December 2008

Like all of you, we at Business Bank are watching closely as events unfold in the national financial markets. The volatility is unsettling to say the least. The nation is now, and has been in a recession since December of 2007. Business Bank management took an aggressive approach with the real estate loan portfolio months ago, when we saw that there were weaknesses that could be affected by a steep downturn. Thus, we increased our Allowance for Loan Loss. Our credit administration will continue this aggressive posture until the recession runs its course.

Previous recessions have shown that our region has not been affected as soon, and we have rebounded more rapidly than most of the nation. At this time, an oversupply of housing and building lots has adversely affected most contractors and developers. As a commercial bank, some of our clients are involved in the construction industry. Recently, the bank allocated an additional $1.7 million to loan loss reserves. Fortunately, we increased our capital by $4 million at the end of 2007 and Business Bank remains well capitalized.

As we weather this storm together, I want you to remain confident about your decision to partner with Business Bank. Yes, things are going to be tight, some things will change dramatically, but we at the bank know that there will be a turn around and we can weather this storm. Not only are we well capitalized but the FDIC has increased the deposit insurance from $100,000 to $250,000 for all deposits through 2009. Individual Retirement Accounts will continue to be insured up to $250,000.

I invite you to share your thoughts, suggestions or concerns with us. You can do so in any of three ways, on-line at www.businessbankwa.com on the "Contact Us" page, write us a note or better yet, come on in and have a cup of coffee with one of the officers. We take being a community bank seriously and we would love to hear from you.

Thank you for choosing Business Bank. We appreciate your business!

Don Zimmerman
President and CEO