Texas Capital Bancshares (TCBI) 8-K Texas Capital Bancshares Announces Third Quarter Earnings with a 56% Increase In Earnings Per Share

Exhibit 99.1

FOR IMMEDIATE RELEASE
October 22, 2003

CONTACT
Tricia Linderman, 214/932-6798
tricia.linderman@texascapitalbank.com

TEXAS CAPITAL BANCSHARES ANNOUNCES THIRD QUARTER
EARNINGS WITH A 56% INCREASE IN EARNINGS PER SHARE

OVERVIEW
Texas Capital Bancshares (Nasdaq: TCBI), the parent company of Texas Capital Bank, continued its strong growth in the third quarter of 2003 as compared to the third quarter of 2002:

• EPS increased 56%

• Net income increased 59%

• Loans grew 16%

• Deposits grew 27%

On August 13, 2003 the Company completed its initial public offering (IPO) of 6,900,000 shares of common stock. The Texas Capital IPO was the first completed by a company in Texas during 2003. The offering totaled $76 million with the Company and selling stockholders realizing $34.5 and $36.1 million respectively, in proceeds from the sale. The public offering was consistent with the Company’s emphasis on creating value for stockholders.

During the third quarter, the Bank also successfully:

• Opened its first Houston office in the One Riverway complex with a team of local bankers led by veterans Joe Bailey and Jon Clarkson

• Created a mortgage origination division to generate additional fee income and satisfy private client needs

• Developed a sophisticated new asset allocation advisory relationship with DiMeo Schneider for the benefit of its wealth management clients

• Launched a co-branded 401(k) product with Principal Financial as part of the Bank’s growing insurance line of business

• Acquired the deposits of Bluebonnet Savings Bank

“We are pleased with our third quarter performance — our first as a public company – and are also encouraged by an improving economic outlook,” said Jody Grant, Chairman and CEO.

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FINANCIAL SUMMARY

(dollars in thousands)	Q3 2003			Q3 2002			% Change
Total Assets	$	2,150,508		$	1,617,469			33	%
Total Deposits		1,427,107			1,119,592			27	%
Loans, Net		1,108,552			959,759			16	%
Loans, Held For Sale		91,686			76,053			21	%
Net Income		3,332			2,094			59	%
Diluted EPS	$	.14		$	.09			56	%
ROA		.64	%		.61	%		5	%
ROE		9.05	%		6.95	%		30	%
Shares Outstanding		24,814,282			21,272,124

DETAILED FINANCIALS
Texas Capital Bancshares, Inc. reported net income of $3.3 million for the third quarter of 2003 compared to $2.1 million for the third quarter of 2002. On a fully diluted basis, earnings per share were $.14 for the three months ended September 30, 2003 compared to $.09 for the same period last year, representing an increase of 56 percent. Net income for the nine months ended September 30, 2003 was $10.2 million compared to $5.5 million for the same period in 2002. Earnings per share on a fully diluted basis for the nine months ended September 30, 2003 were $.45 versus $.24 for the same period in 2002, an increase of 88%.

Return on average equity was 9.05 percent and return on average assets was .64 percent for the third quarter of 2003 compared to 6.95 percent and .61 percent, respectively, for the third quarter of 2002. The increase in net income and continued improvement in returns on equity and assets in 2003 are attributed to growth in net interest income and improved efficiency. Capital adequacy was further enhanced with the IPO proceeds.

Net interest income was $13.4 million for the third quarter of 2003, compared to $10.9 million for the third quarter of 2002. The increase was due to an increase in average earning assets of $620.3 million as compared to the third quarter of 2002, which offset a 56 basis point decrease in net interest margin. The increase in average earning assets included a $270.3 million increase in average net loans and a $347.4 million increase in average securities. For the quarter ended September 30, 2003, average net loans and securities represented 66 percent and 34 percent, respectively, of average earning assets compared to 76 percent and 23 percent in the same quarter of 2002. The decrease in loan percentage reflects management’s decision to tighten lending standards beginning in 2001 and continuing during 2002 pending clearer signs of improvement in the U.S. economy. While we continue to

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apply prudent lending standards, loan growth in the third quarter of 2003 in our core loan portfolio (excluding loans held for sale) totaled $35 million. Our securities percentage has increased as we have continued to use additional securities to increase our earnings and improve our return on equity by taking advantage of market spreads. Average interest-bearing liabilities increased $553.6 million from the third quarter of 2002, which included a $233.4 million increase in interest-bearing deposits and a $300.2 million increase in other borrowings. The increase in interest bearing deposits includes the purchase of deposit accounts from Bluebonnet Savings Bank, FSB in August 2003. The increase in average borrowings was primarily related to an increase in federal funds purchased and securities sold under repurchase agreements, and was used to supplement deposits in funding loan growth and securities purchases. The average cost of interest-bearing liabilities decreased from 2.63 percent for the quarter ended September 30, 2002 to 1.85 percent for the same period of 2003, reflecting the reduction in market interest rates and a $112.9 million increase in non-interest bearing deposits.

