WILSON BANK HOLDING CO (Form: 10-K, Received: 03/13/2006 17:31:41)

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-K

(Mark One)


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

For the fiscal year ended December 31, 2005


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

For the transition period from to

Commission file number 0-20402

WILSON BANK HOLDING COMPANY

(Exact name of registrant as specified in its charter)


Tennessee		62-1497076

(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

623 West Main Street Lebanon, Tennessee		37087

(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code:
(615) 444-2265

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

None

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

Common Stock, $2.00 par value per share
(Title of class)

Indicate by check mark if the registrant is a well-known seasoned issuer. 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 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 check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the 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. o

Indicate by check mark 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.). (Check one):

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

The aggregate market value of the voting stock held by non-affiliates of the registrant on June 30, 2005, the last business day of the registrant’s most recently completed second fiscal quarter, was approximately $139,571,185. For purposes of this calculation, “affiliates” are considered to be the directors of the registrant. The market value calculation was determined using $32.50 per share.

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

Shares of common stock, $2.00 par value per share, outstanding on March 10, 2006 were 5,057,706.

DOCUMENTS INCORPORATED BY REFERENCE


Part of Form 10-K		Documents from which portions are incorporated by reference
Part II		Portions of the Registrant’s Annual Report to Shareholders for the fiscal year ended December 31, 2005 are incorporated by reference into Items 5, 6, 7, 7A and 8.

Part III		Portions of the Registrant’s Proxy Statement relating to the Registrant’s Annual Meeting of Shareholders to be held on April 11, 2006 are incorporated by reference into Items 10, 11, 12, 13 and 14.

TABLE OF CONTENTS


PART I
	Item 1. Business
	Item 1A. Risk Factors
	Item 1B. Unresolved Staff Comments
	Item 2. Properties
	Item 3. Legal Proceedings
	Item 4. Submission of Matters to a Vote of Security Holders
PART II
	Item 5. Market for Registrant’s Common Equity, Related Shareholder Matters and Issuer Purchasers of Equity Securities
	Item 6. Selected Financial Data
	Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
	Item 7A. Quantitative and Qualitative Disclosures About Market Risk
	Item 8. Financial Statements and Supplementary Data
	Item 9. Changes In and Disagreements With Accountants on Accounting and Financial Disclosure
	Item 9A. Controls and Procedures
	Item 9B. Other Information
PART III
	Item 10. Directors and Executive Officers of the Registrant
	Item 11. Executive Compensation
	Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
	Item 13. Certain Relationships and Related Transactions
	Item 14. Principal Accountant Fees and Services
	Item 15. Exhibits and Financial Statement Schedules
SIGNATURES
INDEX TO EXHIBITS
Ex-10.7 Form of Wilson Bank Holding Company Incentive Stock Option Agreement
Ex-10.8 Director and Named Executive Officer Compensation Summary
Ex-13.1 Selected Portions of the Wilson Bank Holding Company Annual Report
Ex-21.1 Subsidiaries of the Company
Ex-23.1 Consent of Independent Registered Public Accounting Firm
Ex-31.1 Section 302 Certification of the CEO
Ex-31.2 Section 302 Certification of the CFO
Ex-32.1 Section 906 Certification of the CEO
Ex-32.2 Section 906 Certification of the CFO

PART I

Item 1. Business .

General

Wilson Bank Holding Company (the “Company”) was incorporated on March 17, 1992 under the laws of the State of Tennessee. The purpose of the Company was to acquire all of the issued and outstanding capital stock of Wilson Bank and Trust (the “Bank”) and act as a one-bank holding company. On November 17, 1992, the Company acquired 100% of the capital stock of the Bank pursuant to the terms of a plan of share exchange and agreement.

All of the Company’s banking business is conducted through the Bank, a state chartered bank organized under the laws of the State of Tennessee. The Bank, on December 31, 2005, had ten full service banking offices located in Wilson County, Tennessee, one full service banking facility in Trousdale County, Tennessee, two full service banking offices in eastern Davidson County, one banking facility and one full service banking office located in Rutherford County, two full service banking offices in DeKalb County, Tennessee and two full service banking facilities in Smith County, Tennessee.

Prior to March 31, 2005, the Company owned a 50% interest in DeKalb Community Bank and Community Bank of Smith County. On March 31, 2005, the Company acquired the minority interest in the subsidiaries when the two subsidiaries were merged into the Bank with the shareholders of these subsidiaries, other than the Company, receiving shares of the Company’s common stock in exchange for their shares of common stock in the subsidiaries. Prior to March 31, 2005, these two 50% owned subsidiaries were included in the consolidated financial statements.

The Company’s principal executive office is located at 623 West Main Street, Lebanon, Tennessee, which is also the principal location of the Bank. The Bank’s branch offices are located at 1444 Baddour Parkway, Lebanon, Tennessee; 200 Tennessee Boulevard, Lebanon, Tennessee; Public Square, Watertown, Tennessee; 8875 Stewart’s Ferry Pike, Gladeville, Tennessee; 1476 North Mt. Juliet Road, Mt. Juliet, Tennessee; 11835 Highway 70, Mount Juliet, Tennessee; 127 McMurry Boulevard, Hartsville, Tennessee; 1130 Castle Heights Avenue North, Lebanon, Tennessee; the Wal-Mart Super Center, Lebanon, Tennessee; 440 Highway 109 North, Lebanon, Tennessee; 4736 Andrew Jackson Parkway in Hermitage, Tennessee; 151 Heritage Park Drive, Suite 102, in Murfreesboro, Tennessee; 217 Donelson Pike, Nashville, Tennessee, 802 NW Broad St, Murfreesboro, Tennessee, 576 West Broad Street, Smithville, Tennessee, 306 Brush Creek Road, Alexandria, Tennessee,1300 Main Street North, Carthage, Tennessee, and 7 New Middleton Highway, Gordonsville, Tennessee. Management believes that Wilson County, Trousdale County, Davidson County, Rutherford County, DeKalb County and Smith County offer an environment for continued banking growth in the Company’s target market, which consists of local consumers, professionals and small businesses. The Bank offers a wide range of banking services, including checking, savings, and money market deposit accounts, certificates of deposit and loans for consumer, commercial and real estate purposes. The Bank also offers custodial, trust and discount brokerage services to its customers. The Bank does not have a concentration of deposits obtained from a single person or entity or a small group of persons or entities, the loss of which would have a material adverse effect on the business of the Bank. Furthermore, no concentration of loans exists within a single industry or group of related industries.

The Bank was organized in 1987 to provide Wilson County with a locally-owned, locally-managed commercial bank. Since its opening, the Bank has experienced a steady growth in deposits and loans as a result of providing personal, service-oriented banking services to its targeted market. For the year ended December 31, 2005, the Company reported net earnings of approximately $11.0 million and had total assets of approximately $1.05 billion.

Financial and Statistical Information

The Company’s audited consolidated financial statements, selected financial data and Management’s Discussion and Analysis of Financial Condition and Results of Operations contained in the Company’s Annual Report to Shareholders for the year ended December 31, 2005 filed as Exhibit 13 to this Form 10-K (the “ 2005 Annual Report ”), are incorporated herein by reference.

Regulation and Supervision

In addition to the information set forth herein, Management’s Discussion and Analysis of Financial Condition and Results of Operations, incorporated by reference in Item 7 hereof, further discusses recent banking legislation and regulation and should be reviewed in conjunction herewith.

The Company and the Bank are subject to extensive regulation under state and federal statutes and regulations. The discussion in this section, which briefly summarizes certain of such statutes, does not purport to be complete, and is qualified in its entirety by reference to such statutes. Other state and federal legislation and regulations directly and indirectly affecting banks are likely to be enacted or

implemented in the future; however, such legislation and regulations and their effect on the business of the Company and its subsidiaries cannot be predicted.

The Company is a bank holding company within the meaning of the Bank Holding Company Act of 1956 (the “Act”) and is registered with the Board of Governors of the Federal Reserve System (the “Board”). The Company is required to file annual reports with, and is subject to examination by, the Board. The Bank is chartered under the laws of the State of Tennessee and is subject to the supervision of, and is regularly examined by, the Tennessee Department of Financial Institutions. The Bank is also regularly examined by the Federal Deposit Insurance Corporation.

Under the Act, a bank holding company may not directly or indirectly acquire ownership or control of more than five percent of the voting shares or substantially all of the assets of any company, including a bank, without the prior approval of the Board. In addition, bank holding companies are generally prohibited under the Act from engaging in non-banking activities, subject to certain exceptions and the recent modernization of the financial services industry in connection with the passing of the Gramm-Leach-Bliley Act of 1999 (the “GLB Act”). Under the Act, the Board is authorized to approve the ownership by a bank holding company of shares of any company whose activities have been determined by the Board to be so closely related to banking or to managing or controlling banks as to be a proper incident thereto.

In November 1999, the GLB Act became law. Under the GLB Act, a “financial holding company” may engage in activities the Board determines to be financial in nature or incidental to such financial activity or complementary to a financial activity and not a substantial risk to the safety and soundness of such depository institutions or the financial system. Generally, such companies may engage in a wide range of securities activities and insurance underwriting and agency activities. The Company has not made application to the Board to become a “financial holding company.”

Under the Tennessee Bank Structure Act, a bank holding company which controls 30% or more of the total deposits in all federally insured financial institutions in Tennessee is prohibited from acquiring any bank in Tennessee. Furthermore, no bank holding company may acquire any bank in Tennessee that has been in operation less than three years or organize a new bank in Tennessee, except in the case of certain interim bank mergers and acquisitions of banks in financial difficulty. State banks and national banks in Tennessee, however, may establish branches anywhere in the state.

The Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994 (the “IBBEA”) authorized interstate acquisitions of banks and bank holding companies without geographic limitation beginning on June 1, 1997. In addition, on that date, the IBBEA authorized a bank to merge with a bank in another state as long as neither of the states has opted out of interstate branching between the date of enactment of the IBBEA and May 1, 1997. Tennessee enacted interstate branching laws in response to the federal law which prohibit the establishment or acquisition in Tennessee by any bank of a branch office, branch bank or other branch facility in Tennessee except (i) a Tennessee-chartered bank, (ii) a national bank which has its main office in Tennessee or (iii) a bank which merges or consolidates with a Tennessee-chartered bank or national bank with its main office in Tennessee.

The Company and the Bank is subject to certain restrictions imposed by the Federal Reserve Act and the Federal Deposit Insurance Act, respectively, on any extensions of credit to the bank holding company or its subsidiary bank, on investments in the stock or other securities of the bank holding company or its subsidiary bank, and on taking such stock or other securities as collateral for loans of any borrower. The Bank takes Company Common Stock as collateral for borrowings subject to the aforementioned restrictions.

The FDIC has adopted a risk-based assessment system for insured depository institutions that takes into account the risks attributable to different categories and concentrations of assets and liabilities. In early 2006, Congress passed the Federal Deposit Insurance Reform Act of 2005, which made certain changes to the Federal deposit insurance program. These changes included merging the Bank Insurance Fund and the Savings Association Insurance Fund, increasing retirement account coverage to $250,000 and providing for inflationary adjustments to general coverage beginning in 2010, providing the FDIC with authority to set the fund’s reserve ratio within a specified range, and requiring dividends to banks if the reserve ratio exceeds certain levels. The new statute grants banks an assessment credit based on their share of the assessment base on December 31, 1996, and the amount of the credit can be used to reduce assessments in any year subject to certain limitations.

The Financial Reform, Recovery and Enforcement Act of 1989 (“FIRREA”) provides that a holding company’s controlled insured depository institutions are liable for any loss incurred by the FDIC in connection with the default of, or any FDIC-assisted transaction involving, an affiliated insured bank or savings association.

The maximum permissible rates of interest on most commercial and consumer loans made by the Company’s bank subsidiaries are governed by Tennessee’s general usury law and the Tennessee Industrial Loan and Thrift Companies Act (“Industrial Loan Act”). Certain other usury laws affect limited classes of loans, but the Company believes that the laws referenced above are the most significant. Tennessee’s general usury law authorizes a floating rate of 4% per annum over the average prime or base commercial loan rate, as published by the Federal Reserve Board from time to time, subject to an absolute 24% per annum limit. The Industrial Loan

Act, which is generally applicable to most of the loans made by the Company’s bank subsidiary in Tennessee, authorizes an interest rate of up to 24% per annum and also allows certain loan charges, generally on a more liberal basis than does the general usury law.

Competition

The banking industry is highly competitive. The Company, through its subsidiary bank, competes with national and state banks for deposits, loans, and trust and other services.

The Bank competes with much larger commercial banks in Wilson County, the Bank’s primary market area, including four banks in Wilson County owned by regional multi-bank holding companies headquartered outside of Tennessee and four banks owned by Tennessee multi-bank holding companies. These institutions enjoy existing depositor relationships and greater financial resources than the Company and can be expected to offer a wider range of banking services. In addition, the Bank competes with two credit unions located in Wilson County and two locally-owned banks which were organized in 2001.

The Bank competes with much larger commercial banks in DeKalb County, including two banks owned by Tennessee multi-bank holding companies. While these institutions enjoy existing depositor relationships and greater financial resources than the Bank and can be expected to offer a wider range of banking services, the Company believes that the Bank can expect to attract customers since and most loan and management decisions will be made at the local level.

The Bank competes with three commercial banks in Smith County, all of which are small community banking organizations. These institutions enjoy existing depositor relationships; however, the Company believes that the Bank can be expected to offer a wider range of banking services through its financial resources as well as broader range of product offerings.

Given the competitive market place, the Company makes no predictions as to how its relative position will change in the future.

Monetary Policies

The results of operations of the Bank and the Company are affected by the policies of the regulatory authorities, particularly the Board. An important function of the Board is to regulate the national supply of bank credit in order to combat recession and curb inflation. Among the instruments used to attain these objectives are open market operations in U.S. government securities, changes in the discount rate on bank borrowings and changes in reserve requirements relating to member bank deposits. These instruments are used in varying combinations to influence overall growth and distribution of bank loans, investments and deposits, and their use may also affect interest rates charged on loans and paid for deposits. Policies of the regulatory agencies have had a significant effect on the operating results of commercial banks in the past and are expected to do so in the future. The effect of such policies upon the future business and results of operations of the Company and the Bank cannot be predicted with accuracy.

Employment

As of March 10, 2006, the Company and its subsidiary collectively employed 313 full-time equivalent employees. Additional personnel will be hired as needed to meet future growth.

Available Information

The Company’s Internet website is http://www.wilsonbank.com. Please note that our website address is provided as an inactive textual reference only. The Company makes available free of charge on its website the Company’s annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports as soon as reasonably practicable after it electronically files or furnishes such materials to the Securities and Exchange Commission (the “SEC”). The information provided on our website is not part of this report, and is therefore not incorporated by reference herein unless such information is otherwise specifically referenced elsewhere in this report.

Statistical Information Required by Guide 3

The statistical information required to be displayed under Item 1 pursuant to Guide 3, “Statistical Disclosure by Bank Holding Companies,” of the Exchange Act Industry Guides is incorporated herein by reference to the Consolidated Financial Statements and the notes thereto and the Management’s Discussion and Analysis sections in the Company’s 2005 Annual Report . Certain information not contained in the Company’s 2005 Annual Report , but required by Guide 3, is contained in the tables immediately following:

[REMINDER OF PAGE INTENTIONALLY LEFT BLANK]

WILSON BANK HOLDING COMPANY

Form 10-K

December 31, 2005

I.		Distribution of Assets, Liabilities and Stockholders’ Equity:

		Interest Rates and Interest Differential

		The Schedule which follows indicates the average balances for each major balance sheet item, an analysis of net interest income and the change in interest income and interest expense attributable to changes in volume and changes in rates.

		The difference between interest income on interest-earning assets and interest expense on interest-bearing liabilities is net interest income, which is the Company’s gross margin. Analysis of net interest income is more meaningful when income from tax-exempt earning assets is adjusted to a tax equivalent basis. Accordingly, the following schedule includes a tax equivalent adjustment of tax-exempt earning assets, assuming a weighted average Federal income tax rate of 34%.

		In this Schedule “change due to volume” is the change in volume multiplied by the interest rate for the prior year. “Change due to rate” is the change in interest rate multiplied by the volume for the prior year. Changes in interest income and expense not due solely to volume or rate changes have been allocated to the “change due to volume” and “change due to rate” in proportion to the relationship of the absolute dollar amounts of the change in each category.

		Non-accrual loans have been included in the loan category. Loan fees of $2,197,000, $1,815,000 and $1,495,000 for 2005, 2004 and 2003, respectively, are included in loan income and represent an adjustment of the yield on these loans.

WILSON BANK HOLDING COMPANY

Form 10-K

December 31, 2005


	*In Thousands, Except Interest Rates*
	2005								2004								2005/2004 Change
	Average			Interest			Income/		Average			Interest			Income/		Due to			Due to
	Balance			Rate			Expense		Balance			Rate			Expense		Volume			Rate			Total

Loans, net of unearned interest	$	747,922			6.72	%		50,283		656,973			6.51	%		42,796		6,072			1,415			7,487

Investment securities — taxable		134,539			3.31			4,447		127,043			3.13			3,971		241			235			476

Investment securities - tax exempt		15,596			3.99			623		16,199			4.14			671		(24	)		(24	)		(48	)

Taxable equivalent adjustment		—			2.06			321		—			2.13			346		(13	)		(12	)		(25	)

Total tax-exempt investment securities		15,596			6.05			944		16,199			6.28			1,017		(37	)		(36	)		(73	)


Total investment securities		150,135			3.59			5,391		143,242			3.48			4,988		243			160			403


Loans held for sale		4,122			4.25			175		3,634			4.43			161		21			(7	)		14

Federal funds sold		24,363			2.76			673		29,505			1.08			319		(65	)		419			354

Restricted securities		2,632			4.44			117		2,619			3.97			104		1			12			13


Total earning assets		929,174			6.10			56,639		835,973			5.79			48,368		5,587			2,684			8,271


Cash and due from banks		25,126								21,299

Allowance for possible loan losses		(9,566	)							(8,596	)

Bank premises and equipment		21,987								20,209

Other assets		16,598								10,950


Total assets	$	983,319								879,835

WILSON BANK HOLDING COMPANY

Form 10-K

December 31, 2005


	*In Thousands, Except Interest Rates*
	2005							2004							2005/2004 Change
	Average		Interest			Income/		Average		Interest			Income/		Due to			Due to
	Balance		Rate			Expense		Balance		Rate			Expense		Volume			Rate			Total

Deposits:
Negotiable order of withdrawal accounts	$	72,453		.89	%		650		62,723		.36	%		223		40			387			427
Money market demand accounts		190,867		1.65			3,142		195,769		1.17			2,290		(59	)		911			852
Individual retirement accounts		44,725		3.48			1,555		40,847		3.03			1,238		124			193			317
Other savings deposits		40,524		1.94			787		43,249		1.36			590		(39	)		236			197
Certificates of deposit $100,000 and over		174,628		3.81			6,659		137,872		3.11			4,284		1,288			1,087			2,375
Certificates of deposit under $100,000		246,872		3.45			8,527		221,990		3.02			6,693		807			1,027			1,834

Total interest-bearing deposits		770,069		2.77			21,320		702,450		2.18			15,318		1,575			4,428			6,002

Securities sold under repurchase agreements		6,622		2.70			179		9,254		1.75			162		(55	)		72			17
Federal funds purchased		1,023		2.05			21		1,157		1.82			21		(2	)		2			—
Advances from Federal Home Loan Bank		14,500		4.34			630		5,343		4.68			250		399			(19	)		380

Total interest-bearing liabilities		792,214		2.80			22,150		718,204		2.19			15,751		1,728			4,671			6,399


Demand deposits		98,486							83,448

Other liabilities		5,284							11,217

Stockholders’ equity		87,335							66,966

Total liabilities and stockholders’ equity	$	983,319							879,835


Net interest income							34,489							32,617


Net yield on earning assets				3.71	%						3.90	%


Net interest spread				3.30	%						3.60	%

WILSON BANK HOLDING COMPANY

Form 10-K

December 31, 2005


	*In Thousands, Except Interest Rates*
	2004								2003								2004/2003 Change
	Average			Interest			Income/		Average			Interest			Income/		Due to			Due to
	Balance			Rate			Expense		Balance			Rate			Expense		Volume			Rate			Total

Loans, net of unearned interest	$	656,973			6.51	%		42,796		568,227			6.93	%		39,368		5,909			(2,481	)		3,428

Investment securities — taxable		127,043			3.13			3,971		108,430			3.37			3,654		592			(275	)		317

Investment securities - tax exempt		16,199			4.14			671		14,384			5.08			731		85			(145	)		(60	)

Taxable equivalent adjustment		—			2.13			346		—			2.62			377		44			(75	)		(31	)

Total tax-exempt investment securities		16,199			6.28			1,017		14,384			7.70			1,108		129			(220	)		(91	)


Total investment securities		143,242			3.48			4,988		122,814			3.88			4,762		746			(520	)		226


Loans held for sale		3,634			4.43			161		6,643			5.39			358		(141	)		(56	)		(197	)

Federal funds sold		29,505			1.08			319		56,226			1.04			584		(286	)		21			(265	)

Restricted equity securities		2,619			3.97			104		2,521			4.01			101		4			(1	)		3


Total earning assets		835,973			5.79			48,368		756,431			5.97			45,173		4,600			(1,405	)		3,195


Cash and due from banks		21,299								17,559

Allowance for possible loan losses		(8,596	)							(7,637	)

Bank premises and equipment		20,209								16,506

Other assets		10,950								9,201


Total assets	$	879,835								792,060

WILSON BANK HOLDING COMPANY

Form 10-K

December 31, 2005


	*In Thousands, Except Interest Rates*
	2004							2003							2004/2003 Change
	Average		Interest			Income/		Average		Interest			Income/		Due to			Due to
	Balance		Rate			Expense		Balance		Rate			Expense		Volume			Rate			Total

Deposits:
Negotiable order of withdrawal accounts	$	62,723		.36	%		223		52,770		.44	%		234		37			(48	)		(11	)
Money market demand accounts		195,769		1.17			2,290		183,633		1.24			2,275		147			(132	)		15
Individual retirement accounts		40,847		3.03			1,238		35,466		3.50			1,243		174			(179	)		(5	)
Other savings deposits		43,249		1.36			590		36,582		1.76			645		105			(160	)		(55	)
Certificates of deposit $100,000 and over		137,872		3.11			4,284		129,955		3.15			4,098		240			(54	)		186
Certificates of deposit under $100,000		221,990		3.02			6,693		202,561		3.19			6,458		594			(359	)		235

Total interest-bearing deposits		702,450		2.18			15,318		640,967		2.33			14,953		1,369			(1,004	)		365

Securities sold under repurchase agreements		9,254		1.75			162		10,591		1.92			203		(24	)		(17	)		(41	)
Federal funds purchased		1,157		1.82			21		104		1.92			2		19			—			19
Advances from Federal Home Loan Bank		5,343		4.68			250		827		7.13			59		217			(26	)		191

Total interest-bearing liabilities		718,204		2.19			15,751		652,489		2.33			15,217		1,478			(944	)		534


Demand deposits		83,448							70,160

Other liabilities		11,217							10,425

Stockholders’ equity		66,966							58,986

Total liabilities and stockholders’ equity	$	879,835							792,060


Net interest income							32,617							29,956


Net yield on earning assets				3.90	%						3.96	%


Net interest spread				3.60	%						3.64	%

WILSON BANK HOLDING COMPANY

Form 10-K

December 31, 2005

II.

Investment Portfolio:

Investment securities at December 31, 2005 consist of the following:


	Securities Held-To-Maturity
			(In Thousands)
			Gross		Gross		Estimated
	Amortized		Unrealized		Unrealized		Market
	Cost		Gains		Losses		Value
Obligations of states and political subdivisions	$	14,241		202		69		14,374
Mortgage-backed securities		133		—		—		133


	$	14,374		202		69		14,507


	Securities Available-For-Sale
			(In Thousands)
			Gross		Gross		Estimated
	Amortized		Unrealized		Unrealized		Market
	Cost		Gains		Losses		Value
U.S. Treasury and other U.S. Government agencies and corporations	$	138,056		—		3,349		134,707
Obligations of states and political subdivisions		1,340		23		4		1,359
Mortgage-backed securities		3,426		1		29		3,398


	$	142,822		24		3,382		139,464

WILSON BANK HOLDING COMPANY

Form 10-K

December 31, 2005

II. Investment Portfolio, Continued:

A. Continued:

Securities at December 31, 2004 consist of the following:


	Securities Held-To-Maturity
			(In Thousands)
			Gross		Gross		Estimated
	Amortized		Unrealized		Unrealized		Market
	Cost		Gains		Losses		Value
Obligations of states and political subdivisions	$	14,202		512		9		14,705
Mortgage-backed securities		235		—		—		235


	$	14,437		512		9		14,940


	Securities Available-For-Sale
			(In Thousands)
			Gross		Gross		Estimated
	Amortized		Unrealized		Unrealized		Market
	Cost		Gains		Losses		Value
U.S. Treasury and other U.S. Government agencies and corporations	$	109,945		24		1,586		108,383
Obligations of states and political subdivisions		1,035		61		—		1,096
Mortgage-backed securities		9,208		5		57		9,156


	$	120,188		90		1,643		118,635

WILSON BANK HOLDING COMPANY

Form 10-K

December 31, 2005

II. Investment Portfolio, Continued:

A. Continued:

Securities at December 31, 2003 consist of the following:


	Securities Held-To-Maturity
			(In Thousands)
			Gross		Gross		Estimated
	Amortized		Unrealized		Unrealized		Market
	Cost		Gains		Losses		Value
Obligations of states and political subdivisions	$	15,851		709		26		16,534
Mortgage-backed securities		792		1		1		792


	$	16,643		710		27		17,326


	Securities Available-For-Sale
			(In Thousands)
			Gross		Gross		Estimated
	Amortized		Unrealized		Unrealized		Market
	Cost		Gains		Losses		Value
U.S. Treasury and other U.S. Government agencies and corporations	$	122,046		621		886		121,781
Obligations of states and political subdivisions		1,380		81		—		1,461
Corporate bonds		500		—		1		499
Mortgage-backed securities		9,191		6		45		9,152


	$	133,117		708		932		132,893

WILSON BANK HOLDING COMPANY

Form 10-K

December 31, 2005

II.

Investment Portfolio, Continued:

The following schedule details the estimated maturities and weighted average yields of investment securities (including mortgage backed securities) of the Company at December 31, 2005:


			Estimated		Weighted
	Amortized		Market		Average
	Cost		Value		Yields
Held-To-Maturity Securities	(In Thousands, Except Yields)
U.S. Treasury and other U.S. Government agencies and corporations, including mortgage-backed securities:
Less than one year	$	—		—		—	%
One to five years		91		91		5.92
Five to ten years		—		—		—
More than ten years		42		42		3.86

Total securities of U.S. Treasury and other U.S. Government agencies and corporations		133		133		5.27


Obligations of states and political subdivisions*:
Less than one year		129		131		4.60
One to five years		7,103		7,184		4.11
Five to ten years		5,918		5,941		3.66
More than ten years		1,091		1,118		4.76

Total obligations of states and political subdivisions		14,241		14,374		3.98


Total held-to-maturity securities	$	14,374		14,507		3.99	%


*		Weighted average yield is stated on a tax-equivalent basis, assuming a weighted average Federal income tax rate of 34%.

WILSON BANK HOLDING COMPANY

Form 10-K

December 31, 2005

II.

Investment Portfolio, Continued:

Continued:


			Estimated		Weighted
	Amortized		Market		Average
Available-For-Sale Securities	Cost		Value		Yields
	(In Thousands, Except Yields)
U.S. Treasury and other U. S. Government agencies and corporations, including mortgage-backed securities:
Less than one year	$	26,259		25,811		2.51	%
One to five years		107,002		104,246		3.63
Five to ten years		7,185		7,020		3.92
More than ten years		1,036		1,028		4.63

Total securities of U.S. Treasury and other U.S. Government agencies and corporations		141,482		138,105		3.44


Obligations of states and political subdivisions*:
Less than one year		—		—		—
One to five years		1,139		1,147		3.51
Five to ten years		201		212		4.66
More than ten years		—		—		—

Total obligations of states and political subdivisions		1,340		1,359		3.68

Total available-for-sale securities	$	142,822		139,464		3.45	%


*		Weighted average yield is stated on a tax-equivalent basis, assuming a weighted average Federal income tax rate of 34%.

