UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-K

þ		ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2006

o		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Access National Corporation

Organized under the laws of Virginia		82-0545425
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification Number)

1800 Robert Fulton Drive, Suite 310, Reston, Virginia 20191
(Address of principal executive office) (Zip Code)

(703) 871-2100
(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class Common Stock $.835 par value		Name of each exchange on which registered The NASDAQ Stock Market LLC

Securities registered pursuant to Section 12 (g) of the Act:
(Title of class) None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes o No þ

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act.
Yes o No þ

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No o

Indicate by checkmark if disclosure of delinquent filers in response to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K þ

Indicate by checkmark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act.

Large accelerated filer o      Accelerated filer o      Non-accelerated filer þ

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act) o Yes þ No

The aggregate market value of the voting and non-voting common equity held by non-affiliates of the registrant, computed by reference to the price at which the stock was last sold as of the last business day of the registrant’s most recently completed second fiscal quarter was approximately $52,008,000.

As of March 15, 2007, there were 12,020,587 shares of Common Stock, par value $.835 per share of Access National Corporation issued and outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the Registrant’s Proxy Statement for the Corporation’s Annual Meeting of Shareholders to be held on May 22, 2007, are incorporated by reference in Part III of this Form 10-K.

 

 

Access National Corporation
FORM 10-K
INDEX

					Page
PART I
		Item 1		Business			2
		Item 1A		Risk Factors			10
		Item 1B		Unresolved Staff Comments			13
		Item 2		Properties			13
		Item 3		Legal Proceedings			13
		Item 4		Submission of Matters to a Vote of Security Holders			13
PART II
		Item 5		Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities			13
		Item 6		Selected Financial Data			15
		Item 7		Management’s Discussion and Analysis of Financial Condition and Results of Operation			15
		Item 7A		Quantitative and Qualitative Disclosures About Market Risk			35
		Item 8		Financial Statements and Supplementary Data			36
		Item 9		Changes in and Disagreements with Accountants On Accounting and Financial Disclosure			71
		Item 9A		Controls and Procedures			71
		Item 9B		Other Information			71
PART III
		Item 10		Directors, Executive Officers and Corporate Governance			71
		Item 11		Executive Compensation			71
		Item 12		Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters			71
		Item 13		Certain Relationships and Related Transactions, and Director Independence			72
		Item 14		Principal Accountant Fees and Services			72
PART IV
		Item 15		Exhibits, Financial Statement Schedules			73
		Signatures					75

PART I

In addition to historical information, the following report contains forward looking statements that are subject to risks and uncertainties that could cause the Corporation’s actual results to differ materially from those anticipated. Readers are cautioned not to place undue reliance on these forward-looking statements, which reflect management’s analysis only as of the date of the Report.

ITEM 1 – BUSINESS

Access National Corporation, (the “Corporation”) was organized June 15, 2002 under the laws of Virginia to operate as a bank holding company. The Corporation has three wholly owned subsidiaries: Access National Bank, Access National Capital Trust I and Access National Capital Trust II. Effective June 15, 2002, pursuant to an Agreement and Plan of Reorganization dated April 18, 2002 between the Corporation and Access National Bank (the “Bank”), the Corporation acquired all of the outstanding stock of the Bank in a statutory share exchange transaction. The Corporation does not have any significant operations and serves primarily as the parent company for the Bank. Access National Capital Trust I and Access National Capital Trust II were formed for the purpose of issuing redeemable capital securities. The Corporation’s income is primarily derived from dividends received from the Bank. These dividends are determined by the Bank’s earnings and capital position.

Access National Bank is the primary operating business of the Corporation. The Bank provides commercial credit, deposit and mortgage services to middle market businesses and associated professionals, primarily in the greater Washington, D.C. Metropolitan Area. The Bank was organized under federal law as a national banking association to engage in a general banking business to serve the communities in and around Northern Virginia. The Bank opened for business on December 1, 1999 at 14006 Lee-Jackson Memorial Highway in Chantilly, Virginia. The headquarters for the Corporation, Bank and Access National Mortgage Corporation (the “Mortgage Corporation”) is located at 1800 Robert Fulton Drive, Reston, Virginia. Deposits with the Bank are insured to the maximum amount provided by the Federal Deposit Insurance Corporation. The Bank offers a comprehensive range of financial services and products and specializes in providing customized financial services to small and medium sized businesses, professionals, and associated individuals. The Bank provides its customers with personal customized service utilizing the latest technology and delivery channels.

Bank revenues are derived from interest and fees received in connection with loans, deposits and investments. Interest paid on deposits and borrowings are the major expenses followed by administrative and operating expenses. Revenues from the Mortgage Corporation consist primarily of gains from the sale of loans and loan origination fees. Major expenses of the Mortgage Corporation consist of personnel, interest, advertising and other operating expenses.

The economy, interest rates, monetary and fiscal policies of the federal government and regulatory policies have a significant influence on the banking industry.

The Bank has experienced consistent growth and profitability since inception. Our goal is to become a leading provider of financial services to small to medium sized businesses, and professionals in Northern Virginia. Our strategy is to know the needs of our clients and to deliver the corresponding financial services. We employ highly qualified personnel and emphasize the use of the latest technology in operations and the services we provide. Our marketing efforts are directed to prospective clients that value high quality service and that are, or have the potential to become, highly profitable.

Assets at year end totaled over $644.8 million and net income amounted to $7.6 million. The Bank operates from four banking centers located in Chantilly, Tysons Corner, Reston, and Leesburg, Virginia and online at www.accessnationalbank.com. Additional offices may be added from time to time based upon management’s constant analysis of the market and opportunities.

On December 1, 1999, the Bank acquired Access National Mortgage Corporation, formerly known as Mortgage Investment Corporation. The Mortgage Corporation is headquartered in Reston, Virginia. The Mortgage Corporation specializes in the origination of conforming and non-conforming residential mortgages primarily in the greater Washington, D.C. Metropolitan Area and the surrounding areas of its branch locations. The Mortgage Corporation has established offices throughout Virginia, in Fredericksburg, Reston, Roanoke, Richmond, Warrenton and Vienna. Offices outside the state of Virginia include Westminster and Bowie in Maryland, Clearwater in Florida, Nashville in Tennessee, Denver and Windsor in Colorado, and San Antonio, Texas.

On April 10, 2002 the Bank acquired Access National Leasing Corporation (the “Leasing Corporation”), formerly known as Commercial Finance Corporation. The Leasing Corporation is presently inactive. However commercial and industrial lease financing is offered through and managed by the Bank.

On May 19, 2003 the Bank formed Access Real Estate LLC (“Access Real Estate”). The sole purpose of forming Access Real Estate was to acquire and hold title to real estate for the Corporation. On July 10, 2003, Access Real Estate acquired a 45,000 square foot, three story office building located at 1800 Robert Fulton Drive in Reston, Virginia at a cost of approximately $7.1 million that serves as the corporate headquarters for the Corporation, Bank, and Mortgage Corporation.

On July 19, 2004, the Corporation’s common stock commenced trading on the NASDAQ National Market system under the ticker symbol “ANCX”.

On August 17, 2004, the Bank acquired 100% of the common stock in United First Mortgage Corporation (“UFM”) from Community First Bank N.A of Bluefield, Virginia in a stock purchase transaction. The operations of UFM have been merged into that of the Mortgage Corporation and the corporate entity acquired is now inactive.

On July 25, 2005 Access Real Estate purchased Lot # 1 in the Fredericksburg Business Park at a cost of $1.2 million. This property was purchased for future expansion of the Bank and Mortgage Corporation. The property is presently undeveloped.

On December 23, 2005, the Corporation issued a 2 for 1 stock split. The authorized shares of common stock increased from 30,000,000 to 60,000,000 and par value decreased from $1.67 to $.835. Prior periods have been restated to reflect the stock split.

In August 2006, the Corporation sold 2,300,000 shares of common stock at $9.38 per share in a public offering and netted approximately $20 million in new capital.

Our Strategy – historical and prospective

We consider our business to be a young and emerging enterprise that is well positioned to be an effective competitor in the financial services industry over the long term. Our view of the financial services market place is that community banks must be effective in select market niches that are under-served and stay clear of competing with large national competitors on a head to head basis for broad based consumer business. We started by organizing a de novo national bank in 1999. The focus of the bank was and is serving the small to middle market businesses and their associated professionals in the greater Washington, D.C. Metropolitan Area. We find that large national competitors are ineffective at addressing this market as it is difficult to distinguish where a business’s financial needs stop and the personal financial needs of that business’s professionals start. Emerging businesses and the finances of their owners are best served hand-in-hand.

Our core competency is judgmental discipline of commercial lending based upon personnel and practices that help our clients strategize and grow their businesses from a financial perspective. As financial success takes hold in the business, personal goals and wealth objectives of the business owners become increasingly important. Our second competency is a derivative of the first. We have the personnel and know how to provide private banking services, the skills and strategy that assist our individual clients to acquire assets, build wealth and manage their resources. Mortgage banking and the related activities in our model goes hand-in-hand with supplying effective private banking services. Unlike most banking companies, the heart of our Mortgage Corporation is ingrained into our commercial bank, serving the same clients side-by-side in a coordinated and seamless fashion. Lending is not enough in today’s environment. The credit services must be backed up by competitive deposit and cash management products and operational excellence. We have made significant investments in skilled personnel and the latest technology to ensure we can deliver on these promises.

We generally expect to have fewer branch locations compared to similar size banking companies. We do not view our branch network as a significant determinant of our growth. Our marketing strategies focus on benefits other than branch location convenience.

The acquisition of the Mortgage Corporation in 1999 provided two key benefits to our strategy: 1) it solidified our second competency from a personnel and operational perspective that would have taken years to replicate with organic growth alone; and 2) it provided a fee income and overhead base from which to launch a new banking business. Strong profits and cash flow from the Mortgage Corporation in the early years subsidized the growth and development of the Bank and allowed for the acceleration of its growth plans and, in time, its profitability.

The long term goal was and is to generate 70-80% of the Corporation’s earnings from the core business bank, with the rest of our consolidated earnings to be generated from related fee income activities. At the present time, the sole related fee income activity remains our Mortgage Corporation. We will consider entering other related fee income businesses that serve our target market as opportunities, market conditions and our capacity dictate. A detailed review of the “Segment Reporting” elements of the financial statements and analysis readily reveal that contribution from our Banking Segment has grown steadily.

We expect to grow our business bank by continuing to hire skilled personnel, train our own and provide a sound infrastructure that facilitates the success of businesses, their owners and key personnel, not only today but tomorrow and on into the ensuing decades.

Lending Activities

The Bank’s lending activities involve commercial loans, commercial real estate loans, commercial and residential real estate construction loans, residential mortgage loans, home equity loans, and consumer loans. These lending activities provide access to credit to small businesses, professionals and consumers in the greater Washington, D.C. Metropolitan Area. Loans originated by the Bank are classified as loans held for investment. The Mortgage Corporation originates residential mortgages and home equity loans that are only held temporarily pending their sale to third parties and in some cases the Bank. The Mortgage Corporation also brokers loans that do not conform to existing products offered. Each of our principal loan types are described below.

At December 31, 2006 loans held for investment totaled $433.6 million compared to $369.7 million at year end 2005. The increase in loans is attributable to our customer base, referrals and new business. The Bank is predominantly a secured lender. Secured loans comprise over 99% of the total loan portfolio. Table 4, Loan Portfolio, reflects the composition of loans held for investment.

The Bank’s lending activities are subject to a variety of lending limits imposed by federal law. While differing limits apply in certain circumstances based on the type of loan, in general, the Bank’s lending limit to any one borrower on loans that are not fully secured by readily marketable or other permissible collateral is equal to 15% of the Bank’s capital and surplus. The Bank has established relationships with correspondent banks to participate in loans when loan amounts exceed the Bank’s legal lending limits or internal lending policies.

We have an established credit policy that includes procedures for underwriting each type of loan and lending personnel have been assigned specific authorities based upon their experience. Loans in excess of an individual loan officer’s authority are presented to our Loan Committee for approval. The Loan Committee meets weekly to facilitate a timely approval process for our clients. Loans are approved based on the borrower’s capacity for credit, collateral and sources of repayment. Loans are actively monitored to detect any potential performance issues. We manage our loans within the context of a risk grading system developed by management based upon extensive experience in administering loan portfolios in our market. Payment performance is carefully monitored for all loans. When loan repayment is dependent upon an operating business or investment real estate, periodic financial reports, site visits and select asset verification procedures are used to ensure that we accurately rate the relative risk of our assets. Based upon criteria that are established by management and the Board of Directors, the degree of monitoring is escalated or relaxed for any given borrower based upon our assessment of the future repayment risk.