In management’s opinion, overall portfolio quality remained at an acceptable level at this stage of the economic cycle and in comparison to regional peers. At September 30, 2003, our reserve for loan losses totaled $17.3 million, which is 1.41 percent of total loans, compared to $13.8 million or 1.31 percent at September 30, 2002. The company’s ratio of reserve for loan losses to non-performing loans was 142.53 percent at September 30, 2003, compared to 169.66 percent at September 30, 2002. Texas Capital had net charge-offs of loans and leases of $473,000 (.15 percent of average loans) in the quarter versus net losses of $632,000 (.25 percent of average loans) in the third quarter of 2002. Net chargeoffs for the nine months ended September 30, 2003 were $587,000 (.07 percent of average loans) compared to $3.1 million (.45 percent of average loans) in the same period in 2002. The provision for possible loan losses reflects management’s assessment of the risks in Texas Capital Bank’s loan portfolio. The provision was $475,000 for the third quarter of 2003 compared to $2.4 million for the third quarter of 2002. Our non-performing loans and leases increased to $12.1 million or .99 percent of total loans from $8.2 million or .77 percent of total loans at September 30, 2003. Our non-performing assets include $1.1 million of loans past due for more than 90 days, which are fully guaranteed by the U.S. Government and still accruing interest, and $11.0 million of non-accrual loans.

Non-interest income increased $1.0 million, or 69 percent, during the third quarter of 2003 compared to the same quarter of 2002. The Company benefited from growth in fees related to cash management, wealth management, insurance, and mortgage warehousing.

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Non-interest expense for the third quarter of 2003 increased $1.9 million or 22 percent, compared to the third quarter of 2002. The increase is primarily related to a $1.6 million increase in salaries and employee benefits to $5.8 million from $4.2 million. This increase resulted from an increase in the total number of employees from 214 at September 30, 2002 to 271 at September 30, 2003; the increase related primarily to staffing for the new Houston office and the start-up of the residential mortgage origination group.

During the third quarter, management modestly increased asset sensitivity, positioning the Company to benefit from an improving economy and rising interest rates. The interest sensitivity is largely due to the concentration of assets in variable rate loans.

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 registration statement on Form S-3, as amended, relating to the initial public offering and other filings made by Texas Capital Bancshares with the Securities and Exchange Commission.

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TEXAS CAPITAL BANCSHARES, INC.

SELECTED FINANCIAL HIGHLIGHTS
(Dollars in thousands except per share data)

	3rd			2nd			1st			4th			3rd
	Quarter			Quarter			Quarter			Quarter			Quarter
	2003			2003			2003			2002			2002
CONSOLIDATED STATEMENT OF OPERATIONS
Interest income	$	20,970		$	21,357		$	20,142		$	20,067		$	18,062
Interest expense		7,619			8,693			8,400			8,303			7,188
Net interest income		13,351			12,664			11,742			11,764			10,874
Provision for loan losses		475			1,600			1,250			1,270			2,380
Net interest income after provision for loan losses		12,876			11,064			10,492			10,494			8,494
Non-interest income		2,512			2,473			2,986			2,106			1,488
Gain on sale of securities		–			345			341			–			1,375
Non-interest expense		10,483			16,901			9,378			10,027			8,563
Income (loss) before income taxes		4,905			(3,019	)		4,441			2,573			2,794
Income tax expense (benefit)		1,573			(6,876	)		1,410			701			700
Net income	$	3,332		$	3,857		$	3,031		$	1,872		$	2,094
Diluted EPS	$	.14		$	.18		$	.14		$	.08		$	.09
Adjusted income(2)	$	3,332		$	2,320		$	3,031		$	2,645		$	2,094
Adjusted diluted EPS(2)	$	.14		$	.11		$	.14		$	.14		$	.09
CONSOLIDATED BALANCE SHEET DATA
Total assets	$	2,150,508		$	2,003,198		$	1,948,177		$	1,793,282		$	1,617,469
Loans, net		1,108,552			1,073,392			1,037,121			988,019			959,759
Loans held for sale		91,686			157,176			122,950			116,106			76,053
Securities		811,968			649,522			620,769			553,169			446,783
Deposits		1,427,107			1,340,322			1,296,146			1,196,535			1,119,592
Other borrowings		527,613			502,967			504,142			449,460			368,087
Long-term debt		20,000			20,000			10,000			10,000			–
Stockholders’ equity		165,080			132,168			127,762			124,976			120,828
End of period common shares outstanding(1)		24,814,282			21,370,749			21,313,640			21,297,640			21,272,124
Book value per share	$	6.65		$	6.18		$	5.99		$	5.87		$	5.68
SELECTED FINANCIAL RATIOS
Return on average assets(2)		.64	%		.80	%		.67	%		.54	%		.61	%
Return on average equity(2)		9.05	%		12.03	%		9.68	%		6.27	%		6.95	%
Efficiency ratio (excludes securities gains)(2)		66.08	%		111.65	%		63.67	%		72.29	%		69.27	%
Tier 1 capital ratio		12.35	%		10.27	%		9.69	%		10.16	%		9.59	%
Total capital ratio		13.53	%		11.50	%		10.88	%		11.32	%		10.75	%
Tier 1 leverage ratio		8.81	%		7.43	%		7.15	%		7.66	%		8.45	%
ASSET QUALITY RATIOS
Net charge-offs to average loans		.15	%		.07	%		(.04	%)		.21	%		.25	%
Allowance for loan losses to total loans		1.41	%		1.38	%		1.35	%		1.30	%		1.31	%
Allowance for loan losses to non-performing and renegotiated loans		142.53	%		136.12	%		417.47	%		499.42	%		169.66	%
Non-performing and renegotiated loans to total loans		.99	%		1.01	%		.32	%		.26	%		.77	%

