 decreased to $2,000, compared with $658,000 and $1,213,000 in the years ended December 31, 2004 and 2003, respectively. The decrease in the provision for loan losses for the year ended December 31, 2005 compared to the year ended December 31, 2004 was primarily attributable to a substantial decrease in nonperforming and impaired loans during 2005. In addition, during 2005 and as a result of management's continuing allowance for loan loss methodology review, West Pointe determined that a reserve associated with the possible closure of Scott Air Force Base was no longer necessary. During 2005, the U. S. Department of Defense through the Base Realignment and Closure (BRAC) Commission determined that, unlike several other military bases, Scott Air Force Base was not to be considered for closure. In West Pointe's market area, Scott Air Force Base is vital to the economy. As such, closure of the base could have resulted in additional loan loss exposure to West Pointe. During 2005, the impact on the provision for loan losses that resulted from these items was partially offset by net loans charged off. During the latter part of 2004 and throughout 2005, management continued to monitor and evaluate the Company's allowance for loan loss methodology. That review included a thorough evaluation of selected credits with heightened risk or inherent losses. The results of that review also contributed to the reduced provision for loan losses recorded during 2005 compared to 2004. The provisions for loan losses recorded during 2005 and 2004 were recorded during the first nine months of those years. The results of the allowance for loss methodology review and the evaluation of the credit quality                                          10   of the loan portfolio, in general, resulted in no provisions for loan losses being recorded during the fourth quarters of 2005 or 2004. Activity in the allowance for loan losses and nonperforming loan data are discussed under "ASSET QUALITY."    NONINTEREST INCOME       Excluding net securities gains, noninterest income for the year ended December 31, 2005 was $4,008,635, compared with $4,078,925 and $4,316,108 in the years ended December 31, 2004 and 2003, respectively. Total noninterest income as a percentage of average assets was .97%, 1.01% and 1.18% for the years ended December 31, 2005, 2004 and 2003, respectively.       The following table sets forth information pertaining to the major components of noninterest income.                                                                      Year Ended December 31,                                                            --------------------------------------                                                               2005          2004          2003 - -------------------------------------------------------------------------------------------------     Service charges on deposits                                $1,383,815    $1,531,329    $1,331,403 Mortgage banking                                              375,023       461,206       865,375 Trust fees                                                    691,856       674,723       694,157 Brokerage and insurance service                               373,254       369,697       331,532 Credit card income                                            405,641       402,872       378,317 Earnings on cash surrender value of life insurance            308,000       428,068       488,087 Gain on sale of securities, net                               378,516       314,048       629,318 Gain on sale of credit card portfolio                         191,221            --            -- Other                                                         279,825       211,030       227,237 - -------------------------------------------------------------------------------------------------   Total noninterest income                                 $4,387,151    $4,392,973    $4,945,426 =================================================================================================        Service charges on deposits are fees received for services related to retail and commercial deposit products. These fees apply to both interest bearing and noninterest bearing accounts and also include charges for insufficient funds and overdrafts. These fees represent the largest component of noninterest income. Service charges on deposits totaled $1,383,815 for the year ended December 31, 2005 compared to $1,531,329 and $1,331,403 for the years ended December 31, 2004 and December 31, 2003, respectively. The decrease for the year ended December 31, 2005 compared to the year ended December 31, 2004 was primarily attributable to decreases in charges for insufficient funds and overdrafts coupled with decreases resulting from a reduction in the volume of service charges on business deposit accounts. Many of West Pointe's commercial deposit accounts receive an earnings credit on balances maintained. These earnings credits are used to reduce scheduled service charges and increase or decrease as interest rates rise or fall. As a result of the higher interest rate environment experienced in 2005, these earnings credits increased, thus reducing the level of service charges being assessed. The increase for the year ended December 31, 2004 compared to the year ended December 31, 2003 was primarily attributable to an increase in charges for insufficient funds and overdrafts coupled with increases in various service charges that resulted from an analysis of the Company's service charge schedule. The results of that analysis, completed during the fourth quarter of 2003, were implemented on January 1, 2004.       Mortgage banking income totaled $375,023 for the year ended December 31, 2005, compared to $461,206 and $865,375 for the years ended December 31, 2004 and December 31, 2003, respectively. Mortgage banking income includes mortgage origination fees, mortgage servicing and miscellaneous fees, and gains or losses on the sale of mortgage loans. The level of mortgage banking income decreased 18.7% for the year ended December 31, 2005 compared to the year ended December 31, 2004 and decreased 46.7% for the year ended December 31, 2004 compared to the year ended December 31, 2003. The mortgage loan sales volume depends heavily on the prevailing interest rates and the strength of the local real estate market. The lower levels of                                          11   mortgage banking income for the years ended December 31, 2005 and December 31, 2004 were reflective of the higher interest rate environment that existed during those years. The higher level of mortgage banking income recorded during the year ended December 31, 2003 was indicative of the lower interest rate environment that characterized that year. A rising interest rate environment, as experienced in 2005 and the latter half of 2004, tends to decrease mortgage loan production and mortgage refinancing activity. Conversely, a decreasing interest rate environment tends to increase these activities. The majority of mortgage loans originated by West Pointe are sold into the secondary market with servicing rights retained in certain cases. West Pointe management anticipates that mortgage banking activities will continue at lower levels during 2006.       Income from trust fees totaled $691,856 for the year ended December 31, 2005 compared to $674,723 and $694,157 for the years ended December 31, 2004 and December 31, 2003, respectively. Income from trust fees is derived primarily from administration of estates, personal trusts and investment management agencies. The modest increase in income from trust fees for the year ended December 31, 2005 compared to the year ended December 31, 2004 was primarily due to the receipt of one-time fees charged in connection with the administration of certain trusts.       Income from brokerage and insurance services totaled $373,254 for the year ended December 31, 2005 compared to $369,697 and $331,532 for the years ended December 31, 2004 and December 31, 2003, respectively, and remained relatively stable for those years compared. During the past several years, through an arrangement with Raymond James Financial Services, Inc., member NASD and SIPC, West Pointe has expanded its product line to include additional investment opportunities. Products available through the brokerage and insurance service function include stocks, bonds, mutual funds, annuities and other non-deposit investment products.       Credit card income totaled $405,641 for the year ended December 31, 2005 compared to $402,872 and $378,317 for the years ended December 31, 2004 and December 31, 2003, respectively. Credit card income primarily consists of merchant processing fees for credit card transactions and interchange fees received on transactions of West Pointe's cardholders. Credit card income remained stable for the year ended December 31, 2005 compared to the year ended December 31, 2004. Credit card income increased $24,555 for the year ended December 31, 2004, compared to the year ended December 31, 2003. This increase was partially due to higher levels of merchant processing fees for credit card transactions and additional interchange fees received on transactions of West Pointe's cardholders. At the end of the third quarter of 2005, West Pointe sold its credit card portfolio to an unaffiliated third party. The decision to sell the portfolio was based, in part, on management's analysis of the program's level of contribution to West Point's earnings. The sale was completed following the purchaser's due diligence examination and the execution of a definitive agreement. A gain of $191,221 was recognized on the sale of the portfolio. Notwithstanding the sale, West Pointe will continue to receive a portion of the interchange revenues on credit cards issued by the purchaser. In addition, the sale is not expected to diminish West Pointe's interchange revenues on debit cards.       During the year ended December 31, 2005, West Pointe recorded an increase in cash surrender value of life insurance of $308,000 compared to $428,068 and $488,087 for the years ended December 31, 2004 and December 31, 2003, respectively. These cash surrender value increases relate to various bank owned life insurance (BOLI) policies. Certain of the BOLI policies were purchased in connection with West Pointe's director fee deferral program and West Pointe's salary continuation agreements which have been established with various Company officers. The remaining BOLI policies were purchased in connection with the Company's split dollar agreements with certain Company officers and other employee benefit programs. These BOLI policies provide certain benefits to the Company including, but not limited to, exclusion from income taxes of the increase in their cash surrender values. The reduced level of the cash surrender value increase from the year ended December 31, 2004 to the year ended December 31, 2005 was primarily due to the write-down of the carrying value of an insurance policy to its                                         12   appropriate cash surrender value. The subject insurance policy is associated with a split dollar agreement executed in 2000 by and between the Company and an officer of the Company. The reduced level of the cash surrender value increase from the year ended December 31, 2003 to the year ended December 31, 2004 was primarily the result of interest rate reductions on certain of the BOLI policies.       Net securities gains totaled $378,516 for the year ended December 31, 2005 compared to $314,048 and $629,318 for the years ended December 31, 2004 and December 31, 2003, respectively. Available for sale securities transactions are an integral part of balance sheet and interest rate risk management activities and result in gains or losses being realized from the sale of such securities. Net securities gains recorded during the years ended December 31, 2005 and December 31, 2004 resulted from management's decision to sell certain securities due to favorable market conditions. Net securities gains recorded during the year ended December 31, 2003 resulted from management's decisions to decrease interest income on non-taxable securities to minimize alternative minimum tax positions and to reconfigure certain segments of the securities portfolio to limit potential interest rate risk that could result from a rising interest rate environment, as described under "Net Interest Income." West Pointe management believes that the securities portfolio is presently structured to minimize interest rate risk that can occur in a rising rate environment.       Other noninterest income includes such items as interchange fees on automated teller machine (ATM) transactions, safe deposit rental fees, check printing fees, wire transfer fees and other miscellaneous fees. Collectively, the components of other noninterest income generated revenues of $279,825 for the year ended December 31, 2005 compared to $211,030 and $227,237 for the years ended December 31, 2004 and December 31, 2003, respectively. The increase in for the year ended December 31, 2005 compared to the year ended December 31, 2004 primarily resulted from an increase in fee income earned in connection with the issuance of West Pointe's money orders and other official checks. These money orders and official checks are drawn on another financial institution and West Pointe receives commission fee income based on the float associated with those items. The decrease for the year ended December 31, 2004 compared to the year ended December 31, 2003 resulted from modest declines in a number of categories of other noninterest income.    NONINTEREST EXPENSE       Noninterest expense increased to $13,114,649 for the year ended December 31, 2005 compared with $12,571,337 and $12,589,157 for the years ended December 31, 2004 and 2003, respectively. The increase for the year ended December 31, 2005 compared to the year ended December 31, 2004 was attributable to increases in employee compensation and benefits, net occupancy expenses, legal and professional fees, data processing expenses, advertising expenses and other noninterest expenses, partially offset by a modest decrease in furniture and equipment expenses. The modest decrease for the year ended December 31, 2004 compared to the year ended December 31, 2003 was primarily attributable to a decrease in legal and professional fees, partially offset by increases in employee compensation and benefits, furniture and equipment and other noninterest expenses. Noninterest expense as a percentage of average assets was 2.90%, 2.89% and 3.0% for the years ended December 31, 2005, 2004 and 2003, respectively.                                          13        The following table sets forth information pertaining to the major components of noninterest expense.                                                                     Year Ended December 31,                                                         -----------------------------------------                                                            2005           2004           2003 - -------------------------------------------------------------------------------------------------     Employee compensation and benefits                      $ 6,964,304    $ 6,696,338    $ 6,530,843 Occupancy, net                                              805,354        729,936        730,497 Furniture and equipment                                     732,345        803,270        679,766 Legal and professional fees                                 718,277        636,225      1,071,471 Data processing                                             499,245        461,601        459,832 Advertising                                                 477,805        419,565        399,278 Other                                                     2,917,319      2,824,402      2,717,470 - -------------------------------------------------------------------------------------------------        Total noninterest expense                        $13,114,649    $12,571,337    $12,589,157 =================================================================================================        Employee compensation and benefits is the largest component of noninterest expense representing approximately 53% of total noninterest expense for the year ended December 31, 2005. Expenses associated with employee compensation and benefits totaled $6,964,304 for the year ended December 31, 2005 compared to $6,696,338 and $6,530,843 for the years ended December 31, 2004 and December 31, 2003, respectively. The increase in employee compensation and benefits for the year ended December 31, 2005 compared to the year ended December 31, 2004 primarily reflected the cost of normal merit increases and increased medical insurance benefit costs. The increase in employee compensation and benefits for the year ended December 31, 2004 compared to the year ended December 31, 2003 primarily reflected the cost of normal merit increases, increased medical insurance benefit costs, and increased costs associated with the salary continuation agreements established for various company officers. West Pointe had 121 full-time equivalent employees at December 31, 2005, compared to 119 and 131, respectively, at December 31, 2004 and 2003.       Net occupancy expenses totaled $805,354 for the year ended December 31, 2005 compared to $729,936 and $730,497 for the years ended December 31, 2004 and December 31, 2003, respectively. The increase in occupancy expenses for the year ended December 31, 2005 compared to the year ended December 31, 2004 primarily resulted from increased real estate taxes and utility costs associated with the Company's banking locations.       Furniture and equipment expenses totaled $732,345 for the year ended December 31, 2005 compared to $803,270 and $679,766 for the years ended December 31, 2004 and December 31, 2003, respectively. The decrease in furniture and equipment expenses for the year ended December 31, 2005 compared to the year ended December 31, 2004 was primarily attributable to reduced depreciation expenses as well as reduced equipment rent and maintenance expenses. The increase in furniture and equipment expenses for the year ended December 31, 2004 compared to the year ended December 31, 2003 was primarily attributable to depreciation expenses associated with the Company's technology hardware as well as other furniture and equipment.       Legal and professional fees include costs relating to audit and accounting fees, investment consulting services, legal fees for compliance with Securities and Exchange Commission regulations, legal fees for the collection of delinquent loans, and legal fees relating to the defense of various lawsuits of which the Company is a party to in the ordinary course of business. Legal and professional fees totaled $718,277 for the year ended December 31, 2005, compared to $636,225, and $1,071,471 for the years ending December 31, 2004 and December 31, 2003, respectively. The increase in legal and professional fees for the year ended December 31, 2005 compared to the year ended December 31, 2004 primarily resulted from increased legal fees incurred on various corporate matters. The decrease in legal and professional fees for the year ended December 31, 2004 compared to the year ended December 31, 2003 was primarily attributable to the recovery of                                          14   approximately $501,000 from the Company's insurance carrier of legal fees previously paid in connection with certain lawsuits of which the Company was a party to. The recovery resulted from the settlement of various lawsuits in 2004. During 2005, West Pointe would have incurred a substantial decrease in legal and professional fees compared to 2004 had the aforementioned recovery not been received.       Data processing expenses totaled $499,245 for the year ended December 31, 2005 compared to $461,601 and $459,832 for the years ended December 31, 2004 and December 31, 2003, respectively. The modest increases for the periods compared resulted from normal growth in operations. West Pointe currently employs the services of an outside provider for its data processing needs.       Advertising expenses totaled $477,805 for the year ended December 31, 2005 compared to $419,565 and $399,278 for the years ended December 31, 2004 and December 31, 2003, respectively. The increases resulted from expanded media advertising activities in areas served by West Pointe's banking centers.       Other noninterest expense includes such items as FDIC insurance premiums, mortgage banking expenses, contributions, telephone expenses, postage costs, certain credit card program expenses, foreclosed property expenses and other miscellaneous expenses. Other noninterest expense totaled $2,917,319 for the year ended December 31, 2005 compared to $2,824,402 and $2,717,470 for the years ended December 31, 2004 and December 31, 2003, respectively. The increases for the year ended December 31, 2005 compared to the year ended December 31, 2004 and for the year ended December 31, 2004 compared to the year ended December 31, 2003 were primarily attributable to expenses associated with certain non-performing assets.       West Pointe recorded income tax expense of $1,126,200 for the year ended December 31, 2005 compared to $1,139,400 and $1,083,600 for the years ended December 31, 2004 and December 31, 2003, respectively. The provision for income taxes consists of both federal and state income taxes. The modest increase in income tax expense for the year ended December 31, 2004 compared to the year ended December 31, 2003 was primarily attributable to an increased level of income before income taxes. The effective income tax rates remained stable at 24.1%, 24.2% and 23.8% for the years ended December 31, 2005, 2004 and 2003, respectively.  FINANCIAL CONDITION    GENERAL       Total assets at December 31, 2005 increased $33,369,908 to $477,391,032 compared with $444,021,124 at December 31, 2004. This increase primarily resulted from increases in the volume of loans and securities. These increases were funded primarily by an increase in deposits.    LOANS       Loans, including loans held for sale, are the largest classification within earning assets of West Pointe and represented 59.8%, 56.4% and 56.3% of average interest earning assets during the years ended December 31, 2005, 2004 and 2003, respectively. Loans increased 6.2% to $255,699,529 at year-end 2005 from $240,767,062 at year-end 2004. Average loans, including loans held for sale, totaled $250,625,438 in 2005 and increased $23,602,104, or 10.4% from $227,023,334 in 2004. The growth in average loans during 2004 was primarily attributable to increased loan demand and continuing aggressive sales efforts in an extremely competitive market environment. Substantially all of West Pointe's loans were originated in its primary market territory.                                          15        The following table presents the composition of the loan portfolio by type of borrower and major loan category and the percentage of each to the total loan portfolio for the periods presented.                                                                      December 31,                          -------------------------------------------------------------------------------------------------                                   2005                     2004                     2003                     2002                          -------------------------------------------------------------------------------------------------                             AMOUNT      PERCENT      AMOUNT      PERCENT      AMOUNT      PERCENT      AMOUNT      PERCENT - --------------------------------------------------------------------------------------------------------------------------          COMMERCIAL BORROWERS Commercial, financial  and agricultural        $ 65,768,521     25.7%   $ 64,073,669     26.6%   $ 55,147,337     25.5%   $ 59,685,132     27.3% Commercial real estate     77,458,569     30.3      83,832,494     34.8      79,620,879     36.7      85,147,362     38.8 Real estate  construction              51,568,490     20.2      30,794,287     12.8      19,489,319      9.0      11,552,620      5.3 - -------------------------------------------------------------------------------------------------------------------------- Total commercial          194,795,580     76.2     178,700,450     74.2     154,257,535     71.2     156,385,114     71.4 - -------------------------------------------------------------------------------------------------------------------------- CONSUMER BORROWERS 1-4 family residential  real estate               51,722,980     20.2      51,798,164     21.5      52,059,308     24.0      50,812,257     23.2 Other consumer loans        9,180,969      3.6      10,268,448      4.3      10,438,146      4.8      11,766,777      5.4 - -------------------------------------------------------------------------------------------------------------------------- Total consumer             60,903,949     23.8      62,066,612     25.8      62,497,454     28.8      62,579,034     28.6 - --------------------------------------------------------------------------------------------------------------------------      Total loans         $255,699,529    100.0%   $240,767,062    100.0%   $216,754,989    100.0%   $218,964,148    100.0% ==========================================================================================================================                                 December 31,                          ----------------------                                   2001                          ----------------------                             AMOUNT      PERCENT - -----------------------------------------------    COMMERCIAL BORROWERS Commercial, financial  and agricultural        $ 48,560,141     24.4% Commercial real estate     75,352,452     37.9 Real estate  construction               9,816,970      4.9 - ----------------------------------------------- Total commercial          133,729,563     67.2 - ----------------------------------------------- CONSUMER BORROWERS 1-4 family residential  real estate               53,548,197     26.9 Other consumer loans       11,699,831      5.9 - ----------------------------------------------- Total consumer             65,248,028     32.8 - -----------------------------------------------      Total loans         $198,977,591    100.0% ===============================================        West Pointe's commercial, financial and agricultural loan portfolio is diversified and includes loans secured by non-real estate collateral to manufacturers, retailers, distributors, service providers and investors. Emphasis is generally placed upon middle-market and community businesses with financial stability and known local management. Underlying collateral for commercial, financial and agricultural loans includes, but is not limited to, inventory, equipment, vehicles and accounts receivable. In the case of corporations, the Bank may obtain personal guarantees from principal shareholders and/or officers.       