WILSON BANK HOLDING COMPANY

Form 10-K

December 31, 2005

III.

Loan Portfolio:

Loan Types

The following schedule details the loans of the Company at December 31, 2005, 2004, 2003, 2002 and 2001:


	In Thousands
	2005			2004			2003			2002			2001
Commercial, financial and agricultural	$	251,494			217,372			174,235			192,945			190,700
Real estate — construction		58,672			49,085			39,508			30,794			25,044
Real estate — mortgage		414,543			384,062			314,168			267,145			228,316
Installment		86,079			73,482			64,880			59,721			50,741

Total loans		810,788			724,001			592,791			550,605			494,801

Less unearned interest		—			—			—			(4	)		(35	)


Total loans, net of unearned interest		810,788			724,001			592,791			550,601			494,766

Less allowance for possible loan losses		(9,083	)		(9,370	)		(8,077	)		(6,943	)		(5,489	)


Net loans	$	801,705			714,631			584,714			543,658			489,277

WILSON BANK HOLDING COMPANY

Form 10-K

December 31, 2005

III.

Loan Portfolio, Continued:

Maturities and Sensitivities of Loans to Changes in Interest Rates

The following schedule details maturities and sensitivity to interest rates changes for commercial loans of the Company at December 31, 2005:


	In Thousands
			1 Year to
	Less Than		Less Than		After 5
	1 Year*		5 Years		Years		Total
Maturity Distribution:
Commercial, financial and agricultural	$	151,289		70,315		29,890		251,494
Real estate — construction		48,776		9,896		—		58,672


	$	200,065		80,211		29,890		310,166


Interest-Rate Sensitivity:

Fixed interest rates	$	152,035		56,141		1,515		209,691

Floating or adjustable interest rates		48,030		24,070		28,375		100,475


Total commercial, financial and agricultural loans plus real estate - construction loans	$	200,065		80,211		29,890		310,166


*		Includes demand loans, bankers acceptances, commercial paper and deposit notes.

WILSON BANK HOLDING COMPANY

Form 10-K

December 31, 2005

III.

Loan Portfolio, Continued:

Risk Elements

The following schedule details selected information as to non-performing loans of the Company at December 31, 2005, 2004, 2003, 2002 and 2001:


	In Thousands, Except Percentages
	2005			2004		2003		2002		2001
Non-accrual loans:
Commercial, financial and agricultural	$	—			7		17		—		—
Real estate — construction		—			—		—		—		—
Real estate — mortgage		190			526		270		327		71
Installment		35			91		175		156		98

Total non-accrual	$	225			624		462		483		169


Loans 90 days past due:
Commercial, financial and agricultural	$	80			197		170		22		—
Real estate — construction		42			—		8		—		124
Real estate — mortgage		1,585			1,698		872		318		194
Installment		308			638		716		407		270

Total loans 90 days past due	$	2,015			2,533		1,766		747		588


Renegotiated loans:
Commercial, financial and agricultural	$	—			—		—		—		—
Real estate — construction		—			—		—		—		—
Real estate — mortgage		—			—		—		—		—
Installment		—			—		—		—		—

Total renegotiated loans past due	$	—			—		—		—		—


Loans current — considered uncollectible	$	—			—		—		—		—


Total non-performing loans	$	2,240			3,157		2,228		1,230		757


Total loans, net of unearned interest	$	810,788			724,001		592,791		550,601		494,766


Percent of total loans outstanding, net of unearned interest		0.28	%		0.44		0.38		0.22		0.15


Other real estate	$	277			580		417		818		415

WILSON BANK HOLDING COMPANY

Form 10-K

December 31, 2005

III.

Loan Portfolio, Continued:

Risk Elements, Continued :

The accrual of interest income is discontinued when it is determined that collection of interest is less than probable or the collection of any amount of principal is doubtful. The decision to place a loan on a non-accrual status is based on an evaluation of the borrower’s financial condition, collateral liquidation value, economic and business conditions and other factors that affect the borrower’s ability to pay. At the time a loan is placed on a non-accrual status, the accrued but unpaid interest is also evaluated as to collectibility. If collectibility is doubtful, the unpaid interest is charged off. Thereafter, interest on non-accrual loans is recognized only as received. Non-accrual loans totaled $225,000 at December 31, 2005, $624,000 at December 31, 2004, $462,000 at December 31, 2003, $483,000 at December 31, 2002 and $169,000 at December 31, 2001. Gross interest income on non-accrual loans, that would have been recorded for the year ended December 31, 2005 if the loans had been current totaled $13,000 compared to $13,000 in 2004, $8,000 in 2003, $12,000 in 2002 and $12,000 in 2001. The amount of interest and fee income recognized on total loans during 2005 totaled $50,283,000 as compared to $42,796,000 in 2004, $39,368,000 in 2003, $39,788,000 in 2002 and $40,955,000 in 2001.

At December 31, 2005, loans, which include the above, totaling $8,751,000 were included in the Company’s internal classified loan list. Of these loans $6,921,000 are real estate and $1,830,000 are various other types of loans. The values collateralizing these loans is estimated by management to be approximately $16,494,000 ($14,225,000 related to real property and $2,268,000 related to the various other types of loans). Such loans are listed as classified when information obtained about possible credit problems of the borrowers has prompted management to question the ability of the borrower to comply with the repayment terms of the loan agreement. The loan classifications do not represent or result from trends or uncertainties which management expects will materially impact future operating results, liquidity or capital resources.

At December 31, 2005 there were no loan concentrations that exceeded ten percent of total loans other than as included in the preceding table of types of loans. Loan concentrations are amounts loaned to a multiple number of borrowers engaged in similar activities which would cause them to be similarly impacted by economic or other conditions.

At December 31, 2005 and 2004 other real estate totaled $277,000 and $580,000, respectively.

WILSON BANK HOLDING COMPANY

Form 10-K

December 31, 2005

III.

Loan Portfolio, Continued:

Risk Elements, Continued :

There were no material amounts of other interest-bearing assets (interest-bearing deposits with other banks, municipal bonds, etc.) at December 31, 2005 which would be required to be disclosed as past due, non-accrual, restructured or potential problem loans, if such interest-bearing assets were loans.

WILSON BANK HOLDING COMPANY

Form 10-K

December 31, 2005

IV.

Summary of Loan Loss Experience:

The following schedule details selected information related to the allowance for possible loan loss account of the Company at December 31, 2005, 2004, 2003, 2002 and 2001 and the years then ended.


	In Thousands, Except Percentages
	2005			2004			2003			2002			2001
Allowance for loan losses at beginning of period	$	9,370			8,077			6,943			5,489			4,525


Less: net of loan charge-offs:
Charge-offs:
Commercial, financial and agricultural		(359	)		(229	)		(15	)		(160	)		(311	)
Real estate construction		—			(7	)		—			(8	)		(83	)
Real estate — mortgage		(133	)		(632	)		(145	)		(218	)		(131	)
Installment		(1,124	)		(1,430	)		(806	)		(713	)		(726	)

		(1,616	)		(2,298	)		(966	)		(1,099	)		(1,251	)


Recoveries:
Commercial, financial and agricultural		4			53			13			2			4
Real estate construction		—			—			—			—			—
Real estate — mortgage		3			5			8			1			—
Installment		186			260			175			206			235

		193			318			196			209			239

Net loan charge-offs		(1,423	)		(1,980	)		(770	)		(890	)		(1,012	)


Provision for loan losses charged to expense		1,136			3,273			1,904			2,344			1,976


Allowance for loan losses at end of period	$	9,083			9,370			8,077			6,943			5,489


Total loans, net of unearned interest, at end of year	$	810,788			724,001			592,791			550,601			494,766


Average total loans out- standing, net of unearned interest, during year	$	747,922			656,973			568,227			521,799			460,556


Net charge-offs as a percentage of average total loans outstanding, net of unearned interest, during year		0.19	%		0.30			0.14			0.17			0.22


Ending allowance for loan losses as a percentage of total loans outstanding net of unearned interest, at end of year		1.12	%		1.29			1.36			1.26			1.11

WILSON BANK HOLDING COMPANY

Form 10-K

December 31, 2005

IV.

Summary of Loan Loss Experience, Continued:

The allowance for possible loan losses is an amount that management believes will be adequate to absorb possible losses on existing loans that may become uncollectible. The provision for possible loan losses charged to operating expense is based on past loan loss experience and other factors which, in management’s judgment, deserve current recognition in estimating possible loan losses. Such other factors considered by management include growth and composition of the loan portfolio, review of specific loan problems, the relationship of the allowance for possible loan losses to outstanding loans, adverse situations that may affect the borrower’s ability to repay, the estimated value of any underlying collateral and current economic conditions that may affect the borrower’s ability to pay.

Management conducts a continuous review of all loans that are delinquent, previously charged down or loans which are determined to be potentially uncollectible. Loan classifications are reviewed periodically by a person independent of the lending function. The Board of Directors periodically reviews the adequacy of the allowance for possible loan losses.

The following detail provides a breakdown of the allocation of the allowance for possible loan losses:


	December 31, 2005					December 31, 2004
			Percent of					Percent of
			Loans In					Loans In
	In		Each Category			In		Each Category
	Thousands		To Total Loans			Thousands		To Total Loans
Commercial, financial and agricultural	$	2,802		31.0	%	$	4,754		30.0	%
Real estate construction		253		7.2			114		6.8
Real estate mortgage		4,162		51.2			2,800		53.0
Installment		1,866		10.6			1,702		10.2

	$	9,083		100.0	%	$	9,370		100.0	%


	December 31, 2003					December 31, 2002
			Percent of					Percent of
			Loans In					Loans In
	In		Each Category			In		Each Category
	Thousands		To Total Loans			Thousands		To Total Loans
Commercial, financial and agricultural	$	2,099		29.4	%	$	828		35.0	%
Real estate construction		340		6.7			302		5.6
Real estate mortgage		4,660		53.0			4,723		48.5
Installment		978		10.9			1,090		10.9

	$	8,077		100.0	%	$	6,943		100.0	%


	December 31, 2001
				Percent of
				Loans In
	In			Each Category
	Thousands		To Total Loans
Commercial, financial and agricultural	$	651			38.5	%
Real estate construction		236			5.1
Real estate mortgage		3,892			46.1
Installment		710			10.3

	$	5,489			100.0	%

WILSON BANK HOLDING COMPANY

Form 10-K

December 31, 2005

Deposits:

The average amounts and average interest rates for deposits for 2005, 2004 and 2003 are detailed in the following schedule:


	2005					2004					2003
	Average					Average					Average
	Balance					Balance					Balance
	In		Average			In		Average			In		Average
	Thousands		Rate			Thousands		Rate			Thousands		Rate
Non-interest bearing deposits	$	98,486		—	%		83,448		—	%		70,160		—	%
Negotiable order of withdrawal accounts		72,453		.89	%		62,723		.36	%		52,770		.44	%
Money market demand accounts		190,867		1.65	%		195,769		1.17	%		183,633		1.24	%
Individual retirement accounts		44,725		3.48	%		40,847		3.03	%		35,466		3.50	%
Other savings		40,524		1.94	%		43,249		1.36	%		36,582		1.76	%
Certificates of deposit $100,000 and over		174,628		3.81	%		137,872		3.11	%		129,955		3.15	%
Certificates of deposit under $100,000		246,872		3.45	%		221,990		3.02	%		202,561		3.19	%


	$	868,555		2.45	%		785,898		1.95	%		711,127		2.10	%

The following schedule details the maturities of certificates of deposit and individual retirement accounts of $100,000 and over at December 31, 2005:


	In Thousands
	Certificates		Individual
	of		Retirement
	Deposit		Accounts		Total
Less than three months	$	27,203		240		27,443

Three to six months		38,057		5,139		43,196

Six to twelve months		48,109		3,258		51,367

More than twelve months		68,942		5,932		74,874


	$	182,311		14,569		196,880

WILSON BANK HOLDING COMPANY

Form 10-K

December 31, 2005

VI.

Return on Equity and Assets:

The following schedule details selected key ratios of the Company at December 31, 2005, 2004 and 2003:


	2005			2004			2003
Return on assets (1)		1.12	%		1.04	%		1.31	%
(Net income divided by average total assets)

Return on equity		12.59	%		13.61	%		16.00	%
(Net income divided by average equity)

Dividend payout ratio		37.44	%		36.23	%		26.36	%
(Dividends declared per share divided by net income per share)

Equity to asset ratio		8.88	%		7.61	%		7.45	%
(Average equity divided by average total assets)

Leverage capital ratio		9.13	%		8.71	%		8.83	%
(Equity divided by fourth quarter average total assets, excluding the net unrealized gain (loss) on available-for-sale securities and including minority interest)

The minimum leverage capital ratio required by the regulatory agencies is 4%.

Beginning January 1, 1991, new risk-based capital guidelines were adopted by regulatory agencies. Under these guidelines, a credit risk is assigned to various categories of assets and commitments ranging from 0% to 100% based on the risk associated with the asset.

(1) Includes minority interest earnings of consolidated subsidiaries.

WILSON BANK HOLDING COMPANY

Form 10-K

December 31, 2005

VI.

Return on Equity and Assets, Continued:

The following schedule details the Company’s risk-based capital at December 31, 2005 excluding the net unrealized loss on available-for-sale securities which is shown as a deduction in stockholders’ equity in the consolidated financial statements:


	In Thousands
Tier I capital:
Stockholders’ equity, excluding the net unrealized loss on available-for-sale securities and goodwill	$	92,377

Total capital:
Allowable allowance for possible loan losses (limited to 1.25% of risk-weighted assets)		9,083


Total capital	$	101,460


Risk-weighted assets	$	792,557


Risk-based capital ratios:
Tier I capital ratio		11.66	%


Total risk-based capital ratio		12.80	%

WILSON BANK HOLDING COMPANY

Form 10-K

December 31, 2005

VI.

Return on Equity and Assets, Continued:

The Company is required to maintain a Total capital to risk-weighted asset ratio of 8% and a Tier I capital to risk-weighted asset ratio of 4%. At December 31, 2005, the Company and its subsidiary banks were in compliance with these requirements.

The following schedule details the Company’s interest rate sensitivity at December 31, 2005:


	Repricing Within
(In Thousands)	Total		0-30 Days			31-90 Days			91-180 Days			181-365 Days			Over 1 Year
Earning assets:
Loans, net of unearned interest	$	810,788		142,787			40,135			68,751			121,642			437,473
Securities		153,838		30			—			4,664			21,247			127,897
Loans held for sale		2,935		2,935			—			—			—			—
Federal funds sold		5,640		5,640			—			—			—			—
Restricted equity securities		2,782		2,782			—			—			—			—

Total earning assets		975,983		154,174			40,135			73,415			142,889			565,370


Interest-bearing liabilities:
Negotiable order of withdrawal accounts		86,037		86,037			—			—			—			—
Money market demand accounts		202,235		202,235			—			—			—			—
Individual retirement accounts		46,413		6,814			2,576			9,306			8,075			19,642
Other savings		38,421		38,421			—			—			—			—
Certificates of deposit, $100,000 and over		182,311		1,061			25,337			38,411			48,559			68,943
Certificates of deposit, under $100,000		260,313		2,247			40,671			44,204			85,160			88,031
Securities sold under repurchase agreements		9,156		9,156			—			—			—			—
Advances from Federal Home Loan Bank		13,688		—			—			—			—			13,688

		838,574		345,971			68,584			91,921			141,794			190,304


Interest-sensitivity gap	$	137,409		(191,797	)		(28,449	)		(18,506	)		1,095			375,066


Cumulative gap				(191,797	)		(220,246	)		(238,752	)		(237,657	)		137,409


Interest-sensitivity gap as % of total assets				(18.23	)		(2.70	)		(1.76	)		.10			35.64


Cumulative gap as % of total assets				(18.23	)		(20.93	)		(22.69	)		(22.59	)		13.05

The Company presently maintains a liability sensitive position over the next twelve months. However, management expects that liabilities of a demand nature will renew and that it will not be necessary to replace them with significantly higher cost funds.

Item 1A. Risk Factors .

The Company is geographically concentrated in Wilson County, Tennessee and its surrounding counties and changes in local economic conditions could impact its profitability.

The Company operates primarily in Wilson, DeKalb and Smith counties and the surrounding counties and substantially all of its loan customers and most of its deposit and other customers live or have operations in this same geographic area. Accordingly, the Company’s success significantly depends upon the growth in population, income levels, and deposits in these areas, along with the continued attraction of business ventures to the area, and its profitability is impacted by the changes in general economic conditions in this market. In addition, unfavorable local or national economic conditions could reduce the Company’s growth rate, affect the ability of its customers to repay their loans and generally affect its financial condition and results of operations. The Company is less able than a larger institution to spread the risks of unfavorable local economic conditions across a large number of diversified economies.

The Company could sustain losses if its asset quality declines.

The Company’s earnings are significantly affected by its ability to properly originate, underwrite and service loans. The Company could sustain losses if it incorrectly assesses the creditworthiness of its borrowers or fails to detect or respond to deterioration in asset quality in a timely manner. Problems with asset quality could cause the Company’s interest income and net interest margin to decrease and its provisions for loan losses to increase, which could adversely affect its results of operations and financial condition.

An inadequate allowance for loan losses would reduce the Company’s earnings.

The risk of credit losses on loans varies with, among other things, general economic conditions, the type of loan being made, the creditworthiness of the borrower over the term of the loan and, in the case of a collateralized loan, the value and marketability of the collateral for the loan. Management maintains an allowance for loan losses based upon, among other things, historical experience, an evaluation of economic conditions and regular reviews of delinquencies and loan portfolio quality. Based upon such factors, management makes various assumptions and judgments about the ultimate collectibility of the loan portfolio and provides an allowance for loan losses based upon a percentage of the outstanding balances and takes a charge against earnings with respect to specific loans when their ultimate collectibility is considered questionable. If management’s assumptions and judgments prove to be incorrect and the allowance for loan losses is inadequate to absorb losses, or if the bank regulatory authorities require the Bank to increase the allowance for loan losses as a part of their examination process, the Bank’s earnings and capital could be significantly and adversely affected.

Liquidity needs could adversely affect the Company’s results of operations and financial condition.

The Company relies on dividends from the Bank as its primary source of funds. The primary source of funds of the Bank are customer deposits and loan repayments. While scheduled loan repayments are a relatively stable source of funds, they are subject to the ability of borrowers to repay the loans. The ability of borrowers to repay loans can be adversely affected by a number of factors, including changes in economic conditions, adverse trends or events affecting business industry groups, reductions in real estate values or markets, business closings or lay-offs, inclement weather, natural disasters and international instability. Additionally, deposit levels may be affected by a number of factors, including rates paid by competitors, general interest rate levels, returns available to customers on alternative investments and general economic conditions. Accordingly, the Company may be required from time to time to rely on secondary sources of liquidity to meet withdrawal demands or otherwise fund operations. Such sources include Federal Home Loan Bank advances and federal funds lines of credit from correspondent banks. While the Company believes that these sources are currently adequate, there can be no assurance they will be sufficient to meet future liquidity demands.

Competition from financial institutions and other financial service providers may adversely affect the Company’s profitability.

The banking business is highly competitive and the Company experiences competition in each of its markets from many other financial institutions. The Company competes with commercial banks, credit unions, savings and loan associations, mortgage banking firms, consumer finance companies, securities brokerage firms, insurance companies, money market funds, and other mutual funds, as well as other community banks and super-regional and national financial institutions that operate offices in the Company’s primary market areas and elsewhere. Many of the Company’s competitors are well-established, larger financial institutions that have greater resources and lending limits and a lower cost of funds than the Company has.

Additionally, the Company faces competition from de novo community banks, including those with senior management who were previously affiliated with other local or regional banks or those controlled by investor groups with strong local business and

community ties. These de novo community banks may offer higher deposit rates or lower cost loans in an effort to attract the Company’s customers, and may attempt to hire the Company’s management and employees.

The Company competes with these other financial institutions both in attracting deposits and in making loans. In addition, the Company has to attract its customer base from other existing financial institutions and from new residents. This competition has made it more difficult for the Company to make new loans and at times has forced the Company to offer higher deposit rates. Price competition for loans and deposits might result in the Company earning less interest on its loans and paying more interest on its deposits, which reduces the Company’s net interest income. The Company’s profitability depends upon its continued ability to successfully compete with an array of financial institutions in its market areas.

The Company’s key management personnel may leave at any time .

The Company’s future success depends to a significant extent on the continued service of its key management personnel, especially Randall Clemons, its president and chief executive officer and Elmer Richerson, the president of the Bank. While the Company does not have employment agreements with any of its personnel and can provide no assurance that it will be able to retain any of its key officers and employees or attract and retain qualified personnel in the future, it has entered into non-competition agreements with such persons which would prevent them in most circumstances, from competing with the Bank for one year following their termination. In addition, these persons are parties to certain deferred compensation and equity incentive plans, the benefits of which would cease to accrue upon the termination of the person’s employment with the Company or the Bank.

The Company, as well as the Bank, operate in a highly regulated environment and are supervised and examined by various federal and state regulatory agencies who may adversely affect the Company’s ability to conduct business.

The Tennessee Department of Financial Institutions and the Board of Governors of the Federal Reserve supervise and examine the Bank and the Company, respectively. Because the Bank’s deposits are federally insured, the FDIC also regulates its activities. These and other regulatory agencies impose certain regulations and restrictions on the Bank, including:

	•		explicit standards as to capital and financial condition;

	•		limitations on the permissible types, amounts and extensions of credit and investments;

	•		restrictions on permissible non-banking activities; and

	•		restrictions on dividend payments.

Federal and state regulatory agencies have extensive discretion and power to prevent or remedy unsafe or unsound practices or violations of law by banks and bank holding companies. As a result, the Company must expend significant time and expense to assure that it is in compliance with regulatory requirements and agency practices.

The Company, as well as the Bank, also undergoes periodic examinations by one or more regulatory agencies. Following such examinations, the Company or the Bank may be required, among other things, to make additional provisions to its allowance for loan loss or to restrict its operations. These actions would result from the regulators’ judgments based on information available to them at the time of their examination. The Bank’s operations are also governed by a wide variety of state and federal consumer protection laws and regulations. These federal and state regulatory restrictions limit the manner in which the Company and the Bank may conduct business and obtain financing. These laws and regulations can and do change significantly from time to time, and any such change could adversely affect the Company’s results of operations.

The Company’s common stock is thinly traded, and recent prices may not reflect the prices at which the stock would trade in an active trading market.

The Company’s common stock is not traded through an organized exchange, but rather is traded in individually-arranged transactions between buyers and sellers. Therefore, recent prices may not necessarily reflect the actual value of the Company’s common stock. A shareholder’s ability to sell the shares of Company common stock in a timely manner may be substantially limited by the lack of a trading market for the common stock.

Item 1B. Unresolved Staff Comments .

None.

Item 2. Properties

The Company’s main office is owned by the Company and consists of approximately four acres at 623 West Main Street, Lebanon, Tennessee. The building is a two story, brick building, with approximately 35,000 square feet. The lot has approximately 350 feet of road frontage on West Main Street. In addition thereto, the Bank has eighteen branch locations located at the following locations: 1444 Baddour Parkway, Lebanon, Tennessee; 200 Tennessee Boulevard, Lebanon, Tennessee; 8875 Stewart’s Ferry Pike, Gladeville, Tennessee; Public Square, Watertown, Tennessee; 1476 North Mt. Juliet Road, Mt. Juliet, Tennessee; 11835 Highway 70, Mount Juliet, Tennessee; 1130 Castle Heights Avenue North, Lebanon, Tennessee; 127 McMurry Blvd., Hartsville, Tennessee; the Wal-Mart Supercenter, Lebanon, Tennessee; 440 Highway 109 North, Lebanon, Tennessee; 4736 Andrew Jackson Parkway in Hermitage, Tennessee; 151 Heritage Park Drive, Suite 102 in Murfreesboro, Tennessee; and 217 Donelson Pike, Nashville, Tennessee, 802 NW Broad in Murfreesboro, Tennessee, 576 West Broad Street in Smithville, Tennessee, 306 Brush Creek Road in Alexandria, Tennesee, 1300 Main Street North in Carthage, Tennessee, and 7 New Middleton Highway in Gordonsville, TN.

The Mt. Juliet office contains approximately 16,000 square feet of space; the Castle Heights Office contains 2,400 square feet of space; the Hartsville Office contains 8,000 square feet of space; the Leeville-109 branch contains approximately 4,000 square feet and the Heritage Park Drive branch contains less than 1,000 square feet. The Hermitage branch opened in the fall of 1999 and contains 8,000 square feet of space. The Gladeville branch contains approximately 3,400 square feet of space. The Lebanon facility at Tennessee Boulevard was expanded in 1997 to 2,200 square feet of space. The Mount Juliet facility on Highway 70 was completed in July 2004 and contains approximately 3,450 square feet of space. The NorthWest Broad Street facility contains approximately 2800 square feet. Each of the branch facilities of the Bank not otherwise described above contains approximately 1,000 square feet of space. The Bank owns all of its branch facilities except for the Lebanon facility at Tennessee Boulevard, its space in the Wal-Mart Supercenter, its Heritage Park Drive facility in Murfreesboro and its North West Broad facility in Murfreesboro, which are leased. The Bank also leases space at 25 locations within Wilson County, DeKalb County and Smith County where it maintains and operates automatic teller machines.

The Bank also has a facility at 576 West Broad Street in Smithville, Tennessee which was expanded in 2001 and now contains approximately 10,300 square feet of space and a facility at 306 Brush Creek Road in Alexandria, Tennessee which occupies approximately 2,400 square feet of space. The Bank owns both facilities. The Bank also owns a building at 1300 Main Street North, Carthage, Tennessee, which was expanded in 2005 and now contains approximately 11,000 square feet and a second facility in Gordonsville, Tennessee at 7 New Middleton Highway, Gordonsville, Tennessee.

Item 3. Legal Proceedings

As of the date hereof, there are no material pending legal proceedings to which the Company or any of its subsidiaries is a party or of which any of its properties are subject; nor are there material proceedings known to the Company or its subsidiaries to be contemplated by any governmental authority; nor are there material proceedings known to the Company or its subsidiaries, pending or contemplated, in which any director, officer or affiliate or any principal security holder of the Company or any of its subsidiaries or any associate of any of the foregoing, is a party or has an interest adverse to the Company or any of its subsidiaries.

Item 4. Submission of Matters to a Vote of Security Holders

No matters were submitted to a vote of security holders in the fourth quarter of 2005.

PART II

Item 5. Market for Registrant’s Common Equity, Related Shareholder Matters and Issuer Purchasers of Equity Securities

Information required by this item is contained under the heading “Wilson Bank Holding Company Common Stock Market Information” on page 90 of the Company’s 2005 Annual Report and is incorporated herein by reference.

The Company did not repurchase any shares of its common stock during the quarter ended December 31, 2005.

Item 6. Selected Financial Data

Information required by this item is contained under the heading “Wilson Bank Holding Company Financial Highlights (Unaudited)” on page 22 of the Company’s 2005 Annual Report and is incorporated herein by reference.

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Information required by this item is contained under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations” as set forth on pages 23 through 37 of the Company’s 2005 Annual Report and is incorporated herein by reference.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Information required by this item is contained under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Quantitative and Qualitative Disclosures About Market Risk” as set forth on page 34 of the Company’s 2005 Annual Report and is incorporated herein by reference.

Item 8. Financial Statements and Supplementary Data

The consolidated financial statements and the independent auditor’s report of Maggart & Associates, P.C. required by this item are contained in pages 41 through 89 and on page 40, respectively, of the Company’s 2005 Annual Report and are incorporated herein by reference.

Item 9. Changes In and Disagreements With Accountants on Accounting and Financial Disclosure

None.

Item 9A. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

The Company maintains disclosure controls and procedures, as defined in Rule 13a-15(e) promulgated under the Securities Exchange Act of 1934 (the “Exchange Act”), that are designed to ensure that information required to be disclosed by it in the reports that if files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms and that such information is accumulated and communicated to the Company’s management, including its Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. The Company carried out an evaluation, under the supervision and with the participation of its management, including its Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of its disclosure controls and procedures as of the end of the period covered by this report. Based on the evaluation of these disclosure controls and procedures, the Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures were effective.

