First, let me wish everyone a Happy New Year.

2011 was a very busy year for your bank. As you know, the bank completed the purchase of a branch in Casa Grande in September as well as acquiring a bank in Prescott in July. We were proud to welcome these new customers to the Foothills Bank family. We are thrilled about the potential success in both markets and have confidence that we can continue to provide the same high quality service in Pinal and Yavapai Counties that we strive for in Yuma.

As we enter 2012, questions remain regarding the future of the economy nationally, regionally and locally. The uncertainty of this unprecedented period makes each one of us wonder when we will see the recovery that the “think tanks” in Washington, DC said began earlier this year. With high unemployment, small businesses struggling to survive, high foreclosure and bankruptcy rates and no clear path to follow, we are not seeing the level of recovery that we are hearing about elsewhere. However, the Board of Directors and Management of the bank continue to be dedicated to the daily management of a strong, conservative community bank. Our daily focus is to ensure the safety, soundness, and continuity of the bank while maintaining our commitment to the highest standards of customer service. Each and every staff member looks forward to providing you with the “Banking with a Personal Touch” philosophy you’ve come to know and expect.

I continue to be excited about the future of our communities and the bank. The Foothills Bank is proud to report that we’re a strong financial institution. We continue to be highly rated with numerous national rating companies. We were named one of the top ten banks in Arizona in 2011. Our capital ratio, which is an indication of our net worth is very excellent, and enhances our ability to weather tough economic times. Unlike many other banks our earnings and capital have been sufficient to operate without the need for raising additional equity. We are considered well capitalized by our regulators and have a capital ratio that is very strong.

As always, I invite you to speak to our board of directors or management team about any questions or concerns you may have. Rest assured that the Board of Directors and Management of the bank consider the safety and soundness of this institution our top priority. I also invite you to take a look at our full line of very competitive business and personal banking services, including deposit accounts, online banking and bill payment, residential and commercial loans, and a host of other services.

Finally, thank you for being our customer. Our success depends on you. Together we can move forward toward a brighter future.

Regards,

Wayne Gale

President & CEO