Dear Northwest Commercial Bank Shareholders,

 

Trends continued to be positive during Q2 of this year, with a net profit of $83,000 recorded for your bank. This compares to a $71,000 net profit for Q1 of 2010. The year to date net profit of $154,000 compares to a net loss of $160,000 during the same time period in 2009.

 

We continue to see excellent net interest income from $1,341,000 at the end of June 2009, increasing to $1,709,000 at the end of June 2010. This 27% increase reflects our efforts to reduce the cost of funds, while maintaining a reasonable interest rate structure in the loan portfolio. Our interest rate margin is currently 4.99%, which is well above our peer group of banks.

 

Your banks capital ratios are very strong. As of June 30, 2010 they were:

 

             Tier 1 leverage ratio:      12.65%

             Tier 1 risk based ratio:   14.72 %

             Total risk based capital:  15.97%

 

· Loans, net of reserves on June 30, 2010, were $61,879,000, compared to $62,055,000 on March 31, 2010; a slight decrease of 0.03% from Q1 to Q2.

· Deposits increased from $60,082,000 to $61,914,000 from Q1 to Q2 in 2010, or an increase of 3.00%.

· Assets totaled $73,590,000 at June 30, 2010, compared to $71,707,000, as of March 31, 2010, or a 2.60% increase.

 

We are encouraged by these results year to date. Although the economy continues to experience slow improvement, we strive to control and increase profitability by seeking out good quality loans and low cost deposits. Our marketing activities are starting to show signs of success in these areas.

 

As always, we thank you for your support. Please continue to refer your friends and neighbors to your bank. You truly are the key to our success.

 

Sincerely,

Kurt Graff

CEO/President