Management Report on Internal Control Over Financial Reporting

Management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. The Company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America. Internal control over financial reporting includes those written policies and procedures that:

	•		Pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company;

	•		Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with accounting principles generally accepted in the United States of America and that receipts and expenditures of the Company are being made only in accordance with authorization of management and directors of the Company; and

	•		Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on the Company’s consolidated financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness of future periods are subject to the risk that controls may become inadequate because of the changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Management evaluated the Company’s internal control over financial reporting as of December 31, 2005. This assessment was based on criteria for effective internal control over financial reporting described in “Internal Control-Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

Based on that assessment, management concluded that, as of December 31, 2005, the Company’s internal control over financial reporting was effective based on those criteria.

The Company’s independent registered public accounting firm has issued an attestation report on management’s assessment of the Company’s internal control over financial reporting, which report is contained on pages 38 through 39 of Wilson Bank Holding Company’s 2005 Annual Report and is incorporated herein by reference.

Changes in Internal Controls

Other than as described below with respect to the process by which the Company’s audited consolidated financial statements for the fiscal year ended December 31, 2005 were prepared, no changes were made to the Company’s internal control over financial reporting during the quarter ended December 31, 2005 that have materially affected, or that are reasonably likely to materially affect, the Company’s internal control over financial reporting.

The Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2004 identified a material weakness in the Company’s internal control over financial reporting as a result of the fact that the Company’s independent registered public accounting firm prepared the initial draft of the financial statements and related notes based on financial information and electronic files prepared by the chief financial officer of the Company, with management of the Company thereafter reviewing and revising the financial statements and related notes. During the fiscal quarter ended December 31, 2005, the Company’s management implemented changes to the process by which the Company’s audited consolidated financial statements for the fiscal year ended December 31, 2005 were to be prepared resulting in the practice of Company personnel preparing, without the assistance of the Company’s independent registered public accounting firm, the initial draft of the Company’s audited consolidated financial statements for the fiscal year ended December 31, 2005, including all numerical and textual financial statement and footnote disclosures contained therein, with these Company-prepared financial statements and related footnotes thereafter being provided to the Company’s independent registered public accounting firm for audit. Because of these changes, the Company was able to successfully remediate the material weakness identified in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2004.

Item 9B. Other Information

None.

PART III

Item 10. Directors and Executive Officers of the Registrant

The information required by this item with respect to directors is incorporated herein by reference to the section entitled “Election of Directors” in the Company’s definitive proxy materials filed in connection with the Company’s 2006 Annual Meeting of Shareholders. The information required by this item with respect to executive officers is set forth below:

James Randall Clemons (53) — Mr. Clemons is President and Chief Executive Officer of the Company and the Chief Executive Officer of the Bank. Mr. Clemons also serves on the Board of Directors of the Company and the Bank. He has held such positions with the Company since its formation in March 1992 and has held his Bank positions since the Bank commenced operations in May 1987. Prior to that time, Mr. Clemons served as Senior Vice President and Cashier for Peoples Bank, Lebanon, Tennessee.

Ken Dill (60) — Mr. Dill joined the Bank in 1997. Prior to that time he was employed by Farm Credit Services, Lebanon, TN for 20 years. Currently, Mr. Dill serves as Senior Vice President of lending of the Bank. His primary duties include overseeing the lending function of the bank including SBA and commercial lending.

Elmer Richerson (53) — Mr. Richerson joined the Bank in February 1989. Prior to such time, Mr. Richerson was the manager of the Lebanon branch of Heritage Federal Savings and Loan Association from March 1988 to February 1989. From September 1986 until March 1988, Mr. Richerson was a liquidation assistant for the Federal Deposit Insurance Corporation. Since May 2002, Mr. Richerson has served as President of the Bank. From 1997 to May 2002, Mr. Richerson served as an Executive Vice President and Senior Loan Officer of the Bank and oversaw the branch administration for the Bank. Mr. Richerson also serves on the Board of Directors of the Bank and in 1998 was elected to serve on the Board of Directors of the Company as well.

Larry Squires (54) — Mr. Squires joined the Bank in 1989 and is currently Senior Vice President and Investment Officer. Prior to that time Mr. Squires was Vice President of Liberty State Bank in Lebanon. His principal duty is overseeing the Bank’s investment and brokerage center.

Gary Whitaker (48) — Mr. Whitaker joined the Bank in May 1996. Prior to that time Mr. Whitaker was employed with NationsBank of Tennessee, N.A. in Nashville (and its predecessors) from 1979. He has held positions in collections, as branch manager, in construction lending, retail marketing, automobile lending, loan administration, operations analyst, as Vice President, Senior Vice President and most recently as Executive Vice President since 2002. His principal duties include overseeing the Bank’s lending function and loan operations.

Lisa Pominski (41) — Ms. Pominski is Senior Vice President and the Chief Financial Officer of the Bank and the Company and is the Company’s principal financial and accounting officer. Ms. Pominski has held several positions including Asst. Cashier, Asst. Vice President and Vice President since the Bank’s formation in May of 1987. Prior to 1987 Ms. Pominski was employed by People’s Bank, Lebanon, TN 37087.

John Goodman (39) — Mr. Goodman joined the Bank in November of 2002 as Senior Vice President-Western Division. From 1998 to 2002 he was First Vice President of Commercial Lending for NBC Bank, Nashville, TN. His primary duties include the development of commercial lending and the supervision of the branch offices in the western portion of Wilson County and the eastern portion of Davidson County.

John McDearman (37) — Mr. McDearman joined the Bank in November of 1998. He has held positions in branch administration and commercial lending. Currently he serves as Senior Vice President-Central Division of the Bank, a position he has held since November of 2002. Prior to joining the Bank in 1998 he was Assistant Vice President, Banking Center Manager for NationsBank, Chattanooga, TN, a position he held from 1994 to 1998. His primary duties include the continuing development of the commercial loan portfolio.

Christy Norton (39) — Mrs. Norton joined the Bank in February of 1989. Prior to that time she was employed by First Tennessee Bank, Lebanon, TN. She has held several positions for the Bank in Retail and Branch Administration and is currently a Senior Vice President, a position she has held since November of 2002. Her primary duties include bank operations and supervision of the Bank’s training department.

All officers serve at the pleasure of the Board of Directors. No officers are involved in any legal proceedings which are material to an evaluation of their ability and integrity.

The Company has adopted a code of conduct for its senior executive and financial officers (the “Code of Conduct”), a copy of which will be provided to any person, without charge, upon request to the Company at 623 West Main Street, Lebanon, Tennessee 37087, Attention: Corporate Secretary. The Company will make any legally required disclosures regarding amendments to, or waivers of, provisions of its Code of Conduct in accordance with the rules and regulations of the Securities and Exchange Commission.

The information required by this item with respect to the Company’s audit committee and any “audit committee financial expert” is incorporated herein by reference to the section entitled “ Item-1 Election of Directors — Description of the Board and Committees of the Board” in the Company’s definitive proxy materials filed in connection with the 2006 Annual Meeting of Shareholders.

The information required by this item with respect to compliance with Section 16(a) of the Exchange Act is incorporated herein by reference to the Section entitled “Item-1 Election of Directors — Compliance with Section 16(a) of the Securities Exchange Act of 1934” in the Company’s definitive proxy materials filed in connection with the 2006 Annual Meeting of Shareholders.

Item 11. Executive Compensation

Information required by this item is incorporated herein by reference to the section entitled “Executive Compensation” in the Company’s definitive proxy materials filed in connection with the 2006 Annual Meeting of Shareholders.

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

Information required by this item is incorporated herein by reference to the section entitled “Stock Ownership” in the Company’s definitive proxy materials filed in connection with the 2006 Annual Meeting of Shareholders.

The following table summarizes information concerning the Company’s equity compensation plans at December 31, 2005 and has been adjusted to reflect the Company’s two-for-one stock split in the form of a 100% stock dividend paid on October 30, 2003:

Number of Shares to

Weighted Average

be Issued upon

Exercise Price of

Number of Shares Remaining Available for

Exercise of

Outstanding

Future Issuance Under Equity Compensation

Outstanding Options

Options

Plans (Excluding Shares Reflected in First

Plan Category

or Warrants

Column)

Equity compensation plans approved by shareholders

81,862

18.93

88,415

Equity compensation plans not approved by shareholders

N/A

Total

81,862

18.93

88,415

Item 13. Certain Relationships and Related Transactions

Information required by this item is incorporated herein by reference to the section entitled “Certain Relationships and Related Transactions” in the Company’s definitive proxy materials filed in connection with the 2006 Annual Meeting of Shareholders.

Item 14. Principal Accountant Fees and Services

Information required by this item is incorporated herein by reference to the section entitled “Independent Registered Public Accounting Firm Information” in the Company’s definitive proxy materials filed in connection with the 2006 Annual Meeting of Shareholders.

Item 15. Exhibits and Financial Statement Schedules

(a)(1) Financial Statements. See Item 8.

(a)(2) Financial Statement Schedules. Inapplicable.

(a)(3) Exhibits. See Index to Exhibits.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


	WILSON BANK HOLDING COMPANY
	By:	/s/ J. Randall Clemons
		J. Randall Clemons
		President and Chief Executive Officer

	Date: March 13, 2006

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.


Signature	Title	Date

/s/ J. Randall Clemons J. Randall Clemons	President, Chief Executive Officer and Director (Principal Executive Officer)	March 13, 2006

/s/ Lisa Pominski Lisa Pominski	Chief Financial Officer (Principal Financial and Accounting Officer)	March 13, 2006

/s/ Elmer Richerson Elmer Richerson	Executive Vice President & Director	March 13, 2006

/s/ Charles Bell Charles Bell	Director	March 13, 2006

/s/ Jack W. Bell Jack W. Bell	Director	March 13, 2006

/s/ Mackey Bentley Mackey Bentley	Director	March 13, 2006

/s/ James F. Comer James F. Comer	Director	March 13, 2006

/s/ Jerry L. Franklin Jerry L. Franklin	Director	March 13, 2006

John B. Freeman	Director


Signature	Title	Date

Marshall Griffith	Director

/s/ Harold R. Patton Harold R. Patton	Director	March 13, 2006

/s/ James Anthony Patton James Anthony Patton	Director	March 13, 2006

/s/ John R. Trice John R. Trice	Director	March 13, 2006

/s/ Robert T. VanHooser, Jr. Robert T. VanHooser, Jr.	Director	March 13, 2006

INDEX TO EXHIBITS


2.1		Agreement and Plan of Merger dated November 16, 2004, among Wilson Bank Holding Company, Wilson Bank and Trust and DeKalb Community Bank. (Pursuant to Item 601(b)(2) of Regulation S-K, the Schedules to this agreement are omitted, but will be provided supplementally to the Securities and Exchange Commission upon request.) (incorporated herein by reference to Exhibit 2.1 of the Company’s Registration Statement on Form S-4 (Registration No. 333-121943)).

2.2		Agreement and Plan of Merger dated November 16, 2004, among Wilson Bank Holding Company, Wilson Bank and Trust and Community Bank of Smith County. (Pursuant to Item 601(b)(2) of Regulation S-K, the schedules to this agreement are omitted, but will be provided supplementally to the Securities and Exchange Commission upon request.) (incorporated herein by reference to Exhibit 2.1 of the Company’s Registration Statement on Form S-4 (Registration No. 333-122534)).

3.1		Charter of Wilson Bank Holding Company, as amended (restated for SEC electronic filling purposes only) (incorporated herein by reference to Exhibit 3.1 of the Company’s Registration Statement on Form S-4 (Registration No. 333-121943)).

3.2		Bylaws of Wilson Bank Holding Company, as amended (restated for SEC electronic filling purposes only) (incorporated herein by reference to Exhibit 3.2 of the Company’s Registration Statement on Form S-4 (Registration No. 333-121943)).

4.1		Specimen Common Stock Certificate. (incorporated herein by reference to Exhibit 2.1 of the Company’s Registration Statement on Form S-4 (Registration No. 333-121943)).

10.1		Wilson Bank Holding Company 1999 Stock Option Plan (incorporated herein by reference to the Company’s Registration Statement on Form S-8 (Registration No. 333-32442)).*

10.2		Executive Salary Continuation Agreement by and between the Company and J. Randall Clemons dated as of March 30, 1995 (incorporated herein by reference to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2000).*

10.3		Executive Salary Continuation Agreement by and between the Company and Elmer Richerson dated as of March 30, 1995 (incorporated herein by reference to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2000).*

10.4		Executive Salary Continuation Agreement by and between the Company and Gary D. Whitaker dated as of March 1, 1998 (incorporated herein by reference to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2000).*

10.5		Executive Salary Continuation Agreement by and between the Company and Larry Squires dated September 16, 1996 (incorporated herein by reference to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2001).*

10.6		Amendment to the Wilson Bank and Trust Executive Salary Continuation Agreement dated as of January 1, 2001 by and between Wilson Bank and Trust and Larry Squires (incorporated herein by reference to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2001).*

10.7		Form of Wilson Bank Holding Company Incentive Stock Option Agreement.*

10.8		Director and Named Executive Officer Compensation Summary.*

13.1		Selected Portions of the Wilson Bank Holding Company Annual Report to Shareholders for the year ended December 31, 2005 incorporated by reference into items 5, 6, 7, 7A and 8.

21.1		Subsidiaries of the Company.

23.1		Consent of Independent Registered Public Accounting Firm.

31.1		Certification of the Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2		Certification of the Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1		Certification of the Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.


32.2		Certification of the Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.


*		Management compensatory plan or contract

EXHIBIT 10.7

WILSON BANK HOLDING COMPANY
QUALIFIED STOCK OPTION AGREEMENT

TO:

We are pleased to notify you that, as a key employee of Wilson Bank & Trust, a subsidiary of Wilson Bank Holding Company (the "Company"), you have been granted an option ("Option") to purchase ____ of the common stock, $2.00 value ("Common Stock") of the Company at a price of $_______ per share this 1ST DAY OF JANUARY, 2006, under the Company's 1998 Stock Option Plan (the "Plan"). This Option may be exercised only upon the terms and conditions set forth below.

1. PURPOSE OF PLAN.

The purpose of the Plan under which this Option has been granted is to enable the Company to attract, retain and reward key employees of the Company and its subsidiaries (each a "Subsidiary, and, collectively, "Subsidiaries") and to strengthen the mutuality of interests between such key employees by awarding such key employees (collectively, "Participants") performance-based stock incentives and/or other equity interests or equity-based incentives in the Company, as well as performance-based incentives payable in cash.

2. PLAN CONTROLS.

This Option is granted pursuant to the terms of the Plan and is subject to all of the terms and conditions of the Plan, which is incorporated herein by reference. Subject to the provisions of the Plan, the Board shall have the authority to interpret the provisions and supervise the administration of the Plan. If any of the provisions of this Option conflict with or are inconsistent with the provisions of the Plan, the provisions of the Plan shall be controlling.

3. ACCEPTANCE OF OPTION AGREEMENT.

Your execution of this option agreement will indicate your acceptance of and your willingness to be bound by its terms; it imposes no obligation upon you to purchase any of the shares subject to the Option. Your obligation to purchase shares can arise only upon your exercise of the Option in the manner set forth in Section 5 hereof.

4. WHEN OPTION MAY BE EXERCISED.

This Option shall vest one-tenth (1/10) annually for ten years beginning on the anniversary date of this date of grant and may be exercised to the fullest extent it has vested, or any part thereof, beginning on the date that is 12 months after this date of grant. This Option expires 10 years from the date of grant whether or not it has been duly exercised (the "Option Period"), unless sooner terminated as provided in Sections 6, 7 and 8 hereof.

PAGE 2

5. HOW OPTION MAY BE EXERCISED.

This Option is exercisable by giving written notice to the Company at its executive offices, signifying your election to exercise the Option. The notice must state the number of shares of Common Stock as to which the Option is being exercised, must contain a statement by you (in a form acceptable to the Company) that such shares are being acquired by you for investment and not with a view to their distribution or resale (unless a registration statement covering the shares purchasable has been declared effective by the Securities and Exchange Commission) and must be accompanied by check payable to the order of the Company for the full purchase price of the shares being purchased and such amount, if any, as is required for income tax withholding. Such payment may also be made in whole or in part by delivering previously owned unrestricted shares of Common Stock held by you for at least six months (valued at the Fair Market Value of the Common Stock on the date the Option is exercised) as determined by the committee or instructing the Company to withhold that number of shares issuable upon exercise of the Option having a Fair Market Value equal to the purchase price and the amount required for income tax withholding. Any Common Stock delivered in satisfaction of all or any portion of the purchase price shall be appropriately endorsed for transfer and assignment to the Company. No shares shall be issued until full payment therefore has been made and your income tax withholding obligations satisfied.

If notice of the exercise of this Option is given by a person or persons other than you, the Company will require the submission to the Company of appropriate proof of the right of such person or persons to exercise this Option.

Certificates for shares of the Common Stock so purchased will be issued as soon as practicable. The Company, however, shall not be required to issue or deliver a Certificate for any shares until it has complied with all requirements of the Securities Act of 1933, as amended, the Securities Exchange Act of 1934, as amended, any stock Exchange of which the Common Stock may then be listed and all applicable state laws in connection with the issuance of sale of such shares or the listing of such shares on said exchange. Until the issuance of the certificate for such shares, you or such other person as may be entitled to exercise this Option, shall have none of the rights of a stockholder with respect to shares subject to this Option.

PAGE 3

6. TERMINATION OF EMPLOYMENT WITH THE COMPANY.

If your employment with the Company (or a Subsidiary) is terminated for any reason other than as a result of your Death, Disability, Early or Normal retirement, or resignation provided in Sections 7 ,8 and 9 hereof, you may exercise that portion of this Option which was exercisable by you at the date of termination at any time within 90 days of the date of such termination provided, however, such exercise occurs within the Option Period and further provided that in the event such termination was due to "Cause" (as defined in the Plan), this Option shall immediately lapse and expire.

7. RETIREMENT

If your employment by the Company terminates by reason of Normal or Early Retirement, the Option may thereafter be exercised by you, to the extent it was exercisable at the time of termination, for a period of three (3) years from the date of such termination of employment or until the expiration of the stated term of the Option, whichever period is the shorter.

8. DISABILITY

If your employment by the Company terminates by reason of Disability, the Option shall be fully vested and exercisable upon such date of termination and the Option may thereafter be exercised by you for a period of three (3) years from the date of such termination of employment or until the expiration of the stated term of the Option, whichever period is the shorter.

9. DEATH

(A) If your employment is terminated by reason of death, this Option shall become fully exercisable and vested and may be exercised by the legal representative of your estate or the legatee or legatees under your will within 12 months from the date of your death, but in no event after the Option Period.

(B) If you die within three years following termination of your employment due to Disability, Early or Normal Retirement, that portion of this Option which was exercisable by you at the date of your Death, Disability or Early or Normal Retirement may be exercised by the legal representative of your estate of the legatee or legatees under your will within 12 months from the date of your death, but in no event after the expiration of the Option Period.

PAGE 4

10. NON-TRANSFERABILITY OF OPTION.

This Option shall not be assignable or transferable without the prior written consent of the Committee except (a) to a member of your immediate family or a trust for the benefit of you or a member of your immediate family, or (b) by will or the laws of descent and distribution or pursuant to a qualified domestic relations order, and may be exercised during your lifetime only by you or your guardian, legal representative or qualified domestic relations order transferee.

11. QUALIFIED STOCK OPTION.

This Option is not intended to be an "incentive stock option" as defined in Section 42 422 of the Internal Revenue Code of 1986, as amended.

12. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION.

If at any time after the date of grant of this Option, the Company shall, by stock dividend, split-up, combination, reclassification or exchange, or through merger or consolidation, or otherwise, change its shares of Common Stock into a different number or kind or class of shares or other securities or property, then the number of shares covered by this Option and the price of each such share shall be proportion- ately adjusted for any such change by the Board of Directors whose determination shall be conclusive. Any fraction of a share resulting from any adjustment shall be eliminated and the price per share of the remaining shares subject to this Option shall be adjusted accordingly.

13. EFFECTS OF CHANGE IN CONTROL.

Immediately following a "Change in Control" of the Company (as defined in the Plan), this Option shall become immediately vested and fully exercisable, but in no event may this Option be exercised after 10 years from the date this Option was granted to you.

14. MODIFICATION.

This Option may be amended by the Board (subject to certain limitations as set forth in the Plan), prospectively or retroactively and in whole or in part, except that no such action may impair your rights with respect to this Option without your consent, and the Board may, in its sole discretion, waive any restrictions or conditions applicable to, or accelerate the vesting of, this Option, in whole or in part.

PAGE 5

15. MEANING OF CAPITALIZED TERMS.

Capitalized terms used herein and not otherwise defined shall have the meanings ascribed to them in the Plan.

16. WHEN OPTION BECOMES EFFECTIVE.

This Option shall not become effective unless a copy of this letter has been signed by you and returned to the Company at the above address.

Sincerely yours,

WILSON BANK HOLDING COMPANY

By:

J. Randall Clemons Chief Executive Officer

AGREED TO AND ACCEPTED THIS _______ DAY OF _________________, ______.

SIGNATURE OF OPTIONEE

EXHIBIT 10.8
DIRECTOR* COMPENSATION SUMMARY

MEETING FEES

The Board of Directors of the Wilson Bank Holding Company (the "Company") also serves as the Board of Directors of Wilson Bank and Trust (the "Bank"). Each director receives $1,800 per month for his services as a director of the Company and $850 per month for his services as a director of the Bank. In addition, fees of $1,326 and $1,404 were paid to each of the directors of the Company and the directors of the Bank, respectively, for attendance at Company and Bank planning retreats held during 2005, and it is anticipated that similar amounts will be paid for attendance at such retreats in 2006. Messrs. Clemons, C. Bell and Comer receive $400 per month for serving on the Community Bank of Smith County Advisory Board. Messrs. Clemons, Trice, .J. Bell and VanHooser receive $400 per month for serving on the Dekalb Community Bank Advisory Board.

Directors are reimbursed for their expenses incurred in connection with their activities as the Company's directors.

COMMITTEE MEETING FEES

Each director of the Bank receives $450 for each committee meeting of the Bank he attended, not to exceed $1,700 per month, as a member of the various committees on which he serves.

EQUITY COMPENSATION

Each director is eligible to participate in the Company's Stock Option Plan.

The foregoing information is summary in nature. Additional information regarding director compensation will be provided in the Company's proxy statement to be filed in connection with the 2006 annual meeting of the Company's shareholders.

* Includes directors that are also employees of the Company.

NAMED EXECUTIVE OFFICER COMPENSATION SUMMARY

The following table sets forth the current base salaries paid to the Company's President and Chief Executive Officer and its other named executive officers and the amount of the cash bonus paid to these persons for 2005.

EXECUTIVE OFFICER                                              CURRENT SALARY        2005 CASH BONUS
-----------------                                              --------------        ---------------
J. Randall Clemons, President and Chief Executive
       Officer of the Company and Chief
       Executive Officer of the Bank                               $287,692             $156,000

H. Elmer Richerson, President of the Bank
       Executive Vice President of the Company                     $218,502              $93,600

Gary Whitaker, Executive Vice President of the Bank                $127,720              $35,772

Larry Squires, Senior Vice President Investment Division           $106,212              $16,289

John Goodman, Senior Vice President -Western Division
       of the Bank                                                 $105,000              $17,863

John C. McDearman III, Senior Vice President -- Central
       Division of the Bank                                        $105,000              $20,207

The Company has entered into Executive Salary Continuation Agreements with certain of its senior executive officers, including Messrs. Clemons, Richerson, Whitaker and Squires, pursuant to which each such executive officer (or his or her beneficiaries) is entitled, if certain performance targets for the Bank are met, to receive annual payments for 15 years, upon retirement at age 65 or, if sooner, the death or disability of such executive officer.

In addition to their base salaries, these executive officers are also eligible to:

o Participate in the Company's cash bonus plan;

o Participate in the Company's equity incentive programs, which currently involves the award of stock options pursuant to the Company's Stock Option Plan; and

o Participate in the Company's broad-based benefit programs generally available to its employees, including health, disability and life insurance programs and the Company's 401(k) Plan.

The foregoing information is summary in nature. Additional information regarding the named executive officer compensation will be provided in the Company's proxy statement to be filed in connection with the 2006 annual meeting of the Company's shareholders.

EXHIBIT 13.1

COMMON STOCK MARKET INFORMATION

The common stock of Wilson Bank Holding Company is not traded on an exchange nor is there a known active trading market. The number of stockholders of record at February 1, 2006 was 2,462. Based solely on information made available to the Company from limited numbers of buyers and sellers, the Company believes that the following table sets forth the quarterly range of sale prices for the Company's stock during the years 2004 and 2005.

                     STOCK PRICES
     2004                 High            Low
 First Quarter           $28.50         $27.50
Second Quarter            29.50          28.50
 Third Quarter            29.50          28.50
Fourth Quarter            30.50          29.50

    2005
 First Quarter           $31.50         $30.50
Second Quarter            32.50          31.50
 Third Quarter            33.50          32.50
Fourth Quarter            34.50          33.50

On January 1, 2004, a $.35 per share cash dividend was declared and on July 1, 2004, a $.40 per share cash dividend was declared and paid to shareholders of record on those dates. On January 1, 2005 a $.40 per share cash dividend was declared and on July 1, 2005 a $.45 per share cash dividend was declared and paid to shareholders of record on those dates. Future dividends will be dependent upon the Company's profitability, it's capital needs, overall financial condition economic and regulatory consideration.

WILSON BANK HOLDING COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

FORWARD-LOOKING STATEMENTS

This report includes certain forward-looking statements (any statement other than those made solely with respect to historical fact) based upon management's beliefs, as well as assumptions made by and data currently available to management. This information has been, or in the future may be, included in reliance on the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995. The words "expect," "anticipate," "intend," "should," "may," "could," "plan," "believe," "seek," "estimate" and similar expressions are intended to identify such forward-looking statements, but other statements not based on historical information may also be considered forward-looking. All forward-looking statements are subject to risks, uncertainties and other facts that may cause the actual results, performance or achievements of Wilson Bank Holding Company (the "Company") to differ materially from any results expressed or implied by such forward-looking statements. Such factors include those described below under the heading "Risk Factor" and also include, without limitation, (i) increased competition with other financial institutions, (ii) lack of sustained growth in the economy in the Company's market area, (iii) rapid fluctuations in interest rates, (iv) significant downturns in the businesses of one or more large customers, (v) changes in the legislative and regulatory environment, (vi) inadequate allowance for loan losses, and (vii) loss of key personnel. Many of such factors are beyond the Company's ability to control or predict, and readers are cautioned not to put undue reliance on such forward-looking statements. The Company disclaims any obligation to update or revise any forward-looking statements contained in this discussion, whether as a result of new information, future events or otherwise.

GENERAL

The Company is a registered bank holding company that owns 100% of the common stock of Wilson Bank and Trust ("Wilson Bank"), a state bank headquartered in Lebanon, Tennessee. The Company was formed in 1992.

Wilson Bank is a community bank headquartered in Lebanon, Tennessee, serving Wilson County, DeKalb County, Smith County, Trousdale County, Rutherford County, and the eastern part of Davidson County, Tennessee as its primary market areas. Generally, this market is the eastern portion of the Nashville-metropolitan area. The bank has seventeen locations in Wilson, Davidson, DeKalb, Smith, Rutherford and Trousdale Counties. Management believes that these counties offer an environment for continued growth, and the Company's target market is local consumers, professionals and small businesses. The bank offers a wide range of banking services, including checking, savings and money market deposit accounts, certificates of deposit and loans for consumer, commercial and real estate purposes. The Company also offers an investment center which offers a full line of investment services to its customers.

Prior to March 31, 2005, the Company owned a 50% interest in Dekalb Community Bank and Community Bank of Smith County. On March 31, 2005, the Company acquired the minority interest in the subsidiaries when the two subsidiaries were merged into Wilson Bank with the shareholders of these subsidiaries, other than the Company, receiving shares of the Company's common stock in exchange for their shares of common stock in the subsidiaries. Prior to March 31, 2005, these two 50% owned subsidiaries were included in the consolidated financial statements.

The following discussion and analysis is designed to assist readers in their analysis of the Company's consolidated financial statements and should be read in conjunction with such consolidated financial statements. The Company's Board of Directors approved a 2 for 1 stock split for stockholders of record as of October 1, 2003 payable October 30, 2003. Each stockholder received one (1) additional share for each one (1) share owned with allowance for fractional shares. Per share data included in these consolidated financial statements has been restated to give effect to the stock split.

