Texas Capital Bancshares Announces Strong Second Quarter Operating Results

Texas Capital Bancshares Announces Strong Second Quarter Operating Results

DALLAS — Texas Capital Bancshares (Nasdaq:TCBI), the parent company of Texas Capital Bank, announced earnings for the second quarter of 2005.

On a comparative basis:

–Net income increased 51%

–EPS increased 47%

–Loans held for investment grew 32%

–Total loans grew 35%

–Demand deposits grew 32%

–Total deposits grew 21%

“Our outstanding second quarter is due to the continued success of our strategy of focusing on the middle market in the five major cities in Texas,” said Jody Grant, Chairman and CEO. “We are benefiting from our local Texas identity and the exceptionally strong Texas economy.”

FINANCIAL SUMMARY

(dollars and shares in thousands)

Q2 2005 Q2 2004 % Change

———– ———– ———

OPERATING RESULTS

Net Income $6,587 $4,360 51%

Diluted EPS $.25 $.17 47%

ROA .97% .77%

ROE 13.14% 10.04%

Diluted Shares 26,543 26,140 2%

BALANCE SHEET

Total Assets $2,818,039 $2,399,603 17%

Demand Deposits 475,516 359,628 32%

Total Deposits 1,971,005 1,628,397 21%

Loans Held for Investment 1,805,630 1,364,106 32%

Total Loans 1,926,338 1,422,164 35%

Stockholders’ Equity 205,880 174,327 18%

Loans Held for Investment are stated net of unearned income.

DETAILED FINANCIALS

Texas Capital Bancshares, Inc. reported net income of $6.6 million for the second quarter of 2005 and $11.9 million for the year to date. For the second quarter and first half of 2004, the Company reported net income of $4.4 million and $8.3 million, respectively. On a fully diluted basis, earnings per share were $.25 and $.45, for the three and six month periods ended June 30, 2005, respectively. For 2004 the EPS comparisons for the three and six month periods were $.17 and $.32.

Return on average equity was 13.14 percent and return on average assets was .97 percent for the second quarter of 2005 compared to 10.04 percent and .77 percent, respectively, for the second quarter of 2004. The increase in net income and improvement in return on assets in 2005 as compared to 2004 results are attributed to growth in net interest income which came from continued earning asset growth, as well as an improvement in net interest margin.

Net interest income was $24.5 million for the second quarter of 2005, compared to $17.3 million for the second quarter of 2004. The increase was due to an increase in average earning assets of $407.1 million over levels reported in the second quarter of 2004 and an improvement in the net interest margin. The increase in average earning assets included a $429.2 million increase in average loans held for investment (core loans) offset by a decrease of $32.2 million in average securities. The average balance of loans held for sale increased to $84.5 million in the second quarter of 2005 from $68.9 million in 2004. The net interest margin in the second quarter of 2005 was 3.88 percent, a 64 basis point increase from the second quarter of 2004 and a 27 basis point increase from the first quarter of 2005. The improvement in the net interest margin resulted primarily from 148 basis point increase in the yield on earning assets offset by a 105 basis point increase in the cost of interest bearing liabilities from the prior year.

Average interest bearing liabilities increased $297.6 million from the second quarter of 2004, which included a $326.6 million increase in interest bearing deposits offset by a $29.0 million decrease in other borrowings. For the same periods, the average balance of demand deposits increased to $397.3 million from $290.0 million.

Key measures of credit quality showed improvement during the second quarter of 2005. Net recoveries were $59,000 compared to net charge-offs of $96,000, or 0.03 percent of loans, in second quarter 2004 and net recoveries of $17,000 in the first quarter of 2005. The Company also reported that the ratio of non-performing loans to core loans decreased to 0.32 percent. Subsequent to quarter-end, $3.8 million of the Company’s non-performing loans were paid, bringing total non-performing loans to $1.9 million, or 0.10% of core loans. Due to continued improvement in key measures of credit quality, the Company did not record a provision for possible loan losses during the second quarter of 2005, consistent with the first quarter of 2005 and down from $363,000 in the second quarter of 2004. Reserve coverage of losses, non-performing assets and classified loans remained strong. In management’s opinion, the reserve is sufficient to cover all reasonably expected losses in the portfolio and is derived from consistent application of the methodology for establishing the adequacy of reserves for Texas Capital Bank’s loan portfolio.