The commercial real estate loan portfolio consists largely of mortgage loans secured by commercial properties located in the communities served by West Pointe's banking centers. A significant portion of the commercial real estate loan portfolio is comprised of traditional commercial loans with real estate taken as additional collateral. These loans are generally made to fund the acquisition of buildings and real estate for commercial, industrial, office and retail use. The maximum loan-to-value ratio applicable to improved commercial properties is 85%. Prior approval of the Bank's Loan and Discount Committee is required for new loans with loan-to-value ratios exceeding this limit.       The real estate construction loan portfolio consists of loans made to finance land development preparatory to erecting new structures or the on-site construction of 1-4 family residences, commercial properties, retail centers, medical and business offices, warehouse facilities and multi-family residential developments. The maximum loan-to-value ratio applicable to loans made for the purpose of land development activities is 75%. The maximum loan-to-value ratios applicable to commercial/multi-family and 1-4 family residential construction loans are 80% and 85%, respectively.       The 1-4 family residential real estate portfolio is predominantly comprised of loans extended for owner-occupied residential properties. These loans typically are secured by first mortgages on the properties financed and generally have a maximum loan-to-value ratio of 85%. The amortization periods for these loans generally do not exceed twenty years with interest being calculated on a fixed or floating rate basis. The 1-4 family residential real estate category also includes home equity lines of credit and closed-end second mortgage loans. Closed-end second mortgage loans generally bear a fixed rate of interest over a three to five year term with a five to fifteen year                                          16   amortization, while home equity lines of credit generally have an interest rate indexed to the prime rate. Home equity loans generally have a maximum loan-to-value ratio of 85%.       The consumer loan portfolio consists of both secured and unsecured loans to individuals for household, family, and other personal expenditures such as automobile financing, home improvements, recreational and educational purposes. Consumer loans are typically structured with fixed rates of interest and full amortization of principal and interest within three to five years. The maximum loan-to-value ratio applicable to consumer loans is generally 80%. This category also includes revolving credit products such as checking overdraft protection. Consumer loans are either unsecured or are secured with various forms of collateral, other than real estate.       The weighted average yield on the loan portfolio, inclusive of loans held for sale, in 2005 was 6.54% compared to 6.17% and 6.76% in 2004 and 2003, respectively. Overall yields on the loan portfolio trended downward from 2003 to 2004 and trended upward from 2004 to 2005 following the general level of interest rates. West Pointe's loan portfolio yields generally tend to follow trends in the prime lending rate. The prime lending rate declined from 4.25% at the beginning of 2003 to a level of 4.00% at December 31, 2003. The prime lending rate remained at the 4.00% level through June 30, 2004. Between June 30, 2004 and December 31, 2004, the prime lending rate increased five times to a level of 5.25% at December 31, 2004. During 2005, the prime lending rate increased eight times, reaching a level of 7.25% at December 31, 2005. The higher level of interest rates evident during 2005 contributed to the increase in the weighted average yield on the loan portfolio during 2005 compared to 2004. While loan yields tend to follow trends in the prime lending rate, they may not follow simultaneously with such trends. At December 31, 2005, 29.3% of West Pointe's total loan portfolio had floating or adjustable interest rates.       The following table sets forth the amount of loans outstanding as of December 31, 2005, which, based on remaining maturities, are due in the periods indicated. In addition, the amounts due after one year are classified according to sensitivity to changes in interest rates.                                                        After One                                     In One Year      Through         After                                       or Less       Five Years    Five Years       Total - --------------------------------------------------------------------------------------------      Commercial, financial and   agricultural                     $ 35,135,796    $ 27,211,189   $ 3,421,536   $ 65,768,521 Commercial real estate               35,936,278      40,288,968     1,233,323     77,458,569 Real estate construction             35,805,918      14,639,014     1,123,558     51,568,490 1-4 family residential real estate   13,348,255      23,812,360    14,562,365     51,722,980 Other consumer loans                  2,292,318       6,491,249       397,402      9,180,969 - --------------------------------------------------------------------------------------------   Total loans                      $122,518,565    $112,442,780   $20,738,184   $255,699,529 ============================================================================================                                                                          Interest Sensitivity                                                                 --------------------------------                                                                                    Floating or                                                                     Fixed           Adjustable                                                                 Interest Rates    Interest Rates - ------------------------------------------------------------------------------------------------    Due after one year                                               $102,828,722      $30,352,242 ================================================================================================        The Bank's asset quality management program, particularly with regard to loans, is designed to analyze potential risk elements and to support the growth of a profitable and high quality loan portfolio. The Bank employs the use of a loan rating system to monitor the loan portfolio and to determine the adequacy of the allowance for loan losses. West Pointe's lending philosophy is to invest in loans in the communities served by its banking centers so it can effectively monitor and control credit risk. The majority of the loan portfolio is comprised of retail loans and loans to small-to-midsized businesses. A periodic review of selected credits (based on loan size) is                                          17   conducted to identify loans with heightened risks or inherent losses. Factors which could contribute to increased risk in the loan portfolio, include, but are not limited to, changes in interest rates, general economic conditions and reduced collateral values. The loan portfolio does not include any loans to foreign countries.       As of December 31, 2005, and effective January 30, 2006, the statutory legal lending limit amount for the Company's banking subsidiary to loan to one customer was $9,441,015. West Pointe's loan portfolio does not contain any concentrations of credit in any given industry that would cause them to be similarly impacted by economic or other conditions.    SECURITIES       Securities increased $13,516,294, or 8.8% to $167,905,905 at December 31, 2005 compared to $154,389,611 at December 31, 2004. The increase in securities primarily resulted from purchases, net of sales, maturities and payments received on the Company's mortgage-backed securities, in the available for sale category. The securities portfolio provides a balance to interest rate and credit risk in other categories of the balance sheet while providing a vehicle for the investment of available funds not needed to satisfy loan demand. The securities portfolio also supplies securities as required collateral for certain deposits and for securities sold under agreements to repurchase (which we refer to as "repurchase agreements"). Additional information regarding West Pointe's repurchase agreements is presented and discussed under "Borrowings."       West Pointe currently classifies all securities as available for sale. Available for sale securities are held with the option of their disposal in the foreseeable future to meet investment objectives or for other operational needs. All security purchases in 2005, 2004 and 2003 were classified as available for sale.       Available for sale securities are recorded at fair value. Net unrealized losses on available for sale securities totaled $2,250,271 at December 31, 2005 compared to net unrealized gains of $217,643 at December 31, 2004. At December 31, 2005, accumulated other comprehensive losses of $1,395,168 were included in stockholders' equity. At December 31, 2004, accumulated other comprehensive gains of $134,939 was included in stockholders' equity. These accumulated other comprehensive gains at December 31, 2004 and accumulated other comprehensive losses December 31, 2005 were associated with unrealized gains and losses on available for sale securities, net of income taxes. The change in accumulated other comprehensive gains at December 31, 2004 to accumulated other comprehensive losses at December 31, 2005 was primarily attributable to the change in mix of securities and the impact of market interest rates, which continued to trend upward in 2005.       West Pointe management does not expect any losses to result from any unrealized losses in the portfolio, as maturities of securities and other funding sources should meet the Company's liquidity needs. Any losses taken will result from strategic or discretionary decisions to adjust the securities portfolio. Reference is made to Note 4 to the consolidated financial statements, which provides the composition of the securities portfolio for the last two years.       The following table sets forth the composition of the available for sale securities portfolio for the last three years.                                                                     December 31,                                                   ------------------------------------------                                                       2005           2004           2003 - --------------------------------------------------------------------------------------------     AVAILABLE FOR SALE SECURITIES U.S. government agencies                          $ 12,592,707   $  3,970,000   $         -- Mortgage-backed securities                         105,830,332    108,897,319    126,843,672 Obligations of states and political subdivisions    49,482,866     41,522,292     39,856,431 - --------------------------------------------------------------------------------------------        Total available for sale                   $167,905,905   $154,389,611   $166,700,103 ============================================================================================                                           18        The following table sets forth the maturities and weighted average yields of each category of available for sale securities at December 31, 2005 based upon contractual maturities of such securities.                                                            After One Year         After Five Years                                   In One Year              Through                 Through                                     or Less               Five Years              Ten Years             After Ten Years                               --------------------------------------------------------------------------------------------                                 Amount      Yield      Amount       Yield      Amount       Yield       Amount       Yield - --------------------------------------------------------------------------------------------------------------------------          AVAILABLE FOR SALE   SECURITIES U.S. government agencies      $3,987,520    2.36%    $ 8,605,187    4.76%    $        --      --%    $         --      --% Mortgage-backed securities            --      --       1,133,577    3.42      25,340,813    3.80       79,355,942    4.21 Obligations of states and   political subdivisions(1)    3,229,643    2.74       9,856,016    5.58       8,982,430    5.43       27,414,777    6.12 - --------------------------------------------------------------------------------------------------------------------------   Total available for sale    $7,217,163    2.53%    $19,594,780    5.09%    $34,323,243    4.23%    $106,770,719    4.70% ==========================================================================================================================   (1) Yield presented on a tax-equivalent basis assuming a tax rate of 34%.       Average taxable securities, including Federal Home Loan Bank stock, totaled $117,989,363 in 2005 compared to $133,069,241 and $125,078,434 in 2004 and 2003, respectively. The weighted average yield on the taxable securities portfolio was 3.60% for 2005 compared to 3.44% for 2004 and 2003. Holdings of Federal Home Loan Bank stock totaled $13,962,968 at December 31, 2005 compared to $13,299,700 at December 31, 2004. The increase in those holdings resulted from additional shares of stock issued in connection with the Federal Home Loan Bank's dividend reinvestment plan.       Average non-taxable securities totaled $41,943,311 in 2005 compared to $37,315,174 and $34,359,530 in 2004 and 2003, respectively. The weighted average tax-equivalent yield on non-taxable securities was 5.63%, 5.85% and 6.21% during 2005, 2004 and 2003, respectively.       The remainder of West Pointe's interest earning assets consists of federal funds sold and interest bearing due from bank balances. Federal funds sold consist of sales of excess funds and generally have a maturity of one day. West Pointe had no federal funds sold at December 31, 2005, 2004 or 2003. West Pointe's interest bearing due from bank balances consist solely of a daily investment deposit account maintained with the Federal Home Loan Bank. This vehicle is used by West Pointe in addition to or as an alternative to federal funds sold. Daily deposits to or withdrawals from the daily investment deposit account are permitted. The interest rate paid on this account is subject to change on a daily basis. Interest bearing due from bank balances totaled $1,631,828 at December 31, 2005 compared to $131,747 at December 31, 2004. Average interest bearing due from bank balances totaled $8,234,147 in 2005, compared to $5,221,053 and $9,864,786 in 2004 and 2003, respectively. The weighted average yield on interest bearing due from bank balances was 3.31%, 1.29% and .98% during 2005, 2004 and 2003, respectively. The increases in yields on these balances were reflective of the higher interest rate environment.    DEPOSITS       West Pointe's deposit base is its primary source of liquidity and consists of deposits originating within the communities served by its banking locations. Deposits are West Pointe's primary and most reliable funding source for interest earning assets.       Total deposits increased 7.1%, or $26,751,734, to $401,996,154 at December 31, 2005 from $375,244,420 at December 31, 2004. Noninterest bearing demand deposit balances increased to $51,643,811 at December 31, 2005 from $45,206,286 at December 31, 2004. The majority of this increase was associated with normal growth of operations. Interest bearing deposits increased to $350,352,343 at December 31, 2005 from $330,038,134 at December 31, 2004. Collectively, time deposits of $100,000 or more and time deposits less than $100,000 increased to $182,386,361 at December 31, 2005 from $177,131,835 at December 31, 2004. The increase in time deposits was                                          19   attributable to normal growth in operations. The higher interest rate environment, evident during 2005, has increased customer interest in time deposits. Interest bearing demand deposit balances decreased to $10,937,929 at December 31, 2005 from $38,276,366 at December 31, 2004. Savings and money market deposit account balances increased to $157,028,053 at December 31, 2005 from $114,629,933 at December 31, 2004. The decrease in interest bearing demand deposits and the increase in savings and money market deposit account balances primarily resulted from the daily transfer of certain account balances from interest bearing demand deposits to savings deposits. These daily transfers are designed to reduce reserve balances required to be maintained with the Federal Reserve Bank. West Pointe continues to offer competitive pricing of all deposit products within its market territory.       The following table sets forth the composition of the deposit portfolio for the periods presented.                                                                 December 31,                                             -----------------------------------------------                                                      2005                     2004                                             -----------------------------------------------                                                AMOUNT      PERCENT      AMOUNT      PERCENT      - ------------------------------------------------------------------------------------------- Noninterest bearing demand deposits         $ 51,643,811     12.8%   $ 45,206,286     12.0% Interest bearing demand deposits              10,937,929      2.7      38,276,366     10.2 Savings and money market deposits            157,028,053     39.1     114,629,933     30.6 Time deposits $100,000 or more                68,748,406     17.1      68,142,051     18.2 Time deposits less than $100,000             113,637,955     28.3     108,989,784     29.0 - -------------------------------------------------------------------------------------------   Total deposits                            $401,996,154    100.0%   $375,244,420    100.0% ===========================================================================================        Average total deposits increased to $378,945,835 for the year ended December 31, 2005 compared to $370,734,447 and $358,825,143 for the years ended December 31, 2004 and December 31, 2003, respectively. The increases in average total deposits resulted primarily from normal growth in operations coupled with additional public fund deposits. The average rates paid on total deposits were 2.07%, 1.58% and 1.82% for 2005, 2004 and 2003, respectively. The higher interest rate environment in 2005 led to the increase in average rates paid in 2005 compared to 2004.       The following table sets forth the major categories of average deposits and the weighted average interest rates paid on such categories for the last three years.                                                          December 31,                             -----------------------------------------------------------------                                     2005                   2004                  2003                             -----------------------------------------------------------------                                AMOUNT      RATE       AMOUNT      RATE       AMOUNT      RATE        - --------------------------------------------------------------------------------------------- Noninterest bearing demand   deposits                  $ 46,318,198     --%   $ 42,698,167     --%   $ 37,204,297     --% Interest bearing demand   deposits                    21,149,415    .85      35,424,249    .39      33,318,879    .47 Savings and money market   deposits                   133,924,966   1.30     116,026,951    .96     116,993,523   1.08 Time deposits                177,553,256   3.33     176,585,080   2.62     171,308,444   2.97 - ---------------------------------------------------------------------------------------------   Total deposits            $378,945,835   2.07%   $370,734,447   1.58%   $358,825,143   1.82% =============================================================================================                                           20        The following table sets forth the amounts and maturities of time deposits of $100,000 or more at December 31, 2005 and December 31, 2004.                                                                        December 31,                                                               -------------------------                                                                  2005          2004    - --------------------------------------------------------------------------------------- 3 months or less                                              $21,260,587   $26,148,604 Over 3 through 6 months                                        12,873,489    13,931,156 Over 6 through 12 months                                       23,107,274    16,221,766 Over 12 months                                                 11,507,056    11,840,525 - ---------------------------------------------------------------------------------------   Total                                                       $68,748,406   $68,142,051 =======================================================================================     BORROWINGS       Total borrowings amounted to $35,502,276 at year-end 2005, an increase of $4,155,303 from $31,346,973 at year-end 2004. Total borrowings include repurchase agreements, other short-term borrowings, Federal Home Loan Bank advances and subordinated debentures. On an average basis, total borrowings totaled $34,293,599 for 2005 compared to $27,992,869 and $27,486,763 for 2004 and 2003, respectively.       During portions of the past three years, other short-term borrowings consisted of repurchase agreements and a borrowing from an unaffiliated bank. The average balance of other short-term borrowings totaled $23,532,974 for 2005 compared to $22,049,194 and $22,324,845 for 2004 and 2003, respectively. Repurchase agreements serve as an alternative source of funds to deposit funding sources. West Pointe offers two types of repurchase agreements. The first type is a term repurchase agreement, which represents an alternative to short-term certificates of deposit offered to West Pointe's customers. Generally, these types of repurchase agreement have a maturity of less than one year. The second type of repurchase agreement is commonly called a cash management repurchase agreement account. Such accounts involve the daily transfer of excess funds from noninterest bearing deposit accounts into interest bearing cash management repurchase agreement accounts. West Pointe continues to market its cash management product to commercial and individual deposit customers. Although viewed as a borrowing, the cash management repurchase agreement accounts are considered a stable source of funds. The increase in the average balance of other short-term borrowings during 2005 was primarily attributable to cash management repurchase agreements. In addition to repurchase agreements, West Pointe had, at December 31, 2003, another form of short-term borrowing in the amount of $1,237,100. In the fourth quarter of 1999, West Pointe entered into a line of credit with an unaffiliated bank, which provided for borrowings by West Pointe of up to $2,500,000. The line of credit was subsequently increased to $5,000,000. Initially, West Pointe borrowed $1,837,500 under that line of credit. The original line of credit, which matured on December 7, 2000, was subsequently renewed annually and matured on January 7, 2006, at which time Company management decided not to renew it. In the fourth quarter of 2004, West Pointe paid off the remaining balance of this borrowing. Also during the fourth quarter of 2004, West Pointe entered into a pooled trust preferred security transaction. A portion of the proceeds from that transaction were used to pay off the borrowing under the aforementioned line of credit. More information concerning that transaction is presented later in these discussions and in Note 11 to the Consolidated Financial Statements. The weighted average rate of interest paid for short-term borrowings, excluding overnight Federal Home Loan Bank advances, was 2.91%, 1.65% and 1.63% in 2005, 2004 and 2003, respectively. The increase in the weighted average interest rate in 2005 compared to 2004 and 2003 was reflective of the higher interest rate environment.       At year-end 2004, Federal Home Loan Bank (FHLB) advances consisted of an overnight advance in the amount of $550,000. The overnight advance serves as a funding alternative to federal funds purchased. West Pointe had no FHLB advances at year-end 2005. The average                                          21   balance of Federal Home Loan Bank advances totaled $450,625 for 2005 compared to $5,464,795 and $5,161,918 for 2004 and 2003, respectively. In addition to overnight advances, the average balance of FHLB advances during 2004 and 2003 included one term advance in the amount of $5,000,000. That advance reflected an interest rate of 5.63% and matured on December 13, 2004. The average rate paid on FHLB advances totaled 3.08% for 2005 compared to 5.15% and 5.57% for 2004 and 2003, respectively.       The following table sets forth a summary of information pertaining to short-term borrowings for the periods presented.                                                               December 31,                                ---------------------------------------------------------------------                                        2005                    2004                    2003                                ---------------------------------------------------------------------                                  AMOUNT       RATE       AMOUNT       RATE       AMOUNT       RATE        - ---------------------------------------------------------------------------------------------------- At December 31: Repurchase agreements          $25,192,276     3.52%   $20,486,973     2.08%   $19,185,867      1.31% Other                                   --       --             --       --      1,237,100      3.50 Federal Home Loan Bank   advances(1)                           --       --        550,000     2.47      4,400,000      1.21 - ----------------------------------------------------------------------------------------------------   Total                        $25,192,276     3.52%   $21,036,973     2.09%   $24,822,967      1.40% ==================================================================================================== For the year ended   December 31: Average daily balance: Federal funds purchased        $        --       --%   $        --       --%   $    58,904      1.45% Repurchase agreements           23,532,974     2.91     20,989,737     1.54     21,225,179      1.48 Other                                   --       --      1,059,457     3.67      1,040,762      4.79 Federal Home Loan Bank   advances(1)                      450,625     3.08        697,035     1.42        161,918      1.28 - ----------------------------------------------------------------------------------------------------   Total                        $23,983,599     2.91%   $22,746,229     1.64%   $22,486,763      1.63% ==================================================================================================== Maximum month-end balance: Repurchase agreements          $29,477,272             $26,572,111             $24,832,508 Other                                   --               1,162,100               1,462,100 Federal Home Loan Bank   advances(1)                    5,000,000               2,360,000               4,400,000 ====================================================================================================   (1) Includes Federal Home Loan Bank overnight advances only.       