Thurston First Bank in the News

President and Chairman’s Message

April 2007

One word best describes 2006 …GROWTH! Our total assets increased 75%, from $49 million year end 2005 to nearly $86 million year end 2006, while our loan portfolio doubled from $38 million to $76 million in this same period! Our staff grew from 14 to 21 team members and we added a second Mobile Branch to our force. Recent stock trades have been as high as $12.25 per share and the market has been fairly active. In October, we successfully completed our second year of operation and hit our targeted growth. Much of our growth has been attained by working with other financial institutions including partner banks throughout the state and the USDA under their Rural Development Program.

Attaining profitability became quite challenging for all banks in 2006 due to the flat yield curve, but in our 23rd month of operation we accomplished our first monthly profit! It appears the first quarter of 2007 will be in the black and the balance of the year should remain favorable for profitability.

The banking industry has undergone dramatic changes in recent years. New technology utilizing the internet, software systems, and regulatory requirements are fundamentally changing the way the industry operates. These changes become challenging to banks who often find it difficult to maintain the rapid pace of change. Thurston First Bank was designed to serve a limited and targeted business market, capitalizing on these changes. We are nationally recognized as a leader and innovator of change as featured in nationally published articles. Please take a moment to check out these articles on our website.

Thurston First Bank was among the first banks to utilize full digital and internet processing of daily banking transactions, thus reducing our operating costs and expediting our clients' access to funds. Our Mobile Branches and electronic desk-top remote banking save operating expenses for us by eliminating the need to provide brick and mortar branches and decreases our clients' operating costs, as well. These systems reduce our clients' exposure to fraud, employee injury liability and protects against physical interception. The bank's targeted marketing of business clients reduces our marketing expense and provides a customer base that values our personalized and responsive services.

Industry consolidation through mergers and acquisitions often results in the loss of financial relationships between banks and the small business operators that depend on loan officers with local understanding and authority to act. As a result, "separation anxiety" has developed as their bank's decision-makers are transferred to glass towers in distant cities. Small businesses worry; if consolidation hasn't happened yet today, is it going to happen to my bank in the future? Relationship banking with decisive and knowledgeable personnel is the key to our success. Our highly qualified staff makes the decisions face-to-face with our clients every day and continues to provide personalized, on-site training and service.

As our clients and community prosper, so too will the value of our shares for those of you that have made the commitment to change the course of banking in Thurston County by investing with us. We look forward to continued growth in 2007 and encourage each of you to recommend Thurston First Bank to your business associates. Your referrals make your stock investment grow!

Stephen J. Bean
Chairman of the Board

Michael D. Edwards
President and CEO