Loan Portfolio – Loans Held for Investment. The composition of Loans Held for Investment is summarized in Table 4. The table and numbers discussed in this section do not reflect information regarding Loans Held for Sale.

Commercial Loans: Commercial Loans represent 11.9% of our held for investment portfolio as of December 31, 2006. These loans are to businesses or individuals within our target market for business purposes. Typically the loan proceeds are used to support working capital and the acquisition of fixed assets of an operating business. These loans are underwritten based upon our assessment of the obligor(s)’ ability to generate operating cash flow in the future necessary to repay the loan. To address the risks associated with the uncertainties of future cash flow, these loans are generally well secured by assets owned by the business or its principal shareholders and the principal shareholders are typically required to guarantee the loan.

Real Estate Construction Loans: Real Estate Construction Loans, also known as construction and land development loans, comprise 15.8% of our held for investment loan portfolio, as of December 31, 2006. These loans generally fall into one of three circumstances: first, loans to individuals that are ultimately used to acquire property and construct an owner occupied residence; second, loans to builders for the purpose of acquiring property and constructing homes for sale to consumers; and third, loans to developers for the purpose of acquiring land that is developed into finished lots for the ultimate construction of residential or commercial buildings. Loans of these types are generally secured by the subject property within limits established by the Board of Directors based upon an assessment of market conditions and up-dated from time to time. The loans typically carry recourse to principal owners. In addition to the repayment risk associated with loans to individuals and businesses, loans in this category carry construction completion risk. To address this additional risk, loans of this type are subject to additional administration procedures designed to verify and ensure progress of the project in accordance with allocated funding, project specifications and time frames.

Commercial Real Estate Loans: Also known as “Commercial Mortgages”, loans in this category represent 36.9% of our loan portfolio held for investment, as of December 31, 2006. These loans generally fall into one of three situations in order of magnitude: first, loans supporting an owner occupied commercial property; second, properties used by non-profit organizations such as churches or schools where repayment is dependent upon the cash flow of the non-profit organizations; and third, loans supporting a commercial property leased to third parties for investment. Commercial Real Estate Loans are secured by the subject property and underwritten to policy standards. Policy standards approved by the Board of Directors from time to time set forth, among other considerations, loan to value limits, cash flow coverage ratios, and the general creditworthiness of the obligors.

Residential Real Estate Loans: This category includes loans secured by first or second mortgages on one to four family residential

properties and represent 35.2% of the portfolio, as of December 31, 2006. Of this amount, the following sub-categories exist as a percentage of the whole Residential Real Estate Loan portfolio: Home Equity Lines of Credit 16.2%; First Trust Mortgage Loans 76.7%; Loans Secured by a Junior Trust 4.1%; Multi-family loans and loans secured by Farmland 3.0%.

Home Equity Loans are extended to borrowers in our target market. Real estate equity is the largest component of consumer wealth in our marketplace. Once approved, this consumer finance tool allows the borrower to access the equity in their home or investment property and use the proceeds for virtually any purpose. Home Equity Loans are most frequently secured by a second lien on residential property. 1-4 Family Residential First Trust Loan, or “First Mortgage Loan,” proceeds are used to acquire or refinance the primary financing on owner occupied and residential investment properties. Junior Trust Loans, or “Loans Secured by a Second Trust Loans,” are to consumers wherein the proceeds have been used for a stated consumer purpose. Examples of consumer purposes are education, refinancing debt, or purchasing consumer goods. The loans are generally extended in a single disbursement and repaid over a specified period of time.

Loans in the Residential Real Estate portfolio are underwritten to standards within a traditional consumer framework that is periodically reviewed and up-dated by our management and Board of Directors: repayment source and capacity, value of the underlying property, credit history, savings pattern and stability.

Consumer Loans: Consumer Loans make up less than 1% of our loan portfolio. Most loans are well secured with assets other than real estate, such as marketable securities or automobiles. Very few loans are unsecured. As a matter of operation, management discourages unsecured lending. Loans in this category are underwritten to standards within a traditional consumer framework that is periodically reviewed and up-dated by our management and Board of Directors: repayment source and capacity, collateral value, savings pattern, credit history and stability.

Loans Held for Sale (LHFS) Loans Held for Sale are originated by Access National Mortgage Corporation, a wholly owned subsidiary of Access National Bank. Loans of these types are residential mortgage loans extended to consumers and underwritten in accordance with standards set forth by an institutional investor to whom we expect to sell the loan for a profit. Loan proceeds are used for the purchase or refinance of the property securing the loan. Loans are sold with the servicing released to the investor.

The LHFS loans are closed in our name and carried on our books until the loan is delivered to and purchased by an investor. In 2006, we originated $826.6 million of loans processed in this manner. Repayment risk of this activity is minimal since the loans are on our books for a short time period. Loans are sold without recourse and subject to industry standard representations and warranties. The risks associated with this activity center around borrower fraud and failure of our investors to purchase the loans. These risks are addressed by the on-going maintenance of an extensive quality control program, an internal audit and verification program, and a selective approval and monitoring process of the counterparty risk for investors. In the twenty one years that the Mortgage Corporation has been in the mortgage business it has been able to absorb the financial impact of these risks without material impact on its operating performance. At December 31, 2006 loans held for sale totaled $65.3 million compared to $45.0 million at year end 2005. The increase in loans held for sale at year end 2006 is due to the volume of loans closed during the month. In December 2006 the Mortgage Corporation closed $90.4 million in mortgage loans compared to $45.5 million in December 2005.

Brokered Loans

Brokered loans are underwritten and closed by a third party lender. We are paid a fee for procuring and packaging brokered loans. In 2006, we originated a total volume of $222.5 million in residential mortgage loans under these types of delivery methods. Brokered loans accounted for 21.2% of the total loan volume of Access National Mortgage Corporation. The risks associated with this activity are limited to losses or claims arising from fraud. In our 7 years of mortgage banking we have been able to absorb the financial impact of these risks without material impact to our operating performance.

Deposits

Deposits are the primary source of funding loan growth. Average deposits totaled $423.8 million up from $337.4 million, a 25.6% increase over 2005. Deposits totaled $438.9 million on December 31, 2006, compared to $419.6 million on December 31, 2005, an increase of $19.3 million. Table 7, Average Deposits and Average Rates Paid, reflects the composition of deposits and interest rates.

Market Area

Access National Corporation, Access National Bank, and Access National Mortgage Corporation are headquartered in Fairfax County and serve the Northern Virginia region. Fairfax County is a diverse and thriving urban county. As the most populous jurisdiction in both Virginia and the Washington D.C. Metropolitan Area, the County’s population exceeds that of seven states. The median household income of Fairfax County is the highest in the nation. Northern Virginia had a population of 2.16 million according to the 2000 Census. The proximity to Washington, D.C. and the influence of the federal government and its spending provides somewhat of a recession shelter.

Competition

The Bank competes with virtually all banks and financial institutions which offer services in its market area. Much of this competition comes from large financial institutions headquartered outside the state of Virginia, each of which has greater financial and other resources to conduct large advertising campaigns and offer incentives. To attract business in this competitive environment, the Bank relies on personal contact by its officers and directors, local promotional activities, and the ability to provide personalized custom services to small businesses and professionals. In addition to providing full service banking, the Bank offers and promotes alternative and modern conveniences such as internet banking, automated clearinghouse transactions, remote deposit capture, and offers courier services for commercial clients.

Employees

At December 31, 2006 the Corporation had 253 employees, 82 of whom were employed by the Bank and 171 of whom were employed by the Mortgage Corporation. The Bank recruits experienced and motivated personnel and emphasizes the use of technology. Employee relations have been good.

Supervision and Regulation

Set forth below is a brief description of the material laws and regulations that affect the Corporation. The description of these statutes and regulations is only a summary and does not purport to be complete. This discussion is qualified in its entirety by reference to the statutes and regulations summarized below. No assurance can be given that these statutes or regulations will not change in the future.

General. The Corporation is subject to the periodic reporting requirements of the Securities and Exchange Act of 1934, as amended (the “Exchange Act”), which include, but are not limited to, the filing of annual, quarterly and other reports with the Securities and Exchange Commission (the “SEC”). As an Exchange Act reporting company, the Corporation is directly affected by the Sarbanes-Oxley Act of 2002 (the “SOX”), which aimed at improving corporate governance and reporting procedures and requires expanded disclosure of the Corporation’s corporate operations and internal controls. The Corporation is already complying with new SEC and other rules and regulations implemented pursuant to the SOX and intends to comply with any applicable rules and regulations implemented in the future. Although the Corporation has incurred, and expects to continue to incur, additional expense in complying with the provisions of the SOX and the resulting regulations, such compliance has not had a material impact on the Corporation’s financial condition or results of operations and the management does not expect it to in the future.

The Corporation is a bank holding company within the meaning of the Bank Holding Company Act of 1956, and is registered as such with, and subject to the supervision of, the Board of Governors of the Federal Reserve System and the Federal Reserve Bank of Richmond (the “FRB”). Generally, a bank holding company is required to obtain the approval of the FRB before it may acquire all or substantially all of the assets of any bank, and before it may acquire ownership or control of the voting shares of any bank if, after giving effect to the acquisition, the bank holding company would own or control more than 5% of the voting shares of such bank. The FRB’s approval is also required for the merger or consolidation of bank holding companies.

The Corporation is required to file periodic reports with the FRB and provide any additional information as the FRB may require. The FRB also has the authority to examine the Corporation and the Bank, as well as any arrangements between the Corporation and the Bank, with the cost of any such examinations to be borne by the Corporation.

Banking subsidiaries of bank holding companies are also subject to certain restrictions imposed by Federal law in dealings with their holding companies and other affiliates. Subject to certain restrictions set forth in the Federal Reserve Act, a bank can loan or extend credit to an affiliate, purchase or invest in the securities of an affiliate, purchase assets from an affiliate or issue a guarantee, acceptance or letter of credit on behalf of an affiliate, as long as the aggregate amount of such transactions of a bank and its subsidiaries with its affiliates does not exceed 10% of the capital stock and surplus of the bank on a per affiliate basis or 20% of the capital stock and surplus of the bank on an aggregate affiliate basis. In addition, such transactions must be on terms and conditions that are consistent with safe and sound banking practices. In particular, a bank and its subsidiaries generally may not purchase from an affiliate a low-quality asset, as defined in the Federal Reserve Act. These restrictions also prevent a bank holding company and its other affiliates from borrowing from a banking subsidiary of the bank holding company unless the loans are secured by marketable collateral of designated amounts. Additionally, the Corporation and its subsidiary are prohibited from engaging in certain tie-in arrangements in connection with any extension of credit, sale or lease of property or furnishing of services.

A bank holding company is prohibited from engaging in or acquiring direct or indirect ownership or control of more than 5% of the voting shares of any company engaged in non-banking activities. A bank holding company may, however, engage in or acquire an interest in a company that engages in activities which the FRB has determined by regulation or order are so closely related to banking as to be a proper incident to banking. In making these determinations, the FRB considers whether the performance of such activities by a bank holding company would offer advantages to the public that outweigh possible adverse effects.

As a national bank, the Bank is subject to regulation, supervision and regular examination by the Office of the Comptroller of the Currency (the “Comptroller”). Each depositor’s account with the Bank is insured by the Federal Deposit Insurance Corporation (the “FDIC”) to the maximum amount permitted by law. The Bank is also subject to certain regulations promulgated by the FRB and applicable provisions of Virginia law, insofar as they do not conflict with or are not preempted by Federal banking law.

The regulations of the FDIC, the Comptroller and FRB govern most aspects of the Corporation’s business, including deposit reserve requirements, investments, loans, certain check clearing activities, issuance of securities, payment of dividends, branching, deposit interest rate ceilings and numerous other matters. As a consequence of the extensive regulation of commercial banking activities in the United States, the Corporation’s business is particularly susceptible to changes in state and Federal legislation and regulations, which may have the effect of increasing the cost of doing business, limiting permissible activities or increasing competition.

Governmental Policies and Legislation. Banking is a business that depends primarily on interest rate differentials. In general, the difference between the interest rates paid by the Bank on its deposits and its other borrowings and the interest rates received by the Bank on loans extended to its customers and securities held in its portfolio, comprise the major portion of the Corporation’s earnings. These rates are highly sensitive to many factors that are beyond the Corporation’s control. Accordingly, the Corporation’s growth and earnings are subject to the influence of domestic and foreign economic conditions, including inflation, recession and unemployment.