Non-interest income for the second quarter of 2005 increased $1.6 million, or 52%, to $4.7 million from $3.1 million in the second quarter of 2004. The increase is primarily related to a $1.2 million increase in gains on sale of mortgage loans to $1.9 million from $729,000. Trust fee income increased $161,000 due to continued growth of trust assets.

Non-interest expense for the second quarter of 2005 increased $5.7 million, or 42%, percent, to $19.2 million from $13.5 million in the second quarter of 2004. The increase is primarily related to a $3.9 million increase in salaries and employee benefits to $11.9 million from $8.0 million. The increase in salaries and employee benefits resulted from an increase in the total number of employees related to general business growth, additional staffing for the new Houston office, the significant expansion of the residential mortgage lending division, and increased incentive compensation reflective of the Company’s performance.

TCB also announced the formation of BankDirect Capital Finance (BDCF), a new line of business focused on premium finance and other services for insurance agencies and their customers. The Company paid $6.6 million to create BDCF. BDCF had outstanding loans of $10 million on June 30; current outstandings are $85 million. The Company expects BDCF to be modestly profitable and accretive in 2005.

ABOUT TEXAS CAPITAL BANK

Texas Capital Bancshares (Nasdaq:TCBI) is the parent company of Texas Capital Bank, a commercial bank that delivers highly personalized financial services to businesses and private clients. Headquartered in Dallas, the Bank has full-service locations in Austin, Dallas, Fort Worth, Houston, Plano, and San Antonio.

This release contains forward-looking statements, which are subject to risks and uncertainties. A number of factors, many of which are beyond Texas Capital Bancshares’ control, could cause actual results to differ materially from future results expressed or implied by such forward-looking statements. These risks and uncertainties include the risk of adverse impacts from general economic conditions, competition, interest rate sensitivity and exposure to regulatory and legislative changes. These and other factors that could cause results to differ materially from those described in the forward-looking statements can be found in the Form 10-K and other filings made by Texas Capital Bancshares with the Securities and Exchange Commission.

TEXAS CAPITAL BANCSHARES, INC.

SELECTED FINANCIAL HIGHLIGHTS

(Dollars in thousands except per share data)