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(1) Shares for June 30, 2003, March 31, 2003, December 31, 2002 and September 30, 2002 are adjusted to reflect the conversion of 1,057,142 shares of preferred stock. Preferred shares were converted with the consummation of the offering in August 2003.

(2) During the quarter ended June 30, 2003, net income included the impact of reversing our deferred tax asset valuation allowance of $5.9 million, $6.3 million in penalties related to unwinding repurchase agreements prior to maturity and approximately $250,000 in separation expense related to the resignation of a senior officer. For the quarter ended June 30, 2003, adjusted income, or income per share excluding the impact of reversing the valuation allowance, unwinding penalties and separation expense would have been $0.11, on a diluted basis. During the quarter ended December 31, 2002, net income included $1.2 million in IPO expenses recognized as our offering was postponed. For the quarter ended December 31, 2002, adjusted income, or income per share excluding these IPO expenses would have been $0.14 on a diluted basis. Adjusted income per share, or income per share excluding the impact of reversing the valuation allowance, unwinding penalties and separation expense for the quarter ended June 30, 2003 and adjusted income per share, or income per share excluding IPO expenses for the quarter ended December 31, 2002 are non-GAAP financial measures. As disclosed in our final prospectus filed August 13, 2003 and our second quarter Form 10Q, management believes that these non-GAAP financial measures are useful to investors and to management because they provide additional information that more closely reflects our intrinsic operating performance and growth. Reversal of the entire valuation allowance was based on our assessment of our ability to generate earnings to allow the deferred tax assets to be realized which is supported by our current earnings trends. We unwound certain repurchase agreements, incurring the unwinding penalties, in order to take advantage of historical lows in interest rates, which had decreased on similar repurchase agreements by approximately 1.4% since the time we entered into the original repurchase agreements. Although we have experienced employee separations in the past, this was the first separation with an executive who had entered into an employee agreement with us. We currently have only four other employees with employment agreements. Since we have not had any reversals of valuation allowances, unwinding penalties or separation expenses related to employees who have employment agreements in our operating history, and because expenses related to the initial public offering will not recur now that the offering is completed, we believe that these non-GAAP financial measures are useful to investors and to management to understand the development of our income per share results, efficiency ratio and ratio of non-interest expense to average assets since our founding and to help in comparing our intrinsic operating performance in different periods. Management also uses these measures internally to evaluate our performance and manage our operations. These measurements should not be regarded as a replacement for corresponding GAAP measures.

The following table reconciles each of the non-GAAP financial measures described above to the most directly comparable financial measure presented in accordance with GAAP.