The commercial banking business is affected not only by general economic conditions, but is also influenced by the monetary and fiscal policies of the Federal government and the policies of its regulatory agencies, particularly the FRB. The FRB implements national monetary policies (with objectives such as curbing inflation and combating recession) by its open-market operations in U.S. Government securities, by adjusting the required level of reserves for financial institutions subject to its reserve requirements and by varying the discount rates applicable to borrowings by depository institutions. The actions of the FRB in these areas influence the growth of bank loans, investments and deposits, and also affect interest rates charged on loans and paid on deposits. The nature and impact of any future changes in monetary policies cannot be predicted.

From time to time, legislation is enacted which has the effect of increasing the cost of doing business, limiting or expanding permissible activities or affecting the competitive balance between banks and other financial institutions. Proposals to change the laws and regulations governing the operations and taxation of bank holding companies, banks and other financial institutions are frequently made in Congress, in the Virginia Legislature and brought before various bank holding company and bank regulatory agencies. The likelihood of any major changes and the impact such changes might have are impossible to predict.

Dividends. There are both federal and state regulatory restrictions on dividend payments by both the Bank and the Corporation that may affect the Corporation’s ability to pay dividends on its Common Stock. As a bank holding company, the Corporation is a separate legal entity from the Bank. Virtually all of the Corporation’s income results from dividends paid to the Corporation by the Bank. The amount of dividends that may be paid by the Bank depends upon the Bank’s earnings and capital position and is limited by federal and state law, regulations and policies. In addition to specific regulations governing the permissibility of dividends, both the FRB and the Virginia Bureau of Financial Institutions are generally authorized to prohibit payment of dividends if they determine that the payment of dividends by the Bank would be an unsafe and unsound banking practice. The Corporation meets all regulatory requirements and began paying dividends in February 2006. The Corporation paid dividends totaling $179 thousand in 2006. See “Item 5 — Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.”

Capital Requirements. The FRB, the Comptroller and the FDIC have adopted risk-based capital adequacy guidelines for bank holding companies and banks. These capital adequacy regulations are based upon a risk-based capital determination, whereby a bank holding company’s capital adequacy is determined in light of the risk, both on- and off-balance sheet, contained in the company’s assets. Different categories of assets are assigned risk weightings and are counted at a percentage of their book value.

The regulations divide capital between Tier 1 capital (core capital) and Tier 2 capital. For a bank holding company, Tier 1 capital consists primarily of common stock, related surplus, non-cumulative perpetual preferred stock, minority interests in consolidated subsidiaries and a limited amount of qualifying cumulative preferred securities. Goodwill and certain other intangibles are excluded from Tier 1 capital. Tier 2 capital consists of an amount equal to the allowance for loan and lease losses up to a maximum of 1.25% of risk weighted assets, limited other types of preferred stock not included in Tier 1 capital, hybrid capital instruments and term subordinated debt. Investments in and loans to unconsolidated banking and finance subsidiaries that constitute capital of those subsidiaries are excluded from capital. The sum of Tier 1 and Tier 2 capital constitutes qualifying total capital. The guidelines generally require banks to maintain a total qualifying capital to weighted risk assets level of 8% (the “Risk-based Capital Ratio”). Of the total 8%, at least 4% of the total qualifying capital to weighted risk assets (the “Tier 1 Risk-based Capital Ratio”) must be Tier 1 capital.

The FRB, the Comptroller and the FDIC have adopted leverage requirements that apply in addition to the risk-based capital requirements. Banks and bank holding companies are required to maintain a minimum leverage ratio of Tier 1 capital to average total consolidated assets (the “Leverage Ratio”) of at least 3.0% for the most highly-rated, financially sound banks and bank holding companies and a minimum Leverage Ratio of at least 4.0% for all other banks. The FDIC and the FRB define Tier 1 capital for banks in the same manner for both the Leverage Ratio and the Risk-based Capital Ratio. However, the FRB defines Tier 1 capital for bank holding companies in a slightly different manner. An institution may be required to maintain Tier 1 capital of at least 4% or 5%, or possibly higher, depending upon the activities, risks, rate of growth, and other factors deemed material by regulatory authorities. As of December 31, 2006, the Corporation and Bank both met all applicable capital requirements imposed by regulation.

Federal Deposit Insurance Corporation Improvement Act of 1991 (“FDICIA”). There are five capital categories applicable to insured institutions, each with specific regulatory consequences. If the appropriate Federal banking agency determines, after notice and an opportunity for hearing, that an insured institution is in an unsafe or unsound condition, it may reclassify the institution to the next lower capital category (other than critically undercapitalized) and require the submission of a plan to correct the unsafe or unsound condition. The Comptroller has issued regulations to implement these provisions. Under these regulations, the categories are:

     a. Well Capitalized — The institution exceeds the required minimum level for each relevant capital measure. A well capitalized institution is one (i) having a Risk-based Capital Ratio of 10% or greater, (ii) having a Tier 1 Risk-based Capital Ratio of 6% or greater, (iii) having a Leverage Ratio of 5% or greater and (iv) that is not subject to any order or written directive to meet and maintain a specific capital level for any capital measure.

     b. Adequately Capitalized — The institution meets the required minimum level for each relevant capital measure. No capital distribution may be made that would result in the institution becoming undercapitalized. An adequately capitalized institution is one (i) having a Risk-based Capital Ratio of 8% or greater, (ii) having a Tier 1 Risk-based Capital Ratio of 4% or greater and (iii) having a Leverage Ratio of 4% or greater or a Leverage Ratio of 3% or greater if the institution is rated composite 1 under the CAMELS (Capital, Assets, Management, Earnings, Liquidity and Sensitivity to market risk) rating system.

     c. Undercapitalized — The institution fails to meet the required minimum level for any relevant capital measure. An undercapitalized institution is one (i) having a Risk-based Capital Ratio of less than 8% or (ii) having a Tier 1 Risk-based Capital Ratio of less than 4% or (iii) having a Leverage Ratio of less than 4%, or if the institution is rated a composite 1 under the CAMEL rating system, a Leverage Ratio of less than 3%.

     d. Significantly Undercapitalized — The institution is significantly below the required minimum level for any relevant capital measure. A significantly undercapitalized institution is one (i) having a Risk-based Capital Ratio of less than 6% or (ii) having a Tier 1 Risk-based Capital Ratio of less than 3% or (iii) having a Leverage Ratio of less than 3%.

     e. Critically Undercapitalized — The institution fails to meet a critical capital level set by the appropriate federal banking agency. A critically undercapitalized institution is one having a ratio of tangible equity to total assets that is equal to or less than 2%.

An institution which is less than adequately capitalized must adopt an acceptable capital restoration plan, is subject to increased regulatory oversight, and is increasingly restricted in the scope of its permissible activities. Each company having control over an undercapitalized institution must provide a limited guarantee that the institution will comply with its capital restoration plan. Except under limited circumstances consistent with an accepted capital restoration plan, an undercapitalized institution may not grow. An undercapitalized institution may not acquire another institution, establish additional branch offices or engage in any new line of business unless determined by the appropriate Federal banking agency to be consistent with an accepted capital restoration plan, or unless the FDIC determines that the proposed action will further the purpose of prompt corrective action. The appropriate Federal banking agency may take any action authorized for a significantly undercapitalized institution if an undercapitalized institution fails to submit an acceptable capital restoration plan or fails in any material respect to implement a plan accepted by the agency. A critically undercapitalized institution is subject to having a receiver or conservator appointed to manage its affairs and for loss of its charter to conduct banking activities.

An insured depository institution may not pay a management fee to a bank holding company controlling that institution or any other person having control of the institution if, after making the payment, the institution, would be undercapitalized. In addition, an institution cannot make a capital distribution, such as a dividend or other distribution that is in substance a distribution of capital to the owners of the institution if following such a distribution the institution would be undercapitalized. Thus, if payment of such a management fee or the making of such would cause the Bank to become undercapitalized, it could not pay a management fee or dividend to the Corporation.

As of December 31, 2006, both the Corporation and the Bank were considered “well capitalized.”

Deposit Insurance Assessments. The Bank’s deposits are insured up to applicable limits by the Deposit Insurance Fund (the “DIF”) of the FDIC. The DIF is the successor to the Bank Insurance Fund and the Savings Association Insurance Fund, which were merged in 2006. The FDIC recently amended its risk-based assessment system for 2007 to implement authority granted by the Federal Deposit Insurance Reform Act of 2005 (“FDIRA”). Under the revised system, insured institutions are assigned to one of four risk categories based on supervisory evaluations, regulatory capital levels and certain other factors. An institution’s assessment rate depends upon the category to which it is assigned. Unlike the other categories, Risk Category I, which contains the least risky depository institutions, contains further risk differentiation based on the FDIC’s analysis of financial ratios, examination component ratings and other information. Assessment rates are determined by the FDIC and currently range from five to seven basis points for the healthiest institutions (Risk Category I) to 43 basis points of assessable deposits for the riskiest (Risk Category IV). The FDIC may adjust rates uniformly from one quarter to the next, except that no single adjustment can exceed three basis points. FDIRA also provided for the possibility that the FDIC may pay dividends to insured institutions if the DIF reserve ratio equals or exceeds 1.35% of estimated insured deposits.

Gramm-Leach-Bliley Act of 1999. The Gramm-Leach-Bliley Act of 1999 (the “GLBA”) implemented major changes to the statutory framework for providing banking and other financial services in the United States. The GLBA, among other things, eliminated many of the restrictions on affiliations among banks and securities firms, insurance firms and other financial service providers. A bank holding company that qualifies as a financial holding company will be permitted to engage in activities that are financial in nature or incidental or complimentary to financial activities. The activities that the GLBA expressly lists as financial in nature include insurance underwriting, sales and brokerage activities, providing financial and investment advisory services, underwriting services and limited merchant banking activities.

To become eligible for these expanded activities, a bank holding company must qualify as a financial holding company. To qualify as a financial holding company, each insured depository institution controlled by the bank holding company must be well-capitalized, well-managed and have at least a satisfactory rating under the CRA (discussed below). In addition, the bank holding company must file with the Federal Reserve a declaration of its intention to become a financial holding company. While the Corporation satisfies these requirements, the Corporation has not elected for various reasons to be treated as a financial holding company under the GLBA.

We do not believe that the GLBA has had a material adverse impact on the Corporation’s or the Bank’s operations. To the extent that it allows banks, securities firms and insurance firms to affiliate, the financial services industry may experience further consolidation. The GLBA may have the result of increasing competition that we face from larger institutions and other companies offering financial products and services, many of which may have substantially greater financial resources.

The GLBA and certain other regulations issued by federal banking agencies also provide new protections against the transfer and use by financial institutions of consumer nonpublic personal information. A financial institution must provide to its customers, at the beginning of the customer relationship and annually thereafter, the institution’s policies and procedures regarding the handling of customers’ nonpublic personal financial information. These privacy provisions generally prohibit a financial institution from providing a customer’s personal financial information to unaffiliated third parties unless the institution discloses to the customer that the information may be so provided and the customer is given the opportunity to opt out of such disclosure.

Community Reinvestment Act. The Bank is subject to the requirements of the Community Reinvestment Act (the “CRA”). The CRA imposes on financial institutions an affirmative and ongoing obligation to meet the credit needs of their local communities, including low and moderate-income neighborhoods, consistent with the safe and sound operation of those institutions. A financial institution’s efforts in meeting community credit needs currently are evaluated as part of the examination process pursuant to three performance tests. These factors also are considered in evaluating mergers, acquisitions and applications to open a branch or facility.

Federal Home Loan Bank (FHLB) of Atlanta. The Bank is a member of the FHLB of Atlanta, which is one of twelve regional FHLBS that provide funding to their members for making housing loans as well as for affordable housing and community development lending. Each FHLB serves as a reserve or central bank for its members within its assigned region. It is funded primarily from proceeds derived from the sale of consolidated obligations of the FHLB System. It makes loans to members (i.e., advances) in accordance with policies and procedures established by the Board of Directors of the FHLB. As a member the Bank is required to purchase and maintain stock in the FHLB in an amount equal to 4.5% of aggregate outstanding advances in addition to the membership stock requirement of 0.2% of the Bank’s total assets.