CRITICAL ACCOUNTING POLICIES

The accounting principles we follow and our methods of applying these principles conform with accounting principles generally accepted in the United States and with general practices within the banking industry. In connection with the application of those principles to the determination of our allowance for loan losses ("ALL"), we

WILSON BANK HOLDING COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

have made judgments and estimates which have significantly impacted our financial position and results of operations. Our management assesses the adequacy of the ALL on a regular basis. This assessment includes procedures to estimate the ALL and test the adequacy and appropriateness of the resulting balance. The ALL consists of two portions: (1) an allocated amount representative of specifically identified credit exposure and exposures readily predictable by historical or comparative experience and (2) an unallocated amount representative of inherent loss which is not readily identifiable. Even though the ALL is composed of two components, the entire allowance is available to absorb any credit losses.

We establish the allocated amount separately for two different risk groups: (1) unique loans (commercial loans, including those loans considered impaired) and
(2) homogenous loans (generally consumer loans). We base the allocation for unique loans primarily on risk rating grades assigned to each of these loans as a result of our loan management and review processes. Each risk-rating grade is assigned an estimated loss ratio, which is determined based on the experience of management, discussions with banking regulators, historical and current economic conditions and our independent loan review process. We estimate losses on impaired loans based on estimated cash flows discounted at the loan's original effective interest rate or the underlying collateral value. We also assign estimated loss ratios to our consumer portfolio. However, we base the estimated loss ratios for these homogenous loans on the category of consumer credit (e.g., automobile, residential mortgage, home equity) and not on the results of individual loan reviews.

The unallocated amount is particularly subjective and does not lend itself to the exact mathematical calculation. We use the unallocated amount to absorb inherent losses which may exist as of the balance sheet date for such matters as changes in the local or national economy, the depth or experience of the lending staff, any concentrations of credit in any particular industry group and new banking laws or regulations. After we assess applicable factors, we evaluate the aggregate unallocated amount based on our management's experience.

We then test the resulting ALL balance by comparing the balance in the allowance account to historical trends and peer information. Our management then evaluates the result of the procedures performed, including the result of our testing, and concludes on the appropriateness of the balance of the ALL in its entirety. The loan review and finance committees of our board of directors review the assessment prior to the filing of financial information.

RESULTS OF OPERATIONS

Net earnings for the year ended December 31, 2005 were $10,996,000, an increase of $1,884,000, or 20.7%, compared to 2004. Net earnings for the year ended December 31, 2004 were $9,112,000, a decrease of $323,000, or 3.4%, compared from 2003. Basic earnings per share were $2.27 in 2005, compared with $2.07 in 2004 and $2.20 in 2003.

NET INTEREST INCOME

Net interest income represents the amount by which interest earned on various earning assets exceeds interest paid on deposits and other interest-bearing liabilities and is the most significant component of the Company's earnings. Total interest income in 2005 was $56,318,000, compared with $48,022,000 in 2004 and $44,796,000 in 2003. The increase in total interest income in 2005 was primarily due to an increase in the average earning assets of $93.2 million. Average earning assets increased $79.5 million from December 31, 2003 to December 31, 2004. As interest rates for 2005 continued to rise, the average rate earned on earning assets was 6.10% in 2005 compared with 5.79% in 2004 and 5.97% in 2003.

Interest earned on earning assets does not include any interest income which would have been recognized on non-accrual loans if such loans were performing. The amount of interest not recognized on nonaccrual loans totaled $13,000 in 2005 and 2004, compared with $8,000 in 2003.

WILSON BANK HOLDING COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

Total interest expense for 2005 was $22,150,000, an increase of $6,399,000, or 40.6%, compared to total interest expense of $15,751,000 in 2004. The increase in total interest expense was due to an increase in average interest bearing liabilities of approximately $74,010,000 and an increase in the weighted average cost of funds from 2.19% to 2.80%. Interest expense increased from $15,217,000 in 2003 to $15,751,000 in 2004 or an increase of $534,000, or 3.5%. The increase in 2004 was due to a decrease in the weighted average cost of funds from 2.33% to 2.19% net of the effect of a $65,715,000 increase in average interest bearing liabilities.

Net interest income for 2005 totaled $34,168,000 as compared to $32,271,000 and $29,579,000 in 2004 and 2003, respectively. The net interest spread, defined as the effective yield on earning assets less the effective cost of deposits and borrowed funds (calculated on a fully taxable equivalent basis), decreased to 3.30% from 3.60% in 2004. The net interest spread was 3.64% in 2003. The decrease in the interest spread for 2005 and 2004 as compared to the prior period is a result of a higher interest rate environment. The net interest yield, which is net interest income expressed as a percentage of average earning assets, decreased to 3.71% for 2005 compared to 3.90% in 2004 and 3.96% in 2003. This decrease is due to the Company having more deposits that reprice during a rising rate period than it has loans or securities repricing. Interest rates increased during the latter half of 2004 and in 2005 as a result of the Federal Reserve Bank's decision to raise the discount rate. Since June 30, 2004, the Federal Reserve has raised short term interest rates 325 basis points, and the Company believes that interest rates will remain stable in 2006. The Company is in a position to reprice its liabilities faster than its assets are repricing such that in the short term a rising rate environment may have a negative impact on the Company's earnings as its interest expense increases faster than interest income. Management regularly monitors the competition's deposit rates of its competitors which continue to put pressure on the Company's deposit pricing, thus reducing the net spread. Management also believes that growth in 2006 will generally approximate the growth experienced in 2005. A significant increase in interest rates could have an adverse impact on net interest yields and earnings.

PROVISION FOR POSSIBLE LOAN LOSSES

The provision for loan losses represents a charge to earnings necessary to establish an allowance for possible loan losses that, in management's evaluation, should be adequate to provide coverage for estimated losses on outstanding loans and to provide for uncertainties in the economy. The 2005 provision for possible loan losses was $1,136,000, a decrease of $2,137,000 from the provision of $3,273,000 in 2004. The decrease in the provision was primarily a result of additional provision determined necessary by management during 2004 after performing a detailed evaluation of a loan officer's portfolio. The provision for loan losses was $1,904,000 in 2003. Net charge-offs decreased to $1,423,000 in 2005 from $1,980,000 in 2004. Charge-offs in 2004 were relatively high as a result of the loan officer portfolio analysis. Net charge-offs in 2003 totaled $770,000. The ratio of net charge-offs to average total outstanding loans was .19% in 2005, .30% in 2004, and .14% in 2003.

The net charge-offs and provision for loan losses resulted in a reduction of the allowance for possible loan losses (net of charge-offs and recoveries) to $9,083,000 at December 31, 2005 from $9,370,000 as compared to 2004 and the allowance for possible loan losses was $8,077,000 at December 31, 2003. The allowance decreased 3.1% at December 31, 2005 over December 31, 2004 as compared to a 12.0% increase in total loans over the same period. The allowance for possible loan losses was 1.12% of total loans outstanding at December 31, 2005 compared to 1.29% at December 31, 2004 and 1.36% at December 31, 2003. As discussed below under "Financial Conditions, Loans", the level of non-performing loans and adversely rated loans declined in 2005. As a percentage of nonperforming loans at December 31, 2005, 2004 and 2003, the allowance for possible loan losses represented 405%, 297% and 363%, respectively.

The level of the allowance and the amount of the provision involve evaluation of uncertainties and matters of judgment. The Company maintains an allowance for loan losses which management believes is adequate to absorb losses inherent in the loan portfolio. A formal review is prepared monthly by the Loan Review Officer and provided to the Finance Committee to assess the risk in the portfolio and to determine the adequacy of the allowance for loan losses. The review includes analysis of historical performance, the level of non-performing and adversely rated loans, specific analysis of certain problem loans, loan activity since the previous assessment, reports prepared by the Loan Review Officer, consideration of current economic conditions and other pertinent information. The level of the

WILSON BANK HOLDING COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

allowance to net loans outstanding will vary depending on the overall results of this monthly assessment. The review is presented to the Finance Committee. See the discussion under "Critical Accounting Policies" for more information. Management believes the allowance for possible loan losses at December 31, 2005 to be adequate.

NON-INTEREST INCOME

The components of the Company's non-interest income include service charges on deposit accounts, other fees, gains on sales of loans, gains on sales of fixed assets and other income. Total non-interest income for 2005 was $8,926,000 compared with $8,139,000 in 2004 and $8,379,000 in 2003. The 9.7% increase over 2004 was primarily due to gains on sales of loans (which increased $107,000), service charges on deposit accounts (which increased $331,000) and other fees (which increased $283,000). The Company has entered into a commission participation arrangement with a local insurance agency to sell insurance products. Management does not anticipate that this arrangement will materially impact 2006 non-interest income.

NON-INTEREST EXPENSES

Non-interest expenses consist primarily of employee costs, occupancy expenses, furniture and equipment expenses and other operating expenses. Total non-interest expenses for 2005 increased 8.0% to $24,115,000 from $22,336,000 in 2004. The 2004 non-interest expense was up 9.6% over non-interest expense in 2003 which totaled $20,377,000. The increases in non-interest expenses in 2005 resulted primarily from increases in employee salaries and related benefits. This increase was principally due to an increase in the number of employees necessary to support the Company's expanded operations. Other operating expenses increased to $6,107,000 in 2005 from $5,376,000 in 2004. These expenses included data processing, supplies and general operating expenses, which increased as a result of continued growth of the Company.

INCOME TAXES

The Company's income tax expense was $6,847,000 for 2005, an increase of $1,158,000 from $5,689,000 for 2004. The percentage of income tax expense to earnings before taxes was 38.4% in 2005 and 2004, respectively. The percentage was 39.8% in 2003.

FINANCIAL CONDITION

BALANCE SHEET SUMMARY

The Company's total assets increased $115,015,000 or 12.3%, to $1,052,263,000 at December 31, 2005, after increasing 9.9% in 2004 to $937,248,000 at December 31, 2004. Loans, net of allowance for possible loan losses, totaled $801,705,000 at December 31, 2005, a 12.2% increase compared to December 31, 2004. At year end 2005 securities totaled $153,838,000, an increase of 15.6% from $133,072,000 at December 31, 2004. The increase in securities in 2004 includes a $1,805,000 increase in net unrealized losses on securities available-for-sale.

Total liabilities increased by $98,425,000 to $957,153,000 at December 31, 2005 compared to $858,728,000 at December 31, 2004. This increase was composed primarily of the $96,667,000 increase in total deposits to $929,589,000, a 11.6% increase, and an increase in securities sold under repurchase agreements from $6,679,000 at December 31, 2004 to $9,156,000 at December 31, 2005. Federal Home Loan Bank advances decreased to $13,688,000 from $15,263,000 at the respective year ends 2005 and 2004.

Shareholders' equity increased $23,549,000, or 32.9%, due to net earnings and the issuance of stock pursuant to the Company's Dividend Reinvestment Plan, offset by dividends paid on the Company's common stock, the exercising of stock options and the merger of Dekalb Community Bank and Community Bank of Smith County into Wilson Bank effective March 31, 2005. The increase includes a $1,021,000 decrease in net unrealized losses on available-for-sale securities, net of taxes. A more detailed discussion of assets, liabilities and capital follows.

WILSON BANK HOLDING COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

LOANS:

Loan category amounts and the percentage of loans in each category to total loans are as follows:

                                  DECEMBER 31, 2005        DECEMBER 31, 2004
                             -----------------------    ---------------------
(In Thousands)                  AMOUNT    PERCENTAGE      AMOUNT   PERCENTAGE
                             ----------   ----------    ---------  ----------
Commercial, financial
   and agricultural          $  251,494         31.0%   $ 217,372        30.0%
Installment                      58,672          7.2       73,482         6.8
Real estate - mortgage          414,543         51.2      384,062        53.0
Real estate - construction       86,079         10.6       49,085        10.2
                             ----------   ----------    ---------  ----------
TOTAL                        $  810,788        100.0%   $ 724,001       100.0%
                             ==========   ==========    =========  ==========

Loans are the largest component of the Company's assets and are its primary source of income. The Company's loan portfolio, net of allowance for possible loan losses, increased 12.2% as of year end 2005. The loan portfolio is composed of four primary loan categories: commercial, financial and agricultural; installment; real estate-mortgage; and real estate-construction. The table above sets forth the loan categories and the percentage of such loans in the portfolio at December 31, 2005 and 2004.

As represented in the table, primary loan growth was in real estate mortgage loans and commercial, financial and agricultural loans. Real estate mortgage loans increased 7.9% in 2005 and comprised 51.2 % of total loan portfolio at December 31, 2005, compared to 53% at December 31, 2004. Management believes this increase was primarily due to the favorable interest rate environment and the Company's ability to increase its market share of such loans while maintaining its loan underwriting standards. Commercial, financial and agricultural loans increased 15.7% in 2005 and comprised 31.0% of the total loan portfolio at December 31, 2005, compared to 30.0% at December 31, 2004.

Banking regulators define highly leveraged transactions to include leveraged buy-outs, acquisition loans and recapitalization loans of an existing business. Under the regulatory definition, at December 31, 2005, the Company had no highly leveraged transactions, and there were no foreign loans outstanding during any of the reporting periods.

Non-performing loans, which include non-accrual loans, loans 90 days past due and renegotiated loans totaled $2,240,000 at December 31, 2005, a decrease from $3,157,000 at December 31, 2004. Non-accrual loans are loans on which interest is no longer accrued because management believes collection of such interest is doubtful due to management's evaluation of the borrower's financial condition, collateral liquidation value, economic and business conditions and other factors affecting the borrower's ability to pay. Non-accrual loans totaled $225,000 at December 31, 2005 compared to $624,000 at December 31, 2004. Loans 90 days past due, as a component of non-performing loans, decreased to $2,015,000 at December 31, 2005 from $2,533,000 at December 31, 2004. This decrease is primarily a result of decreases in real estate mortgage loans that are 90 days past due. The Company had no renegotiated loans, which would have been included in non-performing loans.

The Company also internally classifies loans about which management questions the borrower's ability to comply with the present repayment terms of the loan agreement. These internally classified loans totaled $8,751,000, not inclusive of non-performing loans, at December 31, 2005 as compared to $6,529,000 at December 31, 2004. Of the internally classified loans at December 31, 2005, $6,921,000 are real estate related loans and $1,830,000 are various other types of loans. The internally classified loans as a percentage of the allowance for possible loan losses were 96.3% and 103.4%, respectively, at December 31, 2005 and 2004.

WILSON BANK HOLDING COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

The allowance for possible loan losses is discussed under "Critical Accounting Policies" and "Provision for Possible Loan Losses." The Company maintains its allowance for possible loan losses at an amount believed by management to be adequate to provide for the possibility of loan losses in the loan portfolio.

Essentially all of the Company's loans were from Wilson, DeKalb, Smith, Trousdale, Davidson, Rutherford and adjacent counties. The Company seeks to exercise prudent risk management in lending, including diversification by loan category and industry segment as well as by identification of credit risks. At December 31, 2005, no single industry segment accounted for more than 10% of the Company's portfolio other than real estate loans.

The Company's management believes there is a significant opportunity to continue to increase the loan portfolio in the Company's primary market area which was expanded in 1999 to include eastern Davidson County, Tennessee and Rutherford County, Tennessee in 2004. The Company has targeted commercial business lending, commercial and residential real estate lending and consumer lending. Although it is the Company's objective to achieve a loan portfolio equal to approximately 85% of deposit balances, various factors, including demand for loans which meet its underwriting standards, will likely determine the size of the loan portfolio in a given economic climate. This loan demand is reflected in the past two years when the Company's average loan to average deposit ratio was 86.1% and 83.6%, respectively, despite significant deposit growth. As a practice, the Company generates its own loans and does not buy participations from other institutions. The Company may sell some of the loans it generates to other financial institutions if the transaction profits the Company and improves the liquidity of the loan portfolio.

SECURITIES

Securities increased 15.6% to $153,838,000 at year-end 2005 from $133,073,000 at December 31, 2004, and comprised the second largest and other primary component of the Company's earning assets. This increase followed an 11.0% securities portfolio decrease from year end 2003 to 2004. The primary increase in the Company's securities portfolio was in U.S. Treasury and other U.S. Government agencies which increased $26,324,000, or 24.3%, in 2005. This increase was attributed to reinvesting securities that were sold in 2004 to provide liquidity to fund loans. The average yield of the securities portfolio at December 31, 2005 was 3.49% with an average maturity of 2.5 years, as compared to an average yield of 3.25% and an average maturity of 3.5 years at December 31, 2004.

The Company has adopted the provisions of Statement of Financial Accounting Standards No. 115 ("SFAS No. 115"), "Accounting for Certain Investments in Debt and Equity Securities". Under the provisions of the Statement, securities are to be classified in three categories and accounted for as follows:

- Debt securities that the enterprise has the positive intent and ability to hold to maturity are classified as held-to-maturity securities and reported at amortized cost.

- Debt and equity securities that are bought and held principally for the purpose of selling them in the near term are classified as trading securities and reported at fair value with unrealized gains and losses included in earnings.

- Debt and equity securities not classified as either held-to-maturity securities or trading securities are classified as available-for-sale securities and reported at fair value with unrealized gains and losses excluded from earnings and reported in a separate component of shareholders' equity.

WILSON BANK HOLDING COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

The Company's classification of securities as of December 31, 2005 and December 31, 2004 is as follows:

                                         December 31, 2005      December 31, 2005
(In Thousands)                            Held-To-Maturity      Available-For-Sale
                                      ----------------------   -----------------------
                                      Amortized   Estimated    Amortized    Estimated
                                        Cost     Market Value    Cost      Market Value
U.S. Treasury and other
   U.S. Government agencies
   and Corporations                   $       -            -   $ 138,056     134,707
Obligations of states and political
   Subdivisions                          14,241       14,374       1,340       1,359
Mortgage-backed securities                  133          133       3,426       3,398
                                      ---------   ----------   ---------   ---------
                                      $  14,374       14,507   $ 142,822     139,464
                                      =========   ==========   =========   =========

No securities have been classified as trading securities.

                                         December 31, 2004      December 31, 2004
(In Thousands)                            Held-To-Maturity      Available-For-Sale
                                      ----------------------   -----------------------
                                      Amortized   Estimated    Amortized    Estimated
                                        Cost     Market Value    Cost      Market Value
U.S. Treasury and other
   U.S. Government agencies
   and Corporations                   $       -            -   $ 109,945     108,383
Obligations of states and political
   Subdivisions                          14,202       14,705       1,035       1,096
Mortgage-backed securities                  235          235       9,208       9,156
                                      ---------   ----------   ---------   ---------
                                      $  14,437       14,940   $ 120,188     118,635
                                      =========   ==========   =========   =========

No securities have been classified as trading securities.

The classification of a portion of the securities portfolio as available-for-sale was made to provide for more flexibility in asset/liability management and capital management.

WILSON BANK HOLDING COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

The following table shows the Company's investments' gross unrealized losses and fair value, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, at December 31, 2005:

                                                      In Thousands, Except Number of Securities
                            -------------------------------------------------------------------------------------
                                   Less than 12 Months              12 Months or More                 Total
                            ---------------------------------    -------------------------------  ---------------
                                                    Number                            Number
                                                      of                                of
                              Fair    Unrealized  Securities    Fair    Unrealized  Securities   Fair   Unrealized
                             Value      Losses     Included    Value      Losses     Included    Value    Losses
                            --------------------------------   -------------------------------  ------------------
U.S. Treasury and other
 U.S. Government agencies
 and Corporations           $ 29,831        348          26    104,876       3,001         122   134,707   3,349

Obligations of
  states and
  political sub-
  Divisions                    5,539         61          25        666          12           4     6,205      73

Mortgage-backed
  Securities                      17          -           1      3,303          29           8     3,320      29
                           ---------  ---------   ---------    -------   ---------  ----------  -------- -------

     Total
       temporarily
       impaired
       securities           $ 35,387        409          52    108,845       3,042         134   144,232   3,451
                            ========  =========   =========    =======   =========  ==========  ======== =======

DEPOSITS

The increases in assets in 2005 and 2004 were funded primarily by increases in deposits. Total deposits, which are the principal source of funds for the Company, totaled $929,589,000 at December 31, 2005 compared to $832,922,000 and $770,419,000 at December 31, 2004 and 2003, respectively. The Company has targeted local consumers, professionals and small businesses as its central clientele; therefore, deposit instruments in the form of demand deposits, savings accounts, money market demand accounts, certificates of deposits and individual retirement accounts are offered to customers. Management believes the Wilson County, Davidson County, DeKalb County, Smith County, Rutherford County and Trousdale County areas are growing economic markets offering growth opportunities for the Company; however, the Company competes with several of the larger bank holding companies that have bank offices in these counties and therefore, no assurances of market growth or maintenance of current market share can be given. Even though the Company is in a very competitive market, management currently believes that its market share can be maintained or expanded.

WILSON BANK HOLDING COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

The $96,667,000, or 11.6%, growth in deposits in 2005 reflected increases in several deposit categories: savings accounts increased $79,000, or 0.2%, to $38,421,000, total certificates of deposit (including individual retirement accounts) increased $53,601,000, or 12.3%, to $489,037,000, NOW accounts increased $17,809,000, or 26.1%, to $86,037,000, money market accounts increased $13,800,000, or 7.3%, to $202,235,000 and demand deposits increased $11,377,000, or 11.1%, to $113,860,000. The average rate paid on average total interest-bearing deposits was 2.8% for 2005, compared to 2.2% for 2004. The average rate paid in 2003 was 2.3%. Competitive pressure from other banks in our market area relating to deposit pricing continues to affect the rates paid on deposit accounts. The ratio of average loans to average deposits was 86.1% in 2005, compared with 83.6% and 79.9% in 2004 and 2003, respectively.

CONTRACTUAL OBLIGATIONS

The Company has the following contractual obligations as of December 31, 2005:

                            Less than                           More than
   (In Thousands)             1 Year      1-3 Years  3-5 Years   5 Years     Total
                            -------------------------------------------------------
Long-Term Debt                $    -             -       13,688         -    13,688

Capital Leases                     -             -            -         -         -

Operating Leases                 142           133           47         -       322

Purchases                          -             -            -         -         -

Other Long-Term Liabilities        -             -            -         -         -
                              ------      --------   ----------  --------    ------

Total                         $  142           133       13,735         -    14,010
                              ======      ========   ==========  ========    ======

Long-term debt contractual obligations consist of Advances from the Federal Home Loan Bank. The Company leases land for certain branch facilities and automatic teller machine locations. Future minimum rental payments required under the terms of these non cancellable leases are included in operating lease obligations.

OFF BALANCE SHEET ARRANGEMENTS

At December 31, 2005, the Company had unfunded loan commitments outstanding of $110 million, unfunded lines of credit of $33.3 million and outstanding standby letters of credit of $17.3 million. Because these commitments generally have fixed expiration dates and many will expire without being drawn upon, the total commitment level does not necessarily represent future cash requirements. If needed to fund these outstanding commitments, the Company's bank subsidiary has the ability to liquidate Federal funds sold or securities available-for-sale or on a short-term basis to borrow and purchase Federal funds from other financial institutions. Additionally, the Company's bank subsidiary could sell participations in these or other loans to correspondent banks. As mentioned below, the Company's bank subsidiary has been able to fund its ongoing liquidity needs through its stable core deposit base, loan payments, investment security maturities and short-term borrowings.

WILSON BANK HOLDING COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

LIQUIDITY AND ASSET MANAGEMENT

The Company's management seeks to maximize net interest income by managing the Company's assets and liabilities within appropriate constraints on capital, liquidity and interest rate risk. Liquidity is the ability to maintain sufficient cash levels necessary to fund operations, meet the requirements of depositors and borrowers and fund attractive investment opportunities. Higher levels of liquidity bear corresponding costs, measured in terms of lower yields on short-term, more liquid earning assets and higher interest expense associated with extending liability maturities. Liquid assets include cash and cash equivalents and investment securities and money market instruments that will mature within one year. At December 31, 2005, the Company's liquid assets approximately $104 million.

The Company's primary source of liquidity is a stable core deposit base. In addition, short-term investments, loan payments and investment security maturities provide a secondary source. At December 31, 2005, the Company had a liability sensitive position (a negative gap) for 2006. Liability sensitivity means that more of the Company's liabilities are capable of re-pricing over certain time frames than its assets. The interest rates associated with these liabilities may not actually change over this period but are capable of changing.

Interest rate risk (sensitivity) management focuses on the earnings risk associated with changing interest rates. Management seeks to maintain profitability in both immediate and long term earnings through funds management/interest rate risk management. The Company's rate sensitivity position has an important impact on earnings. Senior management of the Company meets monthly to analyze the rate sensitivity position. These meetings focus on the spread between the cost of funds and interest yields generated primarily through loans and investments.

The following table shows the rate sensitivity gaps for different time periods as of December 31, 2005:

INTEREST RATE SENSITIVITY GAPS                                     One Year
December 31, 2005                     1-90     91-180     181-365     and
(In Thousands)                        Days      Days        Days     Longer   Total
                                 ----------   --------   ---------  -------  --------
Interest-earning assets          $  194,309     73,415     142,889  565,370   975,983
Interest-bearing liabilities        414,555     91,921     141,794  190,304   838,574
                                 ----------   --------   ---------  -------  --------
Interest-rate sensitivity gap    $ (220,246)   (18,506)      1,095  375,066   137,409
                                 ==========   ========   =========  =======  ========

   Cumulative gap                $ (220,246)  (238,752)   (237,657) 137,409
                                 ==========   ========   =========  =======

The Company also uses a simulation modeling to evaluate both the level of interest rate sensitivity as well as potential balance sheet strategies. Senior management meets quarterly to analyze the interest rate shock simulation. The interest rate simulation model is based on a number of assumptions. The assumptions relate primarily to loan and deposit growth, asset and liability prepayments, the call features of investment securities, interest rates and balance sheet management strategies. As of December 31, 2005, a -200 basis point rate shock was forecast to increase net earnings an estimated $1,800,000 or 15% over the next twelve months, as compared to rates remaining stable. In addition, the -200 basis point rate shock is estimated to decrease the volatility of equity capital by .71%. Also, a +200 basis point rate shock is estimated to decrease net earnings approximately $2,300,000, or 19% and would decrease the volatility of equity capital by .16%.

At the present time there are no known trends or any known commitments, demands, events or uncertainties that will result in, or that are reasonably likely to result in, the Company's liquidity changing in any material way.

WILSON BANK HOLDING COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

CAPITAL RESOURCES, CAPITAL POSITION AND DIVIDENDS

CAPITAL.

At December 31, 2005, total shareholders' equity was $95,110,000, or 9.0% of total assets, which compares with $71,561,000, or 7.6% of total assets, at December 31, 2004, and $63,323,000, or 7.4% of total assets, at December 31, 2003. The dollar increase in shareholders' equity during 2005 reflects (i) the Company's net income of $10,996,000 less cash dividends of $.85 per share totaling $3,996,000, (ii) the issuance of 111,914 shares of common stock for $3,646,000, as reinvestment of cash dividends, (iii) the issuance of 10,912 shares of common stock pursuant to exercise of stock options for $173,000, (iv) the net unrealized loss on available-for-sale securities of $1,021,000, and (v) an increase of $13,751,000 due to the merger of Dekalb Community Bank and Community Bank of Smith County with and into Wilson Bank & Trust. In connection with the mergers, the Company issued 436,546 shares of its common stock to minority shareholders of Dekalb Community Bank and Community Bank of Smith County on March 31, 2005.

The Company's principal regulators have established minimum risk-based capital requirements and leverage capital requirements for the Company and its subsidiary bank. These guidelines classify capital into two categories of Tier I and Total risk-based capital. Total risk-based capital consists of Tier I (or core) capital (essentially common equity less intangible assets) and Tier II capital (essentially qualifying long-term debt, of which the Company and its subsidiary bank have none, and a part of the allowance for possible loan losses). In determining risk-based capital requirements, assets are assigned risk-weights of 0% to 100%, depending on regulatory assigned levels of credit risk associated with such assets. The risk-based capital guidelines require the subsidiary bank and the Company to have a total risk-based capital ratio of 8.0% and a Tier I risk-based capital ratio of 4.0%. Set forth below is the Company's and the bank subsidiary's capital ratios as of December 31, 2005 and 2004. Management believes it can adequately capitalize its growth for the next few years with retained earnings and dividends reinvested.