2nd Quarter 1st Quarter 4th Quarter

2005 2005 2004

———– ———– ———–

CONSOLIDATED STATEMENT OF

OPERATIONS

Interest income $39,167 $34,187 $32,529

Interest expense 14,683 12,519 11,069

———– ———– ———–

Net interest income 24,484 21,668 21,460

Provision for loan losses – – 200

———– ———– ———–

Net interest income after provision

for loan losses 24,484 21,668 21,260

Non-interest income 4,694 4,179 3,738

Non-interest expense 19,190 17,854 15,917

———– ———– ———–

Income before income taxes 9,988 7,993 9,081

Income tax expense 3,401 2,717 3,054

———– ———– ———–

Net income $6,587 $5,276 $6,027

=========== =========== ===========

Diluted EPS $.25 $.20 $.23

Diluted shares 26,543,191 26,622,813 26,457,466

CONSOLIDATED BALANCE SHEET DATA

Total assets $2,818,039 $2,636,920 $2,611,163

Loans held for investment 1,805,630 1,676,799 1,564,578

Loans held for sale 120,708 70,672 119,537

Securities 725,554 754,154 804,544

Demand deposits 475,516 405,162 397,629

Deposits 1,971,005 1,981,701 1,789,887

Other borrowings 610,254 431,682 594,991

Long-term debt 20,620 20,620 20,620

Stockholders’ equity 205,880 194,511 195,275

End of period shares 25,616,829 25,557,896 25,461,602

Book Value (excluding securities

gains/losses) 8.06 7.79 7.57

SELECTED FINANCIAL RATIOS

Net interest margin 3.88% 3.61% 3.58%

Return on average assets .97% .82% .94%

Return on average equity 13.14% 10.89% 12.50%

Non-interest expense to earning

assets 3.01% 2.94% 2.63%

Efficiency ratio 65.8% 69.1% 63.2%

Tier 1 capital ratio 9.9% 10.4% 10.7%

Total capital ratio 10.7% 11.3% 11.7%

Tier 1 leverage ratio 8.1% 8.3% 8.3%

ASSET QUALITY SUMMARY

Non-performing loans $5,718 $6,065 $6,059

Net charge-offs (recoveries) (59) (17) 233

Net charge-offs (recoveries) to

average loans(1) (.01)% (.00)% .06%

Allowance to loans(1) 1.04% 1.12% 1.20%

Non-performing loans to total

loans(1) .32% .36% .39%

Allowance to non-performing

loans(1) 3.3x 3.1x 3.1x

3rd Quarter 2nd Quarter

2004 2004

—————- ————–

CONSOLIDATED STATEMENT OF

OPERATIONS

Interest income $29,019 $25,056

Interest expense 9,633 7,804

—————- ————–

Net interest income 19,386 17,252

Provision for loan losses 375 363

—————- ————–

Net interest income after

provision for loan losses 19,011 16,889

Non-interest income 3,463 3,116

Non-interest expense 14,595 13,496

—————- ————–

Income before income taxes 7,879 6,509

Income tax expense 2,643 2,149

—————- ————–

Net income $5,236 $4,360

================ ==============

Diluted EPS $.20 $.17

Diluted shares 26,263,714 26,140,080

CONSOLIDATED BALANCE SHEET DATA

Total assets $2,487,371 $2,399,603

Loans held for investment 1,485,156 1,364,106

Loans held for sale 79,010 58,058

Securities 820,661 783,234

Demand deposits 324,292 359,628

Deposits 1,612,762 1,628,397

Other borrowings 653,168 569,404

Long-term debt 20,620 20,620

Stockholders’ equity 190,314 174,327

End of period shares 25,292,206 25,259,574

Book Value (excluding securities

gains/losses) 7.31 7.09

SELECTED FINANCIAL RATIOS

Net interest margin 3.38% 3.24%

Return on average assets .85% .77%

Return on average equity 11.25% 10.04%

Non-interest expense to earning

assets 2.53% 2.52%

Efficiency ratio 63.9% 66.3%

Tier 1 capital ratio 11.0% 11.4%

Total capital ratio 12.0% 12.5%

Tier 1 leverage ratio 8.3% 8.6%

ASSET QUALITY SUMMARY

Non-performing loans $7,016 $10,816

Net charge-offs (recoveries) (78) 96

Net charge-offs (recoveries) to

average loans(1) (.02)% .03%

Allowance to loans(1) 1.26% 1.34%

Non-performing loans to total

loans(1) .47% .79%

Allowance to non-performing

loans(1) 2.7x 1.7x

(1) Excludes loans held for sale.

TEXAS CAPITAL BANCSHARES, INC.

CONSOLIDATED BALANCE SHEETS (UNAUDITED)

(Dollars in thousands)

June 30, June 30, %

2005 2004 Change

———– ———– ———–

Assets

Cash and due from banks $107,982 $90,754 19%

Federal funds sold 5,000 59,970 (92)%

Securities, available-for-sale 725,554 783,234 (7)%

Loans held for sale 120,708 58,058 108%

Loans held for investment (net of

unearned income) 1,805,630 1,364,106 32%

Less: Allowance for loan losses 18,774 18,278 3%

———– ———– ———–

Loans held for investment, net 1,786,856 1,345,828 33%

Premises and equipment, net 5,398 4,719 14%

Accrued interest receivable and

other assets 60,124 55,544 8%

Goodwill, net 6,417 1,496 329%

———– ———– ———–

Total assets $2,818,039 $2,399,603 17%

=========== =========== ===========

Liabilities and Stockholders’ Equity

Liabilities:

Deposits:

Non-interest bearing $475,516 $359,628 32%

Interest bearing 1,208,972 1,174,284 3%

Interest bearing in foreign

branches 286,517 94,485 203%

———– ———– ———–

Total deposits 1,971,005 1,628,397 21%

Accrued interest payable 3,410 2,832 20%

Other liabilities 6,870 4,023 71%

Federal funds purchased 129,262 97,972 32%

Repurchase agreements 354,159 467,686 (24)%

Other borrowings 126,833 3,746 3,286%

Long-term debt 20,620 20,620 –

———– ———– ———–

Total liabilities 2,612,159 2,225,276 17%

Stockholders’ equity:

Common stock, $.01 par value:

Authorized shares –

100,000,000

Issued shares – 25,616,829 and

24,978,518 at June 30, 2005

and 2004, respectively 256 250

Series A-1 non-voting common

stock, $.01 par value:

Issued shares -281,056 at June

30, 2004 – 3

Additional paid-in capital 174,183 170,147

Retained earnings 31,910 8,784

Treasury stock (shares at cost:

84,274 at June 30, 2005 and

2004, respectively) (573) (573)

Deferred compensation 573 573

Accumulated other comprehensive

income (loss), net (469) (4,857)

———– ———– ———–

Total stockholders’ equity 205,880 174,327 18%

———– ———– ———–

Total liabilities and

stockholders’ equity $2,818,039 $2,399,603 17%

=========== =========== ===========

CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

(In thousands except per share data)

Three Months Ended Six Months Ended

June 30 June 30

2005 2004 2005 2004

——— ——— ——– ——–

Interest income

Interest and fees on loans $31,255 $17,498 $56,947 $34,204

Securities 7,887 7,536 16,183 15,087

Federal funds sold 14 18 94 33

Deposits in other banks 11 4 130 6

——— ——— ——– ——–

Total interest income 39,167 25,056 73,354 49,330

Interest expense

Deposits 10,446 4,948 19,379 9,691

Federal funds purchased 1,374 294 2,235 614

Repurchase agreements 2,151 2,250 4,545 4,335

Other borrowings 354 56 358 282

Long-term debt 358 256 685 512

——— ——— ——– ——–

Total interest expense 14,683 7,804 27,202 15,434

——— ——— ——– ——–

Net interest income 24,484 17,252 46,152 33,896

Provision for loan losses – 363 – 1,113

——— ——— ——– ——–

Net interest income after

provision for loan losses 24,484 16,889 46,152 32,783

Non-interest income

Service charges on deposit

accounts 793 891 1,574 1,748

Trust fee income 615 454 1,201 891

Cash processing fees – – – 587

Bank owned life insurance

(BOLI) income 291 329 579 650

Mortgage warehouse fees 195 274 414 512

Gain on sale of mortgage loans 1,911 729 3,676 1,192

Other 889 439 1,429 851

——— ——— ——– ——–

Total non-interest income 4,694 3,116 8,873 6,431

Non-interest expense

Salaries and employee benefits 11,858 7,964 23,387 16,094

Net occupancy expense 1,875 1,341 3,558 2,675

Marketing 922 569 1,621 1,103

Legal and professional 1,097 779 2,194 1,572

Communications and data

processing 914 995 1,569 1,854

Franchise taxes 45 56 90 153

Other 2,479 1,792 4,625 3,377

——— ——— ——– ——–

Total non-interest expense 19,190 13,496 37,044 26,828

——— ——— ——– ——–

Income before income taxes 9,988 6,509 17,981 12,386

Income tax expense 3,401 2,149 6,118 4,089

——— ——— ——– ——–

Net income $6,587 $4,360 $11,863 $8,297

========= ========= ======== ========

Earnings per share:

Basic $.26 $.17 $.46 $.33

Diluted $.25 $.17 $.45 $.32

TEXAS CAPITAL BANCSHARES, INC.