Mortgage Banking Regulation. The Bank’s mortgage banking subsidiary is subject to the rules and regulations of, and examination by the Department of Housing and Urban Development (“HUD”), the Federal Housing Administration, the Department of Veterans Affairs and state regulatory authorities with respect to originating, processing and selling mortgage loans. Those rules and regulations, among other things, establish standards for loan origination, prohibit discrimination, provide for inspections and appraisals of

property, require credit reports on prospective borrowers and, in some cases, restrict certain loan features, and fix maximum interest rates and fees. In addition to other federal laws, mortgage origination activities are subject to the Equal Credit Opportunity Act, Truth-in-Lending Act, Home Mortgage Disclosure Act, Real Estate Settlement Procedures Act, and Home Ownership Equity Protection Act, and the regulations promulgated there under. These laws prohibit discrimination, require the disclosure of certain basic information to mortgagors concerning credit and settlement costs, limit payment for settlement services to the reasonable value of the services rendered and require the maintenance and disclosure of information regarding the disposition of mortgage applications based on race, gender, geographical distribution and income level.

USA PATRIOT Act. The USA PATRIOT Act became effective on October 26, 2001 and provides for the facilitation of information sharing among governmental entities and financial institutions for the purpose of combating terrorism and money laundering. Among other provisions, the USA PATRIOT Act permits financial institutions, upon providing notice to the United States Treasury, to share information with one another in order to better identify and report to the federal government concerning activities that may involve money laundering or terrorists’ activities. The USA PATRIOT Act is considered a significant banking law in terms of information disclosure regarding certain customer transactions. Certain provisions of the USA PATRIOT Act impose the obligation to establish anti-money laundering programs, including the development of a customer identification program, and the screening of all customers against any government lists of known or suspected terrorists. Although it does create a reporting obligation and a cost of compliance, the Bank does not expect the USA PATRIOT Act to materially affect its products, services or other business activities.

Reporting Terrorist Activities. The Federal Bureau of Investigation (“FBI”) has sent, and will send, our banking regulatory agencies lists of the names of persons suspected of involvement in terrorist activities. The Bank has been requested, and will be requested, to search its records for any relationships or transactions with persons on those lists. If the Bank finds any relationships or transactions, it must file a suspicious activity report and contact the FBI.

The Office of Foreign Assets Control (“OFAC”), which is a division of the Department of the Treasury is responsible for helping to insure that United States entities do not engage in transactions with “enemies” of the United States, as defined by various Executive Orders and Acts of Congress. OFAC has sent, and will send, our banking regulatory agencies lists of names of persons and organizations suspected of aiding, harboring or engaging in terrorist acts. If the Bank finds a name on any transaction, account or wire transfer that is on an OFAC list, it must freeze such account, file a suspicious activity report and notify the FBI. The Bank has appointed an OFAC compliance officer to oversee the inspection of its accounts and the filing of any notifications. The Bank actively checks high-risk OFAC areas such as new accounts, wire transfers and customer files. The Bank performs these checks utilizing software, which is updated each time a modification is made to the lists provided by OFAC and other agencies of Specially Designated Nationals and Blocked Persons.

Consumer Laws and Regulations. The Bank is also subject to certain consumer laws and regulations that are designed to protect consumers in transactions with banks. While the list set forth herein is not exhaustive, these laws and regulations include the Truth in Lending Act, the Truth in Savings Act, the Electronic Funds Transfer Act, the Expedited Funds Availability Act, the Equal Credit Opportunity Act, the Fair Credit Reporting Act and the Fair Housing Act, among others. These laws and regulations mandate certain disclosure requirements and regulate the manner in which financial institutions transact business with customers. The Bank must comply with the applicable provisions of these consumer protection laws and regulations as part of its ongoing customer relations.

ITEM 1A – RISK FACTORS

Our profitability depends on interest rates generally, and changes in monetary policy may impact us.

Our profitability depends in substantial part on our net interest margin, which is the difference between the rates we receive on loans and investments and the rates we pay for deposits and other sources of funds. Our net interest margin depends on many factors that are partly or completely outside of our control, including competition, federal economic, monetary and fiscal policies, and economic conditions generally. Our net interest income will be adversely affected if market interest rates change so that the interest we pay on deposits and borrowings increases faster than the interest we earn on loans and investments. Changes in interest rates also affect the value of our loans. An increase in interest rates could adversely affect borrowers’ ability to pay the principal or interest on existing loans or reduce their desire to borrow more money. This may lead to an increase in our nonperforming assets or a decrease in loan originations, either of which could have a material and negative effect on our results of operations. We try to minimize our exposure to interest rate risk, but we are unable to completely eliminate this risk. Fluctuations in market rates are neither predictable nor controllable and may have a material and negative effect on our business, financial condition and results of operations.

Our performance depends substantially upon our credit quality.

As a lender, we are exposed to the risk that our loan customers may not repay their loans according to their terms and any collateral securing payment may be insufficient to fully compensate us for the outstanding balance of the loan plus the costs we incur disposing of the collateral. Although we have collateral for most of our loans, that collateral can fluctuate in value and may not always cover the outstanding balance on the loan. We devote substantial management attention to setting reserves that we believe are adequate to cover potential credit quality problems.

If we are wrong in our assessment, or events occur that reduce the likelihood of loan repayment, our reserves may not be adequate. If it becomes necessary to make material additions to our reserves, our net income could be materially decreased. In general, if the quality of our loans and the underlying collateral decreases, that may reduce our earnings and damage our financial condition.

Our allowance for loan losses could become inadequate.

We maintain an allowance for loan losses that we believe is adequate for absorbing any potential losses in our loan portfolio. Management conducts a periodic review and consideration of the loan portfolio to determine the amount of the allowance for loan losses based upon general market conditions, credit quality of the loan portfolio and performance of our customers relative to their financial obligations with us. The amount of future losses, however, is susceptible to changes in economic and other market conditions, including changes in interest rates and collateral values that are beyond our control, and these future losses may exceed our current estimates. Although we believe the allowance for loan losses is adequate to absorb probable losses in our loan portfolio, we cannot predict such losses or that our allowance will be adequate in the future. Excessive loan losses could have a material impact on our financial performance.

Our profitability depends significantly on local economic conditions.

Our success depends primarily on the general economic conditions of the markets in which we operate. Unlike larger banks that are more geographically diversified, we provide banking and financial services to customers primarily in the Northern Virginia region. The local economic conditions in this area have a significant impact on our business, real estate and construction loans, the ability of the borrowers to repay these loans, the value of the collateral securing these loans and could decrease the demand for loans and other banking services. A significant decline in general economic conditions, caused by inflation, recession, acts of terrorism, an outbreak of hostilities or other international or domestic calamities, unemployment or other factors beyond our control could impact these local economic conditions and could negatively affect the financial results of our banking operations.

Our focus on commercial and real estate loans may increase the risk of credit losses.

We offer a variety of loans including commercial lines of credit, commercial term loans, real estate, construction, home equity, consumer and other loans. Many of these loans are secured by real estate (both residential and commercial) in the greater Washington, D.C. metropolitan area. Although we believe our credit underwriting adequately considers the underlying collateral in the evaluation process, a major change in the real estate market could have an adverse effect on our customer’s ability to repay their loans, which in turn could adversely affect our credit quality and our net income. If the value of real estate serving as collateral for the loan portfolio were to decline materially, a significant part of the loan portfolio could become under-collateralized. If the loans that are secured by real estate become troubled when real estate market conditions are declining or have declined, in the event of foreclosure, we may not be able to realize the amount of collateral that we anticipated at the time of originating the loan. In that event, we might have to increase the provision for loan losses, which could have a material adverse effect on our operating results and financial condition. Risk of loan defaults, foreclosures and under-collateralization is unavoidable in the banking industry, and we try to limit our exposure to this risk by monitoring our extensions of credit carefully. We cannot, however, fully eliminate credit risk and credit losses may occur in the future.

Our small to medium-sized business target market may have fewer financial resources to weather a downturn in the economy.

We target our commercial development and marketing strategy primarily to serve the banking and financial services needs of small and medium-sized businesses. These businesses generally have fewer financial resources in terms of capital or borrowing capacity than larger entities. If general economic conditions negatively impact this major economic sector in the markets in which we operate, our results of operations and financial condition may be adversely affected.

We may be adversely affected by changes in government monetary policy.

As a bank holding company, our business is affected by the monetary policies established by the Board of Governors of the Federal Reserve System, which regulates the national money supply in order to mitigate recessionary and inflationary pressures. In setting its policy, the Federal Reserve may utilize techniques such as the following:

	•		Engaging in open market transactions in United States government securities;
	•		Setting the discount rate on member bank borrowings; and
	•		Determining reserve requirements.

These techniques may have an adverse effect on our deposit levels, net interest margin, loan demand or our business and operations.

We may be adversely affected by unanticipated changes in government regulations.

We and our wholly-owned subsidiary, Access National Bank, are subject to extensive regulation and supervision by the Federal Reserve Bank, the FDIC and the Virginia State Corporation Commission. Any of these agencies, or other governmental or regulatory authorities, could revise existing regulations or adopt new regulations at any time. We cannot predict whether or what form of proposed statute or regulation will be adopted or the extent to which such adoption may affect our business. Regulatory changes may increase our costs, limit the types of financial services and products we may offer and/or increase the ability of non-banks to offer competing financial services and products and thus place other entities that are not subject to similar regulation in stronger, more favorable competitive positions, which could adversely affect our growth. Failure to comply with existing or new laws, regulations or policies could result in sanctions by regulatory agencies, civil money penalties and/or reputation damage, which could have an adverse effect on our business, financial condition and results of operations.

Our future success will depend on our ability to compete effectively in the highly competitive financial services industry.

We face substantial competition in all phases of our operations from a variety of different competitors. In particular, there is very strong competition for financial services in the areas of Virginia in which we conduct a substantial portion of our business. Our future growth and success will depend on our ability to compete effectively in this highly competitive financial services environment. Many of our competitors offer products and services which we do not, and many have substantially greater resources, name recognition and market presence that benefit them in attracting business. In addition, larger competitors may be able to price loans and deposits more aggressively than we do. If we have to raise interest rates paid on deposits to compete effectively, our net interest margin and income could be decreased. Some of the financial services organizations with which we compete are not subject to the same degree of regulation as is imposed on bank holding companies and federally insured state chartered banks. As a result, these non-bank competitors have certain advantages over us in accessing funding and in providing various services. Failure to compete effectively to attract new, or to retain existing, customers may reduce or limit our net income and our market share and may adversely affect our results of operations and financial condition.

We depend on the services of key personnel, and a loss of any of those personnel would disrupt our operations and result in reduced revenues.

Our success depends upon the continued service of our senior management team and upon our ability to attract and retain qualified financial services personnel. Competition for qualified employees is intense. In our experience, it can take a significant period of time to identify and hire personnel with the combination of skills and attributes required in carrying out our strategy. If we lose the services of our key personnel, or are unable to attract additional qualified personnel, our business, financial condition, results of operations and cash flows could be materially adversely affected.

Our common stock has substantially less liquidity than the average trading market for many other publicly traded common stock.

Although our common stock is listed for trading on the NASDAQ Global Market, the trading market in our common stock has substantially less liquidity than the average trading market for many other publicly traded companies, including many companies quoted on the NASDAQ Global Market or traded on the New York Stock Exchange. A public trading market having the desired characteristics of depth, liquidity and orderliness depends on the presence in the market place of willing buyers and sellers of our common stock at any given time. This presence depends on the individual decisions of investors and general economic and market conditions over which we have no control.

Although the Corporation commenced quarterly dividend payments beginning in the first quarter of 2006, we cannot guarantee that we will continue to pay dividends to shareholders in the future.

Dividend payments are subject to determination and declaration by our board of directors, which takes into account many factors. The declaration of dividends by us on our common stock is subject to the discretion of our board and to applicable federal regulatory limitations. We cannot guarantee that dividends will not be reduced or eliminated in future periods. Our ability to pay dividends on our common stock depends on our receipt of dividends from our wholly-owned subsidiary bank, Access National Bank.

Virginia law and our charter documents contain anti-takeover provisions that may make it more difficult or expensive to acquire us in the future or may adversely affect our stock price.

Virginia corporate law and our charter documents contain several provisions that may make it more difficult for a third party to acquire control of us without the approval of our board of directors and may make it more difficult or expensive for a third party to acquire a majority of our outstanding common stock. They may also delay, prevent or deter a merger, acquisition, tender offer, proxy contest or other transaction that might otherwise result in our shareholders receiving a premium over the market price for their common stock. Our stock price could also be negatively affected as a result of these anti-takeover provisions.