                                  Wilson Bank Holding  Wilson Bank & Trust
                                        Company
                                 -----------------------------------------
                                  Amount     Ratio    Amount       Ratio
                                 --------   ------   --------    ---------
                               (Dollars in Thousands (Dollars in Thousands)
December 31, 2005
Actual:
    Total Risk Based Capital     $101,460    12.80%  $101,200        12.77%
    Tier 1 Capital                 92,377    11.66     92,117        11.65
    Leverage                       92,377     9.13     92,117         9.10

For Capital Adequacy Purposes:
    Total Risk Based Capital                   8.0                     8.0
    Tier 1 Capital                             4.0                     4.0
    Leverage                                   4.0                     4.0

December 31, 2004
Actual:
    Total Risked Based Capital   $ 81,787    12.37%  $ 74,482        12.20%
    Tier 1 Capital                 72,417    11.12     65,112        11.00
    Leverage                       72,417     8.71     65,112         9.07

For Capital Adequacy Purposes:
    Total Risked Based Capital                 8.0                     8.0
    Tier 1 Capital                             4.0                     4.0
    Leverage                                   4.0                     4.0

WILSON BANK HOLDING COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Company's primary component of market risk is interest rate volatility. Fluctuations in interest rates will ultimately impact both the level of income and expense recorded on a large portion of the Company's assets and liabilities, and the market value of all interest-earning assets and interest-bearing liabilities, other than those which possess a short term to maturity. Based upon the nature of the Company's operations, the Company is not subject to foreign currency exchange or commodity price risk.

                                               (DOLLARS IN THOUSANDS)
                                   EXPECTED MATURITY DATE-YEAR ENDING DECEMBER 31,
                                   ----------------------------------------------                         FAIR
                                   2006       2007     2008     2009     2010     THEREAFTER    TOTAL     VALUE
                                   --------   ------   ------   ------   ------   ----------   -------    ------
EARNING ASSETS:

Loans, net of unearned interest:
   Variable rate                   $ 54,665   20,129    6,363   12,753   14,794      342,062   450,766    450,766
      Average interest rate            7.65%    6.93%    7.13%    7.11%    7.21%        6.55%     6.71%

   Fixed rate                       168,294   28,426   48,982   46,733   41,355       26,232   360,022    354,941
      Average interest rate            6.75%    9.40%    9.00%    8.27%    7.97%        6.09%     6.75%

Securities                           25,941   51,949   27,641   26,358    6,639       15,310   153,838    153,971
   Average interest rate               2.48%    3.29%    3.65%    3.67%    4.03%        4.16%     3.40%

Loans held for sale                   2,935        -        -        -        -            -     2,935      2,935
   Average interest rate               4.24%       -        -        -        -            -      4.24%

Federal funds sold                    5,640        -        -        -        -            -     5,640      5,640
   Average interest rate               2.76%       -        -        -        -            -      2.76%

Interest-bearing deposits           636,888   93,476   29,397   55,926       43            -   815,730    816,874
   Average interest rate               2.39%    4.06%    4.13%    4.71%    4.83%                  4.02%

Advances from Federal
   Home Loan Bank                         -        -        -   13,354      334            -    13,688     13,406
   Average interest rate                  -        -        -     4.25%    7.14%           -      4.32%

SUPERVISION AND REGULATION

Bank Holding Company Act of 1956. As a bank holding company, the Company is subject to regulation under the Bank Holding Company Act of 1956 (the "Act"), and the regulations adopted by the Board of Governors of the Federal Reserve System (the "Board") under the Act. The Company is required to file reports with, and is subject to examination by, the Board. The subsidiary bank is a Tennessee state chartered nonmember bank, and is therefore subject to the supervision of and is regularly examined by the Tennessee Department of Financial Institutions (the "TDFI") and the Federal Deposit Insurance Corporation ("FDIC").

WILSON BANK HOLDING COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

Under the Act, a bank holding company may not directly or indirectly acquire the ownership or control of more than five percent of the voting shares or substantially all of the assets of any company, including a bank, without the prior approval of the Board. In addition, bank holding companies are generally prohibited under the Act from engaging in non-banking activities, subject to certain exceptions. Under the Act, the Board is authorized to approve the ownership by a bank holding company of shares of any company whose activities have been determined by the Board to be so closely related to banking or to managing or controlling banks as to be a proper incident thereto.

In November, 1999, the Gramm-Leach-Bliley Act of 1999 (the "GLB Act") became law. Under the GLB Act, a "financial holding company" may engage in activities the Board determines to be financial in nature or incidental to such financial activity or complementary to a financial activity and not a substantial risk to the safety and soundness of depository institutions or the financial system. Generally, such companies may engage in a wide range of securities activities and insurance underwriting and agency activities The Company has not sought "financial holding company" status.

Under the Tennessee Bank Structure Act, a bank holding company which controls 30% or more of the total deposits (excluding certain deposits) in all federally insured financial institutions in Tennessee is prohibited from acquiring any bank in Tennessee. State banks and national banks in Tennessee may establish branches anywhere in the state and generally may branch across state lines either through interstate merger or branch acquisition, provided the other state's law affords reciprocity.

The Company and the subsidiary bank are subject to certain restrictions imposed by the Federal Reserve Act and the Federal Deposit Insurance Act, respectively, on any extensions of credit to the Company or Wilson Bank, on investments in the stock or other securities of the Company or Wilson Bank, and on taking such stock or other securities as collateral for loans of any borrower.

Under the Tennessee Banking Act, approval of the Commission of Financial Institutions is required for declaration of any dividends by Wilson Bank to the Company in excess of net income in the calendar year of declaration plus retained net income for the preceding two years.

FDICIA. Under the Federal Deposit Insurance Corporation Improvement Act of 1991 ("FDICIA"), the federal banking regulators have assigned each insured institution to one of five categories ("well capitalized," "adequately capitalized" or one of three under capitalized categories) based upon the three measures of capital adequacy discussed above (see "Capital Resources, Capital Position and Dividends"). Institutions which have a Tier I leverage capital ratio of 5%, a Tier I risk-based capital ratio of 5% and a total risk-based capital ratio of 10% are defined as "well capitalized". All institutions, regardless of their capital levels, are restricted from making any capital distribution or paying any management fees that would cause the institution to fail to satisfy the minimum levels for any of its capital requirements for "adequately capitalized" status. The subsidiary bank currently meets the requirement for "well capitalized"..

An institution that fails to meet the minimum level for any relevant capital measure (an "undercapitalized institution") may be: (i) subject to increased monitoring by the appropriate federal banking regulator; (ii) required to submit an acceptable capital restoration plan within 45 days (which must be guaranteed by the institution's holding company); (iii) subject to asset growth limits; and
(iv) required to obtain prior regulatory approval for acquisitions, branching and new lines of businesses. The bank regulatory agencies have discretionary authority to reclassify a "well capitalized" institution as "adequately capitalized" or to impose on an "adequately capitalized" institution requirements or actions specified for undercapitalized institutions if the agency determines that the institution is in an unsafe or unsound condition or is engaging in an unsafe or unsound practice.

A "significantly undercapitalized" institution may be subject to a number of additional requirements and restrictions, including (1) orders to sell sufficient voting stock to become "adequately capitalized," (2) requirements to reduce total assets and (3) cessation of receipt of deposits from correspondent banks. "Critically undercapitalized" institutions are subject to the appointment of a receiver or conservator.

WILSON BANK HOLDING COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

Under FDICIA, bank regulatory agencies have prescribed safety and soundness guidelines for all insured depository institutions relating to internal controls, information systems, internal audit systems, loan documentation, credit underwriting, interest rate exposure, asset growth, asset quality, earnings and compensation. Wilson Bank is assessed quarterly at the rate of .00330% of insured deposits for deposit insurance. Management is not aware of any current recommendations by the regulatory authorities which, if implemented, would have a material effect on the Company's liquidity, capital resources or operations.

Monetary Policy. The subsidiary bank is affected by commercial bank credit policies of regulatory authorities, including the Board. An important function of the Board is to regulate the national supply of bank credit in order to attempt to combat recessionary and curb inflationary pressures. Among the instruments of monetary policy used by the Board to implement these objectives are open market operations in U.S. Government securities, changes in discount rates on member borrowings, changes in reserve requirements against bank deposits and limitations on interest rates which member banks may pay on time and savings deposits. The monetary policies of the Board have had a significant effect on the operating results of commercial banks, including nonmembers (such as the Company's bank subsidiary as well as members, in the past and are expected to continue to do so in the future.

IMPACT OF INFLATION

Although interest rates are significantly affected by inflation, the inflation rate is believed to be immaterial when reviewing the Company's results of operations.

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

On June 30, 2005, the FASB issued an exposure draft "Business Combinations - a replacement of SFAS No. 141 (141 Revised). The proposed Statement would require the acquirer to measure the fair value of the acquiree, as a whole, as of the acquisition date as opposed to the definitive agreement date. The proposal also requires that contingent consideration be estimated and recorded at the acquisition which is in conflict with SFAS No. 5. SFAS No. 5 would be amended for this exception. Acquisition related costs incurred in connection with the business combination would generally be expensed.

This proposed Statement would require the acquirer in a business combination in which the acquisition-date fair value of the acquirer's interest in the acquiree exceeds the fair value of the consideration transferred for that interest (referred to as a bargain purchase) to account for that excess by first reducing the goodwill related to that business combination to zero, and then by recognizing any excess in income. Statement 141 requires that excess to be allocated as a pro rata reduction of the amounts that would have been assigned to particular assets acquired. The proposed Statement is expected to be effective for acquisitions after January 1, 2007.

On June 1, 2005, the FASB issued Statement No. 154, "Accounting Changes and Error Corrections", a replacement of APB 20 and Statement 3. The Statement applies to all voluntary changes in accounting principle, and changes the requirements for accounting for and reporting of a change in accounting principle. In the absence of specific transition requirements to the contrary in the adoption of an accounting principle, Statement 154 requires retrospective application to prior periods' financial statements of a voluntary change in accounting principle unless it is impracticable for comparability and consistency of financial information between periods. Statement 154 is effective for accounting changes and corrections of errors made in fiscal years beginning after December 15, 2005. Earlier application is permitted for accounting changes and corrections of errors occurring in fiscal years beginning after June 1, 2005.

WILSON BANK HOLDING COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

On July 14, 2005, the FASB issued an Exposure Draft on Accounting for Uncertain Tax Positions, a proposed interpretation of FASB Statement No. 109. The proposed interpretation requires that only benefits from tax positions that are probable of being sustained under audit should be recognized in the financial statements. These benefits would be recorded at amounts considered to be the best estimates of management. At the time these positions become "more likely than not" to be disallowed under audit, their recognition would be reversed. Wilson Bank Holding Company is currently reviewing the potential impact of this proposed Interpretation; any cumulative effect associated with the application of the provisions of the proposed Interpretation will be reported as a change in accounting principle in the period in which the Interpretation is adopted.

There is currently outstanding a bank regulatory interagency proposal dated March 28, 2005 related to the methodology for assigning risk factors to loans and other extensions of credit. The policy, if adopted, could effect the calculation of the allowance for possible loan losses. Management has not determined the impact of this policy statement; however, it is not expected to have a material impact on the consolidated financial statements.

WILSON BANK HOLDING COMPANY FINANCIAL HIGHLIGHTS (UNAUDITED)

                                                IN THOUSANDS, EXCEPT PER SHARE INFORMATION
                                                           AS OF DECEMBER 31,
                                            ---------------------------------------------------
                                              2005         2004      2003     2002      2001
                                            -----------    -------   -------  -------   -------
CONSOLIDATED
BALANCE SHEETS:
Total assets end of year                    $ 1,052,263    937,248   852,619  752,786   667,804
Loans, net                                  $   801,705    714,631   584,714  543,658   489,277
Securities                                  $   153,838    133,072   149,536  115,882    96,558
Deposits                                    $   929,589    832,922   770,419  679,408   602,576
Stockholders' equity                        $    95,110     71,561    63,323   55,031    45,971

                                                        YEARS ENDED DECEMBER 31,
                                            ---------------------------------------------------
                                              2005          2004      2003     2002      2001
                                            -----------    -------   -------  -------   -------
CONSOLIDATED STATEMENTS
OF EARNINGS:
Interest income                             $    56,318     48,022    44,796   45,758    48,576
Interest expense                                 22,150     15,751    15,217   18,215    25,633
                                            -----------    -------   -------  -------   -------
      Net interest income                        34,168     32,271    29,579   27,543    22,943

Provision for possible loan losses                1,136      3,273     1,904    2,344     1,976
                                            -----------    -------   -------  -------   -------
Net interest income after provision for
   possible loan losses                          33,032     28,998    27,675   25,199    20,967
Non-interest income                               8,926      8,139     8,379    7,408     7,039
Non-interest expense                             24,115     22,336    20,377   18,685    17,314
                                            -----------    -------   -------  -------   -------

Earnings before income taxes                     17,843     14,801    15,677   13,922    10,692

Income taxes                                      6,847      5,689     6,242    5,393     4,041
                                            -----------    -------   -------  -------   -------

Net earnings                                $    10,996      9,112     9,435    8,529     6,651
                                            ===========    =======   =======  =======   =======

Minority interest in net earnings of
   subsidiaries                             $       236        475       916      866       587
                                            ===========    =======   =======  =======   =======

Cash dividends declared                     $     3,996      3,262     2,651    2,378     1,920
                                            ===========    =======   =======  =======   =======

PER SHARE DATA: (1)
Basic earnings per common share             $      2.27       2.07      2.20     2.04      1.63
Diluted earnings per common share           $      2.25       2.07      2.20     2.04      1.63
Cash dividends                              $      0.85       0.75      0.63     0.58      0.48
Book value                                  $     19.04      16.13     14.66    13.05     11.19

RATIOS:
Return on average stockholders'
   equity                                         12.59%     13.61%    16.00%   16.98%    15.70%
Return on average assets (2)                       1.12%      1.04%     1.31%    1.33%     1.14%
Capital to assets (3)                              9.04%      8.38%     8.19%    8.08%     7.61%
Dividends declared per share as percentage
   of basic earnings per share                    37.44%     36.23%    26.36%   28.19%    29.14%

(1) Per share data has been retroactively adjusted to reflect a 2 for 1 split which occurred effective October 31, 2003.

(2) Includes minority interest earnings of consolidated subsidiaries in numerator.

(3) Includes minority interest of consolidated subsidiaries in numerator.

WILSON BANK HOLDING COMPANY

CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2005 AND 2004

(WITH INDEPENDENT AUDITOR'S REPORT THEREON)

INDEPENDENT AUDITOR'S REPORT

The Board of Directors
Wilson Bank Holding Company:

We have audited the accompanying consolidated balance sheets of Wilson Bank Holding Company and Subsidiaries as of December 31, 2005 and 2004, and the related consolidated statements of earnings, comprehensive earnings, changes in stockholders' equity and cash flows for each of the three years in the period ended December 31, 2005. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board in the United States. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of Wilson Bank Holding Company and Subsidiaries as of December 31, 2005 and 2004, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2005, in conformity with accounting principles generally accepted in the United States of America.

                                                  /s/ Maggart & Associates, P.C.

Nashville, Tennessee
January 12, 2006

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We have audited management's assessment, included in the accompanying Report of Management on Internal Control Over Financial Reporting, that Wilson Bank Holding Company maintained effective internal control over financial reporting as of December 31, 2005 based on criteria established in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Wilson Bank Holding Company's management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting. Our responsibility is to express an opinion on management's assessment and an opinion on the effectiveness of the Company's internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, evaluating management's assessment, testing and evaluating the design and operating effectiveness of internal control, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles generally accepted in the United States of America. A company's internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements.

Page Two

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, management's assessment that Wilson Bank Holding Company maintained effective internal control over financial reporting as of December 31, 2005, is fairly stated, in all material respects, based on criteria established in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Also in our opinion, Wilson Bank Holding Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2005, based on criteria established in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of Wilson Bank Holding Company as of December 31, 2005 and 2004 and the related consolidated statements of earnings, comprehensive earnings, changes in stockholders equity and cash flows for each of the three years in the period ended December 31, 2005 and our report dated January 12, 2006 expressed an unqualified opinion on those consolidated financial statements.

                                                  /s/ Maggart & Associates, P.C.

Nashville, Tennessee
January 12, 2006

WILSON BANK HOLDING COMPANY

CONSOLIDATED BALANCE SHEETS

DECEMBER 31, 2005 AND 2004

                                                                              In Thousands
                                                                          ----------------------
                                                                             2005        2004
                                                                          ----------   ---------
                       ASSETS
Loans, net of allowance for possible loan losses of $9,083,000
  and $9,370,000, respectively                                            $  801,705     714,631
Securities:
  Held-to-maturity, at amortized cost (market value $14,507,000
   and $14,940,000, respectively)                                             14,374      14,437
  Available-for-sale, at market (amortized cost $142,822,000 and
   $120,188,000, respectively)                                               139,464     118,635
                                                                          ----------   ---------
         Total securities                                                    153,838     133,072

Loans held for sale                                                            2,935       3,515
Federal funds sold                                                             5,640      25,516
Restricted equity securities                                                   2,782       2,661
                                                                          ----------   ---------
         Total earning assets                                                966,900     879,395
                                                                          ----------   ---------

Cash and due from banks                                                       40,811      23,799
Premises and equipment, net                                                   23,601      21,830
Accrued interest receivable                                                    6,332       4,944
Deferred income taxes                                                          3,131       3,194
Other real estate                                                                277         580
Goodwill                                                                       4,805           -
Other intangible assets, net                                                   2,488           -
Other assets                                                                   3,918       3,506
                                                                          ----------   ---------

         Total assets                                                     $1,052,263     937,248
                                                                          ==========   =========

                      LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits                                                                  $  929,589     832,922
Securities sold under repurchase agreements                                    9,156       6,679
Advances from Federal Home Loan Bank                                          13,688      15,263
Accrued interest and other liabilities                                         4,720       3,864
                                                                          ----------   ---------
         Total liabilities                                                   957,153     858,728
                                                                          ----------   ---------

Minority interest                                                                  -       6,959
                                                                          ----------   ---------

Stockholders' equity:
  Common stock, par value $2.00 per share, authorized 10,000,000 shares,
   4,995,979 and 4,436,607 shares issued and outstanding, respectively         9,992       8,873
  Additional paid-in capital                                                  31,502      14,856
  Retained earnings                                                           55,688      48,688
  Net unrealized losses on available-for-sale securities, net of income
   taxes of $1,286,000 and $531,000, respectively                             (2,072)       (856)
                                                                          ----------   ---------
         Total stockholders' equity                                           95,110      71,561
                                                                          ----------   ---------

COMMITMENTS AND CONTINGENCIES
         Total liabilities and stockholders' equity                       $1,052,263     937,248
                                                                          ==========   =========

See accompanying notes to consolidated financial statements.

WILSON BANK HOLDING COMPANY

CONSOLIDATED STATEMENTS OF EARNINGS

THREE YEARS ENDED DECEMBER 31, 2005

                                                               In Thousands (except per share data)
                                                              ---------------------------------------
                                                                  2005        2004        2003
                                                                --------    --------    --------
Interest income:
   Interest and fees on loans                                   $ 50,283      42,796      39,368
   Interest and dividends on securities:
      Taxable securities                                           4,447       3,971       3,654
      Exempt from Federal income taxes                               623         671         731
   Interest on loans held for sale                                   175         161         358
   Interest on Federal funds sold                                    673         319         584
   Interest and dividends on restricted equity securities            117         104         101
                                                                --------    --------    --------
                        Total interest income                     56,318      48,022      44,796
                                                                --------    --------    --------

Interest expense:
   Interest on negotiable order of withdrawal accounts               650         223         234
   Interest on money market accounts and other
      savings accounts                                             3,929       2,880       2,920
   Interest on certificates of deposit                            16,741      12,215      11,799
   Interest on securities sold under repurchase agreements           179         162         203
   Interest on advances from Federal Home Loan Bank                  630         250          59
   Interest on Federal funds purchased                                21          21           2
                                                                --------    --------    --------
                        Total interest expense                    22,150      15,751      15,217
                                                                --------    --------    --------

Net interest income before provision for possible loan losses     34,168      32,271      29,579
Provision for possible loan losses                                (1,136)     (3,273)     (1,904)
                                                                --------    --------    --------
Net  interest income after provision for possible loan losses     33,032      28,998      27,675
Non-interest income                                                8,926       8,139       8,379
Non-interest expense                                             (24,115)    (22,336)    (20,377)
                                                                --------    --------    --------

                        Earnings before income taxes              17,843      14,801      15,677

Income taxes                                                       6,847       5,689       6,242
                                                                --------    --------    --------

                        Net earnings                            $ 10,996       9,112       9,435
                                                                ========    ========    ========

Basic earnings per common share                                 $   2.27        2.07        2.20
                                                                ========    ========    ========

Diluted earnings per common share                               $   2.25        2.07        2.20
                                                                ========    ========    ========

See accompanying notes to consolidated financial statements.

WILSON BANK HOLDING COMPANY

CONSOLIDATED STATEMENTS OF COMPREHENSIVE EARNINGS

THREE YEARS ENDED DECEMBER 31, 2005

                                                                           In Thousands
                                                                --------------------------------
                                                                  2005        2004        2003
                                                                --------    --------    --------
Net earnings                                                    $ 10,996       9,112       9,435
                                                                --------    --------    --------
Other comprehensive earnings (losses), net of tax:
   Net unrealized losses on available-for-sale securities
      arising during period, net of taxes of $634,000,
      $504,000 and $567,000, respectively                         (1,021)       (813)       (915)
   Less:  reclassification adjustment for net losses included
      in net earnings, net of taxes of $26,000 in 2004                 -          42           -
                                                                --------    --------    --------
                        Other comprehensive losses                (1,021)       (771)       (915)
                                                                --------    --------    --------

                        Comprehensive earnings                  $  9,975       8,341       8,520
                                                                ========    ========    ========

See accompanying notes to consolidated financial statements.

WILSON BANK HOLDING COMPANY

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

THREE YEARS ENDED DECEMBER 31, 2005

                                                                            In Thousands
                                               --------------------------------------------------------------------------
                                                                                           Net Unrealized
                                                              Additional                   Gain (Loss) On
                                                 Common         Paid-In       Retained     Available-For-
                                                  Stock         Capital       Earnings     Sale Securities       Total
                                               -----------   ------------   -----------    ---------------    -----------
Balance December 31, 2002                      $     4,216         13,931        36,054                830         55,031

Cash dividends declared, $.63 per share                  -              -        (2,651)                 -         (2,651)

Issuance of 102,568 shares of stock pursuant
   to dividend reinvestment plan                       103          2,289             -                  -          2,392

Issuance of 2,000 shares of stock pursuant
   to exercise of stock options                          3             28             -                  -             31

Issuance of 2,160,028 shares of stock
   pursuant to a 2 for 1 stock split                 4,320         (4,320)            -                  -              -

Net change in unrealized gain (loss) on
   available-for-sale securities during the
   year, net of taxes of $567,000                        -              -             -               (915)          (915)

Net earnings for the year                                -              -         9,435                  -          9,435
                                               -----------   ------------   -----------    ---------------    -----------

Balance December 31, 2003                            8,642         11,928        42,838                (85)        63,323

Cash dividends declared, $.75 per share                  -              -        (3,262)                 -         (3,262)

Issuance of 104,388 shares of stock pursuant
   to dividend reinvestment plan                       208          2,770             -                  -          2,978

Issuance of 11,613 shares of stock pursuant
   to exercise of stock options                         23            158             -                  -            181

Net change in unrealized loss on
   available-for-sale securities during the
   year, net of taxes of $478,000                        -              -             -               (771)          (771)

Net earnings for the year                                -              -         9,112                  -          9,112
                                               -----------   ------------   -----------    ---------------    -----------

Balance December 31, 2004                            8,873         14,856        48,688               (856)        71,561

Cash dividends declared, $.85 per share                  -              -        (3,996)                 -         (3,996)

Issuance of 111,914 shares of stock pursuant
   to dividend reinvestment plan                       224          3,422             -                  -          3,646

Issuance of 10,912 shares of stock pursuant
   to exercise of stock options                         22            151             -                  -            173

Issuance of 436,546 shares of stock pursuant
   to acquisition of minority interest in
   subsidiaries                                        873         13,073             -               (195)        13,751

Net change in unrealized loss on
   available-for-sale securities during the
   year, net of taxes of $634,000                        -              -             -             (1,021)        (1,021)

Net earnings for the year                                -              -        10,996                  -         10,996
                                               -----------   ------------   -----------    ---------------    -----------

Balance December 31, 2005                      $     9,992         31,502        55,688            (2,072)         95,110
                                               ===========   ============   ===========    ===============    ===========

See accompanying notes to consolidated financial statements.

WILSON BANK HOLDING COMPANY

CONSOLIDATED STATEMENTS OF CASH FLOWS

THREE YEARS ENDED DECEMBER 31, 2005

INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS

                                                                                In Thousands
                                                                    -----------------------------------
                                                                       2005        2004         2003
                                                                    ---------    ---------    ---------
Cash flows from operating activities:
   Interest received                                                $  54,809       46,957       43,901
   Fees received                                                        7,683        7,828        6,924
   Other income received                                                  129           35            -
   Proceeds from sales of loans                                        76,378       72,317      129,706
   Origination of loans held for sale                                 (74,685)     (70,854)    (120,704)
   Interest paid                                                      (21,612)     (15,274)     (15,499)
   Cash paid to suppliers and employees                               (22,729)     (20,346)     (18,206)
   Income taxes paid                                                   (6,483)      (6,217)      (7,108)
                                                                    ---------    ---------    ---------
                        Net cash provided by operating activities      13,490       14,446       19,014
                                                                    ---------    ---------    ---------

Cash flows from investing activities:
   Purchase of available-for-sale securities                          (29,937)     (75,268)    (166,265)
   Proceeds from maturities of available-for-sale securities            7,303       63,792      133,378
   Proceeds from sale of available-for-sale securities                      -       24,337            -
   Purchase of held-to-maturity securities                             (1,327)        (250)      (5,211)
   Proceeds from maturities of held-to-maturity securities              1,390        2,456        2,781
   Loans made to customers, net of repayments                         (89,522)    (135,024)     (43,980)
   Purchase of bank premises and equipment                             (3,062)      (4,186)      (5,160)
   Proceeds from sales of fixed assets                                      1           40          137
   Proceeds from sales of other assets                                    201          220          188
   Proceeds from sales of other real estate                             1,229        1,421        1,067
                                                                    ---------    ---------    ---------
                        Net cash used in investing activities        (113,724)    (122,462)     (83,065)
                                                                    ---------    ---------    ---------

Cash flows from financing activities:
   Net increase in non-interest bearing, savings, NOW
      and money market deposit accounts                                43,066        2,009       77,416
   Net increase in time deposits                                       53,601       60,494       13,595
   Proceeds from (purchase of) sale of securities under
      agreements to repurchase                                          2,477       (1,927)         738
   Proceeds from (repayments to) Federal Home Loan Bank, net           (1,575)      14,551         (285)
   Dividends paid                                                      (3,996)      (3,262)      (2,651)
   Dividends paid to minority shareholders                                (77)        (141)        (249)
   Proceeds from sale of stock to minority shareholders                    68          125          224
   Proceeds from sale of common stock dividend reinvestment             3,646        2,978        2,392
   Proceeds from sale of common stock pursuant to exercise
      of stock options                                                    173          181           31
   Cash paid in merger                                                    (13)           -            -
                                                                    ---------    ---------    ---------
                        Net cash provided by financing activities      97,370       75,008       91,211
                                                                    ---------    ---------    ---------

Net increase (decrease) in cash and cash equivalents                   (2,864)     (33,008)      27,160

Cash and cash equivalents at beginning of year                         49,315       82,323       55,163
                                                                    ---------    ---------    ---------

Cash and cash equivalents at end of year                            $  46,451       49,315       82,323
                                                                    =========    =========    =========

See accompanying notes to consolidated financial statements.