At December 31, 2005, the Company had subordinated debentures totaling $10,310,000. On December 15, 2004, the Company completed a private placement to an institutional investor of $10,000,000 of floating rate trust preferred securities, through a newly formed unconsolidated Delaware trust affiliate, West Pointe Statutory Trust I (the "Trust"). The trust preferred securities mature in December 2034, are redeemable at the Company's option beginning in five years, and require quarterly distributions by the Trust to the holder of the trust preferred securities, initially at an interest rate of 4.70%, which will reset quarterly at the three-month LIBOR rate plus 2.25%. At December 31, 2005, the interest rate on this instrument was 6.74%.       The proceeds from the sale of the trust preferred securities were used by the Trust to purchase $10,310,000 in aggregate principal amount of the Company's floating rate junior subordinated debentures. A portion of the net proceeds to the Company from the sale of the debentures to the Trust was used by the Company to pay off the line of credit with an unaffiliated bank. The remainder of the net proceeds will be used by the Company for general corporate purposes.                                          22        The debentures were issued pursuant to a junior subordinated indenture dated December 15, 2004 between the Company, as issuer, and Wilmington Trust Company, as trustee. Like the trust preferred securities, the notes bear interest at a floating rate, initially 4.70%, which will reset on a quarterly basis at a rate equal to LIBOR plus 2.25%. The interest payments by the Company will be used to pay the quarterly distributions payable by the Trust to the holder of the trust preferred securities. However, so long as no event of default has occurred under the notes, the Company may defer interest payments on the notes (in which case the trust will be entitled to defer distributions otherwise due on the trust preferred securities) for up to 20 consecutive quarters.       The debentures are subordinated to the prior payment of any other indebtedness of the Company that, by its terms, is not similarly subordinated. The debentures mature on December 15, 2034, but may be redeemed at the Company's option at par at any time on or after December 15, 2009 or at any time upon certain events, such as a change in regulatory capital treatment of the debentures, the Trust being deemed an investment company or the occurrence of certain adverse tax events. Except upon the occurrence of certain events described above, the Company may redeem the debentures for their aggregate principal amount, plus accrued interest, if any. See "Notes to Consolidated Financial Statements-Subordinated Debentures" for additional information concerning the Company's trust preferred securities.  ASSET QUALITY       West Pointe's asset quality management program, particularly with regard to loans, is designed to analyze potential risk elements and to support the growth of a profitable and high quality loan portfolio. The existing loan portfolio is monitored via West Pointe's loan rating system. The loan rating system is used to determine the adequacy of the allowance for loan losses. West Pointe's loan analysis process proactively identifies, monitors and works with borrowers for whom there are indications of future repayment difficulties.       The following table sets forth a summary of nonperforming assets and related ratios for the periods presented.                                                            December 31,                                --------------------------------------------------------------                                   2005         2004         2003         2002         2001       - --------------------------------------------------------------------------------------------- Nonaccrual loans               $  517,108   $3,842,710   $1,676,187   $  796,349   $  421,662 Accruing loans past due 90   days or more                    329,449      538,199      598,363      940,555      370,080 Troubled debt restructurings           --           --           --           --      314,230 - --------------------------------------------------------------------------------------------- Total nonperforming loans         846,557    4,380,909    2,274,550    1,736,904    1,105,972 Foreclosed property             1,537,757      911,400      230,000      365,000      156,153 - --------------------------------------------------------------------------------------------- Total nonperforming assets     $2,384,314   $5,292,309   $2,504,550   $2,101,904   $1,262,125 ============================================================================================= Nonperforming loans to total   loans                               .33%        1.82%        1.05%         .79%         .56% Nonperforming assets to total   loans and foreclosed   property                            .93%        2.19%        1.15%         .96%         .63% Nonperforming assets to total   assets                              .50%        1.19%         .59%         .51%         .34%        Nonperforming assets decreased $2,907,995 at December 31, 2005 compared to December 31, 2004. This decrease was due to a substantial decrease in nonperforming loans, partially offset by an increase in foreclosed property. The decrease in nonperforming loans at December 31, 2005, primarily related to several loans to three borrowers. One such loan was transferred to foreclosed                                         23   property during the third quarter of 2005. Foreclosed property at December 31, 2005 consisted of three parcels of real estate. Management is in varying stages of workout or liquidation of all nonperforming assets.       It is the policy of West Pointe to discontinue the accrual of interest on loans when principal or interest is due and has remained unpaid for 90 days or more, unless the loan is well secured and in the process of collection and management has documented reasons why the accrual of interest should continue. Restructured loans generally take the form of an extension of the original repayment period, and/or a reduction or deferral of interest or principal because of deterioration in the financial position of the borrowers. West Pointe would have recorded interest income of $41,384 for 2005 if the loans accounted for as nonaccrual and restructured at year-end 2005, had been current in accordance with their original terms and had been outstanding throughout the period or since origination if held for part of the period. During 2005, $8,227 was included in interest income relating to these loans.       Certain loans may require frequent management attention and are reviewed on a monthly or more frequent basis. Although payments on these loans may be current or less than 90 days past due, the borrowers presently have or have had a history of financial difficulties and management has a concern as to the borrowers' ability to comply with the present loan repayment terms. Management believes such loans present more than the normal risk of collectibility. As such, these loans may result in classification at some future point in time as nonperforming. At December 31, 2005, such loans amounted to approximately $5,430,000.                                          24        The following table sets forth information pertaining to West Pointe's provision for loan losses charged to operations, the activity in and an analysis of the allowance for loan losses for the last five years.                                                                  December 31,                                    ------------------------------------------------------------------                                       2005          2004          2003          2002          2001 - -----------------------------------------------------------------------------------------------------       Balance at beginning of year       $2,692,903    $2,697,139    $2,409,446    $2,224,352    $1,769,693 Loans charged off:   Commercial, financial and      agricultural                     158,867        88,902       834,755       220,590       192,528   Real estate:      Commercial                       435,481       195,683        38,550       104,413         7,722      Residential                       64,829       550,706        97,730        20,610        77,484 - -----------------------------------------------------------------------------------------------------        Total real estate              500,310       746,389       136,280       125,023        85,206 - -----------------------------------------------------------------------------------------------------   Consumer                            160,948        80,114        77,228       110,006        91,418 - -----------------------------------------------------------------------------------------------------        Total charge-offs              820,125       915,405     1,048,263       455,619       369,152 - ----------------------------------------------------------------------------------------------------- Recoveries of loans previously   charged off:   Commercial, financial and      agricultural                      44,555       152,734       118,114        26,802       176,843   Real estate:      Commercial                           822        23,874            --         7,722            --      Residential                       60,197        66,698            --           275           150 - -----------------------------------------------------------------------------------------------------        Total real estate               61,019        90,572            --         7,997           150 - -----------------------------------------------------------------------------------------------------   Consumer                             21,707         9,863         4,842         5,914        16,818 - -----------------------------------------------------------------------------------------------------        Total recoveries               127,281       253,169       122,956        40,713       193,811 - ----------------------------------------------------------------------------------------------------- Net charge-offs                       692,844       662,236       925,307       414,906       175,341 - ----------------------------------------------------------------------------------------------------- Provision for loan losses               2,000       658,000     1,213,000       600,000       630,000 - ----------------------------------------------------------------------------------------------------- Balance at end of year             $2,002,059    $2,692,903    $2,697,139    $2,409,446    $2,224,352 ===================================================================================================== Net loan charge-offs as a   percent of average total   loans                                   .28%          .29%          .42%          .20%          .09%        During 2005, West Pointe recorded net charge-offs of $692,844 compared to net charge-offs of $662,236 in 2004. Net charge-offs in the commercial, financial and agricultural segment of the portfolio totaled $114,312 in 2005 compared to net recoveries of $63,832 in 2004. Net charge-offs in 2005 in the commercial, financial and agricultural category related to two loans to one commercial borrower. Net charge-offs in the commercial real estate category totaled $434,659 in 2005 compared to net charge-offs of $171,809 in 2004. The majority of this increase was associated with a loan to one borrower. Most of the amount charged-off in connection with this loan was included in the allowance for loan losses at December 31, 2004. The loan was subsequently transferred to foreclosed property. Net charge-offs in the residential real estate category totaled $4,632 in 2005 compared to net charge-offs of $484,008 in 2004. The majority of the net charge-offs in this category in 2004 were associated with several loans to two borrowers. Net charge-offs in the consumer category totaled $139,241 in 2005 compared to net charge-offs of $70,251 in 2004. Net charge-offs as a percent of average total loans decreased to .28% in 2005 from .29% in 2004.       West Pointe's allowance for loan losses declined to $2,002,059 at December 31, 2005 compared to $2,692,903 at December 31, 2004. The allowance for loan losses is increased by the provision for loan losses and is decreased by net loans charged-off. During the year ended December 31, 2005, the level of net charge-offs was significantly greater than the provision for                                          25   loan losses. The impact on the allowance for loan losses that could have resulted from such activity was more than offset by a substantial reduction in nonperforming loans. West Pointe's allowance for loan losses at December 31, 2005, represented approximately 236% of nonperforming loans compared to 61% at year-end 2004. The increase in the allowance for loan losses as a percentage of nonperforming loans was attributable to a substantial decrease in nonperforming loans in 2005. The substantial decrease in nonperforming loans was primarily associated with the improved condition of three loans to one borrower. A periodic review of selected credits (based on loan size and type) is conducted to identify loans with heightened risk or inherent losses. The primary responsibility for this review rests with the management personnel assigned with accountability for the credit relationship and is supplemented with periodic review by West Pointe's credit review function. Periodic examinations of both selected credits and the credit review process by applicable regulatory agencies is also conducted. These reviews provide information to assist management in the timely identification of problems and potential problems and provides a basis for deciding whether the credit represents a probable loss or risk. In addition to the review of selected credits, the allowance for loan losses is also reviewed on a quarterly or more frequent basis to assess the risk in the portfolio. The methodology used to evaluate the level of the allowance for loan losses includes the assignment of loss factors to loans with similar characteristics for which probable losses can be assessed. These loss factors are based on historical experience coupled with an analysis of current business and economic conditions and are applied to the portfolio to assist in determining the adequacy of the allowance for loan losses. Management believes that the allowance for loan losses at December 31, 2005 was adequate to absorb unidentified probable losses in the loan portfolio. However, past loan loss experience as it relates to current portfolio mix, evaluation of potential losses in the portfolio, subsequent changes in economic conditions and other factors may require changes in the level of the allowance for loan losses.       The following table sets forth the allocation of the allowance for loan losses by loan category and the percent of loans in each category to total loans for the last five years.                                                                      December 31,                        -----------------------------------------------------------------------------------------------------                                 2005                      2004                      2003                      2002                        -----------------------------------------------------------------------------------------------------                                       PERCENT                   PERCENT                   PERCENT                   PERCENT                                       OF LOANS                  OF LOANS                  OF LOANS                  OF LOANS                                       IN EACH                   IN EACH                   IN EACH                   IN EACH                                       CATEGORY                  CATEGORY                  CATEGORY                  CATEGORY                                       TO TOTAL                  TO TOTAL                  TO TOTAL                  TO TOTAL                        ALLOWANCE(1)    LOANS     ALLOWANCE(1)    LOANS     ALLOWANCE(1)    LOANS     ALLOWANCE(1)    LOANS - ----------------------------------------------------------------------------------------------------------------------------          Commercial, financial  and agricultural       $  649,000      25.7%     $  769,000      26.6%     $  981,000      25.5%     $1,210,000      27.3% Real estate:  Commercial                811,000      30.3       1,335,000      34.8         746,000      36.7         249,000      38.8  Residential               309,000      20.2         303,000      21.5         562,000      24.0         486,000      23.2  Construction              122,000      20.2          54,000      12.8          65,000       9.0          31,000       5.3 - ----------------------------------------------------------------------------------------------------------------------------      Total real        estate            1,242,000      70.7       1,692,000      69.1       1,373,000      69.7         766,000      67.3 - ---------------------------------------------------------------------------------------------------------------------------- Consumer                   111,000       3.6         232,000       4.3         220,000       4.8         262,000       5.4 Not allocated                   --       N/A              --       N/A         123,000       N/A         171,000       N/A - ----------------------------------------------------------------------------------------------------------------------------      Total              $2,002,000     100.0%     $2,693,000     100.0%     $2,697,000     100.0%     $2,409,000     100.0% ============================================================================================================================                               December 31,                        -----------------------                                 2001                        -----------------------                                       PERCENT                                       OF LOANS                                       IN EACH                                       CATEGORY                                       TO TOTAL                        ALLOWANCE(1)    LOANS - ----------------------------------------------    Commercial, financial  and agricultural       $1,280,000      24.4% Real estate:  Commercial                377,000      37.9  Residential               324,000      26.9  Construction               49,000       4.9 - ----------------------------------------------      Total real        estate              750,000      69.7 - ---------------------------------------------- Consumer                   151,000       5.9 Not allocated               43,000       N/A - ----------------------------------------------      Total              $2,224,000     100.0% ==============================================   N/A -- Not applicable  (1) Amounts rounded to nearest thousand.  CAPITAL RESOURCES AND ASSET/LIABILITY MANAGEMENT    CAPITAL       Total stockholders' equity increased $2,098,582 to $35,616,201 at December 31, 2005 from $33,517,619 at December 31, 2004. Net income for 2005 totaled $3,548,248. At December 31, 2005,                                          26   total stockholders' equity included an accumulated other comprehensive loss of $1,395,168 compared to the inclusion of accumulated other comprehensive income of $134,939 at December 31, 2004. The change is attributable to securities gains realized during 2005 coupled with a decrease in the market value of the remainder of the securities portfolio. Stockholders' equity as a percent of total assets was 7.46% at December 31, 2005 compared to 7.55% at December 31, 2004.       In 2001, the Company adopted a Dividend Reinvestment Plan (as amended and restated in 2005,"the DRIP"). The DRIP provides holders of the Company's common stock with a convenient method of purchasing additional shares of common stock without fees of any kind by reinvesting Company dividends. Initially, participants in the DRIP also had the option to purchase additional shares of the Company's common stock with cash. Effective January 1, 2006, the Company's Board of Directors terminated the cash purchase option of the DRIP. The Company has registered 75,000 shares of common stock with the Securities and Exchange Commission in connection with the DRIP. Shareholder participation in the DRIP has met West Pointe's expectations.       Financial institutions are required to maintain ratios of capital to assets in accordance with guidelines promulgated by the federal banking regulators. The guidelines are commonly known as "Risk-Based Guidelines" as they define the capital level requirements of a financial institution based upon the level of credit risk associated with holding various categories of assets. The Risk- Based Guidelines require minimum ratios of Tier 1 and Total capital to risk-weighted assets of 4% and 8%, respectively. At December 31, 2005, West Pointe's Tier 1 and Total capital ratios were 15.54% and 16.20%, respectively. In addition to the Risk-Based Guidelines, the federal banking agencies have established a minimum leverage ratio guideline for financial institutions (the "Leverage Ratio Guideline"). The Leverage Ratio Guideline provides for a minimum ratio of Tier 1 capital to average assets of 4%. West Pointe's leverage ratio at December 31, 2005, was 10.05%. Under present regulatory guidelines promulgated by the federal banking regulators, the subordinated debentures issued in December 2004 in connection with the Company's trust preferred securities transaction qualifies for inclusion in capital for purposes of determining the Company's Tier 1 capital, Total capital and leverage ratios. According to the aforementioned regulatory guidelines, West Pointe is considered to be "well capitalized." See "Notes to Consolidated Financial Statements -- Regulatory Matters" for additional information concerning West Pointe's regulatory capital measures.    ASSET/LIABILITY MANAGEMENT       West Pointe's asset/liability strategy is to minimize the sensitivity of its net interest margin as a consequence of changes in interest rates. West Pointe's asset/liability management committee reviews asset and liability repricing in the context of current and possible future interest rate scenarios affecting the economy in its market territory. The asset/liability committee is comprised of executive officers of the Bank representing all major departments of West Pointe.       As assets and liabilities tend to become more rate sensitive, whether due to customer demands or West Pointe's initiatives, it becomes more important that rates earned are matched with rates paid and that repricing dates are matched so the next earning interval will have both components at current rates. Assets and liabilities that mature or are repriced in one year or less are considered in the financial services industry to be "rate sensitive." This means that as rates in the marketplace change, the rates on these assets or liabilities will be impacted soon after. Assuming a reasonably balanced rate sensitivity position, increasing rates will result in more interest income and more interest expense. Conversely, declining rates will result in less interest income and less interest expense.                                          27        The following table reflects an analysis of interest earning assets and liabilities, all of which are held other than for trading purposes, at December 31, 2005, allocated over various time frames in which the instruments are subject to repricing.                                                                     After                                                               Three Months         After                                               Three             Through           One Year                                               Months             Twelve           Through           After                                              or Less             Months          Five Years       Five Years         Total - ------------------------------------------------------------------------------------------------------------------------------       Interest earning assets:   Interest bearing due from banks         $   1,631,828      $          --      $         --     $         --     $  1,631,828   Federal Home Loan Bank Stock                       --                 --                --       13,962,968       13,962,968   Securities(1)                              10,981,433         25,063,843        84,150,417       47,710,212      167,905,905   Loans held for sale                           333,000                 --                --               --          333,000   Loans(2)                                   90,187,916         56,547,059       104,310,510        4,654,044      255,699,529 - ------------------------------------------------------------------------------------------------------------------------------       Total interest earning assets         103,134,177         81,610,902       188,460,927       66,327,224      439,533,230 - ------------------------------------------------------------------------------------------------------------------------------ Cumulative interest earning assets          103,134,177        184,745,079       373,206,006      439,533,230      439,533,230 - ------------------------------------------------------------------------------------------------------------------------------ Interest bearing liabilities:   Interest bearing demand deposits           10,937,929                 --                --               --       10,937,929   Money market deposits                      47,351,115                 --                --               --       47,351,115   Savings deposits                          109,676,938                 --                --               --      109,676,938   Time deposits $100,000 or more             22,352,695         35,408,853        10,986,858               --       68,748,406   Time deposits less than $100,000           29,418,006         48,640,828        35,579,121               --      113,637,955   Repurchase agreements                      22,133,681          1,619,631         1,438,964               --       25,192,276   Subordinated debentures                    10,310,000                 --                --               --       10,310,000 - ------------------------------------------------------------------------------------------------------------------------------       Total interest bearing liabilities    252,180,364         85,669,312        48,004,943               --      385,854,619 - ------------------------------------------------------------------------------------------------------------------------------ Cumulative interest bearing liabilities     252,180,364        337,849,676       385,854,619      385,854,619      385,854,619 - ------------------------------------------------------------------------------------------------------------------------------ Gap analysis:   Interest sensitivity gap                $(149,046,187)     $  (4,058,410)     $140,455,984     $ 66,327,224     $ 53,678,611 ==============================================================================================================================   Cumulative interest sensitivity gap     $(149,046,187)     $(153,104,597)     $(12,648,613)    $ 53,678,611     $ 53,678,611 ============================================================================================================================== Cumulative gap ratio of interest earning   assets to interest bearing liabilities             41%                55%               97%             114%             114% ==============================================================================================================================   (1) Equity securities have no stated maturity and are, therefore, included in     the "after five years" column. Fixed rate mortgage-backed securities are     reported based upon their projected average lives. Floating rate     mortgage-backed securities are reported based upon their next repricing     date.  (2) Nonaccrual loans are reported in the "after one year through five years"     column.       The Company measures and manages its interest rate risk sensitivity on a regular basis to stabilize earnings in changing interest rate environments. The Company evaluates its interest rate risk sensitivity position to determine that the level of risk is commensurate with the rate of return. The methods used to provide insight into the level of risk exposure indicate that the Company is currently within interest rate risk guidelines set by management and that such risk is at a manageable level. While the Company does have some exposure to changing interest rates, management believes that the Company is positioned to protect earnings throughout changing interest rate environments.       The Company's net interest income is affected by changes in the absolute level of interest rates. The Company's interest rate risk position is liability-sensitive; i.e., liabilities are likely to reprice faster than assets, resulting in a decrease in net interest income in a rising rate environment. Conversely, net interest income should increase in a falling rate environment.       Because the interest rate sensitivity analysis does not encompass other factors which affect interest rate risk, the Company employs the use of a simulation model to measure exposure to changes in interest rates. Modeling techniques encompass contractual maturity, prepayment assumptions covering interest rate increases and decreases and index-driven repricing characteristics. The model projects changes in net interest income over a one-year period should interest rates rise, fall or remain constant. These effects typically are analyzed assuming interest rate                                          28   increases or decreases of 100 and 200 basis points. The model also incorporates key assumptions including the nature and timing of interest rate levels, changes in deposit levels, prepayments on loans and securities, pricing decisions on loans and deposits and reinvestment/replacement of asset and liability cash flows. While assumptions are developed based upon current economic and local market conditions, we cannot give assurances as to the predictive nature of these assumptions, including how customer preferences or competitor influences might change. The following table presents, as of December 31, 2005, the projected level and change in net interest income assuming interest rate increases and decreases of 100 and 200 basis points.                                                                   Net Interest Income                     Change in                         --------------------------------------                       Rates                           $ Amount(1)    $ Change(1)    % Change - --------------------------------------------------------------------------------------------     +200 bp                                                  13,478             74        (.6) +100 bp                                                  13,356            (48)        .4 - -100 bp                                                  13,042           (362)       2.7 - -200 bp                                                  12,394         (1,010)       7.5 ============================================================================================   (1) Amounts rounded to nearest thousand.       For additional information regarding the interest rates applicable to certain of the Company's interest sensitive assets and liabilities, see the discussion of "Results of Operations -- Net Interest Income" including the table entitled "Distribution of Average Assets, Liabilities and Stockholders' Equity and Interest Rate Information" at page 6, the discussion of "Financial Condition -- Securities" including the table regarding the maturities and weighted average yields of certain securities at page 18, the discussion of "Financial Condition -- Deposits" including the table regarding average deposits and the weighted average interest rates paid on such deposits at page 19, the discussion of "Financial Condition -- Borrowings" including the table summarizing certain information pertaining to short-term borrowings at page 21. For additional information categorizing certain of the Company's loans as either fixed or variable, see the discussion of "Financial Condition -- Loans" including the table regarding "Interest Sensitivity" at page 15. For additional information regarding the fair value of certain of the Company's interest sensitive instruments, see "Fair Value of Financial Instruments" at Note 17 to the Consolidated Financial Statements at page 55.  ADOPTION OF NEW ACCOUNTING STANDARDS       No new accounting standards were adopted in 2005 which had a material impact on the Company's financial statements.  NEWLY ISSUED BUT NOT YET EFFECTIVE ACCOUNTING STANDARDS       FASB Statement 123 (revised 2004), "Share-Based Payment" requires expensing of stock options effective for years beginning after June 15, 2005. The Company plans to adopt this standard as of January 1, 2006 and will begin expensing any unvested stock options at that time. The Company estimates the 2006 pre-tax compensation expense to be approximately $218,900.       FASB Staff Position (FSP) 115-1 "The Meaning of Other-Than-Temporary Impairment and Its Application to Certain Investments" is effective for reporting periods after December 15, 2005. FSP 115-1 addresses the determination as to when an investment is considered impaired, whether that impairment is other than temporary and the measurement of an impairment loss. This FSP also includes accounting considerations subsequent to the recognition of an other-than-temporary impairment and requires certain disclosures about unrealized losses that have not been recognized as other-than-temporary impairments. The Company does not anticipate that the adoption of this standard will have any material impact on the Company's financial condition or results of operations.                                          29        No other new accounting standards have been issued that are not yet effective that are expected to have a material impact on the Company's financial condition or results of operations.  CRITICAL ACCOUNTING POLICIES       The accounting and reporting policies of West Pointe and its subsidiary conform with U.S. generally accepted accounting principles and general practices within the financial services industry. West Pointe's significant accounting policies are described in Note 1 to the Consolidated Financial Statements at page 39. Certain accounting policies require management to make assumptions and estimates that affect the amounts reported in the financial statements and accompanying notes. Management considers such accounting policies to be critical accounting policies. These assumptions and estimates used by management are based on historical experience and other factors, which are believed to be reasonable under the circumstances. Because of the nature of the assumptions and estimates made by management, actual results could differ from these assumptions and estimates which could have a material impact on West Pointe's carrying values of assets and liabilities and its results of operations. West Pointe considers its more critical accounting policies to consist of the allowance for loan losses and the estimation of fair value, which are separately discussed below.    ALLOWANCE FOR LOAN LOSSES       The allowance for loan losses represents management's best estimate of probable incurred losses in the loan portfolio. The allowance for loan losses is increased by the provision for loan losses charged to expense and reduced by loans charged off, net of recoveries. The provision for loan losses reflects management's judgment of the cost associated with credit risks in the loan portfolio. Factors, which influence management's determination of the provision for loan losses, include, among other things, a review of individual loans, size and quality of the loan portfolio, current and projected economic conditions, regulatory guidelines, and historical loan loss experience. Calculation of the allowance for loan losses is a critical accounting estimate due to the significant judgment, estimates and assumptions related to the amount and timing of estimated losses, consideration of current and historical trends and the amount and timing of cash flows related to impaired loans. Changes in the financial condition of individual borrowers, in economic conditions, and in historical loss experience may all affect the required level of the allowance for loan losses and the associated provision for loan losses. Please refer to the section of this report entitled "Asset Quality" and Notes 1 and 5 to the Consolidated Financial Statements at pages 39 and 47 for a detailed description of our estimation processes and methodology related to the allowance for loan losses.    ESTIMATION OF FAIR VALUE       U.S. generally accepted accounting principles require that certain assets and liabilities be carried on the balance sheet at fair value. In addition, the fair value of financial instruments is required to be disclosed as a part of the notes to the consolidated financial statements for assets and liabilities. Fair values are volatile and may be influenced by a number of factors, including market interest rates, prepayment speeds and discount rates. Following is a discussion of the estimation of fair value for West Pointe's more significant financial instrument:       Available for Sale Securities -- Fair values for the majority of West Pointe's available for sale securities are based on quoted market prices. In instances where quoted market prices are not available, fair values are based on the quoted prices of similar instruments. Please refer to Note 4 to the Consolidated Financial Statements at page 45 for further discussion of the fair value of financial instruments.                                          30   CONTRACTUAL OBLIGATIONS       The Company enters into certain contractual obligations in the ordinary course of operations. The required payments under these contracts represent future cash requirements of the Company. The Company's significant fixed and determinable contractual obligations, as of December 31, 2005, are set forth in the following table:                                                       Payments Due                        ---------------------------------------------------------------------                                          After         After                                        One Year     Three Years                          One Year       Through       Through        After                          or Less      Three Years   Five Years    Five Years       Total - --------------------------------------------------------------------------------------------       Time certificates of   deposit              $135,820,383   $38,150,194   $8,415,784    $        --   $182,386,361 Subordinated   debentures                     --           --            --     10,310,000     10,310,000 Operating leases             47,520        43,560           --             --         91,080 - --------------------------------------------------------------------------------------------   Total contractual      cash obligations  $135,867,903   $38,193,754   $8,415,784    $10,310,000   $192,787,441 ============================================================================================        Please refer to Notes 6, 7, and 11 to the Consolidated Financial Statements at pages 48, 49 and 50 for further discussion of the Company's contractual obligations.  OFF-BALANCE SHEET ARRANGEMENTS       In order to meet the financing needs of its customers, the Company is also a party to certain financial instruments with off-balance sheet risk in the normal course of business. These financial instruments include commitments to extend credit and standby letters of credit, which involve, to varying degrees, elements of credit risk and interest rate risk in excess of the amounts recognized in the Company's consolidated balance sheets.       Unused lines of credit and loan commitments assure a borrower of financing for a specified period of time at a specified rate. The risk to the Company under such commitments is limited to the terms of the contracts. For example, the Company may not be obligated to advance funds if the customer's financial condition deteriorates or if the customer fails to meet specific covenants. An approved, but unfunded, loan commitment represents a potential credit risk once the funds are advanced to the customer. The unused lines of credit and loan commitments also represent a future cash requirement, but this cash requirement will be limited since many commitments are expected to expire or be only partially used.       Stand-by letters of credit represent commitments by the Company to repay a third-party beneficiary when a customer fails to repay a loan or debt instrument. The terms and risk of loss involved in issuing stand-by letters of credit are similar to those involved in issuing loan commitments and extending credit. In addition to credit risk, the letters of credit could present an immediate cash requirement if the obligations require funding.                                          31        The following table presents, as of December 31, 2005 and 2004, the Company's significant off-balance sheet commitments.                                                                        December 31,                                                               -------------------------                                                                  2005          2004 - ---------------------------------------------------------------------------------------    Commitments to originate new loans                            $ 6,826,011   $18,925,736 Commitments to originate new loans held for sale                1,097,725     1,168,849 Unfunded commitments to extend credit under existing equity,   credit card and other lines of credit                        55,337,442    56,248,547 Letters of credit                                               4,690,051     4,337,696 Commitments to sell loans held for sale                         1,430,725     1,244,292   QUARTERLY FINANCIAL INFORMATION (UNAUDITED)                                                  First        Second       Third        Fourth                                              Quarter      Quarter      Quarter      Quarter - ---------------------------------------------------------------------------------------------      2005 Interest income                             $5,205,455   $5,398,639   $5,678,118   $6,237,016 Interest expense                             1,935,313    2,105,221    2,386,634    2,688,114 Net interest income                          3,270,142    3,293,418    3,291,484    3,548,902 Provision for loan losses                      (45,000)      47,000           --           -- Noninterest income                           1,119,503    1,209,850    1,255,329      802,469 Noninterest expense                          3,288,676    3,227,220    3,351,966    3,246,787 Income tax expense                             259,400      298,300      287,600      280,900 - --------------------------------------------------------------------------------------------- Net income                                  $  886,569   $  930,748   $  907,247   $  823,684 ============================================================================================= Per common share   Net income:      Basic                                  $      .88   $      .92   $      .89   $      .81      Diluted                                       .84          .87          .85          .76   Dividends                                        .18          .18          .19          .19 2004 Interest income                             $4,973,664   $4,899,141   $5,058,245   $5,152,196 Interest expense                             1,554,617    1,537,320    1,652,041    1,794,100 Net interest income                          3,419,047    3,361,821    3,406,204    3,358,096 Provision for loan losses                      180,000      418,000       60,000           -- Noninterest income                           1,088,631    1,209,619    1,030,039    1,064,684 Noninterest expense                          3,212,135    3,191,016    3,254,983    2,913,203 Income tax expense                             258,800      202,400      277,800      400,400 - --------------------------------------------------------------------------------------------- Net income                                  $  856,743   $  760,024   $  843,460   $1,109,177 ============================================================================================= Per common share   Net income:      Basic                                  $      .86   $      .76   $      .84   $     1.11      Diluted                                       .83          .73          .81         1.06   Dividends                                        .14          .15          .16          .17                                           32                                     (CROWE LOGO)  REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM - --------------------------------------------------------------------------------  Board of Directors West Pointe Bancorp, Inc. Belleville, Illinois       We have audited the accompanying consolidated balance sheets of West Pointe Bancorp, Inc. and subsidiary ("the Company") as of December 31, 2005 and 2004 and the related consolidated statements of income, comprehensive income, stockholders' equity and cash flows for each of the three years in the period ended December 31, 2005. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.       We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.       In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of West Pointe Bancorp, Inc. and subsidiary as of December 31, 2005 and 2004, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2005, in conformity with U.S. generally accepted accounting principles.  [CROWE SIGNATURE]  Crowe Chizek and Company LLC Indianapolis, Indiana March 17, 2006                                          33   WEST POINTE BANCORP, INC. AND SUBSIDIARY - --------------------------------------------------------------------------------                            CONSOLIDATED BALANCE SHEETS                                       ASSETS                                                                            December 31,                                                                 ----------------------------                                                                     2005            2004 - --------------------------------------------------------------------------------------------    Cash and due from banks                                         $ 11,599,219    $ 11,737,677 Interest bearing due from banks                                    1,631,828         131,747 - --------------------------------------------------------------------------------------------        Cash and cash equivalents                                  13,231,047      11,869,424 Available for sale securities                                    167,905,905     154,389,611 Loans held for sale                                                  333,000          74,238 Loans                                                            255,699,529     240,767,062 Allowance for loan losses                                         (2,002,059)     (2,692,903) - --------------------------------------------------------------------------------------------        Net loans                                                 253,697,470     238,074,159 Bank premises and equipment                                       11,756,248      12,393,908 Federal Home Loan Bank stock                                      13,962,968      13,299,700 Cash surrender value of life insurance                            12,305,648      10,610,716 Accrued interest and other assets                                  4,198,746       3,309,368 - --------------------------------------------------------------------------------------------        Total Assets                                             $477,391,032    $444,021,124 ============================================================================================                              LIABILITIES AND STOCKHOLDERS' EQUITY Liabilities   Deposits:      Noninterest bearing                                        $ 51,643,811    $ 45,206,286      Interest bearing                                            350,352,343     330,038,134 - --------------------------------------------------------------------------------------------        Total deposits                                            401,996,154     375,244,420   Repurchase agreements                                           25,192,276      20,486,973   Federal Home Loan Bank advances                                         --         550,000   Subordinated debentures                                         10,310,000      10,310,000   Accrued interest and other liabilities                           4,276,401       3,912,112 - --------------------------------------------------------------------------------------------        Total Liabilities                                         441,774,831     410,503,505 - -------------------------------------------------------------------------------------------- Stockholders' Equity   Preferred stock, $1 par value -- 50,000 shares authorized      and unissued                                                         --              --   Common stock, $1 par value -- 10,000,000 shares      authorized; 1,041,910 and 1,024,029 shares issued at      December 31, 2005 and 2004, respectively                      1,041,910       1,024,029   Surplus                                                         14,925,466      14,113,209   Retained earnings                                               21,692,568      18,894,017   Treasury stock, 17,750 shares                                     (648,575)       (648,575)   Accumulated other comprehensive income (loss)                   (1,395,168)        134,939 - --------------------------------------------------------------------------------------------        Total Stockholders' Equity                                 35,616,201      33,517,619 - --------------------------------------------------------------------------------------------        Total Liabilities and Stockholders' Equity               $477,391,032    $444,021,124 ============================================================================================   See the accompanying notes to consolidated financial statements.                                          