ITEM 1B – UNRESOLVED STAFF COMMENTS

None

ITEM 2 — PROPERTIES

The Bank and the Mortgage Corporation leases offices that are used in the normal course of business. The principal executive office of the Corporation, Bank and Mortgage Corporation is owned by Access Real Estate, a subsidiary of the Bank, and is located at 1800 Robert Fulton Drive, Reston, Virginia. The Bank leases offices in Chantilly, Tysons Corner, and Leesburg, Virginia. The Mortgage Corporation leases offices in Vienna, Richmond, Fredericksburg, Warrenton and Roanoke in Virginia. The Mortgage Corporation leases two offices in Maryland located at Bowie and Westminster in addition to the offices in Florida, Tennessee, Texas and Colorado. On July 25, 2005, Access Real Estate purchased Lot 1 in the Fredericksburg Business Park at a cost of $1.2 million for future expansion of the Bank and Mortgage Corporation. At present the lot is undeveloped.

All of the owned and leased properties are in good operating condition and are adequate for the Corporation’s present and anticipated future needs.

ITEM 3 – LEGAL PROCEEDINGS

The Bank is a party to legal proceedings arising in the ordinary course of business. Management is of the opinion that these legal proceedings will not have a material adverse effect on the Corporations’ financial condition or results of operations. From time to time the Bank may initiate legal actions against borrowers in connection with collecting defaulted loans. Such actions are not considered material by management unless otherwise disclosed.

ITEM 4 — SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

There were no matters submitted to a vote of security holders during the quarter ended December 31, 2006.

PART II

ITEM 5 – MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

In July 2004, Access National Corporations’ common stock became listed on the NASDAQ Global Market of the NASDAQ Stock Market LLC and is quoted under the symbol of “ANCX”.

Set forth below is certain financial information relating to the Corporation’s common stock price history. Prices reflect transactions executed on NASDAQ.

		2006												2005
		High				Low				Dividends				High				Low				Dividends
First Quarter		$	15.10			$	9.84			$	0.005			$	7.16			$	6.35			$	—
Second Quarter			11.30				8.40				0.005				7.19				6.50				—
Third Quarter			10.39				8.75				0.005				9.72				7.10				—
Fourth Quarter			10.05				9.10				0.005				14.25				8.75				—

Prices have been adjusted for all stock splits and dividends.

As of March 15, 2007, the Corporation had 12,020,587 outstanding shares of Common Stock, par value $.835 per share, held by approximately 383 shareholders of record and the closing price for the Corporation’s common stock on the NASDAQ Global Market was $9.58.

On December 23, 2005, the Corporation issued a 2 for 1 stock split. The authorized shares of common stock increased from 30,000,000 to 60,000,000 and par value decreased from $1.67 to $.835.

At December 31, 2005, there were 1,018,000 outstanding Series A warrants. The Series A warrants were issued by the Bank in December 1999 to the organizing shareholders of the Bank (in conjunction with the organization of the Bank) and the shareholders of Mortgage Investment Company (in conjunction with the acquisition by the Bank of Mortgage Investment Company). Each Series A warrant is exercisable for one share of common stock at an exercise price of $1.67. As of December 31, 2005, 1,018,000 of the Series A warrants had vested and were exercisable.

On February 1, 2006, the Corporation established a Dividend Reinvestment and Stock Purchase Plan (“Plan”). Under the Plan, shareholders may elect to purchase common stock of the Corporation with automatically reinvested dividends or optional cash payments at a discount of 5% from the market price.

The Corporation concluded a public stock offering on August 2, 2006 after selling 2,300,000 shares of common stock at $9.38 per share and netted approximately $20 million after expenses associated with the offering. The new capital will be used to support continued growth.

The Corporation paid its fifth consecutive quarterly cash dividend and increased the amount from $.005 to $.01 per share on February 23, 2007 to shareholders of record as of February 13, 2007. Payment of dividends is at the discretion of the Corporation’s Board of Directors, is subject to various federal and state, regulatory limitations. Future dividends are dependent upon the overall performance and capital requirements of the Corporation. See “Item 1 – Business — Supervision and Regulation — Dividends” for a discussion of regulatory requirements related to dividends.

Issuer Purchases of Equity Securities for the Quarter Ended December 31, 2006

The Corporation did not purchase any of its common stock in the fourth quarter of 2006.

Stock Performance

The following graph compares the Corporation’s cumulative total shareholder return on its common stock for the five year period ended December 31, 2006 with the cumulative return of a broad equity market index, the Standard & Poor’s 500 Index, and a peer group constructed by the Corporation (the “Peer Group”). This presentation assumes $100 was invested in shares of the Corporation and each of the indices on December 31, 2001, and that dividends, if any, were immediately reinvested in additional shares. The graph plots the value of the initial $100 investment at one-year intervals from December 31, 2001 through December 31, 2006.

The Peer Group consists of five companies that, in the opinion of management, are similar to the Corporation in ways relevant to a comparison of stock performance. Specifically, each company in the Peer Group provides commercial banking services in the Mid-Atlantic Region, has existed for a reasonably similar time period as has the Corporation; and is considered by management to be in an expansion mode. In calculating the relative index, the stock values of the Peer Group are re-balanced at the beginning of each year by the weighted market capitalization. The Peer Group consists of:

Company, Headquarters		Exchange		Trading Symbol		Established
Cardinal Financial Corporation		NASDAQ-NM		CFNL		1998
Fairfax, Virginia
Eagle Bancorp. Inc.		NASDAQ–SC		EGBN		1998
Bethesda, Maryland
Towne Bank		OTC-BB		TOWN		1999
Portsmouth, Virginia
Valley Financial Corp of VA		OTC-BB		VYFC		1995
Roanoke, Virginia
Virginia National Bank		OTC-BB		VABK		1998
Charlottesville, Virginia

There can be no assurance the Corporation’s future stock performance will continue with the same or similar trend as illustrated in the graph below.

Access National Corp.

			Period Ending
	Index			12/31/01					12/31/02					12/31/03					12/31/04					12/31/05					12/31/06
	Access National Corp.				100.00					102.08					223.26					209.48					422.23					283.82
	Peer Group Index*				100.00					117.67					181.21					232.90					238.91					240.71
	S&P 500				100.00					77.90					100.24					111.14					116.59					135.00

ITEM 6 – SELECTED FINANCIAL DATA

Information relating to selected financial data is in Table 1.

ITEM 7 — MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIALCONDITION AND RESULTS OF OPERATION

The following discussion and analysis is intended to provide an overview of the significant factors affecting the financial condition and the results of operations of Access National Corporation and subsidiary (the “Corporation”) for the twelve months ended December 31, 2006 and 2005. The consolidated financial statements and accompanying notes should be read in conjunction with this discussion and analysis.

Forward-Looking Statements

In addition to historical information, this Annual Report on Form 10-K may contain forward-looking statements. For this purpose, any statements contained herein, including documents incorporated by reference, that are not statements of historical fact may be deemed to be forward-looking statements. Examples of forward-looking statements include discussions as to our expectations, beliefs, plans, goals, objectives and future financial or other performance or assumptions concerning matters discussed in this document. Forward-looking statements often use words such as “believes,” “expects,” “plans,” “may,” “will,” “should,” “projects,” “contemplates,” “ anticipates,” “forecasts,” “intends” or other words of similar meaning. You can also identify them by the fact that they do not relate strictly to historical or current facts. Forward-looking statements are subject to numerous assumptions, risks and uncertainties, and actual results could differ materially from historical results or those anticipated by such statements. Factors that could have a material adverse effect on the operations and future prospects of the Corporation include, but are not limited to, changes in: branch expansion plans, interest rates, general economic conditions, monetary and fiscal policies of the U.S. Government, including policies of the Office of the Comptroller of the Currency, U.S. Treasury and the FRB, the economy of Northern Virginia, including governmental spending and real estate markets, the quality or composition of the loan or investment portfolios, demand for loan products, deposit flows, competition, and accounting principles, policies and guidelines. These risks and uncertainties should be considered in evaluating the forward-looking statements contained herein, and readers are cautioned not to place undue reliance on such statements. Any forward-looking statement speaks only as of the date on which it is made, and we undertake no obligation to update any forward-looking statement to reflect events or circumstances after the date on which it is made. For additional discussion of risk factors that may cause our actual future results to differ materially for the results indicated within forward looking statements, please see “Item 1A – Risk Factors” herein.

CRITICAL ACCOUNTING POLICIES

Allowance for Loan Losses

The allowance for loan losses is an estimate of the losses that may be sustained in our loan portfolio. The allowance is based on two basic principals of accounting: (i)Statement of Financial Accounting Standards (SFAS) No. 5 Accounting for Contingencies, which requires that losses be accrued when they are probable of occurring and estimatable and (ii) SFAS 114, Accounting by Creditors for Impairment of a Loan, which requires that losses be accrued based on the differences between the value of collateral, present value of future cash flows or values that are observable in the secondary market and the loan balance.

An allowance for loan losses is established through a provision for loan losses based upon industry standards, known risk characteristics, management’s evaluation of the risk inherent in the loan portfolio and changes in the nature and volume of loan activity. Such evaluation considers among other factors, the estimated market value of the underlying collateral, and current economic conditions. For further information about our practices with respect to allowance for loan losses, please see the subsection “Loans” below.

Derivative Financial Instruments

Access National Mortgage Corporation carries all derivative instruments at fair value as either assets or liabilities in the consolidated balance sheets. SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities” as amended (“Statement 133”), provides specific accounting provisions for derivative instruments that qualify for hedge accounting. The Mortgage Corporation has not elected to apply hedge accounting to its derivative instruments as provided in Statement 133.

See Notes 1, 10 and 11 to the financial statements for additional information on derivatives.

FINANCIAL CONDITION

Summary

The Corporation completed its seventh year of operation and achieved record net income of $7.6 million and significant asset growth. Total assets at December 31, 2006 were $644.8 million compared to $537.1 million in 2005, an increase of $107.7 million. The growth in assets is comprised of a $63.9 million increase in loans held for investment, and a $20.3 million increase in loans held for sale, and a $17.4 million increase in investment securities. Total assets averaged $589.8 in 2006 compared to $457.3 in 2005, an increase of approximately $132.5 million.

The growth in assets was funded by a $19.3 million increase in deposits. Short term borrowings increased $36.8 million and long term borrowings increased $20.8 million. Shareholders equity increased $31.1 million resulting from net income of $7.6 million and $23.4 million from our public stock offering and the exercise of options and warrants.

In February, 2007 we opened our fourth banking center in the town of Leesburg, which is located in Loudoun County, Virginia. Loudoun County is one of the areas fastest growing counties in the area. We are also looking to expand in Prince William County near the City of Manassas in the second quarter of 2007. These two new offices will make banking more convenient for our existing clients in these areas and provide us the opportunity for additional growth in deposits and loans.

Management is committed to building a stable base of core deposits through strategic growth opportunities and expansion of our sales staff. This will be accomplished by maintaining and expanding our base of business in our market area.

The following discussions by major categories explain the changes in financial condition in more detail.

Cash and Cash Equivalents

Cash and cash equivalents consisting of cash and due from banks and interest bearing deposits in other banks totaled $27.4 million, up from $23.2 million at December 31, 2005. The increase is due to an increase of $2.1 million in interest bearing accounts and a $2.1 million increase in due from banks.

Investment Securities

The Corporation’s securities portfolio is comprised of U.S. Treasury securities, U.S. Government Agency securities, municipal securities, CRA mutual fund, mortgage backed securities, Federal Reserve and Federal Home Loan Bank stock. The investment portfolio is used to provide liquidity and as a tool for managing interest sensitivity in the balance sheet, while generating a reasonable return. At December 31, 2006 the securities portfolio totaled $105.2 million, up from $87.8 million, in 2005. The increase in investments is due to the increase in deposits and short term borrowings. All securities were classified as available for sale. The Financial Accounting Standards Board requires that securities classified as available for sale be accounted for at fair market value. Unrealized gains and losses are recorded directly to a separate component of stockholders’ equity. The Corporation’s securities classified as available for sale had an unrealized loss net of deferred taxes of $529 thousand on December 31, 2006. Table 3, Securities Available for Sale presents the types, amounts and maturity distribution of the securities portfolio.