WILSON BANK HOLDING COMPANY

CONSOLIDATED STATEMENTS OF CASH FLOWS, CONTINUED

THREE YEARS ENDED DECEMBER 31, 2005

INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS

                                                                                 In Thousands
                                                                       ---------------------------------
                                                                          2005       2004        2003
                                                                       --------    --------    --------
Reconciliation of net earnings to net cash
 provided by operating activities:
   Net earnings                                                        $ 10,996       9,112       9,435
   Adjustments to reconcile net earnings to net cash
      provided by operating activities:
         Depreciation and amortization                                    1,825       1,511       1,287
         Provision for possible loan losses                               1,136       3,273       1,904
         Provision for deferred taxes                                      (403)       (201)       (266)
         Loss on sales of other real estate                                  65          18         112
         Loss on sales of other assets                                       40          64          35
         Security losses                                                      -          68           -
         Gain on sales of fixed assets                                       (1)        (29)        (21)
         FHLB dividend reinvestment                                        (121)       (102)        (99)
         Decrease in loans held for sale                                    580         457       6,887
         Increase (decrease) in taxes payable                               767        (325)       (602)
         Increase in accrued interest receivable                         (1,388)       (204)       (115)
         Increase (decrease) in interest payable                            538         477        (282)
         Increase in other assets                                          (883)       (352)       (358)
         Increase in accrued expenses                                       103         204         181
         Net gains of minority interests of commercial
            bank subsidiaries                                               236         475         916
                                                                       --------    --------    --------
                 Total adjustments                                        2,494       5,334       9,579
                                                                       --------    --------    --------

                 Net cash provided by operating activities             $ 13,490      14,446      19,014
                                                                       ========    ========    ========

Supplemental Schedule of Non-Cash Activities:

   Unrealized gain (loss) in value of securities available-for-sale,
      net of taxes of $634,000 in 2005, $504,000 in 2004,
      and $567,000 in 2003                                             $ (1,021)       (771)       (915)
                                                                       ========    ========    ========

   Non-cash transfers from loans to other real estate                  $    966       1,602         778
                                                                       ========    ========    ========

   Non-cash transfers from loans to other assets                       $    346         232         242
                                                                       ========    ========    ========

   Issuance of 436,546 shares of common stock for minority
      interest in subsidiary                                           $ 13,751           -           -
                                                                       ========    ========    ========

See accompanying notes to consolidated financial statements.

WILSON BANK HOLDING COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2005, 2004 AND 2003

(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The accounting and reporting policies of Wilson Bank Holding Company and Subsidiary ("the Company") are in accordance with accounting principles generally accepted in the United States of America and conform to general practices within the banking industry. The following is a brief summary of the significant policies.

(a) PRINCIPLES OF CONSOLIDATION

The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary Wilson Bank & Trust. All significant intercompany accounts and transactions have been eliminated in consolidation. Prior to March 31, 2005, the Company owned a 50% interest in DeKalb Community Bank and Community Bank of Smith County. On March 31, 2005, the Company acquired the minority interest in the subsidiaries by issuing Wilson Bank Holding Company stock to the minority shareholders. The two subsidiary banks were merged into Wilson Bank & Trust. Prior to March 31, 2005, these two 50% owned subsidiaries were included in the consolidated financial statements.

(b) NATURE OF OPERATIONS

Wilson Bank & Trust operates under a state bank charter and provides full banking services. As a state bank, the subsidiary bank is subject to regulations of the Tennessee Department of Financial Institutions and the Federal Deposit Insurance Corporation. The area served by the bank includes Wilson County, DeKalb County, Rutherford County, Smith County and Trousdale County, Tennessee and surrounding counties in Middle Tennessee. Services are provided at the main office and eighteen branch locations.

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Material estimates that are particularly susceptible to significant change in the near term relate to determination of the allowance for possible loan losses and the valuation of debt and equity securities and the related deferred taxes.

WILSON BANK HOLDING COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

DECEMBER 31, 2005, 2004 AND 2003

(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED

(d) LOANS

Loans are stated at the principal amount outstanding. Unearned discount, deferred loan fees net of loan acquisition costs, and the allowance for possible loan losses are shown as reductions of loans. Loan origination and commitment fees and certain loan-related costs are being deferred and the net amount amortized as an adjustment of the related loan's yield over the contractual life of the loan. Unearned discount represents the unamortized amount of finance charges, principally related to certain installment loans. Interest income on most loans is accrued based on the principal amount outstanding.

The Company follows the provisions of Statement of Financial Accounting Standards (SFAS) No. 114, "Accounting by Creditors for Impairment of a Loan" and SFAS No. 118, "Accounting by Creditors for Impairment of a Loan - Income Recognition and Disclosures." These pronouncements apply to impaired loans except for large groups of smaller-balance homogeneous loans that are collectively evaluated for impairment including residential mortgage and installment loans.

A loan is impaired when it is probable that the Company will be unable to collect the scheduled payments of principal and interest due under the contractual terms of the loan agreement. Impaired loans are measured at the present value of expected future cash flows discounted at the loan's effective interest rate, at the loan's observable market price, or the fair value of the collateral if the loan is collateral dependent. If the measure of the impaired loan is less than the recorded investment in the loan, the Company shall recognize an impairment by creating a valuation allowance with a corresponding charge to the provision for possible loan losses or by adjusting an existing valuation allowance for the impaired loan with a corresponding charge or credit to the provision for possible loan losses.

The Company's installment loans are divided into various groups of smaller-balance homogeneous loans that are collectively evaluated for impairment and, thus, are not subject to the provisions of SFAS Nos. 114 and 118. Substantially all other loans of the Company are evaluated for impairment under the provisions of SFAS Nos. 114 and 118.

The Company considers all loans on nonaccrual status that are subject to the provisions of SFAS Nos. 114 and 118 to be impaired. Loans are placed on nonaccrual status when doubt as to timely collection of principal or interest exists, or when principal or interest is past due 90 days or more unless such loans are well-secured and in the process of collection. Past due status of loans is based on the contractual terms of the loan. Delays or shortfalls in loan payments are evaluated along with various other factors to determine if a loan is impaired. Generally, delinquencies under 90 days are considered

WILSON BANK HOLDING COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

DECEMBER 31, 2005, 2004 AND 2003

(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED

(d) LOANS, CONTINUED

insignificant unless certain other factors are present which indicate impairment is probable. The decision to place a loan on nonaccrual status is also based on an evaluation of the borrower's financial condition, collateral, liquidation value, and other factors that affect the borrower's ability to pay.

Generally, at the time a loan is placed on nonaccrual status, all interest accrued and uncollected on the loan in the current fiscal year is reversed from income, and all interest accrued and uncollected from the prior year is charged off against the allowance for possible loan losses. Thereafter, interest on nonaccrual loans is recognized as interest income only to the extent that cash is received and future collection of principal is not in doubt. If the collectibility of outstanding principal is doubtful, such cash received is applied as a reduction of principal. A nonaccrual loan may be restored to an accruing status when principal and interest are no longer past due and unpaid and future collection of principal and interest on a timely basis is not in doubt.

Loans not on nonaccrual status are classified as impaired in certain cases when there is inadequate protection by the current net worth and financial capacity of the borrower or of the collateral pledged, if any. In those cases, such loans have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt, and if such deficiencies are not corrected, there is a probability that the Company will sustain some loss. In such cases, interest income continues to accrue as long as the loan does not meet the Company's criteria for nonaccrual status.

Generally, the Company also classifies as impaired any loans the terms of which have been modified in a troubled debt restructuring. Interest is generally accrued on such loans that continue to meet the modified terms of their loan agreements.

The Company's charge-off policy for impaired loans is similar to its charge-off policy for all loans in that loans are charged off in the month when they are considered uncollectible.

(e) ALLOWANCE FOR POSSIBLE LOAN LOSSES

The provision for possible loan losses represents a charge to earnings necessary, after loan charge-offs and recoveries, to maintain the allowance for possible loan losses at an appropriate level which is adequate to absorb estimated losses inherent in the loan portfolio. Such estimated losses arise primarily from the loan portfolio but may also be derived from other sources, including commitments to extend credit and standby letters of credit. The level of the allowance is determined on a monthly basis using procedures which include: (1) categorizing commercial and commercial real estate loans into risk categories to estimate loss probabilities based primarily on the historical loss experience

WILSON BANK HOLDING COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

DECEMBER 31, 2005, 2004 AND 2003

(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED

(e) ALLOWANCE FOR POSSIBLE LOAN LOSSES, CONTINUED

of those risk categories and current economic conditions; (2) analyzing significant commercial and commercial real estate credits and calculating specific reserves as necessary; (3) assessing various homogeneous consumer loan categories to estimate loss probabilities based primarily on historical loss experience; (4) reviewing unfunded commitments; and (5) considering various other factors, such as changes in credit concentrations, loan mix, and economic conditions which may not be specifically quantified in the loan analysis process.

The allowance for possible loan losses consists of an allocated portion and an unallocated, or general portion. The allocated portion is maintained to cover estimated losses applicable to specific segments of the loan portfolio. The unallocated portion is maintained to absorb losses which probably exist as of the evaluation date but are not identified by the more objective processes used for the allocated portion of the allowance due to risk of errors or imprecision. While the total allowance consists of an allocated portion and an unallocated portion, these terms are primarily used to describe a process. Both portions of the allowance are available to provide for inherent loss in the entire portfolio.

The allowance for possible loan losses is increased by provisions for possible loan losses charged to expense and is reduced by loans charged off net of recoveries on loans previously charged off. The provision is based on management's determination of the amount of the allowance necessary to provide for estimated loan losses based on its evaluation of the loan portfolio. Determining the appropriate level of the allowance and the amount of the provision involves uncertainties and matters of judgment and therefore cannot be determined with precision.

(f) DEBT AND EQUITY SECURITIES

The Company applies the provisions of Statement of Financial Accounting Standards No. 115, "Accounting for Certain Investments in Debt and Equity Securities". Under the provisions of the Statement, securities are classified in three categories and accounted for as follows:

- Securities Held-to-Maturity

Debt securities that the enterprise has the positive intent and ability to hold to maturity are classified as held-to-maturity securities and reported at amortized cost. Amortization of premiums and accretion of discounts are recognized by the interest method.

WILSON BANK HOLDING COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

DECEMBER 31, 2005, 2004 AND 2003

(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED

(f) DEBT AND EQUITY SECURITIES, CONTINUED

- Trading Securities

Debt and equity securities that are bought and held principally for the purpose of selling them in the near term are classified as trading securities and reported at fair value, with unrealized gains and losses included in earnings.

- Securities Available-for-Sale

Debt and equity securities not classified as either held-to-maturity securities or trading securities are classified as available-for-sale securities and reported at estimated fair value, with unrealized gains and losses excluded from earnings and reported in a separate component of stockholders' equity. Premiums and discounts are recognized by the interest method.

No securities have been classified as trading securities.

Realized gains or losses from the sale of debt and equity securities are recognized based upon the specific identification method.

(g) LOANS HELD FOR SALE

Mortgage loans held for sale are reported at the lower of cost or market value determined by outstanding commitments from investors at the balance sheet date. These loans are valued on an aggregate basis.

(h) PREMISES AND EQUIPMENT

Premises and equipment are stated at cost. Depreciation is computed primarily by the straight-line method over the estimated useful lives of the related assets. Gain or loss on items retired and otherwise disposed of is credited or charged to operations and cost and related accumulated depreciation are removed from the asset and accumulated depreciation accounts.

Expenditures for major renewals and improvements of premises and equipment are capitalized and those for maintenance and repairs are charged to earnings as incurred.

WILSON BANK HOLDING COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

DECEMBER 31, 2005, 2004 AND 2003

(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED

(i) INTANGIBLE ASSETS

Statement of Financial Accounting Standards No. 142, "Goodwill and Other Intangible Assets" (SFAS No. 142) requires that management determine the allocation of intangible assets into identifiable groups at the date of acquisition and appropriate amortization periods be established. Under the provisions of SFAS No. 142 goodwill is not to be amortized rather it is to be monitored for impairment and written down to the impairment value at the time impairment occurs. The Company has determined that no impairment loss needs to be recognized related to the goodwill.

(j) CASH AND CASH EQUIVALENTS

For purposes of reporting cash flows, cash and cash equivalents include cash on hand, amounts due from banks and Federal funds sold. Generally, Federal funds sold are purchased and sold for one-day periods. Management makes deposits only with financial institutions it considers to be financially sound.

(k) SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE

Substantially all repurchase agreement liabilities represent amounts advanced by various customers. Securities are pledged to cover these liabilities, which are not covered by Federal deposit insurance.

(l) LONG-TERM ASSETS

Premises and equipment, intangible assets, and other long-term assets are reviewed for impairment when events indicate their carrying amount may not be recoverable from future undiscounted cash flows. If impaired, the assets are recorded at fair value.

(m) INCOME TAXES

Provisions for income taxes are based on taxes payable or refundable for the current year (after exclusion of non-taxable income such as interest on state and municipal securities) and deferred taxes on temporary differences between the amount of taxable and pretax financial income and between the tax bases of assets and liabilities and their reported amounts in the financial statements. Deferred tax assets and liabilities are included in the financial statements at currently enacted income tax rates applicable to the period in which the deferred tax asset and liabilities are expected to be realized or settled as prescribed in Statement of Financial Accounting Standards No. 109, "Accounting for Income Taxes." As changes in tax laws or rates are enacted, deferred tax assets and liabilities are adjusted through the provision for income taxes.

WILSON BANK HOLDING COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

DECEMBER 31, 2005, 2004 AND 2003

(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED

(m) INCOME TAXES, CONTINUED

The Company and its wholly-owned subsidiary file consolidated Federal and State income tax returns. The 50% owned subsidiaries filed separate Federal income tax returns for the three months prior to the merger. Each subsidiary provides for income taxes on a separate-return basis.

(n) STOCK OPTIONS

The Company uses the fair value method to calculate the compensation reported in the proforma earnings in note 19 to the consolidated financial statements.

(o) ADVERTISING COSTS

Advertising costs are expensed when incurred by the Company.

(p) STOCK SPLIT

The Company's Board of Directors voted a 2 for 1 stock split for stockholders of record as of October 1, 2003 payable October 31, 2003. Each stockholder received one (1) additional share for each one (1) share owned with no allowance for fractional shares. Per share data included in these consolidated financial statements has been restated to give effect to the stock split.

(q) OTHER REAL ESTATE

Real estate acquired in settlement of loans is initially recorded at the lower of cost (loan value of real estate acquired in settlement of loans plus incidental expense) or estimated fair value, less estimated cost to sell. Based on periodic evaluations by management, the carrying values are reduced by a direct charge to earnings when they exceed net realizable value. Costs relating to the development and improvement of the property are capitalized, while holding costs of the property are charged to expense in the period incurred.

(r) RECLASSIFICATIONS

Certain reclassifications have been made to the 2004 and 2003 figures to conform to the presentation for 2005.

WILSON BANK HOLDING COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

DECEMBER 31, 2005, 2004 AND 2003

(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED

(s) OFF-BALANCE-SHEET FINANCIAL INSTRUMENTS

In the ordinary course of business the subsidiary banks have entered into off-balance-sheet financial instruments consisting of commitments to extend credit, commitments under credit card arrangements, commercial letters of credit and standby letters of credit. Such financial instruments are recorded in the financial statements when they are funded or related fees are incurred or received.

(t) IMPACT OF NEW ACCOUNTING STANDARDS

In June, 2002, the FASB issued SFAS 146, "Accounting for Costs Associated with Exit or Disposal Activities". SFAS 146 addresses financial accounting and reporting for costs associated with exit or disposal activities and nullifies Emerging Issues Task Force (EITF) Issue No. 94-3, "Liability Recognition for Certain Employee Termination Benefits and Other Costs to Exit an Activity (including Certain Costs Incurred in a Restructuring)." The provisions of the Statement are effective for exit or disposal activities that are initiated after December 31, 2002. The adoption of SFAS 146 did not have a material impact on the Company's financial position or results of operations.

In October, 2002, the Financial Accounting Standards Board issued Statement of Financial Accounting Standard No. 147, "Acquisitions of Certain Financial Institutions". SFAS No. 147 amends SFAS No. 72 and FASB Interpretation No. 9 to eliminate all acquisitions of financial institutions other than transactions between mutual enterprises from their scope. Accordingly, the excess of the purchase price paid to acquire a financial institution over the fair value of the identifiable tangible and intangible assets and liabilities acquired now must be recorded as goodwill following SFAS No. 141 and assessed for impairment following SFAS No. 142, "Goodwill and Other Intangible Assets". Furthermore, any previously recognized unidentifiable intangible assets resulting from prior business combinations that do not meet SFAS No. 141's criteria for separate recognition must be reclassified to goodwill. The Company has adopted SFAS 147, and has applied the provisions of SFAS No. 141 and SFAS No. 142 to the acquisition of the minority interest as described in note 23 to the consolidated financial statements.

WILSON BANK HOLDING COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

DECEMBER 31, 2005, 2004 AND 2003

(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED

(t) IMPACT OF NEW ACCOUNTING STANDARDS, CONTINUED

In November, 2002, the FASB issued Interpretation (FIN) 45, "Guarantor's Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantee of Indebtedness of Others", which elaborates on the disclosure to be made by a guarantor in its interim and annual financial statements about its obligations under certain guarantees that it has issued. The interpretation also clarifies that a guarantor is required to recognize, at the inception of the guarantee, a liability for the fair value of the obligation undertaken in issuing the guarantee. The adoption of FIN 45 did not have a material impact on the consolidated financial statements.

In May, 2003, the FASB issued SFAS 150, "Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity". This Statement established standards for how an issuer classifies and measures certain financial instruments with characteristics of both liabilities and equity. It requires that an issuer classify a financial instrument that is within its scope as a liability (or an asset in some circumstances). Many of those instruments were previously classified as equity. This statement is effective for financial instruments entered into or modified after May 31, 2003, and otherwise is effective at the beginning of the first interim period beginning after June 15, 2003. The adoption of SFAS 150 did not have a material impact on the Company's financial position or results of operations.

In June, 2003, the American Institute of Certified Public Accountants issued an exposure draft on a Proposed Statement of Position (SOP) on Allowance for Credit Losses. If approved, the Proposed SOP would significantly change the way the allowance for possible loan losses is calculated. Under the Proposed SOP, any loans determined to be impaired, as defined in FASB Statement No. 114, would be assigned a specific reserve based on facts and circumstances surrounding the particular loan and no loss percentage would be assigned. If a loan is determined not to be impaired, it would be assigned to a pool of similar homogeneous loans. A loss percentage would then be assigned to the

WILSON BANK HOLDING COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

DECEMBER 31, 2005, 2004 AND 2003

(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED

(t) IMPACT OF NEW ACCOUNTING STANDARDS, CONTINUED

pool based on historical charge-offs adjusted for internal or external factors such as the economy, changes in underwriting standards, etc. Management has not yet determined the impact this Proposed SOP would have on their consolidated financial statements, but anticipates that it could result in a reduction in the allowance for possible loan losses. Under the Proposal, any changes resulting from the initial application of this Proposed SOP would be treated as a change in accounting estimate.

In addition, there is currently outstanding a bank regulatory interagency proposal dated March 28, 2005 related to the methodology for assigning risk factors to loans and other extensions of credit. The policy, if adopted, could effect the calculation of the allowance for possible loan losses. Management has not determined the impact of this policy statement; however, it is not expected to have a material impact on the consolidated financial statements.

In June, 2003, the Financial Accounting Standards Board issued Statement of Financial Accounting Standard No. 149, "Amendment of Statement 133 on Derivative Instruments and Hedging Activities". SFAS 149 amends and clarifies financial accounting and reporting for derivative instruments, including certain derivative instruments embedded in other contracts (collectively referred to as derivatives) and for hedging activities under FASB Statement No. 133, "Accounting for Derivative Instruments and Hedging Activities". Under SFAS 149 loan commitments that relate to the origination of mortgage loans that will be held for sale, commonly referred to as interest rate lock commitments, must be accounted for as derivatives by the issuer of the commitment. Commitments to originate mortgage loans that will be held for investment purposes and commitments to originate other types of loans are not considered derivatives. The Company has adopted SFAS 149, but it has not had any material impact on the Company's financial position or results of operations.

On December 31, 2003, the Company adopted certain disclosure requirements of Emerging Issues Task Force (EITF) Issue No. 03-1, "The Meaning of Other-Than-Temporary Impairment and Its Application to Certain Investments". These disclosure concerned unrealized losses related to investment in debt and marketable equity securities that are accounted for under SFAS No. 115. Disclosures include the length of time investments have been in a loss position and discussion pertaining to the nature of the impairment. In September, 2004, the FASB approved issuance of Staff Position (FSP) EITF 03-1-1, "Effective Date of Paragraphs 10 through 20 of EITF Issue No. 03-1, the Meaning of Other-Than-Temporary Impairment and Its Application to Certain Investments" (EITF 03-1). FSP EITF 03-1-1 delays the effective date of paragraphs 10 through 20 of EITF 03-1 as they relate to recognition of other-than-temporary impairment for cost method and marketable investments. This deferral will extend until the FASB provides clarification of the guidance presented in paragraphs 10 through 20. Effective July 1, 2004, the Company adopted all remaining provisions of EITF Issue

WILSON BANK HOLDING COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

DECEMBER 31, 2005, 2004 AND 2003

(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED

(t) IMPACT OF NEW ACCOUNTING STANDARDS, CONTINUED

03-1, including measurement guidance for evaluating whether impairment has occurred for marketable securities and cost method investments. The effect of implementing the final provisions of paragraphs 10 through 20 cannot currently be estimated due to the pending implementation issues. The adoption of all other provisions of EITF Issue No. 03-1 did not have an impact on the results of operations.

In December, 2004, the Financial Accounting Standards Board ("FASB") reissued Statement of Financial Accounting Standards No. 123 (revised 204) ("SFAS") related to share based payments. For Wilson Bank Holding Company the SFAS applies to the accounting for stock options. The substance of the revised statement is to require companies to record as an expense amortization of the fair market value of stock options determined as of the grand date. The offsetting credit is to additional paid-in capital unless there is an obligation to buy back the stock or exchange other assets for the stock. If such an obligation exists the offsetting credit would be to a liability account. The statement is effective for the first interim reporting period after June 15, 2005. Management does not expect the impact to be material on the financial condition or result of operations.

WILSON BANK HOLDING COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

DECEMBER 31, 2005, 2004 AND 2003

(2) LOANS AND ALLOWANCE FOR POSSIBLE LOAN LOSSES

The classification of loans at December 31, 2005 and 2004 is as follows:

                                                        In Thousands
                                               ----------------------------
                                                   2005            2004
                                               ------------    ------------
Commercial, financial and agricultural         $    251,494         217,372
 Installment                                         86,079          73,482
Real estate - construction                           58,672          49,085
Real estate - mortgage                              414,543         384,062
                                               ------------    ------------
                                                    810,788         724,001
Allowance for possible loan losses                   (9,083)         (9,370)
                                               ------------    ------------
                                               $    801,705         714,631
                                               ============    ============

The principal maturities on loans at December 31, 2005 are as follows:

                                                         In Thousands
                      ---------------------------------------------------------------------------------
                       Commercial,
                        Financial
                           and                          Real Estate -     Real Estate-
                       Agricultural     Installment     Construction        Mortgage          Total
                      -------------     -----------    ---------------    ------------     ------------
3 months or less      $      37,761           7,112             19,666           1,667           66,206
3 to 12 months              113,528           6,521             29,110           7,009          156,168
1 to 5 years                 70,315          67,460              9,896          76,692          224,363
Over 5 Years                 29,890           4,986                  -         329,175          364,051
                      -------------     -----------    ---------------    ------------     ------------

                      $     251,494          86,079             58,672         414,543          810,788
                      =============     ===========    ===============    ============     ============

At December 31, 2005, variable rate loans were $450,756,000 and fixed rate loans totaled $360,032,000. At December 31, 2004, variable rate and fixed rate loans totaled $391,560,000 and $332,441,000, respectively.

In the normal course of business, the Company's subsidiaries have made loans at prevailing interest rates and terms to directors and executive officers of the Company and to their affiliates. The aggregate amount of these loans was $12,953,000 and $15,416,000 at December 31, 2005 and 2004, respectively. As of December 31, 2005 none of these loans were restructured, nor were any related party loans charged-off during the past three years.

WILSON BANK HOLDING COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

DECEMBER 31, 2005, 2004 AND 2003

(2) LOANS AND ALLOWANCE FOR POSSIBLE LOAN LOSSES, CONTINUED

An analysis of the activity with respect to such loans to related parties is as follows:

                                                              In Thousands
                                                       ------------------------
                                                              December 31,
                                                       ------------------------
                                                           2005          2004
                                                       -----------   ----------
Balance, January 1                                     $    15,416       14,092
New loans during the year                                   16,292       17,949
Repayments during the year                                 (18,755)     (16,625)
                                                       ------------  ----------
Balance, December 31                                   $    12,953       15,416
                                                       ===========   ==========

A director of the Company performs appraisals related to certain loan customers. Fees paid to the director for these services were $400,000 in 2005, $487,000 in 2004 and $493,000 in 2003.

Loans which had been placed on non-accrual status totaled $225,000 and $624,000 at December 31, 2005 and 2004, respectively. Had interest on these loans been accrued, interest income would have been increased by approximately $13,000 in 2005 and $13,000 in 2004. In 2003, interest income that would have been earned had there been no non-accrual loans totaled approximately $8,000. Loans that are past due 90 days or more and are still accruing interest totaled $2,015,000 and $2,533,000 at December 31, 2005 and 2004, respectively.

Transactions in the allowance for possible loan losses for the years ended December 31, 2005, 2004 and 2003 are summarized as follows:

                                                                   In Thousands
                                                  ---------------------------------------------
                                                       2005             2004            2003
                                                  ------------     ------------    ------------
Balance, beginning of year                        $      9,370            8,077           6,943
Provision charged to operating expense                   1,136            3,273           1,904
Loans charged off                                       (1,616)          (2,298)           (966)
Recoveries on losses                                       193              318             196
                                                  ------------     ------------    ------------

Balance, end of year                              $      9,083            9,370           8,077
                                                  ============     ============    ============

The Company's principal customers are basically in the Middle Tennessee area with a concentration in Wilson County, Tennessee. Credit is extended to businesses and individuals and is evidenced by promissory notes. The terms and conditions of the loans including collateral varies depending upon the purpose of the credit and the borrower's financial condition.

WILSON BANK HOLDING COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

DECEMBER 31, 2005, 2004 AND 2003

(2) LOANS AND ALLOWANCE FOR POSSIBLE LOAN LOSSES, CONTINUED

Impaired loans and related loan loss reserve amounts at December 31, 2005 and 2004 were as follows:

                                            In Thousands
                                   ------------------------------
                                            December 31,
                                   ------------------------------
                                       2005            2004
                                   ------------     ------------
Recorded investment                $   --                     295
Loan loss reserve                  $   --                      41

The average recorded investment in impaired loans for the years ended December 31, 2005, 2004 and 2003 was $78,000, $121,000 and $1,006,000, respectively. The related total amount of interest income recognized on the accrual basis for the period that such loans were impaired was $6,000, $8,000 and $69,000 during 2005, 2004 and 2003, respectively.

In 2005, 2004 and 2003, the Company originated and sold loans in the secondary market of $74,685,000 $70,854,000 and $120,704,000, respectively. The gain on sale of these loans totaled $1,113,000, $1,006,000 and $2,115,000 in 2005, 2004 and 2003, respectively.

Of the loans sold in the secondary market, the recourse to the wholly-owned subsidiary Bank is limited. On loans sold to the Federal Home Loan Mortgage Corporation, the Bank has a recourse obligation for one year from the purchase date. At December 31, 2005, there were no loans sold to the Federal Home Loan Mortgage Corporation with existing recourse. All other loans sold in the secondary market provide the purchase recourse to the Bank for a period of 90 days from the date of purchase and only in the event of a default by the borrower pursuant to the terms of the individual loan agreement. At December 31, 2005, total loans sold with recourse to the Bank, including those sold to the Federal Home Loan Mortgage Corporation, aggregated $24,469,000. At December 31, 2005, the wholly-owned subsidiary Bank had not been required to repurchase any of the loans originated by the Bank and sold in the secondary market. Management expects no loss to result from these recourse provisions.

