Financial Results for the Years Ended December 31, 2006 and 2005

First Manitowoc Bancorp, Inc. reported net income of $6.9 million or $1.03 diluted earnings per share for the year ended December 31, 2006, a 3 percent increase as compared to $6.8 million or $1.00 diluted earnings per share for the prior year ended December 31, 2005.

Total assets for the Company increased by $30 million during the year to $688.1 million at December 31, 2006 compared to $658.2 million at December 31, 2005. Our asset growth was generated by $17.6 million in net purchases of investment securities and $15.1 million of net growth in loans. Total deposits and repurchase agreements increased $44.1 million to $583.3 million at December 31, 2006 compared to $539.2 million at December 31, 2005. Total borrowed funds decreased by $19.6 million as our strong core deposit growth was sufficient to sustain our asset growth.

Total shareholders’ equity increased by $5.1 million to $69.6 million at December 31, 2006 as compared with $64.5 million at December 31, 2005. The growth in shareholders’ equity is primarily attributable to our net income of $6.9 million for 2006 offset by our dividends of $2.1 million. Return on average equity was 10.30% compared to 10.46% in 2005. Return on average assets was 1.03% compared to 1.07% in 2005.

Net interest income increased by $0.5 million during 2006 to $20.6 million as compared to $20.1 million in 2005, due to an increase in interest-earning assets, offset by compressed net interest margin. During 2006, our net interest margin compressed due to the challenging interest rate environment that resulted from the inverted yield curve. Provision for loan losses totaled $2.0 million in 2006 compared to $2.2 million in 2005.

Total non-interest income increased by $1.7 million to $8.6 million in 2006 from $6.9 million in 2005. The growth in non-interest income during the year resulted from income generated from our insurance subsidiary, The Vincent Group, as well as income recognized from our asset management company, the George V. Reis Investment Group, which was purchased in April 2006. Service charges, trust fees and gains on sales of securities also increased in 2006 compared to 2005.

Non-interest expense increased by $2.2 million to $18.5 million for 2006 compared to $16.3 million in 2005. Salaries and employee benefits reflected the added expense of the opening of an additional insurance office in Little Chute, the inclusion of expenses from the George V. Reis Investment Group, as well as the addition of bankers in connection with our planned expansion into the Sheboygan County market.

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