Loans

Loans held for investment totaled $433.6 at December 31, 2006 up from $369.7 million at December 31, 2005, an increase of $63.9 million. The Bank concentrates on providing banking services to the small to medium sized businesses and professionals in our market area. Our loan officers maintain a professional relationship with our clients and are responsive to their financial needs. They are directly involved in the community and it is this involvement and commitment that leads to referrals and continued growth. Commercial loans increased by approximately $13.3 million from last year. Loans secured by commercial real estate increased $22.6 million, a 16.4% increase over 2005. The growth in commercial real estate loans reflects our commitment to local owner occupied commercial financing. Real estate construction loans increased $31.5 million, an 85% increase over last year. This loan category is comprised of construction and land development loans. During 2006, we took advantage of the opportunity to expand this portfolio as pricing, terms and conditions tilted in favor of the lender as compared to prior periods. Many lenders in our market withdrew or decreased exposure in this segment while we had capacity to increase our portfolio. The growth in this category is somewhat cyclical and highly competitive. Residential real estate loans decreased $3.5 million as a result of payoffs of adjustable rate mortgages.. Consumer loans totaled $555 thousand in 2006 and 2005. The Bank offers a complete line of consumer lending products, primarily as a service to the affiliates of our commercial and professional clients. The Bank does not actively market its consumer products at this time, which accounts for the nominal amount of consumer type loans.

Loans held for sale totaled $65.3 million at December 31, 2006 compared to $45.0 million at December 31, 2005, an increase of $20.3 million. The increase in loans held for sale is due to an increase in loan originations during the month of December, 2006 which resulted in a large number of loans held for sale being on our balance sheet at December 31, 2006 prior to their sale to third party investors. Loan origination volume was up $58.6 million from 2005 to $1.0 billion in 2006. The increase in loan originations is due to the relatively stable real estate market in our area and the expansion of our wholesale operation.

We look forward to continued growth in 2007 as we expand our base of business in the counties of Loudoun and Prince William. We are forecasting the Mortgage Corporation will generate a similar volume as experienced in 2006.

Table 4 and 4A, The Loan Portfolio and Loan Maturity Distribution, respectively, presents the major classifications and maturity distribution of loans held for investment at December 31, 2006, 2005 and 2004.

Allowance for Loan Losses

The allowance for loan loss totaled approximately $5.5 million at December 31, 2006, up from $5.2 million in 2005. The level of the allowance for loan losses is determined by an ongoing detailed analysis of risk and loss potential within the portfolio as a whole. Although actual loan losses have been insignificant, our senior credit management, with nearly 150 years in collective experience in managing similar portfolios in our marketplace, concluded the amount of our reserve and the methodology applied to arrive at the amount of the reserve is justified and appropriate. Outside of our own analysis, our reserve adequacy and methodology are reviewed on a regular basis by an internal audit program, and bank regulators and such reviews have not resulted in any material adjustment to the reserve.

The Bank, after seven years of operations, does not have a meaningful history of charge offs with which to establish trends in loan losses by loan classifications. As of December 31, 2006 the total net charge offs for the seven years was less than $14 thousand dollars. The overall allowance for loan losses is equivalent to approximately 1.26% of total loans held for investment. The schedule in Table 6, Allocation of the Allowance for Loan Losses, reflects the pro rata allocation by the different loan types. The methodology as to how the allowance was derived is a combination of specific allocations and percentages allocation of the unallocated portion of the allowance for loan losses, as discussed below. The Bank has developed a comprehensive risk weighting system based on individual loan characteristics that enables the Bank to allocate the composition of the allowance for loan losses by types of loans.

The methodology as to how the allowance was derived is detailed below. Unallocated amounts included in the allowance for loan losses have been applied to the loan classifications on a percentage basis.

Adequacy of the reserve is assessed, and appropriate expense and charge offs are taken, no less frequently than at the close of each fiscal quarter end. The methodology by which we systematically determine the amount of our reserve is set forth by the Board of Directors in our Credit Policy. Under this Policy, our Chief Credit Officer is charged with ensuring that each loan is individually evaluated and the portfolio characteristics are evaluated to arrive at an appropriate aggregate reserve. The results of the analysis are documented, reviewed and approved by the Board of Directors no less than quarterly. The following elements are considered in this analysis: loss estimates on specific problem credits (the “Specific Reserve”), individual loan risk ratings, lending staff changes, loan review and board oversight, loan policies and procedures, portfolio trends with respect to volume, delinquency, composition/concentrations of credit, risk rating migration, levels of classified credit, off-balance sheet credit exposure, any other factors considered relevant from time to time (the “General Reserve”) and, finally, an “Unallocated Reserve” to cover any unforeseen factors not considered above in the appropriate magnitude. Each of the reserve components, General, Specific and Unallocated are discussed in further detail below.

With respect to the General Reserve, all loans are graded or “Risk Rated” individually for loss potential at the time of origination and as warranted thereafter, but no less frequently than quarterly. Loss potential factors are applied based upon a blend of the following criteria: our own direct experience at this bank; our collective management experience in administering similar loan portfolios in the market for nearly 150 years; and peer data contained in statistical releases issued by both the Office of the Comptroller of the Currency and the FDIC. Although looking only at peer data and the bank’s historically low write-offs would suggest a lower loan loss allowance, our management’s experience with similar portfolios in the same market combined with the fact that our portfolio is relatively unseasoned, justify a conservative approach in contemplating external statistical resources. Accordingly, management’s collective experience at this bank and other banks is the most heavily weighted criterion, and the weighting is subjective and varies by loan type, amount, collateral, structure, and repayment terms. Prevailing economic condition generally and within each individual borrower’s business sector are considered, as well as any changes in the borrower’s own financial position and, in the case of commercial loans, management structure and business operations. As of December 31, 2006 our evaluation of these factors supported approximately 89.3% of the total loss reserve. As our portfolio ages and we gain more direct experience, the direct experience will weigh more heavily in our evaluation.

When deterioration develops in an individual credit, the loan is placed on a “Watch List” and the loan is monitored more closely. All loans on the watch list are evaluated for specific loss potential based upon either an evaluation of the liquidated value of the collateral or cash flow deficiencies. If management believes that, with respect to a specific loan, an impaired source of repayment, collateral impairment or a change in a debtor’s financial condition presents a heightened risk of non-performance of a particular loan, a portion of the reserve may be specifically allocated to that individual loan. The aggregation of this loan by loan loss analysis comprises the “Specific Reserve”. As of December 31, 2006 there were no additional specific reserves assigned.

The Unallocated Reserve is maintained to absorb risk factors outside of the General and Specific Allocations. Maximum and minimum target limits are established by us on a quarterly basis for the Unallocated Reserve. As of December 31, 2006 the maximum amount for this component was 0.15% of the total loan portfolio and accounted for approximately 10.7% of the total loss reserve.

In addition to the reserves discussed above the Mortgage Corporation maintains separate reserves for LHFS and potential early default penalties.

Nonperforming Loans And Past Due

At December 31, 2006 there was one loan at the Mortgage Corporation in non accrual status and pending foreclosure totaling $360 thousand. The loss potential for this loan has been evaluated and in managements opinion the risk of loss is adequately reserved against. Management actively works with the borrowers to maximize the potential for repayment and reports on the status to the Board of Directors, no less than on a monthly basis.

As of December 31, 2006 there was one loan in the amount of $914 thousand past due more than 90 days with respect to which interest was still being accrued. This loan was subsequently paid off in January 2007.

Deposits

Deposits totaled $438.9 million at December 31, 2006 and were comprised of non-interest bearing demand deposits in the amount of $79.2 million, savings and interest bearing deposits in the amount of $120.3 million and time deposits in the amount of $239.4 million. Total deposits increased $19.3 million over December 31, 2005, an increase of 4.6 %. This modest increase in year over year growth in deposits is due to the composition of our transaction accounts. Our transaction accounts are predominately commercial and subject to wide fluctuations. Average deposits for 2006 totaled $423.8 million compared to $338.0 in 2005, an increase of $85.8 million or 25.4%. The increase in average deposits is primarily due to the expansion of our customer base. We offer a full line of competitive deposit products that have varying rates and terms. Our deposits are primarily from our local market. Professional loan officers are responsible for marketing both loans and deposits. Our primary focus with respect to core deposit growth is upon the business deposits in our market. We plan to strengthen our sales staff by adding personnel, and continue to use direct marketing and traditional media advertising. The opening of our Leesburg office and the planned opening of our office in Manassas is expected to contribute to the growth in deposits in 2007. Our customer service focus is mainly on our business and professional customers, which usually generate more referrals for additional new business than do retail account holders.

Time deposits represent 54.5% of total deposits, up from 45.2% of total deposits on December 31, 2005. Time deposits increased by 26.3% over December 31, 2005 due to transfers from savings and interest bearing account and advertising of competitive interest rates. Savings and interest bearing deposits represent 27.4% of total deposits as compared to 35.5% on December 31, 2005. Non interest bearing demand deposits represent 18.0% of total deposits, down from 19.3% in 2005. This decrease is largely due to temporary balance fluctuations in commercial accounts. One segment of non-interest bearing accounts relating to real estate was down over $15.6 million from December 2005.

Brokered or “wholesale” deposits included in time deposits totaled $64.6 million at December 31, 2006 and represents 14.7% of total deposits compared to $58.8 million and 14.0% of total deposits at December 31, 2005. Wholesale depositors are outside of the target market and place their deposit with us solely due to the interest rate paid. Together with other funding sources, we use these types of deposits for specific funding requirements and to fund the short term cash needs associated with the LHFS program discussed under “Loans” as well as to carry long term investments such as “Mortgage Loans Held for Investment” and our real estate.

Table 7, Average Deposits and Average Rates Paid, details the composition of deposits.

Borrowings

Borrowed funds consist of advances from the Federal Home Loan Bank of Atlanta, subordinated debentures (trust preferred), securities sold under agreement to repurchase, federal funds purchased and commercial paper. At December 31, 2006 borrowed funds totaled $137.8 million, compared to $80.3 million at December 31, 2005. The Corporation utilizes short term advances for supplementing the Mortgage Corporation’s funding requirements and other short term funding needs. Long term advances are used for match funding of Bank term loans and to lock in spreads. Table 9 provides a break down of all borrowed funds.

Shareholders’ Equity

Shareholders’ equity increased $31.1 million during 2006, primarily due to net proceeds of approximately $20 million from a public stock offering that concluded in August 2006, an increase in retained earnings as a result of current year net income of $7.6 million and $3.5 million from the exercise of stock options and warrants.

Banking regulators have defined minimum regulatory capital ratio that the Corporation and the Bank are required to maintain. These risk based capital guidelines take into consideration risk factors, as defined by the banking regulators, associated with various categories of assets, both on and off the balance sheet. Both the Corporation and Bank are classified as Well Capitalized, which is the highest rating. Table 10 Risk Based Capital Analysis, outlines the regulatory components of capital and risk based capital ratios.

RESULTS OF OPERATIONS

Summary

Net income totaled $7.6 million for the year ended December 31, 2006, an increase of $1.7 million over $5.9 million in 2005. Return on average assets remained unchanged from 2005 at 1.29%. Return on average equity decreased to 17.15% from 20.63% in 2005 as a result of the increase in capital. Diluted earnings per share for 2006 were $.72 compared to $.63 in 2005. See Table 1 Summary Financial Data.

In 2005, net income increased $2.6 million from $3.3 million in 2004 to $5.9 million. The increase was due to a 36.2% increase in average earning assets

Net Interest Income

Net interest income, the principal source of Bank earnings, is the amount of income generated by earning assets (primarily loans and investment securities) less the interest expense incurred on interest bearing liabilities (primarily deposits) used to fund earning assets. During 2006 our net interest margin decreased 28 basis points from 3.49% in 2005 to 3.21%. The weighted average yield on earning assets increased .67%, reflecting increases in the Prime rate during the year. The weighted average rate paid on interest bearing liabilities increased 1.02% and contributed to the narrowing of our net interest margin. Table 2 Yield on Average Earning Assets and Rates on Average Interest Bearing Liabilities summarizes the major components of net interest income for the past three years and also provides yields and average balances.

Net interest income increased in 2006 to $18.3 million compared to $15.3 million in 2005. Net interest income depends upon the volume of earning assets and interest bearing liabilities and the associated rates. Average interest earning assets increased $131.8 million to $569.5 million over $437.7 million in 2005. See Table 2A Volume and Rate Analysis for the past three years.

Interest expense totaled $21.7 million, an increase of approximately $9.2 million over 2005. Total interest bearing deposits averaged $362.3 million in 2006 compared to $270.5 million in 2005. Borrowed funds averaged $117.7 million, up from $87.2 million in 2005. The increase in deposits and borrowings funded the growth in earning assets. The average cost of interest bearing liabilities was 4.5% in 2006 compared to 3.5% in 2005.