34   WEST POINTE BANCORP, INC. AND SUBSIDIARY - --------------------------------------------------------------------------------                         CONSOLIDATED STATEMENTS OF INCOME                                                                For the Years Ended December 31,                                                         -----------------------------------------                                                            2005           2003           2004 - -------------------------------------------------------------------------------------------------     Interest Income   Loans, including fees      Taxable                                            $16,126,873    $13,759,724    $14,518,095      Non-taxable                                            202,573        168,923        177,871   Securities      Taxable                                              4,251,695      4,573,127      4,303,341      Non-taxable                                          1,665,589      1,514,265      1,484,197   Deposits with banks                                       272,498         67,207         96,984 - -------------------------------------------------------------------------------------------------        Total Interest Income                             22,519,228     20,083,246     20,580,488 - ------------------------------------------------------------------------------------------------- Interest Expense   Deposits                                                7,838,871      5,870,922      6,512,644   Repurchase agreements                                     684,242        324,204        313,430   Other borrowings                                               --         38,840         50,664   Federal Home Loan Bank advances                            13,875        281,229        287,482   Subordinated debentures                                   578,294         22,883             -- - -------------------------------------------------------------------------------------------------        Total Interest Expense                             9,115,282      6,538,078      7,164,220 - ------------------------------------------------------------------------------------------------- Net Interest Income                                      13,403,946     13,545,168     13,416,268 Provision For Loan Losses                                     2,000        658,000      1,213,000 - -------------------------------------------------------------------------------------------------      Net Interest Income After Provision For Loan        Losses                                            13,401,946     12,887,168     12,203,268 - ------------------------------------------------------------------------------------------------- Noninterest Income   Service charges on deposits                             1,383,815      1,531,329      1,331,403   Mortgage banking                                          375,023        461,206        865,375   Trust fees                                                691,856        674,723        694,157   Brokerage and insurance services                          373,254        369,697        331,532   Credit card income                                        405,641        402,872        378,317   Earnings on cash surrender value of life insurance        308,000        428,068        488,087   Gain on sale of securities, net                           378,516        314,048        629,318   Gain on sale of credit card portfolio                     191,221             --             --   Other                                                     279,825        211,030        227,237 - -------------------------------------------------------------------------------------------------        Total Noninterest Income                           4,387,151      4,392,973      4,945,426 - ------------------------------------------------------------------------------------------------- Noninterest Expenses   Employee compensation and benefits                      6,964,304      6,696,338      6,530,843   Occupancy, net                                            805,354        729,936        730,497   Furniture and equipment                                   732,345        803,270        679,766   Legal and professional fees                               718,277        636,225      1,071,471   Data processing                                           499,245        461,601        459,832   Advertising                                               477,805        419,565        399,278   Other                                                   2,917,319      2,824,402      2,717,470 - -------------------------------------------------------------------------------------------------        Total Noninterest Expenses                        13,114,649     12,571,337     12,589,157 - ------------------------------------------------------------------------------------------------- Income Before Income Taxes                                4,674,448      4,708,804      4,559,537 Income Tax Expense                                        1,126,200      1,139,400      1,083,600 - ------------------------------------------------------------------------------------------------- Net Income                                              $ 3,548,248    $ 3,569,404    $ 3,475,937 ================================================================================================= Earnings Per Share -- Basic                             $      3.50    $      3.58    $      3.54 ================================================================================================= Earnings Per Share -- Diluted                           $      3.32    $      3.43    $      3.42 =================================================================================================   See the accompanying notes to consolidated financial statements.                                          35   WEST POINTE BANCORP, INC. AND SUBSIDIARY - --------------------------------------------------------------------------------                  CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME                                                             For the Years Ended December 31,                                                       --------------------------------------                                                          2005          2004         2003 - --------------------------------------------------------------------------------------------     Net Income                                            $ 3,548,248   $3,569,404   $ 3,475,937 - -------------------------------------------------------------------------------------------- Other Comprehensive Loss, Net of Tax:   Unrealized holding losses on securities available      for sale (net of income tax credits of      $793,971, $377,621 and $522,835 for 2005, 2004      and 2003, respectively)                           (1,295,427)    (616,118)     (853,047)   Less adjustment for realized gains included in net      income (net of income taxes of $143,836,      $119,338 and $239,141 for 2005, 2004 and 2003,      respectively)                                       (234,680)    (194,710)     (390,177) - --------------------------------------------------------------------------------------------        Other Comprehensive Loss                        (1,530,107)    (810,828)   (1,243,224) - -------------------------------------------------------------------------------------------- Comprehensive Income                                  $ 2,018,141   $2,758,576   $ 2,232,713 ============================================================================================   See the accompanying notes to consolidated financial statements.                                          36   WEST POINTE BANCORP, INC. AND SUBSIDIARY - --------------------------------------------------------------------------------                  CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY               FOR THE YEARS ENDED DECEMBER 31, 2005, 2004 AND 2003                                                                                                          Accumulated                                 Common Stock                                      Treasury Stock         Other           Total                            ----------------------                  Retained     ------------------   Comprehensive   Stockholders'                             Shares       Amount       Surplus      Earnings     Shares    Amount     Income (Loss)      Equity - ----------------------------------------------------------------------------------------------------------------------------------          Balance --   January 1, 2003            995,835   $  995,835   $13,005,154   $12,998,298   17,750   $(648,575)   $ 2,188,991     $28,539,703   Issuance of Common     Stock                     12,863       12,863       477,241            --       --          --             --         490,104   Dividends Paid, $.54     Per Share                     --           --            --      (531,107)      --          --             --        (531,107)   Net Income                      --           --            --     3,475,937       --          --             --       3,475,937   Other Comprehensive     Loss                          --           --            --            --       --          --     (1,243,224)     (1,243,224) - ---------------------------------------------------------------------------------------------------------------------------------- Balance --   December 31, 2003        1,008,698    1,008,698    13,482,395    15,943,128   17,750    (648,575)       945,767      30,731,413   Issuance of Common     Stock                     15,331       15,331       630,814            --       --          --             --         646,145   Dividends Paid, $.62     Per Share                     --           --            --      (618,515)      --          --             --        (618,515)   Net Income                      --           --            --     3,569,404       --          --             --       3,569,404   Other Comprehensive     Loss                          --           --            --            --       --          --       (810,828)       (810,828) - ---------------------------------------------------------------------------------------------------------------------------------- Balance --   December 31, 2004        1,024,029    1,024,029    14,113,209    18,894,017   17,750    (648,575)       134,939      33,517,619   Issuance of Common     Stock                     17,881       17,881       812,257            --       --          --             --         830,138   Dividends Paid, $.74     Per Share                     --           --            --      (749,697)      --          --             --        (749,697)   Net Income                      --           --            --     3,548,248       --          --             --       3,548,248   Other Comprehensive     Loss                          --           --            --            --       --          --     (1,530,107)     (1,530,107) - ---------------------------------------------------------------------------------------------------------------------------------- Balance --   December 31, 2005        1,041,910   $1,041,910   $14,925,466   $21,692,568   17,750   $(648,575)   $(1,395,168)    $35,616,201 ==================================================================================================================================   See the accompanying notes to consolidated financial statements.                                          37   WEST POINTE BANCORP, INC. AND SUBSIDIARY - --------------------------------------------------------------------------------                       CONSOLIDATED STATEMENTS OF CASH FLOWS                                                                       For the Years Ended December 31,                                                               -------------------------------------------                                                                   2005           2004           2003 - ---------------------------------------------------------------------------------------------------------     Operating Activities   Net income                                                  $  3,548,248   $  3,569,404   $   3,475,937   Adjustments to reconcile net income to net cash provided     by operating activities:       Depreciation and amortization                                800,889        837,600         722,366       Net amortization on securities                               379,598        838,376       1,321,778       Gain on sale of securities, net                             (378,516)      (314,048)       (629,318)       Gain on sale of mortgage loans                              (236,827)      (331,833)       (760,876)       Gain on sale of credit card portfolio                       (191,221)            --              --       (Gain) loss on sale and write down of foreclosed         property                                                    65,126         (3,275)        (23,206)       Loss on disposition of bank premises and equipment                --             --           9,895       Federal Home Loan Bank stock dividends                      (663,268)      (779,100)       (810,800)       Provision for loan losses                                      2,000        658,000       1,213,000       Proceeds from sales of mortgage loans held for sale       16,832,874     20,238,651      49,668,488       Proceeds from sale of credit card portfolio                1,566,110             --              --       Originations of mortgage loans held for sale             (16,854,809)   (19,642,327)    (46,629,191)       Earnings on cash surrender value of life insurance         policies                                                  (308,000)      (428,068)       (488,087)       Increase in other assets and other liabilities, net          995,009        320,733       1,801,240 - --------------------------------------------------------------------------------------------------------- Net Cash Provided By Operating Activities                        5,557,213      4,964,113       8,871,226 - --------------------------------------------------------------------------------------------------------- Investing Activities   Proceeds from sales of securities available for sale          10,473,067      8,680,559      18,088,140   Proceeds from maturities of securities available for sale     38,807,978     30,371,226      84,284,016   Purchases of securities available for sale                   (65,266,335)   (28,573,408)   (136,728,264)   Net (increase) decrease in loans                             (17,886,613)   (25,449,910)      1,180,640   Purchases of life insurance policies                          (1,344,210)    (1,752,000)             --   Proceeds from sale of foreclosed property                        196,274         90,575         261,418   Purchases of bank premises and equipment                        (163,229)    (1,316,786)       (934,952) - --------------------------------------------------------------------------------------------------------- Net Cash Used In Investing Activities                          (35,183,068)   (17,949,744)    (33,849,002) - --------------------------------------------------------------------------------------------------------- Financing Activities   Net increase in noninterest bearing deposits                   6,437,525      3,736,030         865,995   Net increase in interest bearing deposits                     20,314,209     10,587,506       9,065,052   Net increase (decrease) in repurchase agreements               4,705,303      1,301,106      (2,506,411)   Decrease in other borrowings                                          --     (1,237,100)       (300,000)   Net increase (decrease) in short-term FHLB advances             (550,000)    (3,850,000)      4,400,000   Repayment of FHLB term advance                                        --     (5,000,000)             --   Proceeds from issuance of common stock                           830,138        646,145         490,104   Proceeds from issuance of subordinated debentures                     --     10,310,000              --   Dividends paid                                                  (749,697)      (618,515)       (531,107) - --------------------------------------------------------------------------------------------------------- Net Cash Provided By Financing Activities                       30,987,478     15,875,172      11,483,633 - --------------------------------------------------------------------------------------------------------- Net Increase (Decrease) In Cash And Cash Equivalents             1,361,623      2,889,541     (13,494,143) Cash And Cash Equivalents -- Beginning of Year                  11,869,424      8,979,883      22,474,026 - --------------------------------------------------------------------------------------------------------- Cash And Cash Equivalents -- End of Year                      $ 13,231,047   $ 11,869,424   $   8,979,883 ========================================================================================================= Supplemental Disclosure of Cash Flow Information   Interest paid                                               $  8,780,002   $  6,467,844   $   7,393,729   Income taxes paid                                                871,000        841,003         455,000   Real estate acquired in settlement of loans                      887,757        775,601         103,212   Credit card loans transferred to held for sale                 1,379,464             --              -- - ---------------------------------------------------------------------------------------------------------   See the accompanying notes to consolidated financial statements.                                          38   WEST POINTE BANCORP, INC. AND SUBSIDIARY - --------------------------------------------------------------------------------                     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  1. NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES    GENERAL       The accompanying consolidated financial statements of West Pointe Bancorp, Inc. ("the Company"), and its wholly-owned subsidiary, West Pointe Bank And Trust Company ("the Bank"), have been prepared in accordance with U.S. generally accepted accounting principles and conform to practices prevalent among financial institutions.       The Bank is an Illinois banking organization which operates from five community banking locations in Illinois. The Bank provides a full range of banking services in a single significant business segment, to individual and corporate customers in the St. Louis, Missouri metropolitan area. Substantially all of the Bank's loans, commitments and standby letters of credit have been granted to customers in the Bank's market area. The Bank is subject to intense competition from other financial institutions. The Bank also is subject to the regulations of certain federal and state agencies and undergoes periodic examination by those regulatory authorities.    CONSOLIDATION       The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary. All intercompany balances have been eliminated in consolidation.    ACCOUNTING RECLASSIFICATIONS       Certain items in the prior year financial statements were reclassified to conform to the current year's presentation.    ACCOUNTING ESTIMATES       The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reported period. Actual results could differ from those estimates.       Material estimates that are particularly susceptible to significant change include the determination of the allowance for loan losses, the fair value of financial instruments and the valuation of real estate acquired in connection with foreclosures or in satisfaction of loans.    CASH AND CASH EQUIVALENTS       For purposes of the consolidated statements of cash flows, noninterest bearing due from bank balances, interest bearing due from bank balances and federal funds sold are considered to be cash equivalents. Net cash flows are reported for customer loan and deposit transactions, as well as for other borrowings.                                          39     SECURITIES       The Company currently classifies all securities as available for sale.       Available for sale securities, which include any security for which the Company has no immediate plan to sell but which may be sold in the future, are carried at fair value. Realized gains and losses, based on amortized cost of the specific security, are included in other income. Unrealized gains and losses are recorded, net of related income tax effects, in stockholders' equity as other comprehensive income.       Premiums and discounts are amortized over the lives of the respective securities as an adjustment to yield using a method which approximates level yield. Dividend and interest income are recognized when earned. Realized gains and losses are included in earnings and are derived using the specific-identification method for determining the cost of the securities sold. Securities are written down to fair value when a decline in fair value is not temporary.       Declines in the fair value of securities below their cost that are other than temporary are reflected as realized losses. In estimating other-than-temporary losses, management considers: (1) the length of time and extent that fair value has been less than cost, (2) the financial condition and near term prospects of the issuer, and (3) the Company's ability and intent to hold the security for a period sufficient to allow for any anticipated recovery in fair value.    MORTGAGE LOANS HELD FOR SALE       Mortgage loans held for sale are carried at the lower of aggregate cost or fair value. Mortgage loans held for sale are generally sold with servicing rights retained. Net unrealized losses, if any, are recorded as a valuation allowance and charged to earnings. Gains and losses resulting from sales of mortgage loans are recognized when the respective loans are sold to investors. Gains and losses are determined by the difference between the selling price and the carrying value of the related loan sold. Fees received from borrowers to guarantee the funding of mortgage loans held for sale and fees paid to investors to ensure the ultimate sale of such mortgage loans are recognized as income or expense when the loans are sold or when it becomes evident that the commitment will not be used.    LOANS       Loans that management has the intent and ability to hold for the foreseeable future or until maturity or payoff are reported at the principal balance outstanding, net of unearned interest, deferred loan fees and costs, and an allowance for loan losses. Interest income is reported on the interest method and includes amortization of net deferred loan fees and costs over the loan term. Interest income is generally discontinued at the time the loan is 90 days delinquent unless the loan is well-secured and in process of collection. Consumer loans are typically charged off no later than 120 days past due. In all cases, loans are placed on nonaccrual or charged-off at an earlier date if collection of principal or interest is considered doubtful.       All interest accrued but not received for loans placed on nonaccrual is reversed against interest income. Interest received on such loans is accounted for on the cash-basis or cost-recovery method, until qualifying for return to accrual. Loans are returned to accrual status when all of the principal and interest amounts contractually due are brought current and future payments are reasonably assured.    ALLOWANCE FOR LOAN LOSSES       The allowance for loan losses is a valuation allowance for probable incurred credit losses. Loan losses are charged against the allowance when management believes the uncollectibility of a loan balance is confirmed. Subsequent recoveries, if any, are credited to the allowance. Management estimates the allowance balance required using past loan loss experience, the nature and                                         40   volume of the portfolio, information about specific borrower situations and estimated collateral values, economic conditions and other factors. Allocations of the allowance may be made for specific loans, but the entire allowance is available for any loan that, in management's judgment, should be charged-off.       The allowance consists of specific and general components. The specific component relates to loans that are individually classified as impaired or loans otherwise classified as substandard or doubtful. The general component covers non-classified loans and is based on historical loss experience adjusted for current factors.       A loan is impaired when full payment under the loan terms is not expected. Commercial and commercial real estate loans are individually evaluated for impairment. If a loan is impaired, a portion of the allowance is allocated so that the loan is reported, net, at the present value of estimated future cash flows using the loan's existing rate or at the fair value of collateral if repayment is expected solely from the collateral. Large groups of smaller balance homogeneous loans, such as consumer and residential real estate loans, are collectively evaluated for impairment, and accordingly, they are not separately identified for impairment disclosures.    REAL ESTATE ACQUIRED BY FORECLOSURE       Real estate acquired by foreclosure is held for sale and is initially recorded on an individual property basis at estimated fair value, less cost to sell, on the date of foreclosure, thus establishing a new cost basis. Subsequent to foreclosure, real estate is periodically evaluated by management and a valuation allowance is established if the estimated fair value, less costs to sell, of the property declines. Subsequent increases in fair value are recorded through a reversal of the valuation allowance, but not below zero. Revenue and expenses from operations and changes in the valuation allowance are included in other expenses. At December 31, 2005 and 2004, real estate acquired by foreclosure totaled $1,537,757 and $911,400, respectively.       Profit on sales of foreclosed real estate is recognized when title has passed, minimum down payment requirements have been met, the terms of any notes received by the Company are such to satisfy continuing payment requirements and the Company is relieved of any requirement for continued involvement in the real estate. Otherwise, recognition of profit is deferred until such criteria are met.    BANK PREMISES AND EQUIPMENT       Land is carried at cost. Bank premises and equipment are stated at cost, less accumulated depreciation and amortization computed using straight-line and accelerated methods. The assets are depreciated over the following periods:     Buildings and leasehold improvements                   39 years Furniture and equipment                              5-10 years Automobiles                                           3-5 years     FEDERAL HOME LOAN BANK (FHLB) STOCK       The Bank is a member of the FHLB system. Members are required to own a certain amount of stock based on the level of borrowings and other factors, and may invest in additional amounts. FHLB stock is carried at cost, is classified as a restricted security, and is periodically evaluated for impairment based on ultimate recovery of par value. Both cash and stock dividends are reported as income.    CASH SURRENDER VALUE OF LIFE INSURANCE       The Company has purchased life insurance policies on certain key executives. Company owned life insurance is recorded at its cash surrender value, or the amount that can be realized.                                         41     REPURCHASE AGREEMENTS       The Company enters into sales of repurchase agreements at a specified date. Such repurchase agreements are considered financing arrangements, and, accordingly, the obligation to repurchase securities sold is reflected as a liability in the consolidated balance sheets. Repurchase agreements are collateralized by securities.    ADVERTISING       Advertising costs are expensed when incurred.    INCOME TAXES       The Company and its subsidiary file a consolidated federal income tax return. Income taxes are accounted for under the asset and liability method. Income tax expense is the total of the current year income tax due or refundable and the change in deferred tax assets and liabilities. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.    