(3) DEBT AND EQUITY SECURITIES

Debt and equity securities have been classified in the consolidated balance sheet according to management's intent. Debt and equity securities at December 31, 2005 consist of the following:

                                                           Securities Held-To-Maturity
                                        ---------------------------------------------------------------
                                                                  In Thousands
                                        ---------------------------------------------------------------
                                                             Gross            Gross          Estimated
                                          Amortized       Unrealized       Unrealized         Market
                                            Cost             Gains           Losses            Value
                                        ------------     ------------     ------------     ------------
Obligations of states and political
  subdivisions                          $     14,241              202               69           14,374
Mortgage-backed securities                       133                -                -              133
                                        ------------     ------------     ------------     ------------
                                        $     14,374              202               69           14,507
                                        ============     ============     ============     ============

WILSON BANK HOLDING COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

DECEMBER 31, 2005, 2004 AND 2003

(3) DEBT AND EQUITY SECURITIES, CONTINUED

                                                          Securities Available-For-Sale
                                        ------------------------------------------------------------------
                                                                  In Thousands
                                        ------------------------------------------------------------------
                                                            Gross            Gross          Estimated
                                         Amortized        Unrealized       Unrealized         Market
                                            Cost             Gains           Losses            Value
                                        ------------     ------------     ------------     ------------
U.S. Treasury and other U.S.
  Government agencies and
  corporations                          $    138,056                -            3,349          134,707
Obligations of states and political
  subdivisions                                 1,340               23                4            1,359
Mortgage-backed securities                     3,426                1               29            3,398
                                        ------------     ------------     ------------     ------------
                                        $    142,822               24            3,382          139,464
                                        ============     ============     ============     ============

The Company's classification of securities at December 31, 2004 is as follows:

                                                           Securities Held-To-Maturity
                                        ---------------------------------------------------------------
                                                                  In Thousands
                                        ---------------------------------------------------------------
                                                            Gross            Gross          Estimated
                                         Amortized        Unrealized       Unrealized         Market
                                            Cost             Gains           Losses            Value
                                        ------------     ------------     ------------     ------------
Obligations of states and political
  subdivisions                          $     14,202              512                9           14,705
Mortgage-backed securities                       235                -                -              235
                                        ------------     ----------------------------------------------

                                        $     14,437              512                9           14,940
                                        ============     ============     ============     ============

                                                          Securities Available-For-Sale
                                        ---------------------------------------------------------------
                                                                  In Thousands
                                        ---------------------------------------------------------------
                                                            Gross             Gross          Estimated
                                         Amortized        Unrealized       Unrealized         Market
                                            Cost            Gains            Losses            Value
                                        ------------     ------------     ------------     ------------
U.S. Treasury and other U.S.
  Government agencies and
  corporations                          $    109,945               24            1,586          108,383
Obligations of states and political
  subdivisions                                 1,035               61                -            1,096
Mortgage-backed securities                     9,208                5               57            9,156
                                        ------------     ------------     ------------     ------------

                                        $    120,188               90            1,643          118,635
                                        ============     ============     ============     ============

WILSON BANK HOLDING COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

DECEMBER 31, 2005, 2004 AND 2003

(3) DEBT AND EQUITY SECURITIES, CONTINUED

The amortized cost and estimated market value of debt securities at December 31, 2005, by contractual maturity, are shown below. Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

                                                                      In Thousands
                                                          ----------------------------------
                                                                                 Estimated
                                                            Amortized              Market
Securities Held-To-Maturity                                   Cost                  Value
                                                          -------------        -------------
Due in one year or less                                   $         129                  131
Due after one year through five years                             7,103                7,184
Due after five years through ten years                            5,918                5,941
Due after ten years                                               1,091                1,118
                                                          -------------        -------------
                                                                 14,241               14,374
Mortgage-backed securities                                          133                  133
                                                          -------------        -------------
                                                          $      14,374               14,507
                                                          =============        =============

                                                                      In Thousands
                                                          ----------------------------------
                                                                                 Estimated
                                                            Amortized              Market
Securities Available-For-Sale                                 Cost                 Value
                                                          -------------        -------------
Due in one year or less                                   $      26,259               25,811
Due after one year through five years                           106,938              104,200
Due after five years through ten years                            6,199                6,055
Due after ten years                                                   -                    -
                                                          -------------        -------------
                                                                139,396              136,066
Mortgage-backed securities                                        3,426                3,398
                                                          -------------        -------------
                                                          $     142,822              139,464
                                                          =============        =============

The Company periodically applies the stress test to its securities portfolio. To satisfy the stress test a security's estimated market value should not decline more than certain percentages given certain assumed interest rate increases. The Company had no securities that failed to meet the stress test.

Results from sales of debt and equity securities are as follows:

                                                                   In Thousands
                                                  -----------------------------------------------
                                                       2005             2004            2003
                                                  -------------    ------------    --------------
Gross proceeds                                    $           -          24,337                 -
                                                  =============    ============    ==============
Gross realized gains                              $           -               -                 -
Gross realized losses                                         -              68                 -
                                                  -----------------------------    --------------
           Net realized losses                    $           -             (68)                -
                                                  =============    ============    ==============

WILSON BANK HOLDING COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

DECEMBER 31, 2005, 2004 AND 2003

(3) DEBT AND EQUITY SECURITIES, CONTINUED

Securities carried in the balance sheet of approximately $88,946,000 (approximate market value of $86,860,000) and $96,933,000 (approximate market value of $96,138,000), were pledged to secure public deposits and for other purposes as required or permitted by law at December 31, 2005 and 2004, respectively.

Included in the securities above are $15,382,000 (approximate market value of $15,518,000) and $15,037,000 (approximate market value of $15,578,000) at December 31, 2005 and 2004, respectively, in obligations of political subdivisions located within the State of Tennessee. Management purchases only obligations of such political subdivisions it considers to be financially sound.

Securities that have rates that adjust prior to maturity totaled $205,000 (approximate market value of $206,000) and $327,000 (approximate market value of $327,000) at December 31, 2005 and 2004, respectively.

                                              In Thousands, Except Number of Securities
                  --------------------------------------------------------------------------------------------
                          Less than 12 Months                 12 Months or More                 Total
                  ---------------------------------   --------------------------------   ---------------------
                                          Number                              Number
                                            of                                 of
                    Fair     Unrealized  Securities     Fair    Unrealized  Securities     Fair     Unrealized
                   Value       Losses     Included      Value      Losses    Included      Value      Losses
                  --------   ----------  ----------   --------  ----------  ----------   ---------  ----------
U.S. Treasury
 and other U.S.
 Government
 agencies and
 corporations     $ 29,831          348          26    104,876       3,001         122     134,707       3,349

Obligations of
 states and
 political sub-
 divisions           5,539           61          25        666          12           4       6,205          73

Mortgage-backed
 securities             17            -           1      3,303          29           8       3,320          29
                  --------   ----------  ----------   --------  ----------  ----------   ---------  ----------

    Total
     temporarily
     impaired
     securities   $ 35,387        409            52    108,845       3,042         134     144,232       3,451
                  ========   ==========  ==========   ========  ==========  ==========   =========  ==========

WILSON BANK HOLDING COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

DECEMBER 31, 2005, 2004 AND 2003

(3) DEBT AND EQUITY SECURITIES, CONTINUED

The impaired securities are considered high quality investments in line with normal industry investing practices. The unrealized losses are primarily the result of changes in the interest rate and sector environments. Consistent with the original classification, as available-for-sale or held-to-maturity securities, the Company intends and has the ability to hold the above securities until the value is realized.

The Company may sell the above or other securities in the ordinary course of business in response to unexpected and significant changes in liquidity needs, unexpected and significant increases in interest rates and/or sector spreads that significantly extend the security's holding period, or conducting a small volume of security transactions.

(4) RESTRICTED EQUITY SECURITIES

Restricted equity securities consists of stock of the Federal Home Loan Bank amounting to $2,694,000 and $2,573,000 at December 31, 2005 and 2004, respectively, and the stock of The Bankers Bank amounting to $88,000 at December 31, 2005 and 2004, respectively. The stock can be sold back only at par or a value as determined by the issuing institution and only to the respective financial institution or to another member institution. These securities are recorded at cost.

(5) PREMISES AND EQUIPMENT

The detail of premises and equipment at December 31, 2005 and 2004 is as follows:

                                              In Thousands
                                        --------------------------
                                            2005           2004
                                        -----------     ----------
Land                                    $     7,737          5,869
Buildings                                    16,226         15,512
Construction in progress                        187            109
Leasehold improvements                          140            140
Furniture and equipment                       7,294          6,705
Automobiles                                     215            175
                                        -----------     ----------
                                             31,799         28,510
Less accumulated depreciation                (8,198)        (6,680)
                                        -----------     ----------
                                        $    23,601         21,830
                                        ============    ==========

Building additions during 2005 and 2004 include payments of $177,000 and $643,000, respectively, to a construction company owned by a director of the Company.

Depreciation expense was $1,526,000 $1,511,000 and $1,287,000 for the years ended December 31, 2005, 2004 and 2003, respectively.

WILSON BANK HOLDING COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

DECEMBER 31, 2005, 2004 AND 2003

(6) ACQUIRED INTANGIBLE ASSETS AND GOODWILL

The intangible assets result from the excess of purchase price over the applicable book value of the net assets acquired from minority shareholders:

Amortizable intangible assets:

                                                In Thousands
                                        ----------------------------
                                            2005            2004
                                        ------------    ------------
Premium on purchased deposits           $      2,787               -

Accumulated amortization                         299               -
                                        ------------    ------------
                                        $      2,488               -
                                        ============    ============

                                                    Year Ended December 31,
                                             -----------------------------------
                                               2005            2004       2003
                                             ------------   ---------  ---------
Amortization expense for the year ended      $        299           -          -
                                             ============   =========  =========

Estimated amortization expense:

For the Year Ended
       2006                             $        398
       2007                                      398
       2008                                      398
       2009                                      398
       2010                                      398
       2011                                      398
       2012                                      100

The premium on purchased deposits is being amortized on a straight-line basis over 7 years.

Goodwill:

                                                            In Thousands
                                                    ----------------------------
                                                        2005            2004
                                                    ------------    ------------
Balance at January 1,                               $          -               -
Goodwill acquired during year                              4,805               -
Impairment loss                                                -               -
                                                    ------------    ------------
Balance at December 31,                             $      4,805               -
                                                    ============    ============

WILSON BANK HOLDING COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

DECEMBER 31, 2005, 2004 AND 2003

(7) DEPOSITS

Deposits at December 31, 2005 and 2004 are summarized as follows:

                                                              In Thousands
                                                       -------------------------
                                                           2005          2004
                                                       -----------    ----------
Demand deposits                                        $   113,859       102,482
Savings accounts                                            38,421        38,342
Negotiable order of withdrawal accounts                     86,037        68,228
Money market demand accounts                               202,235       188,435
Certificates of deposit $100,000 or greater                182,311       158,374
Other certificates of deposit                              260,313       235,124
Individual retirement accounts $100,000 or greater          14,569        12,916
Other individual retirement accounts                        31,844        29,021
                                                       -----------    ----------
                                                       $   929,589       832,922
                                                       ===========    ==========

Principal maturities of certificates of deposit and individual retirement accounts at December 31, 2005 are as follows:

                                              (In Thousands)
Maturity                                          Total
                                              -------------
2006                                          $     310,195
2007                                                 93,476
2008                                                 29,397
2009                                                 55,926
2010                                                      -
Thereafter                                               43
                                              -------------
                                              $     489,037
                                              =============

At December 31, 2005, certificates of deposit and individual retirement accounts in denominations of $100,000 or more amounted to $196,880,000 as compared to $171,290,000 at December 31, 2004.

The aggregate amount of overdrafts reclassified as loans receivable was $2,041,000 and $472,000 at December 31, 2005 and 2004, respectively.

The subsidiary bank is required to maintain cash balances or balances with the Federal Reserve Bank or other correspondent banks based on certain percentages of deposit types. The average required amounts for the years ended December 31, 2005 and 2004 were approximately $13,791,000 and $12,061,000, respectively.

WILSON BANK HOLDING COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

DECEMBER 31, 2005, 2004 AND 2003

(8) SECURITIES SOLD UNDER REPURCHASE AGREEMENTS

Securities sold under repurchase agreements were $9,156,000 and $6,679,000 at December 31, 2005 and 2004, respectively. The maximum amounts of outstanding repurchase agreements at any month end during 2005 and 2004 was $9,156,000 and $13,676,000, respectively. The average daily balance outstanding during 2005, 2004 and 2003 was $6,622,000, $9,254,000 and $10,591,000, respectively. The weighted-average interest rate on the outstanding balance at December 31, 2005 and 2004 was 3.21% and 1.68%, respectively. The underlying securities are typically held by other financial institutions and are designated as pledged.

(9) ADVANCES FROM FEDERAL HOME LOAN BANK

The advances from the Federal Home Loan Bank at December 31, 2005 and 2004 consist of the following:

                                          In Thousands
                      ------------------------------------------------------
                                           December 31,
                      ------------------------------------------------------
                               2005                         2004
                      -------------------------    -------------------------
                                     Weighted                     Weighted
                       Amount      Average Rate     Amount      Average Rate
                      ---------    ------------    ---------    ------------
Fixed-rate advance    $  13,688       4.32%        $  15,263        4.58%
                      =========       =====        =========        =====

Advances from the Federal Home Loan Bank are to mature as follows at December 31, 2005:

Year Ending         In Thousands
December 31,           Amount
------------        ------------
   2009               $  13,354
   2010                     334
                      ---------
                      $  13,688
                      =========

These advances are collateralized by a required blanket pledge of qualifying mortgage loans.

WILSON BANK HOLDING COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

DECEMBER 31, 2005, 2004 AND 2003

(10) NON-INTEREST INCOME AND NON-INTEREST EXPENSE

The significant components of non-interest income and non-interest expense for the years ended December 31 are presented below:

                                                                 In Thousands
                                                         -------------------------------
                                                           2005         2004       2003
                                                         ---------     ------     ------
Non-interest income:
   Service charges on deposits                           $   5,291      4,960      4,433
   Other fees                                                2,392      2,109      1,810
   Gains on sales of loans                                   1,113      1,006      2,115
   Gains on sales of fixed assets                                1         29         21
   Other income                                                129         35        -
                                                         ---------     ------     ------
                                                         $   8,926      8,139      8,379
                                                         =========     ======     ======

Non-interest expense:
   Employee salaries and benefits                        $  13,526     12,566     11,082
   Occupancy expenses                                        1,451      1,290      1,152
   Furniture and equipment expenses                          1,849      1,623      1,421
   Loss on sales of other assets                                65         64         35
   Loss on sales of other real estate                           40         18        112
   Security losses                                               -         68          -
   FDIC insurance                                              128        113        108
   Directors' fees                                             713        743        683
   Other operating expenses                                  6,107      5,376      4,868
   Minority interest in net earnings of subsidiaries           236        475        916
                                                         ---------     ------     ------
                                                         $  24,115     22,336     20,377
                                                         =========     ======     ======

(11) INCOME TAXES

The components of the net deferred tax asset are as follows:

                                In Thousands
                            -------------------
                              2005        2004
                            ---------     -----
Deferred tax asset:
   Federal                  $   4,202     3,470
   State                          859       710
                            ---------     -----
                                5,061     4,180
                            ---------     -----
Deferred tax liability:
   Federal                     (1,602)     (819)
   State                         (328)     (167)
                            ---------     -----
                               (1,930)     (986)
                            ---------     -----

                            $   3,131     3,194
                            =========     =====

WILSON BANK HOLDING COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

DECEMBER 31, 2005, 2004 AND 2003

(11) INCOME TAXES, CONTINUED

The tax effects of each type of significant item that gave rise to deferred taxes are:

                                                                         In Thousands
                                                                      -------------------
                                                                        2005        2004
                                                                      --------      -----
Financial statement allowance for loan losses in excess of
   tax allowance                                                      $  3,478      3,301

Excess of depreciation deducted for tax purposes over the
   amounts deducted in the financial statements                           (604)      (656)

Financial statement deduction for deferred compensation in
   excess of deduction for tax purposes                                    298        285

Financial statement income on FHLB stock dividends not
   recognized for tax purposes                                            (374)      (331)

Deposit base premium related to acquisition of minority interest          (953)         -

Unrealized loss on securities available-for-sale                         1,286        595
                                                                      --------      -----

                                                                      $  3,131      3,194
                                                                      ========      =====

The components of income tax expense (benefit) are summarized as follows:

                            In Thousands
                    ------------------------------
                     Federal      State      Total
                    --------      -----      -----
2005
   Current          $  5,983      1,267      7,250
   Deferred             (335)       (68)      (403)
                    --------      -----      -----
         Total      $  5,648      1,199      6,847
                    ========      =====      =====

2004
   Current          $  4,843      1,047      5,890
   Deferred             (167)       (34)      (201)
                    --------      -----      -----
         Total      $  4,676      1,013      5,689
                    ========      =====      =====

2003
   Current          $  5,369      1,139      6,508
   Deferred             (221)       (45)      (266)
                    --------      -----      -----
         Total      $  5,148      1,094      6,242
                    ========      =====      =====

WILSON BANK HOLDING COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

DECEMBER 31, 2005, 2004 AND 2003

(11) INCOME TAXES, CONTINUED

A reconciliation of actual income tax expense of $6,847,000 $5,689,000 and $6,242,000 for the years ended December 31, 2005, 2004 and 2003, respectively, to the "expected" tax expense (computed by applying the statutory rate of 34% to earnings before income taxes) is as follows:

                                                                    In Thousands
                                                            ------------------------------
                                                              2005        2004       2003
                                                            --------      -----      -----
Computed "expected" tax expense                             $  6,067      5,032      5,330
State income taxes, net of Federal income tax benefit            791        669        722
Tax exempt interest, net of interest expense exclusion          (209)      (232)      (213)
Tax expense related to minority interest income in
   subsidiaries                                                   80        162        311
Federal income tax expense above statutory
   rate related to taxable income over $10 million               111         27         32
Other                                                              7         31         60
                                                            --------      -----      -----
                                                            $  6,847      5,689      6,242
                                                            ========      =====      =====

Total income tax expense for 2004 includes tax benefit of $26,000 related to the loss on sale of securities. There were no sales of securities in 2005 and 2003.

(12) COMMITMENTS AND CONTINGENT LIABILITIES

The Company is party to litigation and claims arising in the normal course of business. Management, after consultation with legal counsel, believes that the liabilities, if any, arising from such litigation and claims will not be material to the consolidated financial position.

The subsidiary banks lease land for certain branch facilities and automatic teller machine locations. Future minimum rental payments required under the terms of the noncancellable leases are as follows:

Years Ending December 31,     In Thousands
-------------------------     ------------
         2006                    $  142
         2007                        84
         2008                        49
         2009                        34
         2010                        13
                                 ------
                                 $  322
                                 ======

Total rent expense amounted to $99,000, $72,000 and $52,000, respectively, during the years ended December 31, 2005, 2004 and 2003.

The Company has lines of credit with other financial institutions totaling $45,900,000. At December 31, 2005 and 2004, there was no balance outstanding under these lines of credit.

WILSON BANK HOLDING COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

DECEMBER 31, 2005, 2004 AND 2003

(13) FINANCIAL INSTRUMENTS WITH OFF-BALANCE-SHEET RISK

The Company is party to financial instruments with off-balance-sheet risk in the normal course of business to meet the financing needs of its customers. These financial instruments consist primarily of commitments to extend credit. These instruments involve, to varying degrees, elements of credit risk in excess of the amount recognized in the consolidated balance sheets. The contract or notional amounts of those instruments reflect the extent of involvement the Company has in particular classes of financial instruments.

The Company's exposure to credit loss in the event of nonperformance by the other party to the financial instrument for commitments to extend credit is represented by the contractual notional amount of those instruments. The Company uses the same credit policies in making commitments and conditional obligations as it does for on-balance-sheet instruments.

                                                                        In Thousands
                                                                   -----------------------
                                                                        Contract or
                                                                      Notional Amount
                                                                   -----------------------
                                                                      2005          2004
                                                                   ----------      -------
Financial instruments whose contract amounts represent credit
   risk:
      Unused commitments to extend credit                          $  143,233      133,008
      Standby letters of credit                                        17,383        9,531
                                                                   ----------      -------
            Total                                                  $  160,616      142,539
                                                                   ==========      =======

Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Since many of the commitments are expected to be drawn upon, the total commitment amounts generally represent future cash requirements. The Company evaluates each customer's credit-worthiness on a case-by-case basis. The amount of collateral, if deemed necessary by the Company upon extension of credit, is based on management's credit evaluation of the counterparty. Collateral normally consists of real property.

Standby letters of credit are conditional commitments issued by the Company to guarantee the performance of a customer to a third party. Those guarantees are primarily issued to support public and private borrowing arrangements, including commercial paper, bond financing, and similar transactions. Most guarantees extend from one to two years. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loan facilities to customers. The fair value of standby letters of credit is estimated using the fees currently charged to enter into similar agreements, taking into account the remaining terms of the agreements, the likelihood of the counter parties drawing on such financial instruments and the present creditworthiness of such counter parties. Such commitments have been made on terms which are competitive in the markets in which the Company operates, thus, the fair value of standby letters of credit equals the carrying value for the purposes of this disclosure. The maximum potential amount of future payments that the Company could be required to make under the guarantees totaled $17.4 million at December 31, 2005.

WILSON BANK HOLDING COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

DECEMBER 31, 2005, 2004 AND 2003

(14) CONCENTRATION OF CREDIT RISK

Practically all of the Company's loans, commitments, and commercial and standby letters of credit have been granted to customers in the Company's market area. Practically all such customers are depositors of the subsidiary banks. Investment in state and municipal securities also include governmental entities within the Company's market area. The concentrations of credit by type of loan are set forth in note 2 to the consolidated financial statements.

At December 31, 2005, the Company's cash and due from banks included commercial bank deposits aggregating $161,000 in excess of the Federal Deposit Insurance Corporation limit of $100,000 per institution.

Federal funds sold were deposited with five banks.

(15) EMPLOYEE BENEFIT PLAN

The Company has in effect a 401(k) plan which covers eligible employees. To be eligible an employee must have obtained the age of 20 1/2. The provisions of the plan provide for both employee and employer contributions. For the years ended December 31, 2005, 2004 and 2003, the subsidiary bank contributed $848,000, $653,000 and $614,000, respectively, to this plan.

(16) DIVIDEND REINVESTMENT PLAN

Under the terms of the Company's dividend reinvestment plan holders of common stock may elect to automatically reinvest cash dividends in additional shares of common stock. The Company may elect to sell original issue shares or to purchase shares in the open market for the account of participants. Original issue shares of 111,914 in 2005, 104,388 in 2004 and 102,568 in 2003 were sold to participants under the terms of the plan after giving effect to the 2 for 1 stock split in 2003.

(17) REGULATORY MATTERS AND RESTRICTIONS ON DIVIDENDS

The Company and its bank subsidiary are subject to regulatory capital requirements administered by the Federal Deposit Insurance Corporation, the Federal Reserve and the Tennessee Department of Financial Institutions. Failure to meet minimum capital requirements can initiate certain mandatory and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the Company's financial statements. The Company's capital classification is also subject to qualitative judgments about components, risk weightings and other factors. Those qualitative judgments could also affect the subsidiary bank's capital status and the amount of dividends the subsidiary may distribute.

WILSON BANK HOLDING COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

DECEMBER 31, 2005, 2004 AND 2003

(17) REGULATORY MATTERS AND RESTRICTIONS ON DIVIDENDS, CONTINUED

The Company and its subsidiary bank are required to maintain minimum amounts of capital to total "risk weighted" assets, as defined by the banking regulators. At December 31, 2005, the Company and its bank subsidiary are required to have minimum Tier I and total risk-based capital ratios of 4% and 8%, respectively and a leverage ratio of 4%. The actual ratios of the Company and its bank subsidiary were as follows:

                              Wilson Bank          Wilson
                           Holding Company       Bank & Trust
                           ----------------    ----------------
                            2005      2004      2005      2004
                           -----     -----     -----     -----
Tier I ratio               11.66%    11.12%    11.65%    11.03%

Total risk-based ratio     12.80%    12.37%    12.77%    12.22%

Leverage ratio              9.13%     8.71%     9.10%     9.07%

As of December 31, 2005, the most recent notification from the banking regulators categorized the Company and its subsidiary as well capitalized under the regulatory framework for prompt corrective action. There are no conditions or events since the notification that management believes have changed the Company's category.

(18) DEFERRED COMPENSATION PLAN

The Company's wholly-owned subsidiary bank provides its executive officers a deferred compensation plan, which also provides for death and disability benefits. The plan was established by the Board of Directors to reward executive management for past performance and to provide additional incentive to retain the service of executive management. There were six employees participating in the plan at December 31, 2005.

The plan provides retirement benefits for a period of 180 months after the employee reaches the age of 65. This benefit can be reduced if the wholly-owned subsidiary bank's average return on assets falls below 1%. The plan also provides benefits in the event the executive should die or become disabled prior to reaching retirement. The wholly-owned subsidiary bank has purchased insurance policies or other assets to provide the benefits listed above. The insurance policies remain the sole property of the wholly-owned subsidiary bank and are payable to the Bank. At December 31, 2005 and 2004, the deferred compensation liability totaled $778,000 and $744,000, respectively, the cash surrender value of life insurance was $1,086,000 and $909,000, respectively, and the face amount of the insurance policies in force approximated $5,825,000 and $3,680,000 in 2005 and 2004, respectively. The deferred compensation plan is not qualified under Section 401 of the Internal Revenue Code.

WILSON BANK HOLDING COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

DECEMBER 31, 2005, 2004 AND 2003

(19) STOCK OPTION PLAN

In April, 1999, the stockholders of the Company approved the Wilson Bank Holding Company 1999 Stock Option Plan (the "Stock Option Plan"). The Stock Option Plan provides for the granting of stock options, and authorizes the issuance of common stock upon the exercise of such options, for up to 200,000 shares of common stock, to officers and other key employees of the Company and its subsidiaries. Furthermore, the Company may issue additional shares under the Stock Option Plan as needed in order that the aggregate number of shares that may be issued during the term of the Plan is equal to five percent (5%) of the shares of common stock then issued and outstanding.

Under the Stock Option Plan, stock option awards may be granted in the form of incentive stock options or nonstatutory stock options, and are generally exercisable for up to ten years following the date such option awards are granted. Exercise prices of incentive stock options must be equal to or greater than 100% of the fair market value of the common stock on the grant date.

Statement of Financial Accounting Standards (SFAS) No. 123 "Accounting for Stock Based Compensation", as amended by SFAS No. 148 "Accounting for Stock-Based Compensation - Transition and Disclosure", sets forth the method for recognition of cost of plans similar to those of the Company. As is permitted, management has elected to continue accounting for the plan under APB Opinion 25 and related Interpretations. However, under SFAS No. 123, the Company is required to make proforma disclosures as if cost had been recognized in accordance with the pronouncement. Had compensation cost for the Company's stock option plan been determined based on the fair value at the grant dates for awards under the plan consistent with the method of SFAS No. 123, the Company's net earnings, basic earnings per common share and diluted earnings per common share would have been reduced to the proforma amounts indicated below:

                                                  In Thousands
                                            Except Per Share Amounts
                                         -----------------------------
                                           2005        2004      2003
                                         ---------     -----     -----
Net earnings             As Reported     $  10,996     9,112     9,435
                         Proforma        $  10,952     9,064     9,375

Basic earnings per       As Reported     $    2.27      2.07      2.20
     common share        Proforma        $    2.25      2.06      2.19

Diluted earnings per     As Reported     $    2.25      2.07      2.20
     common share        Proforma        $    2.24      2.06      2.18

WILSON BANK HOLDING COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

DECEMBER 31, 2005, 2004 AND 2003

(19) STOCK OPTION PLAN, CONTINUED

A summary of the stock option activity for 2005, 2004 and 2003 is as follows:

                                   2005                      2004                      2003
                           ---------------------     ---------------------     ---------------------
                                        Weighted                  Weighted                  Weighted
                                        Average                    Average                  Average
                                        Exercise                  Exercise                  Exercise
                            Shares       Price        Shares       Price        Shares       Price
                           -------     ---------     -------     ---------     -------     ---------
Outstanding at
   beginning of year        87,790     $   17.26     100,734     $   16.50      93,634     $   15.80
Granted                      9,000         31.75       5,500         26.27      10,500         22.50
Exercised                  (10,912)       (15.80)    (11,613)       (15.54)     (2,000)       (15.32)
Forfeited                   (4,016)       (19.62)     (6,831)       (16.32)     (1,400)       (15.28)
                           -------     ---------     -------     ---------     -------     ---------
Outstanding at end of
   year                     81,862     $   18.93      87,790     $   17.26     100,734     $   16.50
                           =======     =========     =======     =========     =======     =========

Options exercisable at
   year end                 28,256                    28,870                    31,852
                           =======                   =======                   =======

The following table summarizes information about fixed stock options outstanding at December 31, 2005:

                                 Options Outstanding                   Options Exercisable
                      -----------------------------------------     -------------------------
                                                     Weighted
                                       Weighted       Average                        Weighted
    Range of            Number         Average       Remaining        Number         Average
    Exercise          Outstanding     Exercise      Contractual     Exercisable      Exercise
     Prices           at 12/31/05       Price          Life         at 12/31/05       Price
    --------          -----------     ---------     -----------     -----------      --------
$ 15.28 - $ 19.75        59,712       $  15.35          4.4 years       26,206       $  15.35
$ 22.50 - $ 32.50        22,150       $  23.51          9.0 years        2,050       $  23.15

The fair value of options granted in 2005, 2004 and 2003 was $5.16, $3.89 and $2.69, respectively, for each option. The fair value was estimated using the Black-Scholes option-pricing model. The weighted average assumptions used to calculate the minimum value were as follows for 2005, 2004 and 2003, respectively: risk free interest rate of 4.23%, 4.25% and 3.97%, expected life of ten years; and dividend yield of 2.00%, 2.29% and 2.56%. The dividend yield was computed assuming a dividend payout of $.63, $.63 and $.58 per share, respectively.