Net interest income increased 30.8% in 2005 up from $11.7 million in 2004 to $15.3 million. The increase was due to an $116.4 million increase in average interest earning assets. Net interest margin decreased 15 basis points in 2005 to 3.49% due to increased interest rates on deposits and borrowings.

Provision for Loan Losses

The provision for loan losses charged to operating expense was $232 thousand down from $1.2 million in 2005. The decrease in the provision for loan losses is due to the reallocation of $811 thousand in specific reserves relating to non performing loans that were upgraded to performing loan status in 2006. Management believes the allowance for loan losses is adequate to absorb inherent losses in the loan portfolio based on the evaluation as of December 31, 2006.

Non-Interest Income

Non-interest income consists of revenue generated from a broad range of financial services and activities. The Mortgage Corporation provides the most significant contributions towards non-interest income. Total non-interest income was $27.6 million in 2006, down $3.4 million from $31.0 million in 2005 primarily due to a decrease in gains on the sale of loans originated by the Mortgage Corporation. Gains on the sale of loans totaled $19.3 million in 2006 compared to $22.4 million in 2005. This decrease is due to a general compression of margins available in the market place as well as an increase in wholesale loan originations which generally have lower margins than retail loan originations. Mortgage broker fees amounted to $5.3 million in 2006 down from $5.6 million in 2005, as fewer loans were brokered.

The volume of our Mortgage Corporation is subject to many cyclical risks against which we actively manage. Volume and the accompanying non-interest income are subject to the risks associated with the general interest rate environment as well as the new home and resale activity of the residential real estate market in the communities we serve. Our ability to recruit and retain professional mortgage loan officers also impacts our volume and margins.

Non–interest income totaled $31.5 million in 2005, up $5.5 million from $26.0 million in 2004. The increase was primarily due to an increase in gains on the sale of mortgage loans.

Non Interest Expense

Non interest expense totaled $34.2 million in 2006 down $1.6 million from $35.8 million in 2005. Salaries and benefits totaled $19.4 million, a decrease of $1.1 million over $20.5 million in 2005. The decrease in salaries and benefits is due to a decrease in commissions at the Mortgage Corporation as a result of margin compression on retail loans and the increase in loans originated by the Wholesale Division. Broker fees are paid to non-employees for wholesale loan originations. Approximately 67.2% of the total salaries expense is attributable to the Mortgage Corporation and 32.8% is attributable to the Bank. The majority of compensation expense for the Mortgage Corporation is variable with loan origination volume. Mortgage loan originations increased from $990 million in 2005 to $1 billion in 2006.

Other operating expense decreased approximately $500 thousand from $13.4 million in 2005 to $12.9 in 2006. Note 18 to the financial statements details the changes in other operating expense.

Non-interest expense totaled $36.3 million in 2005 compared to $31.6 million in 2004, an increase of $4.7 million. This increase was largely due to increased salary and commission expense at the Mortgage Corporation as a result of increased loan production. Other operating expense increased $2.8 million in 2005 and is attributable to advertising and marketing expense, settlement fees, management fees and investor fees.

Income Taxes

Income tax expense totaled approximately $3.9 million compared to $3.3 million in 2005. Note 8 to the financial statements show the components of federal Income tax.

We expect to continue to accrue and pay taxes in accordance with all applicable tax laws and regulations. Many of our competitors, primarily federal and state credit unions, are exempt from the taxation against which we are subjected

Quarterly Results

Net income and per share information on a quarterly basis for 2006 and 2005 is reflected in Table 1A. The increase in net income is due to increases in earning assets funded by deposit growth and short term borrowings.

Liquidity Management

Liquidity is the ability of the Corporation to convert assets into cash or cash equivalents without significant loss and to raise additional funds by increasing liabilities. Liquidity management involves maintaining the Corporation’s ability to meet the daily cash flow requirements of both depositors and borrowers.

Asset and liability management functions not only serve to assure adequate liquidity in order to meet the needs of the Corporation’s customers, but also to maintain an appropriate balance between interest sensitive assets and interest sensitive liabilities so that the Corporation can earn an appropriate return for its shareholders.

The asset portion of the balance sheet provides liquidity primarily through loan principal repayments and maturities of investment securities. Other short-term investments such as Federal Funds sold and maturing interest bearing deposits with other banks are additional sources of liquidity funding. At December 31, 2006, overnight interest bearing balances totaled $15.4 million and securities available for sale net of restricted stock totaled $99.3 million.

The liability portion of the balance sheet provides liquidity through various interest bearing and non interest bearing deposit accounts, Federal Funds purchased, securities sold under agreement to repurchase and other short-term borrowings. At December 31, 2006, the Corporation had a line of credit with the Federal Home Loan Bank of Atlanta totaling $177.6 million and outstanding variable rate loans of $45 million, and an additional $42.6 million in term loans at fixed rates ranging from 2.70% to 5.21% leaving $90.1 million available on the line. In addition to the line of credit at the Federal Home Loan Bank, the Bank and its mortgage bank subsidiary also issue repurchase agreements and commercial paper. As of December 31, 2006, outstanding repurchase agreements totaled $14.5 million and commercial paper issued amounted to $39.9 million. The interest rate on these instruments is variable and subject to change daily. The Bank also maintains Federal Funds lines of credit with its correspondent banks and, at December 31, 2006, these lines amounted to $22.6 million. The Corporation also has $10.3 million in subordinated debentures to support the growth of the organization. The table below presents the Corporation’s contractual obligation and scheduled payment amounts due at various intervals over the next three years and beyond, as of December 31, 2006. Table 9, Borrowed Funds Distribution, outlines the composition of borrowed funds for 2006, 2005 and 2004.

Contractual Obligations

		Payments Due By Period
		December 31, 2006
		Less Than				1 - 3				More Than
		1 Year				Years				3 Years				Total
						(In Thousands)
FHLB Advances		$	45,000			$	—			$	—			$	45,000
Securities sold under agreements to repurchase			14,541				—				—				14,541
FHLB long term Borrowings			—				36,500				6,071				42,571
Other short term borrowings			20,599				—				—				20,599
Subordinated debentures			—				—				10,311				10,311
Leases			308				575				689				1,572
Total interest-bearing liabilities		$	80,448			$	37,075			$	17,071			$	134,594

The Corporation funded the growth in interest earning assets through a combination of deposits, retention of earnings and borrowed funds. The Corporation expects its short and long term sources of liquidity and capital to remain adequate to support expected growth. The Bank relies on a variety of short and long term resources for liquidity from a variety of sources that substantially reduces reliance upon any single provider.

Off Balance Sheet Items

During the ordinary course of business, the Bank issues commitments to extend credit and, at December 31, 2006, these commitments amounted to $17 million. These commitments do not necessarily represent cash requirements, since many commitments are expected to expire without being drawn on.

At December 31, 2006 the Bank had approximately $88 million in unfunded lines of credit. These lines of credit, if drawn upon, would be funded from routine cash flows. Cash flows from financing activities, which includes deposit growth and borrowing, generated over $100.1 million.

Recent Accounting Pronouncements

In September 2006, the Securities and Exchange Commission (the “SEC”) released Staff Accounting Bulletin No. 108 (“SAB 108”), which provides detail in the quantification and correction of financial statement misstatements. SAB 108 specifies that companies should apply a combination of the “rollover” and “iron curtain” methodologies when making determinations of materiality. The rollover method quantifies a misstatement based on the amount of the error originating in the current year income statement. The iron curtain approach quantifies misstatements based on the effects of correcting the misstatement existing in the balance sheet at the end of the current year, regardless of the year(s) of origination. SAB 108 instructs companies to quantify the misstatement under both methodologies and, if either method results in the determination of a material error, the Company must adjust its financial statements to correct the error. SAB 108 also reminds preparers that a change from an accounting principle that is not generally accepted to a principle that is generally accepted is a correction of an error. SAB 108 is effective for annual financial statements covering the first fiscal year ending after November 15, 2006. The adoption of SAB 108 did not have a material effect on the Corporation’s financial condition or results of operations.

In February 2006, FASB issued SFAS No. 155, “Accounting for Certain Hybrid Financial Instruments—an amendment of FASB Statements No. 133 and 140.” This statement amends Statements No. 133 and 140 by: permitting fair value remeasurement for any hybrid financial instrument with an embedded derivative that otherwise would require bifurcation; clarifying which interest-only strips and principal-only strips are not subject to the requirements of Statement No. 133; establishing a requirement to evaluate interests in securitized financial assets to identify interests that are freestanding derivatives or that are hybrid financial instruments that contain an embedded derivative requiring bifurcation; clarifying that concentrations of credit risk in the form of subordination are not embedded derivatives; and amending Statement No. 140 to eliminate the prohibition on a qualifying special-purpose entity from holding a derivative financial instrument that pertains to a beneficial interest other than another derivative financial instrument. The statement is effective for fiscal years beginning after September 15, 2006. The adoption of this standard is not anticipated to have a material impact on financial condition, results of operations or cash flows.

In July 2006, the FASB issued FASB Interpretation No. 48 (FIN 48), “Accounting for Uncertainty in Income Taxes—an interpretation of FASB Statement 109,” which provides guidance on the measurement, recognition, and disclosure of tax positions taken or expected to be taken in a tax return. The interpretation also provides guidance on de-recognition, classification, interest and penalties, and disclosure. FIN 48 prescribes that a tax position should only be recognized if it is more-likely-than-not that the position will be sustained upon examination by the appropriate taxing authority. A tax position that meets this threshold is measured as the largest amount of benefit that is more likely than not (greater than 50 percent) realized upon ultimate settlement. The cumulative effect of applying FIN 48 is to be reported as an adjustment to the beginning balance of retained earnings in the period of adoption. FIN 48 is effective for fiscal years beginning after December 15, 2006. The adoption of this standard is not anticipated to have a material impact on financial condition, results of operations or cash flows.

In September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements.” SFAS 157 establishes a framework for measuring fair value in generally accepted accounting principles (“GAAP”), and expands disclosures about fair value measurements. While the Statement applies under other accounting pronouncements that require or permit fair value measurements, it does not require any new fair value measurements. SFAS No. 157 defines fair value as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants at the measurement date. In addition, the Statement establishes a fair value hierarchy, which prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. Lastly, SFAS No. 157 requires additional disclosures for each interim and annual period separately for each major category of assets and liabilities. The Statement is effective for financial statements issued for fiscal years beginning after November 15, 2007, and interim periods within those fiscal years. Management does not expect the adoption of this Statement to have a material impact on the Corporation’s financial statements.

     In February 2007, the FASB issued SFAS 159 “The Fair Value Option for Financial Assets and Financial Liabilities—including an amendment of FASB Statement No. 115”. This Statement permits entities to choose to measure many financial instruments and certain other items at fair value. The objective is to improve financial reporting by providing entities with the opportunity to mitigate volatility in reported earnings caused by measuring related assets and liabilities differently without having to apply complex hedge accounting provisions. This Statement is expected to expand the use of fair value measurement, which is consistent with the Board’s long-term measurement objectives for accounting for financial instruments. This Statement is effective as of the beginning of an entity’s first fiscal year that begins after November 15, 2007. Early adoption is permitted as of the beginning of a fiscal year that begins on or before November 15, 2007, provided the entity also elects to apply the provisions of FASB Statement No. 157, Fair Value Measurements. The Corporation does not believe the adoption of this statement to have a material effect on the Corporation’s consolidated financial statements.

