Dear Shareholders and Friends:
I am proud to report that Integrity Bank has just completed its first three years of unequalled performance and is no longer considered a de novo bank. During that time we set numerous records and we are proud to say that Integrity Bank completed this period as the “highest performing Pennsylvania de novo bank ever.”
A few of the major milestones during our de novo period and second quarter 2006 were:
• Assets grew to $222 million as of June 30, 2006; a 38% increase during the last twelve (12) months.
• Loans grew to $189 million as of June 30, 2006; a 41% increase during the last twelve months. In addition, Integrity Bank has $36 million in unadvanced loans and manages another $51 million in loans that are participated to other banks. Our loan portfolio is excellent! As of June 30, 2006, Integrity Bank had only one past due loan in the entire portfolio and that loan was paid in full in early July 2006.
• Net income before taxes soared 96% from $287,000 for the second quarter 2005 to $563,000 for the second quarter 2006. However, because the bank reached full taxation in December 2005, our net income for the quarter ended June 30, 2006 was $370,000 after paying $193,000 in taxes; still a 29% increase over the same period in the prior year.
• Integrity Bank’s performance was reflected as the stock price increased to $20.00 per share from the original offering price of $10.00 per share in May 2003.
• We have increased our franchise value by having high volume (deposit) branches. The average branch in Central Pennsylvania has $39 million in deposits after several years of operation. The Camp Hill branch has three times that number and we expect both the New Cumberland and Downtown York branches to eclipse that average in less than two years of operations! A high volume of deposits for each of our four branches gives us a strategic advantage over our competitors.
• Our fourth branch office at Senate Avenue in Camp Hill opened in May 2006, and we have scheduled the Grand Openings for the Colonial Road and Allentown Boulevard branches on the East Shore of Harrisburg for September 16, 2006.
• We received national attention from the ABA Banking Journal for our innovative three-step drive-thru, and in May 2006 we were one of only two banks to receive the “Omni Award” from Metavante Banking Solutions. This award is presented annually to banks that display Creativity in Business Approach, Precision in Processes and Procedures, Strength in Leadership and Direction, and Excellence in Service. The relationship with Metavante Banking Solutions has allowed us to have many technological advantages over the majority of the marketplace.
Our ability to position the bank’s “De Novo” balance sheet with profitable deposits and loans, while managing expenses and credit quality, is unsurpassed and demonstrated in our earnings.
Well…enough of our amazing past.
Our focus for the future is more of the same, but with additional high-quality employees, more locations, lots of raving fans, happy shareholders, and an excellent reputation. We will continue to have outstanding, controlled, strong, solid growth while we manage loan quality, expenses, and our net interest margin. We are committed to focusing on financial soundness and profitability, and not letting our egos for growth overshadow our long-term plans.
If you are a customer in support of Integrity Bank, I thank you. If you are not,I ask you to help build your own company by putting your business with us, as well as sending referrals to our highly qualified staff.
In closing, I’m very thankful to the Board of Directors for their numerous hours and commitment to the bank, to my dedicated staff who have given so much everyday to make this success happen, to many friends who have offered continued encouragement and support, and to each shareholder who believed in the Board of Directors, the Integrity staff, and their ability to execute outstanding banking performance.
The future is exciting! With this level of momentum and past performance, we expect to become a much greater annoyance for our competitors.
WHAT A RIDE!!!!
James T. Gibson