SUMMARY OF LOAN LOSS EXPERIENCE

(Dollars in thousands)

2nd 1st 4th 3rd 2nd

Quarter Quarter Quarter Quarter Quarter

2005 2005 2004 2004 2004

——– ——– ——– ——– ——–

Beginning balance $18,715 $18,698 $18,731 $18,278 $18,011

Loans charged-off:

Commercial 70 266 258 – –

Real estate 28 – – – –

Consumer 52 1 16 135 6

Leases 2 58 115 65 266

——– ——– ——– ——– ——–

Total 152 325 389 200 272

Recoveries:

Commercial 171 282 6 142 –

Leases 40 60 150 136 176

——– ——– ——– ——– ——–

Total recoveries 211 342 156 278 176

——– ——– ——– ——– ——–

Net charge-offs

(recoveries) (59) (17) 233 (78) 96

Provision for loan losses – – 200 375 363

——– ——– ——– ——– ——–

Ending balance $18,774 $18,715 $18,698 $18,731 $18,278

======== ======== ======== ======== ========

Reserve to loans held for

investment(2) 1.04% 1.12% 1.20% 1.26% 1.34%

Reserve to average loans

held for investment(2) 1.07% 1.18% 1.23% 1.31% 1.38%

Net charge-offs

(recoveries) to average

loans (1) (2) (.01)% (.00)% .06% (.02)% .03%

Provision for loan losses

to average loans (1) (2) – – .05% .10% .11%

Recoveries to gross

charge-offs 138.8% 105.2% 40.1% 139.0% 64.7%

Reserve as a multiple of

net charge-offs N/M N/M 80.2x N/M 190.4x

Non-performing loans:

Loans past due (90 days) $- $18 $209 $117 $4,423

Non-accrual 5,718 6,047 5,850 6,899 6,393

——– ——– ——– ——– ——–

Total $5,718 $6,065 $6,059 $7,016 $10,816

======== ======== ======== ======== ========

Reserve as a percent of

non-performing loans (2) 3.3x 3.1x 3.1x 2.7x 1.7x

(1) Interim period ratios are annualized.

(2) Excludes loans held for sale.

TEXAS CAPITAL BANCSHARES, INC.

CONSOLIDATED STATEMENT OF OPERATIONS

(Dollars in thousands)