Statistical Information

The following statistical information is provided pursuant to the requirements of Guide 3, promulgated by the Securities Act of 1933:

Table 1

Summary Financial Data

		Year Ended December 31
		2006				2005				2004				2003				2002
		(In Thousands, Except Per Share Data)
Income Statement Data:
Net interest income		$	18,256			$	15,273			$	11,694			$	9,138			$	5,848
Provision for loan losses			232				1,196				1,462				526				841
Non-interest income			27,633				30,955				25,952				33,765				22,494
Non-interest expense			34,211				35,830				31,580				36,432				23,447
Income taxes			3,853				3,305				1,619				2,129				1,359
Net income before extra-ordinary items			7,593				5,897				2,985				3,816				2,695
Extra-ordinary income, net of income tax							—				330				—				—
Net Income		$	7,593			$	5,897			$	3,315			$	3,816			$	2,695
Per Share Data:
Earnings per share
Basic, before extra-ordinary income		$	0.81			$	0.75			$	0.40			$	0.55			$	0.41
Basic			0.81				0.75				0.44				0.55				0.41
Diluted, before extra-ordinary-income			0.72				0.63				0.33				0.44				0.36
Diluted			0.72				0.63				0.36				0.44				0.36
Cash dividends declared			0.02				—				—				—				—
Book value at period end			5.27				3.92				3.29				2.84				2.32
Balance Sheet Data:
Total assets		$	644,782			$	537,050			$	420,098			$	257,390			$	240,348
Loans held for sale			65,320				45,019				36,245				29,756				93,852
Total loans			433,594				369,733				292,594				189,320				114,835
Total securities			105,163				87,771				51,378				23,178				15,637
Total deposits			438,932				419,629				317,393				198,183				178,251
Shareholders’ equity			62,295				31,185				25,998				19,755				16,291
Average shares outstanding, basic			9,429,074				7,867,135				7,509,536				6,986,680				6,594,000
Average shares outstanding, diluted			10,541,873				9,423,087				9,155,778				8,822,372				7,478,064
Performance Ratios:
Return on average assets			1.29	%			1.29	%			0.97	%			1.45	%			1.64	%
Return on average equity			17.15	%			20.63	%			14.48	%			20.48	%			20.17	%
Net interest margin (1)			3.21	%			3.49	%			3.64	%			3.58	%			3.73	%
Efficiency Ratios:
Access National Bank			48.67	%			52.21	%			56.40	%			50.71	%			56.97	%
Access National Mortgage Corp.			92.42	%			89.13	%			94.18	%			89.66	%			85.23	%
Access National Corporation			75.06	%			80.09	%			87.61	%			84.26	%			82.20	%
Asset Quality Ratios:
Allowance to period end loans			1.26	%			1.41	%			1.37	%			1.35	%			1.78	%
Allowance to nonperforming loans			1514	%			397.78	%			185.07	%			310.93	%			—
Net charge-offs to average loans			—				—				—				—				—
Capital Ratios:
Tier I risk-based capital			15.01	%			10.78	%			10.97	%			12.54	%			12.09	%
Total risk-based capital			16.18	%			12.11	%			12.80	%			15.47	%			13.33	%
Leverage capital ratio			11.53	%			7.60	%			8.83	%			10.28	%			8.12	%

Table 1A

The following is a summary of the results of operations for each quarter of 2006 and 2005.

		First				Second				Third				Fourth
		Quarter				Quarter				Quarter				Quarter
		(In Thousands, Except Per Share Data)
2006
Total interest income		$	8,645			$	9,776			$	10,570			$	10,947
Total interest expense			4,548				5,371				5,740				6,023
Net interest income			4,097				4,405				4,830				4,924
Provision for loan losses			124				49				—				59
Net interest income after provision for loan losses			3,973				4,356				4,830				4,865
Total noninterest income			6,231				6,486				7,252				7,664
Total noninterest expense			7,744				8,065				9,286				9,117
Income tax expense			837				971				895				1,150
Net income		$	1,623			$	1,806			$	1,901			$	2,262
Earnings Per Share:
Basic		$	0.20			$	0.22			$	0.19			$	0.20
Diluted			0.17				0.19				0.17				0.19

		First				Second				Third				Fourth
		Quarter				Quarter				Quarter				Quarter
		(In Thousands, Except Per Share Data)
2005
Total interest income		$	5,619			$	6,368			$	7,561			$	8,245
Total interest expense			2,435				2,801				3,350				3,936
Net interest income			3,184				3,567				4,211				4,309
Provision for loan losses			114				383				325				374
Net interest income after provision for loan losses			3,070				3,184				3,886				3,935
Total noninterest income			6,153				9,147				9,375				6,792
Total noninterest expense			7,655				10,000				10,641				8,044
Income tax expense			533				827				911				1,034
Net income		$	1,035			$	1,504			$	1,709			$	1,649
Earnings Per Share:
Basic		$	0.13			$	0.19			$	0.22			$	0.21
Diluted			0.12				0.16				0.18				0.17

Table 2

Yield on Average Earning Assets and Rates on Average Interest-Bearing Liabilities

		Period Ended December 31,
		2006												2005												2004
		Average				Income /				Yield /				Average				Income /				Yield /				Average				Income /				Yield /
		Balance				Expense				Rate				Balance				Expense				Rate				Balance				Expense				Rate
		(Dollars In Thousands)
Assets:
Interest earning assets:
Securities		$	107,165			$	4,687				4.37	%		$	64,862			$	2,489				3.84	%		$	25,385			$	905				3.57	%
Loans(3)			454,146				34,899				7.68	%			364,126				25,043				6.88	%			289,225				17,228				5.96	%
Interest bearing deposits & federal funds sold			8,193				400				4.88	%			8,739				279				3.19	%			6,715				92				1.37	%
Total interest earning assets			569,504				39,986				7.02	%			437,727				27,811				6.35	%			321,325				18,225				5.67	%
Non-interest earning assets:
Cash and due from banks			10,546												10,579												8,169
Premises, land and equipment			9,616												9,260												8,466
Other assets			5,531												4,118												6,138
Less: allowance for loan losses			(5,363	)											(4,433	)											(2,945	)
Total non-interest earning assets			20,330												19,524												19,828
Total Assets		$	589,834											$	457,251											$	341,153
Liabilities and Shareholders’ Equity:
Interest bearing liabilities:
Interest-bearing demand deposits		$	10,691			$	224				2.10	%		$	10,630			$	200				1.88	%		$	9,075			$	93				1.02	%
Money market deposit accounts			118,548				4,859				4.10	%			130,147				4,256				3.27	%			40,506				838				2.07	%
Savings accounts			2,147				88				4.10	%			450				4				0.89	%			470				4				0.85	%
Time deposits			230,896				10,605				4.59	%			129,314				4,560				3.53	%			109,453				3,420				3.12	%
Total interest-bearing deposits			362,282				15,776				4.35	%			270,541				9,020				3.33	%			159,504				4,355				2.73	%
FHLB Advances			61,066				3,161				5.18	%			43,375				1,610				3.71	%			44,598				662				1.48	%
Securities sold under agreements to repurchase			4,643				166				3.58	%			925				19				2.05	%			2,290				25				1.09	%
Other short-term borrowings			18,005				738				4.10	%			8,520				250				2.93	%			4,741				121				2.55	%
Long-term borrowings			23,722				962				4.06	%			24,028				917				3.82	%			17,801				854				4.80	%
Subordinated Debentures			10,311				879				8.52	%			10,311				706				6.85	%			10,311				514				4.98	%
Total interest-bearing liabilities			480,029				21,682				4.52	%			357,700				12,522				3.50	%			239,245				6,531				2.73	%
Non-interest bearing liabilities:
Demand deposits			61,506												66,862												75,883
Other liabilities			4,029												4,103												3,124
Total liabilities			545,564												428,665												318,252
Shareholders’ Equity			44,270												28,586												22,901
Total Liabilities and Shareholders’ Equity:		$	589,834											$	457,251											$	341,153
Interest Spread(1)											2.50	%											2.85	%											2.94	%
Net Interest Margin(2)*						$	18,304				3.21	%						$	15,289				3.49	%						$	11,694				3.64	%

Table 2A

Volume and Rate Analysis

		2006 compared to 2005												Years Ended December 31 2005 compared to 2004												2004 compared to 2003
		Change Due To:												Change Due To:												Change Due To:
		Increase /												Increase /												Increase /
		(Decrease)				Volume				Rate				(Decrease)				Volume				Rate				(Decrease)				Volume				Rate
		(In Thousands)
Interest Earning Assets:
Investments		$	2,197				1,814			$	383			$	1,584			$	1,511			$	73			$	527			$	369			$	158
Loans			9,856				6,713				3,143				7,815				4,897				2,918				3,706				3,699				7
Interest bearing deposits			121				(18	)			139				187				35				152				(52	)			(93	)			41
Federal funds sold			1				1				—				—				0				—				2				—				2
Total Increase (Decrease) in Interest Income			12,175				8,510				3,665				9,586				6,443				3,143				4,183				3,976				208
Interest Bearing Liabilities:
Interest-bearing demand deposits			24				0				24				107				18				89				25				30				(5	)
Money market deposit accounts			603				(406	)			1,009				3,418				2,709				709				569				410				159
Savings accounts			84				43				41				—				—				—				1				—				1
Time deposits			6,045				4,376				1,669				1,140				662				478				(206	)			(253	)			47
Total interest-bearing deposits			6,756				4,013				2,743				4,665				3,389				1,276				389				187				202
FHLB Advances			1,551				785				766				948				(19	)			967				487				503				(16	)
Securities sold under agreements to repurchase			147				124				23				(6	)			(20	)			14				16				8				8
Other short-term borrowings			488				359				129				129				109				20				82				2				80
Long-term borrowings			45				(12	)			57				63				260				(197	)			433				147				286
Trust Preferred			173				1				172				192				—				192				220				236				(16	)
Total Increase (Decrease) in Interest Expense			9,160				5,270				3,890				5,991				3,719				2,272				1,627				1,083				544
Increase (Decrease) in Net Interest Income		$	3,015			$	3,240			$	(225	)		$	3,595			$	2,724			$	871			$	2,556			$	2,892			$	(336	)

Table 3

Investment Securities Available for Sale

		Year Ended December 31,
		2006				2005				2004
		(In Thousands)
Investment Securities available for sale:
US Treasury Securities		$	996			$	1,602			$	1,638
US Government Agency Securities			91,609				75,260				44,261
Mortgage Backed Securities			1,040				1,393				2,235
Tax Exempt Municipals			2,888				2,840				—
Taxable Municipals			1,275				1,466				—
Mutual Fund			1,468				1,471				—
Other			5,887				3,739				3,244
Total Securities		$	105,163			$	87,771			$	51,378

Investment Securities Available for Sale 2006

Table 3A

		Maturing
										After One Year								After Five Years								After TenYears
		Within								But Within								But Within
		One Year								Five Years								Ten Years																Total
		Amount				Yield				Amount				Yield				Amount				Yield				Amount				Yield				Amount				Yield
		(In Thousands)
Investment Securities Available for Sale (1)
US Treasury Securities		$	—				—			$	996				4.99	%		$	—				—			$	—				—			$	996				4.99	%
US Government Agency Securities			34,690				3.60	%			55,446				4.65	%			1,473				5.15	%			—				—				91,609				4.26	%
Mortgage Backed Securities			49				4.64	%			991				4.79	%			—				—				—				—				1,040				4.78	%
Tax Exempt Municipals			—				—								—				2,888				5.34	%											2,888				5.34	%
Taxable Municipals			—				—								—				1,275				4.30	%			—				—				1,275				4.30	%
Total		$	34,739				3.60	%		$	57,433				4.65	%		$	5,636				5.06	%		$	—							$	97,808				4.30	%

Table 4

Loan Portfolio

		Year Ended December 31,
		2006								2005								2004								2003								2002
		Amount				Percentage of Total				Amount				Percentage of Total				Amount				Percentage of Total				Amount				Percentage of Total				Amount				Percentage of Total
		(In Thousands)
Commercial		$	51,825				11.95	%		$	38,516				10.42	%		$	48,427				16.55	%		$	31,759				16.78	%		$	17,324				15.09	%
Commercial real estate			159,996				36.90	%			137,423				37.17				96,939				33.13				69,128				36.51				41,081				35.77
Real estate construction			68,570				15.81	%			37,054				10.02				33,073				11.30				13,766				7.27				10,057				8.76
Residential real estate			152,648				35.21	%			156,185				42.24				113,432				38.77				73,846				39.01				45,591				39.70
Consumer			555				0.13	%			555				0.15				723				0.25				821				0.43				782				0.68
Total loans		$	433,594				100.00	%		$	369,733				100.00	%		$	292,594				100.00	%		$	189,320				100.00	%		$	114,835				100.00	%

Loan Maturity Distribution

Table 4A

		December 31, 2006
		Three Months or				Over Three Months				Over One Year				Over
		Less				Through One Year				Through Five Years				Five Years				Total
		(In Thousands)
Commercial		$	19,433			$	15,947			$	15,711			$	734			$	51,825
Commercial real estate			19,565				22,860				98,668				18,903				159,996
Real estate construction			16,834				37,610				10,182				3,944				68,570
Residential real estate			33,788				19,399				87,257				12,204				152,648
Consumer			39				231				214				71				555
Total		$	89,659			$	96,047			$	212,032			$	35,856			$	433,594