STOCK OPTION PLAN       The Company has a stock-based employee compensation plan, which is described more fully in Note 14. The Company accounts for this plan under the recognition and measurement principles of APB Opinion No. 25, "Accounting for Stock Issued to Employees," and related Interpretations. No stock-based employee compensation cost is reflected in net income, as all options granted under those plans had an exercise price equal to the market value of the underlying common stock on the grant date. The following table illustrates the effect on net income and earnings per share if the Company had applied the fair value recognition provisions of FASB Statement No. 123, "Accounting for Stock-Based Compensation," to stock-based employee compensation:                                                                  Year Ended December 31,                                                         ------------------------------------                                                            2005         2004         2003     - -------------------------------------------------------------------------------------------- Net income, as reported                                 $3,548,248   $3,569,404   $3,475,937 Less: Total stock-based employee compensation cost   determined under the fair value based method, net of   income taxes                                            (216,268)    (204,890)    (199,036) - --------------------------------------------------------------------------------------------   Pro forma net income                                  $3,331,980   $3,364,514   $3,276,901 ============================================================================================ Earnings per share:   Basic -- as reported                                  $     3.50   $     3.58   $     3.54   Basic -- pro forma                                          3.29         3.37         3.33   Diluted -- as reported                                      3.32         3.43         3.42   Diluted -- pro forma                                        3.12         3.23         3.22     EARNINGS PER SHARE       Basic earnings per share (EPS) is computed by dividing income available to common stockholders by the weighted average number of common shares outstanding for the period. The computation of diluted EPS is similar except diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into                                          42   common stock or resulted in the issuance of common stock that then shared in the earnings of the entity.    LOAN COMMITMENTS AND RELATED FINANCIAL INSTRUMENTS       Financial instruments include off-balance sheet credit instruments, such as commitments to make loans and commercial letters of credit, issued to meet customer financing needs. The face amount for these items represents the exposure to loss, before considering customer collateral or ability to repay. Such financial instruments are recorded when they are funded.    COMPREHENSIVE INCOME       Comprehensive income consists of net income and other comprehensive income. Other comprehensive income includes unrealized gains and losses on securities available for sale which are also recognized as separate components of equity.    ADOPTION OF NEW ACCOUNTING STANDARDS       No new accounting standards were adopted in 2005 which had a material impact on the Company's financial statements.    NEWLY ISSUED BUT NOT YET EFFECTIVE ACCOUNTING STANDARDS       FASB Statement 123 (revised 2004), "Share-Based Payment" requires expensing of stock options effective for years beginning after June 15, 2005. The Company plans to adopt this standard as of January 1, 2006 and will begin expensing any unvested stock options at that time. The Company estimates the 2006 pre-tax compensation expense to be approximately $218,900.       FASB Staff Position (FSP) 115-1 "The Meaning of Other-Than-Temporary Impairment and Its Application to Certain Investments" is effective for reporting periods after December 15, 2005. FSP 115-1 addresses the determination as to when an investment is considered impaired, whether that impairment is other than temporary and the measurement of an impairment loss. This FSP also includes accounting considerations subsequent to the recognition of an other-than-temporary impairment and requires certain disclosures about unrealized losses that have not been recognized as other-than-temporary impairments. The Company does not anticipate that the adoption of this standard will have any material impact on the Company's financial condition or results of operations.       No other new accounting standards have been issued that are not yet effective that are expected to have a material impact on the Company's financial condition or results of operations.    LOSS CONTINGENCIES       Loss contingencies, including claims and legal actions arising in the ordinary course of business, are recorded as liabilities when the likelihood of loss is probable and an amount or range of loss can be reasonably estimated. Management does not believe there now are such matters that will have a material effect on the financial statements.    DIVIDEND RESTRICTION       Banking regulations require maintaining certain capital levels and may limit the dividends paid by the bank to the holding company or by the holding company to shareholders. These restrictions pose no practical limit on the ability of the bank or holding company to pay dividends at historical levels.                                          43     OPERATING SEGMENTS       While the chief decision-makers monitor the revenue streams of the various products and services, the identifiable segments are not material and operations are managed and financial performance is evaluated on a Company-wide basis. Accordingly, all of the financial service operations are considered by management to be aggregated in one reportable operating segment.    LONG-TERM ASSETS       Premises and equipment and other long-term assets are reviewed for impairment when events indicate their carrying amount may not be recoverable from future undiscounted cash flows. If impaired, the assets are recorded at fair value.    FAIR VALUE OF FINANCIAL INSTRUMENTS       Fair values of financial instruments are estimated using relevant market information and other assumptions, as more fully disclosed in a separate note. Fair value estimates involve uncertainties and matters of significant judgment regarding interest rates, credit risk, prepayments, and other factors, especially in the absence of broad markets for particular items. Changes in assumptions or in market conditions could significantly affect the estimates.  2. EARNINGS PER SHARE       The computation of EPS is summarized as follows:                                                                  2005          2004          2003 - -------------------------------------------------------------------------------------------------     Basic EPS:   Net income                                               $3,548,248    $3,569,404    $3,475,937 =================================================================================================   Weighted average common shares outstanding                1,013,315       997,506       983,281 =================================================================================================   Basic EPS                                                $     3.50    $     3.58    $     3.54 ================================================================================================= Diluted EPS:   Net income                                               $3,548,248    $3,569,404    $3,475,937 =================================================================================================   Weighted average common shares outstanding                1,013,315       997,506       983,281   Dilutive potential due to stock options                      54,830        44,237        34,412 - -------------------------------------------------------------------------------------------------   Weighted average number of common shares and dilutive      potential common shares outstanding                    1,068,145     1,041,743     1,017,693 =================================================================================================   Diluted EPS                                              $     3.32    $     3.43    $     3.42 =================================================================================================   3. RESTRICTIONS ON CASH AND DUE FROM BANKS       The Company's banking subsidiary is required to maintain cash on hand or on deposit with the Federal Reserve Bank of $3,718,000 and $5,979,000 to meet regulatory reserve and clearing requirements at year-end 2005 and 2004, respectively. These balances do not earn interest.                                          44   4. SECURITIES    AVAILABLE FOR SALE       The fair value of available for sale debt securities and their gross unrealized gains and gross unrealized losses are summarized as follows:                                                                       December 31, 2005                                                        -----------------------------------------                                                                          Gross          Gross                                                                        Unrealized    Unrealized                                                         Fair Value       Gains         Losses - ------------------------------------------------------------------------------------------------     U.S. government agencies                               $ 12,592,707    $  13,215     $   (49,811) Mortgage-backed securities                              105,830,332       96,583      (2,237,450) Obligations of states and political subdivisions         49,482,866      576,985        (649,793) - ------------------------------------------------------------------------------------------------      Total securities                                  $167,905,905    $ 686,783     $(2,937,054) ================================================================================================                                                                       December 31, 2004                                                        -----------------------------------------                                                                          Gross          Gross                                                                        Unrealized    Unrealized                                                         Fair Value       Gains         Losses - ------------------------------------------------------------------------------------------------     U.S. government agencies                               $  3,970,000   $       --     $   (30,781) Mortgage-backed securities                              108,897,319      328,824        (908,041) Obligations of states and political subdivisions         41,522,292      999,601        (171,960) - ------------------------------------------------------------------------------------------------      Total securities                                  $154,389,611   $1,328,425     $(1,110,782) ================================================================================================        Available for sale securities with a carrying value of approximately $110,575,000 and $103,231,000 at December 31, 2005 and 2004, respectively, were pledged to secure public deposits and for other purposes required or permitted by law.       The fair value of available for sale debt securities by contractual maturity, are shown below. Actual maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties. The equity securities have no maturity dates and therefore, have been excluded.                                                                    December 31, 2005                                                                 -----------------                                                                       Fair                                                                       Value - ---------------------------------------------------------------------------------   Due in one year or less                                           $  7,217,163 Due after one year through five years                               18,461,203 Due after five years through ten years                               8,982,430 Due after ten years                                                 27,414,777 Mortgage-backed securities                                         105,830,332 - ---------------------------------------------------------------------------------      Total debt securities                                        $167,905,905 =================================================================================        Proceeds from sales of available for sale debt securities were $10,473,067, $8,680,559, and $18,088,140 in 2005, 2004 and 2003, respectively.       Gross realized gains on sales of available for sale debt securities are summarized as follows:                                                                      2005        2004        2003 - ------------------------------------------------------------------------------------------------     Gross realized gains                                            $378,516    $314,048    $629,318 - ------------------------------------------------------------------------------------------------        The Company had no gross realized losses on sales of available for sale debt securities in 2005, 2004 or 2003.                                          45        Securities with unrealized losses at year-end 2005 and 2004, presented by length of time in an unrealized loss position, are as follows:                                                                 Year-End 2005                            ----------------------------------------------------------------------------------                               Less than 12 Months          12 Months or More                 Total                            ----------------------------------------------------------------------------------                               Fair       Unrealized       Fair       Unrealized        Fair       Unrealized                               Value         Loss          Value         Loss          Value          Loss - -------------------------------------------------------------------------------------------------------------        U.S. government agencies   $ 5,747,458   $   (37,331)  $ 3,987,520   $   (12,480)  $  9,734,978   $   (49,811) Mortgage-backed   securities                42,863,653      (665,477)   56,653,373    (1,571,973)    99,517,026    (2,237,450) Obligations of states and   political subdivisions    21,086,922      (416,448)    9,908,701      (233,345)    30,995,623      (649,793) - ------------------------------------------------------------------------------------------------------------- Total temporarily   impaired                 $69,698,033   $(1,119,256)  $70,549,594   $(1,817,798)  $140,247,627   $(2,937,054) =============================================================================================================                                                                 Year-End 2004                            ----------------------------------------------------------------------------------                               Less than 12 Months          12 Months or More                 Total                            ----------------------------------------------------------------------------------                               Fair       Unrealized       Fair       Unrealized        Fair       Unrealized                               Value         Loss          Value         Loss          Value          Loss - -------------------------------------------------------------------------------------------------------------        U.S. government agencies   $ 3,970,000   $   (30,781)  $        --   $        --   $  3,970,000   $   (30,781) Mortgage-backed   securities                73,631,078      (566,247)   19,101,911      (341,794)    92,732,989      (908,041) Obligations of states and   political subdivisions    15,062,471      (171,960)           --            --     15,062,471      (171,960) - ------------------------------------------------------------------------------------------------------------- Total temporarily   impaired                 $92,663,549   $  (768,988)  $19,101,911   $  (341,794)  $111,765,460   $(1,110,782) =============================================================================================================        The Company evaluates securities for other-than-temporary impairment, at least on a quarterly basis, and more frequently when economic or market concerns warrant such evaluation. Consideration is given to the length of time and the extent to which the fair value has been less than cost, the financial condition and near-term prospects of the issuer, and the intent and ability of the Company to retain its investment in the issuer for a period of time sufficient to allow for any anticipated recovery in fair value. In analyzing an issuer's financial condition, the Company may consider whether the securities are issued by the federal government or its agencies, whether downgrades by rating agencies have occurred and the results of reviews of the issuer's financial condition. West Pointe management does not expect any losses to result from any unrealized losses in the portfolio, as maturities of securities and other funding sources should meet the Company's liquidity needs. Any losses taken will result from strategic or discretionary decisions to adjust the securities portfolio. As a result, no declines are deemed to be other than temporary.                                          46   5.  LOANS       Loans consist of:                                                                      2005           2004 - -----------------------------------------------------------------------------------------    Commercial loans                                              $ 65,768,521   $ 64,073,669 Commercial real estate loans                                    77,458,569     83,832,494 Real estate construction loans                                  51,568,490     30,794,287 Residential real estate loans                                   51,722,980     51,798,164 Consumer loans                                                   9,180,969     10,268,448 - -----------------------------------------------------------------------------------------   Total loans                                                  255,699,529    240,767,062 Less: Allowance for loan losses                                  2,002,059      2,692,903 - -----------------------------------------------------------------------------------------   Net loans                                                   $253,697,470   $238,074,159 =========================================================================================        A summary of activity in the allowance for loan losses follows:                                                              2005         2004         2003 - --------------------------------------------------------------------------------------------     Balance -- beginning of year                           $2,692,903   $2,697,139   $ 2,409,446 Provision charged to operations                             2,000      658,000     1,213,000 Charge-offs                                              (820,125)    (915,405)   (1,048,263) Recoveries                                                127,281      253,169       122,956 - -------------------------------------------------------------------------------------------- Balance -- end of year                                 $2,002,059   $2,692,903   $ 2,697,139 ============================================================================================        The following table lists information related to nonperforming loans:                                                                    2005        2004 - -----------------------------------------------------------------------------------    Loans on nonaccrual status                                    $517,108   $3,842,710 Accruing loans past due 90 days or more                        329,449      538,199 - -----------------------------------------------------------------------------------   Total nonperforming loans                                   $846,557   $4,380,909 =================================================================================== Interest that would have been recognized on nonaccrual loans   in accordance with their original terms                     $ 41,384   $  467,096 Actual interest recorded for nonaccrual loans                    8,227       58,782 ===================================================================================                                           47        A portion of the allowance for loan losses is allocated to loans deemed impaired. All impaired loans are included in nonperforming loans. Information on these loans and their related allowance for loan losses is as follows:                                       2005                     2004                     2003                           ----------------------   ----------------------   ----------------------                            RECORDED    VALUATION    RECORDED    VALUATION    RECORDED    VALUATION                           INVESTMENT   ALLOWANCE   INVESTMENT   ALLOWANCE   INVESTMENT   ALLOWANCE - --------------------------------------------------------------------------------------------------        Impaired loans:   Valuation allowance      required             $  271,660    $191,706    $3,929,434   $976,769    $1,832,923   $470,738   No valuation allowance      required                    --          --           --          --           --          -- - --------------------------------------------------------------------------------------------------      Total impaired        loans              $  271,660    $191,706    $3,929,434   $976,769    $1,832,923   $470,738 ================================================================================================== Average balance of   impaired loans during   the year                $1,017,709                $4,125,488               $1,871,134 Interest income   recognized on impaired   loans during the year        4,698                    71,192                   35,084 Cash basis interest   received                     4,698                    64,730                   24,674 ==================================================================================================   6. BANK PREMISES AND EQUIPMENT       Bank premises and equipment consist of:                                                                     2005          2004 - ---------------------------------------------------------------------------------------    Land                                                          $ 1,854,457   $ 1,761,457 Buildings                                                       9,401,232     9,164,874 Leasehold improvements                                            683,198       683,198 Furniture and equipment                                         3,964,638     3,823,928 Automobiles                                                       207,589       214,190 Construction in progress                                            3,500       326,517 - ---------------------------------------------------------------------------------------                                                                16,114,614    15,974,164 Less: Accumulated depreciation and amortization                 4,358,366     3,580,256 - ---------------------------------------------------------------------------------------   Total bank premises and equipment                           $11,756,248   $12,393,908 =======================================================================================        Since December 31, 2005, the Company entered into a contract to sell one of its non-banking locations. The carrying value of the property as of December 31, 2005 was $320,234. The contract sales price of the property is $345,000. Closing on the sale is expected to be completed during the first quarter of 2006. The Company does not expect to incur a loss on the sale of the property.       The Company is obligated under a long-term lease agreement for the Bank's branch location in Columbia, Illinois through November 2007 with four five-year extension options granted to the Company. The lease provides that the Company may use and occupy the premises only for the purpose of maintaining and operating a branch bank. The lease calls for monthly rental payments of $3,960 through the initial term of the lease and through the period covered by the first two extension options. The monthly rental payments for the remaining extension options will be at a reasonable rate as agreed upon by the parties to the lease. Management intends to utilize the extension options as provided for under the lease.                                          48        Minimum lease payments at December 31, 2005 are due as follows:    Year                                Amount - -------------------------------------------   2006                                 47,520 2007                                 43,560 - -------------------------------------------                                     $91,080 ===========================================        Rent expense for the years ended December 31, 2005, 2004 and 2003 amounted to $96,944, $109,081 and $112,311, respectively.  7. DEPOSITS       Deposits consist of:                                                                      2005           2004 - -----------------------------------------------------------------------------------------    Noninterest bearing deposits:   Demand deposit accounts                                     $ 51,643,811   $ 45,206,286 - ----------------------------------------------------------------------------------------- Interest bearing deposits:   Demand deposit accounts (NOW)                                 10,937,929     38,276,366   Money market accounts                                         47,351,115     47,899,842   Savings                                                      109,676,938     66,730,091   Certificates of deposit, $100,000 and over                    68,748,406     68,142,051   Other certificates of deposit                                113,637,955    108,989,784 - -----------------------------------------------------------------------------------------      Total interest bearing deposits                           350,352,343    330,038,134 - -----------------------------------------------------------------------------------------      Total deposits                                           $401,996,154   $375,244,420 =========================================================================================        The scheduled maturities of time deposits are as follows:    Year                                                             Amount - --------------------------------------------------------------------------   2006                                                           135,820,383 2007                                                            30,399,777 2008                                                             7,750,417 2009                                                             4,200,372 2010                                                             4,215,412 - --------------------------------------------------------------------------                                                               $182,386,361 ==========================================================================   8. REPURCHASE AGREEMENTS       Repurchase agreements are treated as financing arrangements and other obligations to repurchase securities sold and are reflected as liabilities in the consolidated balance sheets. The repurchase agreements generally mature within one year. The securities underlying the repurchase agreements were held by a designated safekeeping agent.       