2nd 1st 4th 3rd 2nd

Quarter Quarter Quarter Quarter Quarter

2005 2005 2004 2004 2004

——– ——– ——– ——– ——–

Interest income

Interest and fees on

loans $31,255 $25,692 $23,941 $20,455 $17,498

Securities 7,887 8,296 8,567 8,546 7,536

Federal funds sold 14 80 17 15 18

Deposits in other banks 11 119 4 3 4

——– ——– ——– ——– ——–

Total interest income 39,167 34,187 32,529 29,019 25,056

Interest expense

Deposits 10,446 8,933 7,315 6,231 4,948

Federal funds purchased 1,374 861 740 437 294

Repurchase agreements 2,151 2,394 2,631 2,572 2,250

Other borrowings 354 4 80 112 56

Long-term debt 358 327 303 281 256

——– ——– ——– ——– ——–

Total interest expense 14,683 12,519 11,069 9,633 7,804

——– ——– ——– ——– ——–

Net interest income 24,484 21,668 21,460 19,386 17,252

Provision for loan

losses – – 200 375 363

——– ——– ——– ——– ——–

Net interest income

after provision for

loan losses 24,484 21,668 21,260 19,011 16,889

Non-interest income

Service charges on

deposit accounts 793 781 797 825 891

Trust fee income 615 586 559 482 454

Bank owned life

insurance (BOLI) income 291 288 292 346 329

Mortgage warehouse fees 195 219 243 241 274

Gain on sale of mortgage

loans 1,911 1,765 1,145 1,083 729

Other 889 540 702 486 439

——– ——– ——– ——– ——–

Total non-interest

income 4,694 4,179 3,738 3,463 3,116

Non-interest expense

Salaries and employee

benefits 11,858 11,529 9,786 8,914 7,964

Net occupancy expense 1,875 1,683 1,577 1,443 1,341

Marketing 922 699 837 669 569

Legal and professional 1,097 1,097 814 755 779

Communications and data

processing 914 655 540 764 995

Franchise taxes 45 45 41 52 56

Other 2,479 2,146 2,322 1,998 1,792

——– ——– ——– ——– ——–

Total non-interest

expense 19,190 17,854 15,917 14,595 13,496

——– ——– ——– ——– ——–

Income before income

taxes 9,988 7,993 9,081 7,879 6,509

Income tax expense 3,401 2,717 3,054 2,643 2,149

——– ——– ——– ——– ——–

Net income $6,587 $5,276 $6,027 $5,236 $4,360

======== ======== ======== ======== ========

QUARTERLY FINANCIAL SUMMARY – UNAUDITED

Consolidated Daily Average Balances, Average Yields and Rates

(Dollars in thousands)

2nd Quarter 2005

———————————-

Revenue/

Average Expense Yield/

Balance (1)(2) Rate

———– ———– ———-

Assets

Securities – Taxable $685,058 $7,451 4.36%

Securities – Non-taxable 48,694 671 5.53%

Federal funds sold 1,980 14 2.84%

Deposits in other banks 1,736 11 2.54%

Loans held for sale 84,497 2,897 13.75%

Loans held for investment 1,755,311 28,358 6.48%

Less reserve for loan losses 18,753 – –

———– ———– ———-

Loans, net of reserve 1,821,055 31,255 6.88%

———– ———– ———-

Total earning assets 2,558,523 39,402 6.18%

Cash and other assets 162,835

———–

Total assets $2,721,358

===========

Liabilities and Stockholders’

Equity

Transaction deposits $111,029 $292 1.05%

Savings deposits 654,519 3,886 2.38%

Time deposits 782,643 6,268 3.21%

———– ———– ———-

Total interest bearing deposits 1,548,191 10,446 2.71%

Other borrowings 545,896 3,879 2.85%

Long-term debt 20,620 358 6.96%

———– ———– ———-

Total interest bearing liabilities 2,114,707 14,683 2.78%

Demand deposits 397,266

Other liabilities 8,370

Stockholders’ equity 201,015

———–

Total liabilities and stockholders’

equity $2,721,358

===========

Net interest income $24,719

Net interest income to earning

assets 3.88%

1st Quarter 2005

———————————-

Revenue/

Average Expense Yield/

Balance (1)(2) Rate

———– ———– ———-

Assets

Securities – Taxable $729,907 $7,861 4.37%

Securities – Non-taxable 48,715 669 5.57%

Federal funds sold 12,377 80 2.62%

Deposits in other banks 17,858 119 2.70%

Loans held for sale 81,956 2,281 11.29%

Loans held for investment 1,590,207 23,411 5.97%

Less reserve for loan losses 18,930 – –

———– ———– ———-

Loans, net of reserve 1,653,233 25,692 6.30%

———– ———– ———-

Total earning assets 2,462,090 34,421 5.67%

Cash and other assets 148,557

———–

Total assets $2,610,647

===========

Liabilities and Stockholders’

Equity

Transaction deposits $107,162 $255 0.97%

Savings deposits 613,391 3,147 2.08%

Time deposits 765,497 5,531 2.93%

———– ———– ———-

Total interest bearing deposits 1,486,050 8,933 2.44%

Other borrowings 534,773 3,259 2.47%

Long-term debt 20,620 327 6.43%

———– ———– ———-

Total interest bearing liabilities 2,041,443 12,519 2.49%

Demand deposits 363,398

Other liabilities 9,241

Stockholders’ equity 196,565

———–

Total liabilities and stockholders’

equity $2,610,647

===========

Net interest income $21,902

Net interest income to earning

assets 3.61%

4th Quarter 2004

———————————-

Revenue/

Average Expense Yield/

Balance (1)(2) Rate

———– ———– ———-

Assets

Securities – Taxable $765,943 $8,168 4.24%

Securities – Non-taxable 44,907 614 5.44%

Federal funds sold 3,159 17 2.14%

Deposits in other banks 773 4 2.06%

Loans held for sale 94,510 2,191 9.22%

Loans held for investment 1,516,672 21,750 5.71%

Less reserve for loan losses 18,870 – –

———– ———– ———-

Loans, net of reserve 1,592,312 23,941 5.98%

———– ———– ———-

Total earning assets 2,407,094 32,744 5.41%

Cash and other assets 137,702

———–

Total assets $2,544,796

===========

Liabilities and Stockholders’