WILSON BANK HOLDING COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

DECEMBER 31, 2005, 2004 AND 2003

(20) EARNINGS PER SHARE

Statement of Financial Accounting Standards (SFAS) No. 128 "Earnings Per Share" establishes uniform standards for computing and presenting earnings per share. The computation of basic earnings per share is based on the weighted average number of common shares outstanding during the period. For the Company the computation of diluted earnings per share begins with the basic earnings per share plus the effect of common shares contingently issuable from stock options.

The following is a summary of the components comprising basic and diluted earnings per share (EPS):

                                                         In Thousands (except share data)
                                                    ------------------------------------------
                                                        2005             2004          2003
                                                    ------------      ---------      ---------
Basic EPS Computation:
   Numerator - Earnings available to
      common stockholders                           $     10,996          9,112          9,435
                                                    ------------      ---------      ---------
   Denominator - Weighted average number
      of common shares outstanding                     4,844,486      4,393,791      4,285,000
                                                    ------------      ---------      ---------
               Basic earnings per common share      $       2.27           2.07           2.20
                                                    ============      =========      =========

Diluted EPS Computation:
   Numerator - Earnings available to
      common stockholders                           $     10,996          9,112          9,435
                                                    ------------      ---------      ---------
   Denominator:
      Weighted average number of common
         shares outstanding                            4,844,486      4,393,791      4,285,000
      Dilutive effect of stock options                    34,899         13,035          9,844
                                                    ------------      ---------      ---------
                                                       4,879,385      4,406,826      4,294,844
                                                    ------------      ---------      ---------
               Diluted earnings per common
                  share                             $       2.25           2.07           2.20
                                                    ============      =========      =========

WILSON BANK HOLDING COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

DECEMBER 31, 2005, 2004 AND 2003

(21) WILSON BANK HOLDING COMPANY - PARENT COMPANY FINANCIAL INFORMATION

WILSON BANK HOLDING COMPANY
(PARENT COMPANY ONLY)

BALANCE SHEETS

DECEMBER 31, 2005 AND 2004

                                                                            In Thousands
                                                                  --------------------------------
                                                                       2005             2004
                                                                  ---------------   --------------
                                ASSETS

Cash                                                              $           142*             125*
Investment in wholly-owned commercial bank subsidiary                      94,850*          64,359*
Investment in 50% owned commercial bank subsidiaries                            -            6,959*
Refundable income taxes                                                       118              118
                                                                  ---------------   --------------

         Total assets                                             $        95,110           71,561
                                                                  ===============   ==============

                      LIABILITIES AND STOCKHOLDERS' EQUITY

Stockholders' equity:
     Common stock, par value $2.00 per share, authorized
         10,000,000 shares, 4,995,979 and 4,436,607 shares
         issued and outstanding, respectively                     $         9,992            8,873
     Additional paid-in capital                                            31,502           14,856
     Retained earnings                                                     55,688           48,688
     Unrealized losses on available-for-sale securities, net of
         income taxes of $1,286,000 and $531,000, respectively             (2,072)            (856)
                                                                  ---------------   --------------
                  Total stockholders' equity                               95,110           71,561
                                                                  ---------------   --------------

                  Total liabilities and stockholders' equity      $        95,110           71,561
                                                                  ===============   ==============

*Eliminated in consolidation.

WILSON BANK HOLDING COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

DECEMBER 31, 2005, 2004 AND 2003

(21) WILSON BANK HOLDING COMPANY - PARENT COMPANY FINANCIAL INFORMATION, CONTINUED

WILSON BANK HOLDING COMPANY
(PARENT COMPANY ONLY)

STATEMENTS OF EARNINGS AND COMPREHENSIVE EARNINGS

THREE YEARS ENDED DECEMBER 31, 2005

                                                                               In Thousands
                                                               ---------------------------------------------
                                                                    2005             2004            2003
                                                               --------------   -------------   ------------
Expenses:
     Directors' fees                                           $          296             297            301
     Other                                                                 12              12              -
                                                               --------------   -------------   ------------

         Loss before Federal income tax benefits
             and equity in undistributed earnings of
             commercial bank subsidiaries                                (308)           (309)          (301)

Federal income tax benefits                                               118             118            115
                                                               --------------   -------------   ------------
                                                                         (190)           (191)          (186)

Equity in undistributed earnings of commercial
     bank subsidiaries                                                 11,186*          9,303*         9,621*
                                                               --------------   -------------   ------------

         Net earnings                                                  10,996           9,112          9,435
                                                               --------------   -------------   ------------

Other comprehensive earnings (losses), net of tax:
     Unrealized losses on available-for-sale-securities
         arising during period, net of taxes of $634,000,
         $504,000 and $567,000, respectively                           (1,021)           (813)          (915)
     Less reclassification adjustments for net losses
         included in net earnings, net of taxes of
         $26,000 in 2004                                                    -              42              -
                                                               --------------   -------------   ------------
                           Other comprehensive losses                  (1,021)           (771)          (915)
                                                               --------------   -------------   ------------

                           Comprehensive earnings              $        9,975           8,341          8,520
                                                               ==============   =============   ============

*Eliminated in consolidation.

WILSON BANK HOLDING COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

DECEMBER 31, 2005, 2004 AND 2003

(21) WILSON BANK HOLDING COMPANY - PARENT COMPANY FINANCIAL INFORMATION,CONTINUED

WILSON BANK HOLDING COMPANY
(PARENT COMPANY ONLY)

STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

THREE YEARS ENDED DECEMBER 31, 2005

                                                                        In Thousands
                                                -------------------------------------------------------------
                                                                                     Net Unrealized
                                                             Additional              Gain (Loss) On
                                                  Common      Paid-In     Retained   Available-For-
                                                  Stock       Capital     Earnings   Sale Securities   Total
                                                ----------   ----------   --------   ---------------   ------
Balance December 31, 2002                       $    4,216       13,931     36,054               830   55,031
Cash dividends declared, $.63 per share                  -            -     (2,651)                -   (2,651)
Issuance of 102,568 shares of stock pursuant
     to dividend reinvestment plan                     103        2,289          -                 -    2,392
Issuance of 2,000 shares of stock pursuant
     to exercise of stock options                        3           28          -                 -       31
Issuance of 2,160,028 shares of stock
     pursuant to a 2 for 1 stock split               4,320       (4,320)         -                 -
Net change in unrealized gain (loss) on
     available-for-sale securities during the
     year, net of taxes of $567,000                      -            -          -              (915)    (915)
Net earnings for the year                                -            -      9,435                 -    9,435
                                                ----------   ----------   --------   ---------------   ------

Balance December 31, 2003                            8,642       11,928     42,838               (85)  63,323
Cash dividends declared, $.75 per share                  -            -     (3,262)                -   (3,262)
Issuance of 104,388 shares of stock pursuant
     to dividend reinvestment plan                     208        2,770          -                 -    2,978
Issuance of 11,613 shares of stock pursuant
     to exercise of stock options                       23          158          -                 -      181
Net change in unrealized loss on
     available-for-sale securities during the
     year, net of taxes of $478,000                      -            -          -              (771)    (771)
Net earnings for the year                                -            -      9,112                -     9,112
                                                ----------   ----------   --------   ---------------   ------

Balance December 31, 2004                            8,873       14,856     48,688              (856)  71,561
Cash dividends declared, $.85 per share                  -            -     (3,996)                -   (3,996)
Issuance of 111,914 shares of stock pursuant
     to dividend reinvestment plan                     224        3,422          -                 -    3,646
Issuance of 10,912 shares of stock pursuant
     to exercise of stock options                       22          151          -                 -      173
Issuance of 436,546 shares of stock pursuant
     to acquisition of minority interest in
     subsidiaries                                      873       13,073          -              (195)  13,751
Net change in unrealized loss on
     available-for-sale securities during the
     year, net of taxes of $634,000                      -            -          -            (1,021)  (1,021)
Net earnings for the year                                -            -     10,996                 -   10,996
                                                ----------   ----------   --------   ---------------   ------

Balance December 31, 2005                       $    9,992       31,502     55,688            (2,072)  95,110
                                                ==========   ==========   ========   ===============   ======

WILSON BANK HOLDING COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

DECEMBER 31, 2005, 2004 AND 2003

(21) WILSON BANK HOLDING COMPANY - PARENT COMPANY FINANCIAL INFORMATION, CONTINUED

WILSON BANK HOLDING COMPANY
(PARENT COMPANY ONLY)

STATEMENTS OF CASH FLOWS

THREE YEARS ENDED DECEMBER 31, 2005

INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS

                                                                             In Thousands
                                                                 -----------------------------------
                                                                     2005         2004        2003
                                                                 -----------   ----------   --------
Cash flows from operating activities:
     Cash paid to suppliers and other                            $      (308)        (309)      (301)
     Tax benefits received                                               118          115        123
                                                                 -----------   ----------   --------
                     Net cash used in operating activities              (190)        (194)      (178)
                                                                 -----------   ----------   --------

Cash flows from investing activities:
     Dividends received from commercial bank
         subsidiaries                                                    452          486        639
     Dividends reinvested in commercial bank
         subsidiaries                                                    (68)        (125)      (226)
                                                                 -----------   ----------   --------
                     Net cash provided by investing activities           384          361        413
                                                                 -----------   ----------   --------

Cash flows from financing activities:
     Dividends paid                                                   (3,996)      (3,262)    (2,651)
     Proceeds from sale of stock                                       3,646        2,978      2,392
     Proceeds from exercise of stock options                             173          181         31
                                                                 -----------   ----------   --------
                  Net cash used in financing activities                 (177)        (103)      (228)
                                                                 -----------   ----------   --------

                  Net increase in cash and cash equivalents               17           64          7

Cash and cash equivalents at beginning of year                           125           61         54
                                                                 -----------   ----------   --------

Cash and cash equivalents at end of year                         $       142          125         61
                                                                 ===========   ==========   ========

Supplemental Schedule of Non-Cash Activities:

     Issuance of 436,546 shares of common stock
         for minority interest in subsidiaries                   $    13,751            -          -
                                                                 ===========   ==========   ========

WILSON BANK HOLDING COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

DECEMBER 31, 2005, 2004 AND 2003

(21) WILSON BANK HOLDING COMPANY - PARENT COMPANY FINANCIAL INFORMATION, CONTINUED

WILSON BANK HOLDING COMPANY
(PARENT COMPANY ONLY)

STATEMENTS OF CASH FLOWS, CONTINUED

THREE YEARS ENDED DECEMBER 31, 2005

INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS

                                                                        In Thousands
                                                               -----------------------------
                                                                  2005       2004      2003
                                                               ----------   -------   ------
Reconciliation of net earnings to net cash used in operating
     activities:
         Net earnings                                          $   10,996     9,112    9,435

Adjustments to reconcile net earnings to net cash used in
     operating activities:
         Equity in earnings of commercial bank
              subsidiaries                                        (11,186)   (9,303)  (9,621)
         Decrease (increase) in refundable income taxes                 -        (3)       8
                                                               ----------   -------   ------
              Total adjustments                                   (11,186)   (9,306)  (9,613)
                                                               ----------   -------   ------

              Net cash used in operating activities            $     (190)     (194)    (178)
                                                               ==========   =======   ======

WILSON BANK HOLDING COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

DECEMBER 31, 2005, 2004 AND 2003

(22) DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS

Statement of Financial Accounting Standards (SFAS) No. 107, "Disclosures about Fair Value of Financial Instruments", requires that the Company disclose estimated fair values for its financial instruments. Fair value estimates, methods, and assumptions are set forth below for the Company's financial instruments.

Cash and short-term investments

For those short-term instruments, the carrying amount is a reasonable estimate of fair value.

Securities

The carrying amounts for short-term securities approximate fair value because they mature in 90 days or less and do not present unanticipated credit concerns. The fair value of longer-term securities and mortgage-backed securities, except certain state and municipal securities, is estimated based on bid prices published in financial newspapers or bid quotations received from securities dealers. The fair value of certain state and municipal securities is not readily available through market sources other than dealer quotations, so fair value estimates are based on quoted market prices of similar instruments, adjusted for differences between the quoted instruments and the instruments being valued.

SFAS No. 107 specifies that fair values should be calculated based on the value of one unit without regard to any premium or discount that may result from concentrations of ownership of a financial instrument, possible tax ramifications, or estimated transaction costs. Accordingly, these considerations have not been incorporated into the fair value estimates.

Loans

Fair values are estimated for portfolios of loans with similar financial characteristics. Loans are segregated by type such as commercial, mortgage, credit card and other consumer. Each loan category is further segmented into fixed and adjustable rate interest terms.

WILSON BANK HOLDING COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

DECEMBER 31, 2005, 2004 AND 2003

(22) DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS, CONTINUED

Loans, Continued

The fair value of the various categories of loans is estimated by discounting the future cash flows using the current rates at which similar loans would be made to borrowers with similar credit ratings and for the same remaining average estimated maturities.

The estimated maturity for mortgages is modified from the contractual terms to give consideration to management's experience with prepayments. Management has made estimates of fair value discount rates that it believes to be reasonable. However, because there is no market for many of these financial instruments, management has no basis to determine whether the fair value presented below would be indicative of the value negotiated in an actual sale.

The value of the loan portfolio is also discounted in consideration of the credit quality of the loan portfolio as would be the case between willing buyers and sellers. Particular emphasis has been given to loans on the subsidiary banks' internal watch list. Valuation of these loans is based upon borrower performance, collateral values (including external appraisals), etc.

Deposit Liabilities

The fair value of demand deposits, savings accounts and certain money market deposits is the amount payable on demand at the reporting date. The fair value of fixed-maturity certificates of deposit is estimated using the rates currently offered for deposits of similar remaining maturities. Under the provision of SFAS No. 107 the fair value estimates for deposits does not include the benefit that results from the low cost funding provided by the deposit liabilities compared to the cost of borrowing funds in the market.

Securities Sold Under Repurchase Agreements

The securities sold under repurchase agreements are payable upon demand. For this reason the carrying amount is a reasonable estimate of fair value.

Advances from Federal Home Loan Bank

The fair value of the advances from the Federal Home Loan Bank are estimated by discounting the future cash outflows using the current market rates.

WILSON BANK HOLDING COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

DECEMBER 31, 2005, 2004 AND 2003

(22) DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS, CONTINUED

Commitments to Extend Credit, Standby Letters of Credit and Financial Guarantees Written

Loan commitments are made to customers generally for a period not to exceed one year and at the prevailing interest rates in effect at the time the loan is closed. Commitments to extend credit related to construction loans are generally made for a period not to exceed six months with interest rates at the current market rate at the date of closing. In addition, standby letters of credit are issued for periods extending from one to two years with rates to be determined at the date the letter of credit is funded. Fees are only charged for the construction loans and the standby letters of credit and the amounts unearned at December 31, 2005 and 2004 are insignificant. Accordingly, these commitments have no carrying value and management estimates the commitments to have no significant fair value.

The carrying value and estimated fair values of the Company's financial instruments at December 31, 2005 and 2004 are as follows:

                                                          In Thousands
                                       ------------------------------------------------------
                                                   2005                       2004
                                       --------------------------     -----------------------
                                        Carrying                      Carrying
                                         Amount        Fair Value      Amount      Fair Value
                                       -----------     ----------     --------     ----------
Financial assets:
  Cash and short-term
     investments                       $    46,451        46,451        49,315        49,315
  Securities                               153,838       153,971       133,072       133,575
  Loans, net of unearned
     interest                              810,788                     724,001
  Less:  allowance for possible
     loan losses                             9,083                       9,370
                                       -----------                    --------
  Loans, net of allowance                  801,705       796,624       714,631       712,712
                                       -----------                    --------

  Loans held for sale                        2,935         2,935         3,515         3,515
  Restricted equity securities               2,782         2,782         2,661         2,661

Financial liabilities:
  Deposits                                 929,589       930,733       832,922       833,268
  Securities sold
     under repurchase
     agreements                              9,156         9,156         6,679         6,679
  Advances from Federal Home
     Loan Bank                              13,688        13,406        15,263        15,588

Unrecognized financial
  instruments:
     Commitments to
       extend credit                             -             -             -             -
     Standby letters of credit                   -             -             -             -

WILSON BANK HOLDING COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

DECEMBER 31, 2005, 2004 AND 2003

(22) DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS, CONTINUED

Limitations

Fair value estimates are made at a specific point in time, based on relevant market information and information about the financial instruments. These estimates do not reflect any premium or discount that could result from offering for sale at one time the Company's entire holdings of a particular financial instrument. Because no market exists for a significant portion of the Company's financial instruments, fair value estimates are based on judgments regarding future expected loss experience, current economic conditions, risk characteristics of various financial instruments, and other factors. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and therefore cannot be determined with precision. Changes in assumptions could significantly affect the estimates.

Fair value estimates are based on estimating on-and-off-balance sheet financial instruments without attempting to estimate the value of anticipated future business and the value of assets and liabilities that are not considered financial instruments. For example, a subsidiary Bank has a mortgage department that contributes net fee income annually. The mortgage department is not considered a financial instrument, and its value has not been incorporated into the fair value estimates. Other significant assets and liabilities that are not considered financial assets or liabilities include deferred tax assets and liabilities and property, plant and equipment. In addition, the tax ramifications related to the realization of the unrealized gains and losses can have a significant effect on fair value estimates and have not been considered in the estimates.

(23) MERGER OF SUBSIDIARY BANKS

On March 31, 2005, each of DeKalb Community Bank, a Tennessee state chartered bank and 50% owned subsidiary of the Company ("DeKalb") and Community Bank of Smith County, a Tennessee state chartered bank and 50% owned subsidiary of the Company ("CBSC") merged with and into Wilson Bank & Trust. The banks merged to reduce the regulatory reporting requirements and for reduction in operational costs. Following the mergers of DeKalb and CBSC with and into Wilson Bank & Trust, the Company will no longer account for the outside 50% interest of DeKalb and CBSC's results of operations as minority interest but rather will recognize 100% of DeKalb's and CBSC's results of operations. The purchase of the minority interest was accounted for as a purchase under the provisions of Statement of Financial Accounting Standards No. 141. The market value of the shares issued was $31.50 per share.

WILSON BANK HOLDING COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

DECEMBER 31, 2005, 2004 AND 2003

(23) MERGER OF SUBSIDIARY BANKS, CONTINUED

The stock consideration paid totaled $13,751,000, cash paid totaled $13,000, and 50% of the book values at March 31, 2005 totaled $7,094,000 resulting in an excess of consideration over book value of $6,670,000. The excess was allocated $2,787,000 to premium on purchased deposits, $235,000 to fixed assets, $1,157,000 to deferred taxes payable and $4,805,000 to goodwill. Pro forma results of operations (assuming the mergers took place on January 1, 2004) for the year ended December 31, 2005 and December 31, 2004 are as follows:

                                                       Year Ended December 31, 2005
                                             ----------------------------------------------------
                                                                 Proforma
                                               As Reported      Adjustments           Proforma
                                             --------------   -----------------    --------------
                                                 (In Thousands, except per share amounts)
Total interest income                        $       56,318   $            -       $       56,318

Net income                                   $       10,996   $          345 (1)   $       11,341

Weighted average shares outstanding               4,844,486          109,137 (2)        4,953,623

Dilutive effect of stock options                     34,899                -               34,899

Weighted average shares outstanding for
  dilutive earnings per share                     4,879,385          109,137            4,988,522

Basic earnings per common share              $         2.27   $            -       $         2.29

Diluted earnings per common share            $         2.25   $            -       $         2.27

(1) Earnings of minority interest for first quarter of 2005 of $236,000 plus 25% of estimated savings of $1,107,000 net of taxes less 25% of amortization of premiums on purchased deposits, net of tax.

(2) Adjusted for weighted average common shares issued to minority interest shareholders related to first quarter 2005.

WILSON BANK HOLDING COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

DECEMBER 31, 2005, 2004 AND 2003

(23) MERGER OF SUBSIDIARY BANKS, CONTINUED

                                                         Year Ended December 31, 2004
                                             -----------------------------------------------------
                                                                Proforma
                                              As Reported      Adjustments             Proforma
                                             --------------   -----------------     --------------
                                                     (In Thousands, except per share amounts)
Total interest income                        $       48,022   $            -        $       48,022

Net income                                   $        9,112   $          913 (3)    $       10,025

Weighted average shares outstanding               4,393,791          436,546 (4)         4,830,337

Dilutive effect of stock options                     13,035                -                13,035

Weighted average shares outstanding for
  dilutive earnings per share                     4,406,826          436,546             4,843,372

Basic earnings per common share              $         2.07   $            -        $         2.08

Diluted earnings per common share            $         2.07   $            -        $         2.07

(3) Add earnings of minority interest of $475,000 plus estimated cost savings of $1,107,000 net of taxes, less amortization of premiums on purchased deposits, net of taxes.

(4) Add common shares issued for minority interest.

WILSON BANK HOLDING COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

DECEMBER 31, 2005, 2004 AND 2003

(23) MERGER OF SUBSIDIARY BANKS, CONTINUED

The following is a summary of the fair market value of the assets, liabilities and stockholders' equity purchased from DeKalb and CBSC at March 31, 2005:

                                                                             In Thousands
                                       -------------------------------------------------------------------------------------
                                                                                               Assignment          Total
                                                                                  Book Value   of Excess            Fair
                                                                       Total      Purchased     Purchase            Value
                                         DeKalb          CBSC       Book Value      (50%)        Price            Purchased
                                       -----------   -----------   -----------   -----------   --------------    -----------
Assets
   Loans, net                          $    80,677        68,217       148,894        74,447                          74,447
   Securities, held-to-maturity              1,738             -         1,738           869                             869
   Securities, available-for-sale           15,872        13,899        29,771        14,885                          14,885

   Federal funds sold                        7,414         3,284        10,698         5,349                           5,349
   Cash and due from banks                   2,510         1,345         3,855         1,928                           1,928
   Bank premises and
     equipment, net                          2,233         2,401         4,634         2,317           235 (1)         2,552
   Deposit base premium on
     purchased deposits                          -             -             -             -         2,787 (3)         2,787
   Goodwill                                      -             -             -             -         4,805 (4)         4,805
   Other assets                              1,813         1,415         3,228         1,614                           1,614
                                       -----------   -----------   -----------   -----------                     -----------

     Total assets                      $   112,257        90,561       202,818       101,409                         109,236
                                       ===========   ===========   ===========   ===========                     ===========

Liabilities and
   Stockholders' Equity:
   Deposits                            $   102,965        80,874       183,839        91,920                          91,920
   Other liabilities                         1,433         3,358         4,791         2,395         1,157 (2)         3,552
                                       -----------   -----------   -----------   -----------                     -----------

     Total liabilities                     104,398        84,232       188,630        94,315                          95,472
                                       -----------   -----------   -----------   -----------                     -----------

     Total stockholders'
        equity                               7,859         6,329        14,188         7,094         6,670            13,764
                                       -----------   -----------   -----------   -----------                     -----------

     Total liabilities and
        stockholders' equity           $   112,257        90,561       202,818       101,409                         109,236
                                       ===========   ===========   ===========   ===========                     ===========

(1) Excess fair market value over book value at March 31, 2005.

(2) Deferred taxes on amortizable intangible assets at the weighted average statutory Federal and State income tax rate of 38.29%.

(3) Deposit based premium on purchased deposits.

(4) Goodwill represents the excess of the purchase price over the fair value of assets acquired less identifiable intangible assets.

WILSON BANK HOLDING COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

DECEMBER 31, 2005, 2004 AND 2003

(24) QUARTERLY FINANCIAL DATA (UNAUDITED)

Selected quarterly results of operations for the four quarters ended December 31 are as follows:

                                                           (In Thousands, except per share data)
                           -----------------------------------------------------------------------------------------------------
                                                   2005                                               2004
                           -------------------------------------------------      ----------------------------------------------
                             Fourth         Third        Second       First        Fourth       Third        Second       First
                             Quarter       Quarter      Quarter      Quarter      Quarter      Quarter      Quarter      Quarter
                           ----------      -------      -------      -------      -------      -------      -------      -------
Interest income            $   13,909       15,142       14,044       13,223       10,926       12,788       12,355       11,953

Net interest
  income                        7,624        9,350        8,743        8,451        6,625        8,777        8,626        8,243

Provision for
  possible loan
  losses                          240          281          222          393        1,001          515          337        1,420

Earnings before
  income taxes                  4,492        4,857        4,622        3,870        3,866        4,046        3,913        2,976

Net earnings                    2,811        3,004        2,854        2,327        2,432        2,459        2,415        1,806

Basic earnings per
  common share                    .56          .60          .59          .52          .55          .55          .56          .41

Diluted earnings
  per common share                .54          .60          .59          .52          .55          .55          .56          .41

EXHIBIT 21.1

SUBSIDIARIES OF THE ISSUER

The Company has a wholly-owned subsidiary, Wilson Bank and Trust, a state chartered bank incorporated under the laws of the State of Tennessee and doing business under the same name.

EXHIBIT 23.1

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We consent to the incorporation by reference in the Registration Statement (Form S-8, No. 333-32442) pertaining to the Wilson Bank Holding Company 1999 Stock Option Plan and the Registration Statement (Form S-3, No. 333-81984) pertaining to the Wilson Bank Holding Company Dividend Reinvestment Plan of our reports dated January 12, 2006, with respect to the consolidated financial statements of Wilson Bank Holding Company, Wilson Bank Holding Company management's assessment of the effectiveness of internal control over financial reporting, and the effectiveness of internal control over financial reporting of Wilson Bank Holding Company and subsidiaries included in this Annual Report on Form 10-K for the year ended December 31, 2005.

                                        /s/    Maggart & Associates, P.C.
                                        ----------------------------------------
                                        MAGGART & ASSOCIATES, P.C.


Nashville, Tennessee
March 13, 2006

EXHIBIT 31.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

I, J. Randall Clemons, certify that:

1. I have reviewed this annual report on Form 10-K of Wilson Bank Holding Company;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15(d)-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent function):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: March 13, 2006

                                        By:      /s/ J. Randall Clemons
                                        ---------------------------------------
                                        Name: J. Randall Clemons
                                        President and Chief Executive Officer

EXHIBIT 31.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER

I, Lisa Pominski , certify that:

1. I have reviewed this annual report on Form 10-K of Wilson Bank Holding Company;

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: March 13, 2006

                             By:      /s/ Lisa Pominski
                             --------------------------------------------------
                             Name: Lisa Pominski
                             Senior Vice President and Chief Financial Officer

EXHIBIT 32.1

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report of Wilson Bank Holding Company (the "Company") on Form 10-K for the period ending December 31, 2005 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Randall Clemons, President and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/     J. Randall Clemons
----------------------------------------------
Randall Clemons
President and Chief Executive Officer

Date: March 13, 2006

EXHIBIT 32.2

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report of Wilson Bank Holding Company (the "Company") on Form 10-K for the period ending December 31, 2005 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Lisa Pominski, Senior Vice President and Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/     Lisa Pominski
-------------------------------------------------
Lisa Pominski, Senior Vice President and Chief
Financial Officer

March 13, 2006

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