The average balance and maximum amount outstanding at any month-end of repurchase agreements for the years ended December 31, 2005, 2004 and 2003 is summarized as follows:                                                            2005          2004          2003 - --------------------------------------------------------------------------------------------     Average balance outstanding                          $23,532,974   $20,989,737   $21,225,179 - -------------------------------------------------------------------------------------------- Maximum month-end balance outstanding                $29,477,272   $26,572,111   $24,832,508 - -------------------------------------------------------------------------------------------- Average interest rate during the year                       2.91%         1.54%         1.48% - -------------------------------------------------------------------------------------------- Weighted average interest rate at year-end                  3.52%         2.08%         1.31% ============================================================================================                                           49   9. OTHER BORROWINGS       On December 7, 1999, the Company entered into a revolving line of credit with an unaffiliated bank which provides for financing of up to $2,500,000 at a variable rate of interest. The line of credit was payable on demand and has since been increased to $5,000,000. The Company extended the term of the line of credit such that if no demand for payment is made, any outstanding principal balance is due on January 7, 2006. The line of credit is secured by 350,000 shares of Bank common stock. At December 31, 2005 and December 31, 2004, there were no advances on the line of credit.  10. FEDERAL HOME LOAN BANK ADVANCES       Advances from the Federal Home Loan Bank of Chicago (FHLB) totaled $550,000 at December 31, 2004. The Company had no FHLB advances at December 31, 2005. Advances at December 31, 2004 solely consisted of an overnight advance. Overnight advances serve as a funding alternative to federal funds purchased. Advances from the FHLB are secured by a blanket lien on qualifying first mortgage loans. As of December 31, 2005, the Company had $31,674,750 available for borrowings from the FHLB.  11. SUBORDINATED DEBENTURES       On December 15, 2004, the Company completed a private placement to an institutional investor of $10,000,000 of floating rate trust preferred securities, through a newly formed unconsolidated Delaware trust affiliate, West Pointe Statutory Trust I (the "Trust"). The trust preferred securities mature in December 2034, are redeemable at the Company's option at par beginning in five years, and require quarterly distributions by the Trust to the holder of the trust preferred securities, initially at an interest rate of 4.70%, which will reset quarterly at the three-month LIBOR rate plus 2.25%. As of December 31, 2005, the interest rate on the trust preferred securities was 6.74%.       The proceeds from the sale of the trust preferred securities were used by the Trust to purchase $10,310,000 in aggregate principal amount of the Company's floating rate junior subordinated debentures. The debentures were issued pursuant to a junior subordinated indenture dated December 15, 2004 between the Company, as issuer, and Wilmington Trust Company, as trustee. Like the trust preferred securities, the notes bear interest at a floating rate, initially 4.70%, which will reset on a quarterly basis at a rate equal to LIBOR plus 2.25%. As of December 31, 2005, the interest rate on the notes was 6.74%. The interest payments by the Company will be used to pay the quarterly distributions payable by the Trust to the holder of the trust preferred securities. However, so long as no event of default has occurred under the notes, the Company may defer interest payments on the notes (in which case the trust will be entitled to defer distributions otherwise due on the trust preferred securities) for up to 20 consecutive quarters.                                          50   12.  INCOME TAXES       The composition of income tax expense is as follows:                                                               2005         2004         2003 - --------------------------------------------------------------------------------------------     Current   Federal                                               $  687,174   $  610,566   $  590,795   State                                                    200,535      178,644      213,822 - --------------------------------------------------------------------------------------------                                                            887,709      789,210      804,617 Deferred   Federal                                                  193,643      284,534      226,413   State                                                     44,848       65,656       52,570 - --------------------------------------------------------------------------------------------                                                            238,491      350,190      278,983 - -------------------------------------------------------------------------------------------- Income tax expense                                      $1,126,200   $1,139,400   $1,083,600 ============================================================================================        The components of deferred tax assets and deferred tax liabilities are summarized as follows:                                                                     2005          2004 - ---------------------------------------------------------------------------------------    Deferred tax assets:   Allowance for loan losses                                   $   464,785   $   715,502   Alternative minimum tax credits                                 227,673       269,526   Available for sale securities market valuation                  855,103            --   Deferred compensation                                           954,460       725,650 - ---------------------------------------------------------------------------------------      Total deferred tax assets                                  2,502,021     1,710,678 - --------------------------------------------------------------------------------------- Deferred tax liabilities:   Depreciation on bank premises and equipment                  (1,566,785)   (1,631,861)   Accumulated market discount                                      (9,380)       (5,885)   Available for sale securities market valuation                       --       (82,704)   Federal Home Loan Bank stock dividends                       (1,036,753)     (779,273)   Other                                                          (128,742)     (149,910) - ---------------------------------------------------------------------------------------      Total deferred tax liabilities                            (2,741,660)   (2,649,633) - ---------------------------------------------------------------------------------------   Net deferred tax liability                                  $  (239,639)  $  (938,955) =======================================================================================        As of December 31, 2005, the company had $227,673 of alternative minimum tax credits available to offset future federal income taxes. The credits have no expiration date.       The following is a reconciliation of income tax expense to the amount computed at the federal statutory rate of 34%:                                                2005                   2004                   2003                                      -----------------------------------------------------------------                                        AMOUNT        %        AMOUNT        %        AMOUNT        % - ------------------------------------------------------------------------------------------------------        Expected tax expense                 $1,589,312     34.0    $1,600,993     34.0    $1,550,242     34.0 Items affecting federal income   tax rate:   State income taxes                    156,964      3.3       154,303      3.2       153,024      3.4   Tax-exempt interest                  (566,384)   (12.1)     (524,719)   (11.1)     (518,775)   (11.4)   Other                                 (53,692)    (1.1)      (91,177)    (1.9)     (100,891)    (2.2) - ------------------------------------------------------------------------------------------------------ Income tax expense                   $1,126,200     24.1    $1,139,400     24.2    $1,083,600     23.8 ======================================================================================================                                           51   13. EMPLOYEE BENEFIT PLANS       The Company maintains a qualified, noncontributory, trusteed Retirement Savings Plan covering eligible full-time employees. The plan provides for contributions by the Company in such amounts as the Board of Directors may annually determine. The Company is under no obligation to make contributions to the plan. The employees may make voluntary contributions subject to certain limitations. The Board of Directors approved the accrual of a contribution to the Retirement Savings Plan in the amount of $108,000, $108,000 and $96,000 in 2005, 2004 and 2003, respectively.       The Company has available a deferred compensation plan for the Company's Board of Directors. The obligation under the plan is accrued and expensed as it is earned. The expense related to the deferred compensation plan totaled $214,477, $195,382 and $181,259 in 2005, 2004 and 2003, respectively. The deferred compensation accrual is included in other liabilities in the consolidated balance sheets and amounted to $1,430,147 and $1,215,670 at December 31, 2005, and 2004, respectively.       In 2000, the Company established a deferred compensation plan for the Company's president. In 2005, 2004 and 2002, the Company established deferred compensation plans for several other officers of the Company. The obligation under all of the plans is accrued and expensed as it is earned. The expense related to the deferred compensation plans totaled $375,205, $269,766 and $228,907 in 2005, 2004 and 2003, respectively. The deferred compensation accrual is included in other liabilities in the consolidated balance sheets and amounted to $1,028,534 and $653,329 at December 31, 2005, and 2004, respectively.       In 2000, the Bank entered into an employment agreement with the Company's chairman of the board. The original agreement provided that during his employment and for 15 years thereafter, he would not engage in competition with the Bank, divert any client from the Bank or solicit a Bank employee or otherwise engage in conduct adverse to the Bank. In consideration, the Bank would pay him 50% of his annual base salary for the calendar year ending prior to termination of employment, for 15 years following termination of his employment. In the event of his death prior to the end of the 15-year payout period, the Bank would continue that payment to his wife until her death. In March 2006, the Bank executed an agreement that amended and restated the prior agreement. The new agreement is substantially similar to the prior agreement. The term of the payment and non-competition period was reduced to 10 years following his termination of employment from 15 years in the prior agreement. The new agreement also provides that the chairman will make himself available to render strategic consulting services to the Bank during the non-competition period. In consideration, the new agreement provides that the Bank will pay him each year for a period of 10 years the greater of (i) an amount equal to 50% of his annual base salary for the calendar year ending prior to his date of termination of employment or (ii) an amount equal to 50% of his annual base salary as of his termination of employment. In addition, in the event of his death either while employed by the Bank or after termination of his employment with the Bank, the Bank will pay to his wife the same amount that would have been paid to him had he lived and terminated employment. Such payment to his wife will continue until the earlier of his wife's death or the tenth anniversary of the commencement of payments to either him or his wife.                                          52   14. STOCK OPTION PLAN       Options to buy stock are granted to directors, officers and employees under the Company's Stock Option Plan, which provides for the issuance of up to 250,000 shares of common stock to directors and employees in key management positions to encourage such directors and key employees to remain with the Company. Interest in the Plan for each participant vests in five equal installments from the date options are granted. The maximum term of the options is 10 years. Activity within the Plan is summarized as follows:                                           2005                    2004                    2003                                --------------------------------------------------------------------                                            WEIGHTED                WEIGHTED                WEIGHTED                                 NUMBER     AVERAGE      NUMBER     AVERAGE      NUMBER     AVERAGE                                   OF       EXERCISE       OF       EXERCISE       OF       EXERCISE                                 SHARES      PRICE       SHARES      PRICE       SHARES      PRICE - ---------------------------------------------------------------------------------------------------        Outstanding at January 1        184,500     $29.37     155,500      $27.43     135,000      $25.70 Granted                          29,500      43.75      29,000       39.75      28,500       35.75 Forfeited                            --         --          --          --       8,000       27.96 - --------------------------------------------------------------------------------------------------- Outstanding at December 31      214,000     $31.35     184,500      $29.37     155,500      $27.43 ===================================================================================================        At December 31, 2005, 2004 and 2003, 134,300, 107,000, and 80,700 stock options were exercisable, respectively. The weighted average exercise prices for options exercisable at December 31, 2005, 2004 and 2003 were $26.81, $25.41 and $24.31, respectively.       The following table summarizes information about stock options outstanding at December 31, 2005:                        Outstanding Stock Options                         Exercisable Stock Options - ------------------------------------------------------------------   ----------------------------                   Number of     Weighted Average       Weighted       Number of       Weighted    Range of        Options     Remaining Years of      Average         Options        Average Exercise Prices  Outstanding    Contractual Life    Exercise Price   Exercisable   Exercise Price - -------------------------------------------------------------------------------------------------       $20.00 -- $22.00    48,000            2.71              $21.00          48,000         $21.00 $27.00 -- $30.25    80,500            5.13              $28.47          69,700         $28.36 $35.75 -- $43.75    85,500            8.11              $39.87          16,600         $37.15 - -------------------------------------------------------------------------------------------------                    214,000            5.78              $31.35         134,300         $26.82 =================================================================================================        The per share fair values of stock options granted in 2005, 2004 and 2003 were estimated on the date of grant at $9.36, $8.14 and $8.27, respectively, using the Black-Scholes option-pricing model.       The following table summarizes the assumptions used to determine the per share fair value of the stock options granted in 2005, 2004 and 2003:                                                                    2005    2004    2003 - ------------------------------------------------------------------------------------     Dividends yields                                                1.4%    1.4%     1.1% Risk-free interest rates                                        4.3%    4.0%     4.1% Stock volatility factors                                        1.0%    5.0%     6.0% Expected life of options (in years)                             10.0    10.0    10.0        The pro forma effect of applying SFAS No. 123 on net income and earnings per share is displayed in Note 1.  15. FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK       The Company is a party to financial instruments with off-balance-sheet risk in the normal course of business to meet the financing needs of its customers. These financial instruments                                         53   include commitments to extend credit and financial guarantees. These instruments involve, to varying degrees, elements of credit and interest rate risk in excess of the amount recognized in the consolidated balance sheets. Interest rate risk on commitments to extend credit results from the possibility that interest rates may have moved unfavorably, from the position of the Company, since the time the commitment was made. The contract or notional amounts of these instruments reflect the extent of the Company's involvement in particular classes of financial instruments.       The Company's exposure to credit loss in the event of nonperformance by the other party to the financial instrument for commitments to extend credit and financial guarantees written is represented by the contractual amount of these instruments. The Company uses the same credit policies in making commitments and conditional obligations as it does for on-balance-sheet instruments. Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Since certain of the commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. The Company evaluates each customer's creditworthiness on a case-by-case basis. The amount of collateral obtained, if deemed necessary by the Company upon extension of credit, is based on management's credit evaluation of the counterparty. Collateral held varies but may include commercial real estate, accounts receivable, inventory, equipment and residential real estate.       Standby letters of credit and financial guarantees written are conditional commitments issued by the Company to guarantee the performance of a customer to a third party. These guarantees are primarily issued to support contractual obligations of Bank customers. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loan facilities to customers.       At December 31, 2005 and 2004, the Company's fixed and variable outstanding commitments to extend credit, outstanding standby letters of credit and outstanding commitments to sell loans held for sale as follows:                                                         2005                          2004                                           --------------------------------------------------------                                              FIXED        VARIABLE         FIXED        VARIABLE - --------------------------------------------------------------------------------------------------      Commitments to originate new loans        $ 4,416,784    $ 2,409,227    $ 5,760,100    $13,165,636 Commitments to originate new loans   held for sale                             1,097,725             --      1,168,849             -- Unfunded commitments to extend credit   under existing equity, credit card   and other lines of credit                19,644,175     35,693,267     19,915,421     36,333,126 Letters of credit                             384,149      4,305,902      1,705,740      2,631,956 Commitments to sell loans held for   sale                                      1,430,725             --      1,244,292             --        The range of interest rates applicable to the fixed rate financial instruments set forth above are as follows:                                                                       2005             2004 - ---------------------------------------------------------------------------------------------    Commitments to originate new loans                               6.50%-9.75%      4.60%-7.00% Commitments to originate new loans held for sale               6.125%-7.085%    5.375%-6.375% Unfunded commitments to extend credit under existing   equity, credit card and other lines of credit                 3.75%-18.00%     3.25%-18.00% Letters of credit                                                5.50%-7.50%      5.25%-8.00% Commitments to sell loans held for sale                         5.75%-7.085%     5.375%-6.50%                                           54   16. RELATED PARTY TRANSACTIONS       Certain executive officers and directors were indebted to the Company for loans in the aggregate amount of $9,577,725 and $7,956,976 at December 31, 2005 and 2004, respectively. Following is a summary of activity for 2005 of loans made by the Company to executive officers and directors or to entities in which such individuals had a beneficial interest.     Balance at January 1, 2005                                      $ 7,956,976 New loans                                                        10,117,717 Payments received                                                 8,496,968 - --------------------------------------------------------------------------- BALANCE AT DECEMBER 31, 2005                                    $ 9,577,725 ===========================================================================        Deposits from those parties at December 31, 2005 and 2004 amounted to $1,536,540 and $1,420,893, respectively.  17. FAIR VALUE OF FINANCIAL INSTRUMENTS       The estimated fair values of the Company's financial instruments were as follows:                                               DECEMBER 31, 2005               December 31, 2004                                       ------------------------------------------------------------                                         CARRYING          FAIR          CARRYING          FAIR                                          AMOUNT          VALUE           AMOUNT          VALUE - --------------------------------------------------------------------------------------------------      Financial assets:   Cash and cash equivalents           $ 13,231,047    $ 13,231,047    $ 11,869,424    $ 11,869,424   Federal Home Loan Bank stock          13,962,968      13,962,968      13,299,700      13,299,700   Available for sale securities        167,905,905     167,905,905     154,389,611     154,389,611   Loans held for sale                      333,000         333,900          74,238          77,083   Loans, net                           253,697,470     251,811,100     238,074,159     238,046,917   Interest receivable                    1,993,673       1,993,673       1,627,313       1,627,313 Financial liabilities:   Deposits                             401,996,154     401,505,366     375,244,420     376,148,674   Repurchase agreements                 25,192,276      25,192,276      20,486,973      20,486,973   FHLB advances                                 --              --         550,000         550,000   Subordinated debentures               10,310,000      10,310,000      10,310,000      10,310,000   Interest payable                       1,041,426       1,041,426         706,146         706,146        The following methods and assumptions were used to estimate fair value of each class of financial instrument listed above:    CASH AND CASH EQUIVALENTS       Cash and cash equivalents consist of cash and due from banks, interest bearing due from banks, and federal funds sold. The carrying value is considered a reasonable estimate of fair value of these financial instruments due to their short-term nature.                                          55     FEDERAL HOME LOAN BANK STOCK       The fair value of Federal Home Loan Bank stock approximates carrying value.    SECURITIES       Fair values are based on quoted market prices or dealer quotes.    LOANS HELD FOR SALE       Fair value of loans held for sale is based on market quotes.    LOANS       The fair value of loans is estimated by discounting the future cash flows using the current rates at which similar loans would be made to borrowers with similar credit ratings and for the same remaining maturities. Loans with similar characteristics were aggregated for purposes of the calculations. For homogeneous categories of loans, such as mortgage loans, fair value is estimated using the quoted market prices for securities backed by similar loans, adjusted for differences in loan characteristics.    INTEREST RECEIVABLE/PAYABLE       The fair values of interest receivable/payable approximate carrying values due to their short-term nature.    DEPOSITS       The fair value of deposits with no stated maturity, such as noninterest bearing checking accounts, NOW accounts, money market deposit accounts, and savings accounts, is equal to the amount payable on demand at the reporting date. The fair value of certificates of deposit, all of which have stated maturities, is based on the discounted value of contractual cash flows. The discount rate is estimated using the rates currently offered for deposits of similar remaining maturities.    REPURCHASE AGREEMENTS AND OTHER BORROWINGS       The carrying value is considered a reasonable estimate of fair value of these financial instruments due to original maturities generally not exceeding one year.    FHLB ADVANCES       The fair value of FHLB advances is based on the discounted value of contractual cash flows. The discount rate is estimated using rates currently available to the Company for similar terms to maturity.    SUBORDINATED DEBENTURES       The fair value of variable rate/LIBOR-based instruments approximates their carrying values.  18.  REGULATORY MATTERS       The Company and the Bank are subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Company and the Bank must meet specific capital guidelines that involve quantitative measures of the Company's and the Bank's                                         56   assets, liabilities, and certain off-balance-sheet items as calculated under regulatory accounting practices. The Company's and the Bank's capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings, and other factors.       