Equity

Transaction deposits $104,621 $230 0.87%

Savings deposits 587,020 2,548 1.73%

Time deposits 658,447 4,537 2.74%

———– ———– ———-

Total interest bearing deposits 1,350,088 7,315 2.16%

Other borrowings 635,552 3,451 2.16%

Long-term debt 20,620 303 5.85%

———– ———– ———-

Total interest bearing liabilities 2,006,260 11,069 2.19%

Demand deposits 335,914

Other liabilities 10,732

Stockholders’ equity 191,890

———–

Total liabilities and stockholders’

equity $2,544,796

===========

Net interest income $21,675

Net interest income to earning

assets 3.58%

3rd Quarter 2004

———————————-

Revenue/

Average Expense Yield/

Balance (1)(2) Rate

———– ———– ———-

Assets

Securities – Taxable $776,302 $8,337 4.27%

Securities – Non-taxable 24,925 322 5.14%

Federal funds sold 4,192 15 1.42%

Deposits in other banks 1,128 3 1.06%

Loans held for sale 70,730 1,765 9.93%

Loans held for investment 1,432,860 18,690 5.19%

Less reserve for loan losses 18,440 – –

———– ———– ———-

Loans, net of reserve 1,485,150 20,455 5.48%

———– ———– ———-

Total earning assets 2,291,697 29,132 5.06%

Cash and other assets 157,255

———–

Total assets $2,448,952

===========

Liabilities and Stockholders’

Equity

Transaction deposits $99,245 $150 0.60%

Savings deposits 581,616 2,005 1.37%

Time deposits 631,115 4,076 2.57%

———– ———– ———-

Total interest bearing deposits 1,311,976 6,231 1.89%

Other borrowings 617,394 3,121 2.01%

Long-term debt 20,620 281 5.42%

———– ———– ———-

Total interest bearing liabilities 1,949,990 9,633 1.97%

Demand deposits 302,338

Other liabilities 11,395

Stockholders’ equity 185,229

———–

Total liabilities and stockholders’

equity $2,448,952

===========

Net interest income $19,499

Net interest income to earning

assets 3.38%

2nd Quarter 2004

———————————

Revenue/

Average Expense Yield/

Balance (1)(2) Rate

———– ———– ———

Assets

Securities – Taxable $748,343 $7,396 3.97%

Securities – Non-taxable 17,664 215 4.90%

Federal funds sold 7,686 18 0.94%

Deposits in other banks 995 4 1.62%

Loans held for sale 68,922 1,456 8.50%

Loans held for investment 1,326,066 16,042 4.87%

Less reserve for loan losses 18,205 – –

———– ———– ———

Loans, net of reserve 1,376,783 17,498 5.11%

———– ———– ———

Total earning assets 2,151,471 25,131 4.70%

Cash and other assets 138,399

———–

Total assets $2,289,870

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Liabilities and Stockholders’

Equity

Transaction deposits $95,031 $140 0.59%

Savings deposits 560,182 1,639 1.18%

Time deposits 566,369 3,169 2.25%

———– ———– ———

Total interest bearing deposits 1,221,582 4,948 1.63%

Other borrowings 574,942 2,600 1.82%

Long-term debt 20,620 256 4.99%

———– ———– ———

Total interest bearing liabilities 1,817,144 7,804 1.73%

Demand deposits 289,973

Other liabilities 8,047

Stockholders’ equity 174,706

———–

Total liabilities and stockholders’

equity $2,289,870

===========

Net interest income $17,327

Net interest income to earning

assets 3.24%

(1) The loan averages include loans on which the accrual of interest

has been discontinued and are stated net of unearned income.

(2) Taxable equivalent rates used where applicable.

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COPYRIGHT 2005 Gale Group