Quantitative measures established by regulation to ensure capital adequacy require the Company and the Bank to maintain minimum amounts and ratios (set forth in the following table) of Total and Tier I capital (as defined in the regulations) to risk-weighted assets (as defined), and of Tier I capital to average assets (as defined). Management believes, as of December 31, 2005, that the Company and the Bank meet all capital adequacy requirements to which they are subject.       As of December 31, 2005, the most recent financial report filed with the FDIC categorized the Bank as well capitalized under the regulatory framework for prompt corrective action. To be categorized as well capitalized, the Bank must maintain minimum Total risk-based, Tier I risk-based, and Tier I leverage ratios as set forth in the following table. There are no conditions or events since that most recent filing that management believes have changed the institution's category.       The capital amounts and ratios for the Company and the Bank are presented in the table below.                                                                                            To Be Well                                                                   For Capital        Capitalized Under                                                                    Adequacy          Prompt Corrective                                               Actual               Purposes          Action Provisions                                         ---------------------------------------------------------------                                           Amount      Ratio     Amount      Ratio     Amount      Ratio - -------------------------------------------------------------------------------------------------------        As of December 31, 2005   Total capital (to risk-weighted     assets):     Consolidated                        $49,013,428   16.20%  $24,201,356   8.00%            NA      NA     Bank                                 37,764,060   12.48    24,201,356   8.00    $30,251,695   10.00%   Tier 1 capital (to risk-weighted     assets):     Consolidated                         47,011,369   15.54    12,100,678   4.00             NA      NA     Bank                                 35,762,001   11.82    12,100,678   4.00     18,151,017    6.00   Tier 1 capital (to average assets):     Consolidated                         47,011,369   10.05    18,707,094   4.00             NA      NA     Bank                                 35,762,001    7.65    18,707,094   4.00     23,383,867    5.00 As of December 31, 2004   Total capital (to risk-weighted     assets):     Consolidated                        $46,075,583   16.94%  $21,754,509   8.00%            NA      NA     Bank                                 35,657,752   13.11    21,754,509   8.00    $27,193,136   10.00%   Tier 1 capital (to risk-weighted     assets):     Consolidated                         43,382,680   15.95    10,877,254   4.00             NA      NA     Bank                                 32,964,849   12.12    10,877,254   4.00     16,315,881    6.00   Tier 1 capital (to average assets):     Consolidated                         43,382,680    9.70    17,891,552   4.00             NA      NA     Bank                                 32,964,849    7.37    17,891,552   4.00     22,364,440    5.00                                           57   19.  PARENT COMPANY FINANCIAL INFORMATION       The following are condensed balance sheets as of December 31, 2005 and 2004 and condensed statements of income and cash flows for the years ended December 31, 2005, 2004 and 2003 for West Pointe Bancorp, Inc. (parent company only):                              CONDENSED BALANCE SHEETS                                                                       2005           2004 - ------------------------------------------------------------------------------------------    Assets   Cash and due from banks                                       $ 6,210,634    $ 5,383,290   Interest bearing due from banks                                 5,000,000      5,000,000   Investment in bank subsidiary                                  34,366,833     33,099,788   Investment in statutory trust                                     310,000        310,000   Other assets                                                       71,555         67,424 - ------------------------------------------------------------------------------------------      Total Assets                                               $45,959,022    $43,860,502 ========================================================================================== Liabilities and Stockholders' Equity   Subordinated debentures                                       $10,310,000    $10,310,000   Other borrowings                                                       --             --   Other liabilities                                                  32,821         32,883   Stockholders' equity                                           35,616,201     33,517,619 - ------------------------------------------------------------------------------------------      Total Liabilities and Stockholders' Equity                 $45,959,022    $43,860,502 ==========================================================================================                            CONDENSED STATEMENTS OF INCOME                                                               2005         2004         2003 - --------------------------------------------------------------------------------------------     Distributed income from subsidiary                      $1,105,000   $  882,000   $  882,275 Interest income                                            215,590        9,424           -- Interest expense                                          (578,294)     (61,723)     (49,811) Other income                                                17,089           --           -- Other expense                                             (232,789)    (168,512)    (156,906) - --------------------------------------------------------------------------------------------   Income before income tax benefit and equity in      undistributed income of subsidiary                    526,596      661,189      675,558 Income tax benefit                                         224,500       85,700       80,200 - --------------------------------------------------------------------------------------------   Income before equity in undistributed income of      subsidiary                                            751,096      746,889      755,758 Equity in undistributed income of subsidiary             2,797,152    2,822,515    2,720,179 - -------------------------------------------------------------------------------------------- Net Income                                              $3,548,248   $3,569,404   $3,475,937 ============================================================================================                                           58                          CONDENSED STATEMENTS OF CASH FLOWS                                                            2005          2004          2003 - --------------------------------------------------------------------------------------------     Operating Activities   Net income                                         $ 3,548,248   $ 3,569,404   $ 3,475,937   Equity in undistributed income of subsidiary        (2,797,152)   (2,822,515)   (2,720,179)   Increase in other assets and other liabilities,      net                                                  (4,193)      (28,657)       (8,456) - -------------------------------------------------------------------------------------------- Net Cash Provided By Operating Activities                746,903       718,232       747,302 - -------------------------------------------------------------------------------------------- Investing Activities Investment In Statutory Trust            --      (310,000)           -- - -------------------------------------------------------------------------------------------- Net Cash Used In Investing Activities                         --      (310,000)           -- - -------------------------------------------------------------------------------------------- Financing Activities   Decrease in other borrowings                                --    (1,237,100)     (300,000)   Proceeds from issuance of common stock                 830,138       646,145       490,104   Proceeds from issuance of subordinate debentures            --    10,310,000            --   Dividends paid                                        (749,697)     (618,515)     (531,107) - -------------------------------------------------------------------------------------------- Net Cash Provided By (Used In) Financing Activities       80,441     9,100,530      (341,003) - -------------------------------------------------------------------------------------------- Net Increase In Cash And Cash Equivalents                827,344     9,508,762       406,299 Cash And Cash Equivalents -- Beginning of Year        10,383,290       874,528       468,229 - -------------------------------------------------------------------------------------------- Cash And Cash Equivalents -- End of Year             $11,210,634   $10,383,290   $   874,528 ============================================================================================                                           59                                       [PHOTO]                                     DIRECTORS  SEATED, LEFT TO RIGHT: Jack B. Haydon, Charles G. Kurrus, III, William C. Allison, C.P.A.  STANDING, LEFT TO RIGHT: Harry E. Cruncleton, Wayne W. Weeke, David G. Embry, Terry W. Schaefer, Edward J. Szewczyk, M.D.  WILLIAM C. ALLISON, C.P.A. Retired Managing Partner,   Allison Knapp & Siekmann, Ltd.  HARRY E. CRUNCLETON Chairman of the Board  DAVID G. EMBRY President, C-Mac, Inc.  JACK B. HAYDON President, Reese Construction   Company  CHARLES G. KURRUS, III President, Kurrus Funeral Home  TERRY W. SCHAEFER President and   Chief Executive Officer  EDWARD J. SZEWCZYK, M.D. Medical Doctor, private practice,   Ophthalmology  WAYNE W. WEEKE Retired President,   Weeke Wholesale Company                                          60                                       [PHOTO]                                  TRUST COMMITTEE  SEATED, LEFT TO RIGHT:       Jack B. Haydon, Charles G. Kurrus, III,             William C. Allison, C.P.A., Garrett C. Reuter, Attorney at Law  STANDING, LEFT TO RIGHT:       Edward J. Szewczyk, M.D., Robert G. Cady, Wayne W. Weeke,             David G. Embry, Terry W. Schaefer, Harry E. Cruncleton                                          61                                       (PHOTO)                                      OFFICERS      HARRY E. CRUNCLETON                   MELVIN M. EMBRICH          DEBRA S. STEHL Chairman of the Board                 Vice President/Loans       Assistant Vice President/                                                                    Loan Operations TERRY W. SCHAEFER                     WILLIAM M. METZGER President and                         Vice President/Loans       KATHLEEN A. CHRISTOPHER   Chief Executive Officer                                        Assistant Vice President/                                       GLENNON A. ALBERS            Human Resource Director BRUCE A. BONE                         Vice President and Executive Vice President and            Branch Manager           MOLLY M. WATKINS   Chief Financial Officer                                        Assistant Vice President/                                       DALE A. HOEPFINGER           Operations J. E. CRUNCLETON                      Vice President and Corporate Secretary and                 Branch Manager           KIMBERLY A. STEPHENS   Marketing Director                                             Assistant Vice President/                                       KORY A. KUNZE                Information Technology ANTHONY T. HOLDENER, JR.              Vice President and Senior Vice President and               Branch Manager           RITA M. POETTKER   Senior Lending Officer                                         Assistant Vice President/                                       RAMONA L. GEBAUER            Mortgage Loans ROBERT G. CADY                        Vice President/Compliance Senior Vice President and               and Internal Audit       JEANNE M. DALMAN   Trust Officer                                                  Assistant Vice President/                                       TRACEY J. HARTMANN           Operations QUINTEN E. SPIVEY                     Vice President Senior Vice President and               and Trust Officer        CYNTHIA L. HEGGEMEIER   Trust Officer                                                  Senior Credit Analyst                                       VICKI R. FOSTER ALBERT A. MILLER                      Assistant Vice President   PATRICIA A. HOFFMANN Senior Vice                             and Branch Manager       Controller   President/Operations                                       DEBORAH M. LEHMKUHL        LAURA A. SNODGRASS BONNIE M. HETTENHAUSEN                Assistant Vice President/  Loan Operations Officer Senior Vice President/Loans             Mortgage Loans                                                                  JILL M. BASTIAN SHARON L. CLEVELAND                   JACQUELINE LEMMON          Trust Operations Officer Vice President/Mortgage Loans         Assistant Vice President/                                         Loans                    ROSE MARIE FITZGERALD M. TODD BERNHARDT                                                Advantage Pointe Club Vice President and                    RICHARD G. PIPER             Director   Registered Principal                Assistant Vice President/                                         Loans                    SHELIA B. GLENN                                                                  Executive Administrative                                                                    Assistant                                           62                                       [PHOTO]                          ADVANTAGE POINTE ADVISORY BOARD  SEATED, LEFT TO RIGHT:       Roger Wigginton, Maurice E. Bone, Attorney at Law, Arlette A. Lokken, Dr.       Jerome V. Basinski  STANDING, LEFT TO RIGHT:       Judith A. Smith, Edward J. Blake, Sr., Josephine Kosydor, Robert C. Elder,      Evelyn J. Hammel, Dr. Raymond St. Eve, Nancy J. Schmidt  NOT PICTURED:       Virginia G. Frieze                                          63   STOCKHOLDER INFORMATION - --------------------------------------------------------------------------------  CORPORATE HEADQUARTERS  5701 West Main Street Belleville, IL 62226 (618) 234-5700  ANNUAL MEETING  Wednesday, April 19, 2006 9:30 A.M. St. Clair Country Club South 78th Street Belleville, IL 62223  INDEPENDENT AUDITORS  Crowe Chizek and Company LLC 3815 River Crossing Parkway Suite 300 Indianapolis, IN 46240  TRANSFER AGENT  Illinois Stock Transfer Company 209 West Jackson Boulevard Suite 903 Chicago, IL 60606-6905  GENERAL INQUIRIES AND REPORTS  A copy of the Company's 2005 Annual Report to the Securities and Exchange Commission, Form 10-K, including the financial statements, may be obtained without charge by written request of shareholders to: Harry Cruncleton, Chairman West Pointe Bancorp, Inc. 5701 West Main Street Belleville, IL 62226 FDIC DISCLAIMER  This Annual Report has not been reviewed, or confirmed for accuracy or relevance, by the FDIC.    EX-23.1 3 c03802exv23w1.txt SUBSIDIARY OF THE REGISTRANT                                                                       EXHIBIT 23.1                CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM    We consent to the incorporation by reference in the Registration Statements on Form S-3 (333-68800), Form S-3D (333-130627) and on Form S-8 (333-49990) of West Pointe Bancorp, Inc. of our Report dated March 17, 2006, on the consolidated financial statements of West Pointe Bancorp, Inc. which report is incorporated by reference in the Annual Report on Form 10-K of West Pointe Bancorp, Inc. for the year ended December 31, 2005.                                                 /s/ CROWE CHIZEK AND COMPANY LLC                                               Crowe Chizek and Company LLC   Indianapolis, Indiana March 27, 2006    EX-31.1 4 c03802exv31w1.txt RULE 13A-14(A) CERTIFICATION OF CHIEF EXECUTIVE OFFICER                                                                        EXHIBIT 31.1                                   CERTIFICATIONS  Certification of Principal Executive Officer  I, Terry W. Schaefer, certify that:       1.   I have reviewed this annual report on Form 10-K of West Pointe           Bancorp, Inc.;       2.   Based on my knowledge, this report does not contain any untrue           statement of a material fact or omit to state a material fact           necessary to make the statements made, in light of the circumstances           under which such statements were made, not misleading with respect to           the period presented by this annual report;       3.   Based on my knowledge, the financial statements, and other financial           information included in this report, fairly present in all material           respects the financial condition, results of operations and cash flows           of the registrant as of, and for, the periods presented in this annual           report;       4.   The registrant's other certifying officers and I are responsible for           establishing and maintaining disclosure controls and procedures (as           defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal           control over financial reporting (as defined in Exchange Act Rules           13a-15(f) and 15d-15(f)) for the registrant and have:            (a)  Designed such disclosure controls and procedures, or caused such                disclosure controls and procedures to be designed under our                supervision, to ensure that material information relating to the                registrant, including its consolidated subsidiaries, is made                known to us by others within those entities, particularly during                the period in which this annual report is being prepared;            (b)  [reserved]            (c)  Evaluated the effectiveness of the registrant's disclosure                controls and procedures and presented in this annual report our                conclusions about the effectiveness of the disclosure controls                and procedures, as of the end of the period covered by this                annual report based on such evaluation; and            (d)  Disclosed in this report any change in the registrant's internal                control over financial reporting that occurred during the                registrant's most recent fiscal quarter (the registrant's fourth                fiscal quarter in the case of an annual report) that has                materially affected, or is reasonably likely to materially                affect, the registrant's internal control over financial                reporting; and       5.   The registrant's other certifying officers and I have disclosed, based           on our most recent evaluation of internal control over financial           reporting, to the registrant's auditors and the              audit committee of the registrant's board of directors (or persons           performing the equivalent functions):            (a)  All significant deficiencies and material weaknesses in the                design or operation of internal control over financial reporting                which are reasonably likely to adversely affect the registrant's                ability to record, process, summarize and report financial                information; and            (b)  Any fraud, whether or not material, that involves management or                other employees who have a significant role in the registrant's                internal control over financial reporting.   Date: March 29, 2006                    /s/ Terry W. Schaefer                                         ----------------------------------------                                         Terry W. Schaefer                                         President & Chief Executive Officer                                         (Principal Executive Officer)    EX-31.2 5 c03802exv31w2.txt RULE 13A-14(A) CERTIFICATION OF CHIEF FINANCIAL OFFICER                                                                        EXHIBIT 31.2                                   CERTIFICATIONS  Certification of Principal Financial Officer  I, Bruce A. Bone, certify that:       1.   I have reviewed this annual report on Form 10-K of West Pointe           Bancorp, Inc.;       2.   Based on my knowledge, this report does not contain any untrue           statement of a material fact or omit to state a material fact           necessary to make the statements made, in light of the circumstances           under which such statements were made, not misleading with respect to           the period presented by this annual report;       3.   Based on my knowledge, the financial statements, and other financial           information included in this report, fairly present in all material           respects the financial condition, results of operations and cash flows           of the registrant as of, and for, the periods presented in this annual           report;       4.   The registrant's other certifying officers and I are responsible for           establishing and maintaining disclosure controls and procedures (as           defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal           control over financial reporting (as defined in Exchange Act Rules           13a-15(f) and 15d-15(f)) for the registrant and have:            (a)  Designed such disclosure controls and procedures, or caused such                disclosure controls and procedures to be designed under our                supervision, to ensure that material information relating to the                registrant, including its consolidated subsidiaries, is made                known to us by others within those entities, particularly during                the period in which this annual report is being prepared;            (b)  [reserved]            (c)  Evaluated the effectiveness of the registrant's disclosure                controls and procedures and presented in this annual report our                conclusions about the effectiveness of the disclosure controls                and procedures, as of the end of the period covered by this                annual report based on such evaluation; and            (d)  Disclosed in this report any change in the registrant's internal                control over financial reporting that occurred during the                registrant's most recent fiscal quarter (the registrant's fourth                fiscal quarter in the case of an annual report) that has                materially affected, or is reasonably likely to materially                affect, the registrant's internal control over financial                reporting; and       5.   The registrant's other certifying officers and I have disclosed, based           on our most recent evaluation of internal control over financial           reporting, to the registrant's auditors and the              audit committee of the registrant's board of directors (or persons           performing the equivalent functions):            (a)  All significant deficiencies and material weaknesses in the                design or operation of internal control over financial reporting                which are reasonably likely to adversely affect the registrant's                ability to record, process, summarize and report financial                information; and            (b)  Any fraud, whether or not material, that involves management or                other employees who have a significant role in the registrant's                internal control over financial reporting.   Date: March 29, 2006                    /s/ Bruce A. Bone                                         ----------------------------------------                                         Bruce A. Bone                                         Executive Vice President & Chief                                         Financial Officer                                         (Principal Financial Officer)    EX-32.1 6 c03802exv32w1.txt CERTIFICATION OF CHIEF EXECUTIVE OFFICER PURSUANT TO SECTION 1350                                                                        EXHIBIT 32.1               CERTIFICATION OF PRESIDENT AND CHIEF EXECUTIVE OFFICER                        PURSUANT TO 18 U.S.C. SECTION 1350,                              AS ADOPTED PURSUANT TO                   SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002  In connection with the Annual Report of West Pointe Bancorp, Inc. (the "Company") on Form 10-K for the period ending December 31, 2005 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Terry W. Schaefer, President and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:       (1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and       (2) The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.   March 29, 2006                          /s/ Terry W. Schaefer                                         ----------------------------------------                                         Terry W. Schaefer                                         President and Chief Executive Officer  A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to West Pointe Bancorp, Inc. and will be retained by West Pointe Bancorp, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.    EX-32.2 7 c03802exv32w2.txt CERTIFICATION OF CHIEF FINANCIAL OFFICER PURSUANT TO SECTION 1350                                                                        EXHIBIT 32.2                    CERTIFICATION OF EXECUTIVE VICE PRESIDENT AND                              CHIEF FINANCIAL OFFICER                        PURSUANT TO 18 U.S.C. SECTION 1350,                              AS ADOPTED PURSUANT TO                   SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002  In connection with the Annual Report of West Pointe Bancorp, Inc. (the "Company") on Form 10-K for the period ending December 31, 2005 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Bruce A. Bone, Executive Vice President and Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:       (1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and       (2) The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.   March 29, 2006                          /s/ Bruce A. Bone                                         ----------------------------------------                                         Bruce A. Bone                                         Executive Vice President and                                         Chief Financial Officer  A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to West Pointe Bancorp, Inc. and will be retained by West Pointe Bancorp, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.    -----END PRIVACY-ENHANCED MESSAGE-----