		3rd			2nd			1st			4th			3rd
		Quarter			Quarter			Quarter			Quarter			Quarter
		2003			2003			2003			2002			2002
Net income before adjustments		$	3,332		$	3,857		$	3,031		$	1,872		$	2,094
Adjustments (net of tax):
	Repurchase agreement unwinding penalties					4,223
	Impact of reversing deferred tax asset valuation allowance					(5,929	)
	IPO expenses and other					169						773
Adjusted income		$	3,332		$	2,320		$	3,031		$	2,645		$	2,094
Adjusted diluted EPS		$	.14		$	.11		$	.14		$	.14		$	.09
SELECTED FINANCIAL RATIOS
Return on average assets			.64	%		.80	%		.67	%		.54	%		.61	%
Adjusted return on average assets			.64	%		.48	%		.67	%		.63	%		.61	%
Return on average equity			9.05	%		12.03	%		9.68	%		6.27	%		6.95	%
Adjusted return on average equity			9.05	%		7.23	%		9.68	%		8.57	%		6.95	%
Efficiency ratio (excludes securities gains)			66.08	%		111.65	%		63.67	%		72.29	%		69.27	%
Adjusted efficiency ratio (excludes securities gains)			66.08	%		68.63	%		63.67	%		63.71	%		69.27	%

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TEXAS CAPITAL BANCSHARES, INC.

CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)

			September 30,			September 30,			%
			2003			2002			Change
Assets
Cash and due from banks			$	78,900		$	81,359			(3.0	)%
Federal funds sold				–			8,850			100.0	%
Securities, available-for-sale				811,968			446,783			81.7	%
Loans, net				1,108,552			959,759			15.5	%
Loans held for sale				91,686			76,053			20.6	%
Premises and equipment, net				3,695			4,059			(9.0	)%
Accrued interest receivable and other assets				54,211			39,110			38.6	%
Goodwill, net				1,496			1,496			–
Total assets			$	2,150,508		$	1,617,469			33.0	%
Liabilities and Stockholders’ Equity
Liabilities:
	Deposits:
		Non-interest bearing	$	295,902		$	219,160			35.0	%
		Interest bearing		1,131,205			900,432			25.6	%
	Total deposits			1,427,107			1,119,592			27.5	%
	Accrued interest payable			2,530			2,279			11.0	%
	Other liabilities			8,178			6,683			22.4	%
	Federal funds purchased			103,726			79,699			30.1	%
	Repurchase agreements			418,605			251,848			66.2	%
	Other borrowings			5,282			36,540			(85.5	)%
	Long-term debt			20,000			–			–
Total liabilities				1,985,428			1,496,641			32.7	%
Stockholders’ equity:
	Series A convertible preferred stock, $.01 par value, 6%:
		Authorized shares – 10,000,000
		Issued shares – 1,057,142 at September 30, 2002		–			11			100.0	%
	Common stock, $.01 par value:
		Authorized shares – 100,000,000
		Issued shares – 24,523,254 and 18,473,646 at September 30, 2003 and September 30, 2002, respectively		241			184			31.0	%
	Series A-1 non-voting common stock, $.01 par value:
		Issued shares – 304,000 and 697,166 at September 30, 2003 and September 30, 2002, respectively		7			7			–
	Additional paid-in capital			165,972			132,005			25.7	%
	Accumulated deficit			(3,127	)		(15,219	)		(79.5	)%
	Treasury stock (shares at cost: 97,246)			(668	)		(668	)		–
	Deferred compensation			573			573			–
	Accumulated other comprehensive income			2,082			3,935			(47.1	)%
Total stockholders’ equity				165,080			120,828			36.6	%
Total liabilities and stockholders’ equity			$	2,150,508		$	1,617,469			33.0	%

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TEXAS CAPITAL BANCSHARES, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands except per share data)

	Three Months Ended						Nine Months Ended
	September 30						September 30
	2003			2002			2003			2002
Interest income
Interest and fees on loans	$	16,114		$	14,219		$	46,791		$	39,545
Securities		4,832			3,815			15,517			10,320
Federal funds sold		20			25			150			204
Deposits in other banks		4			3			11			6
Total interest income		20,970			18,062			62,469			50,075
Interest expense
Deposits		5,041			5,617			16,020			15,650
Federal funds purchased		348			402			1,257			1,145
Other borrowings		1,980			1,169			6,805			2,798
Long-term debt		250			–			630			–
Total interest expense		7,619			7,188			24,712			19,593
Net interest income		13,351			10,874			37,757			30,482
Provision for loan losses		475			2,380			3,325			4,359
Net interest income after provision for loan losses		12,876			8,494			34,432			26,123
Non-interest income
Service charges on deposit accounts		856			710			2,596			2,055
Trust fee income		350			235			937			727
Gain on sale of securities		–			1,375			686			1,375
Cash processing fees		–			–			973			993
Bank owned life insurance (BOLI) income		451			144			1,293			144
Mortgage warehouse fees		545			188			1,248			545
Other		310			211			924			680
Total non-interest income		2,512			2,863			8,657			6,519
Non-interest expense
Salaries and employee benefits		5,754			4,163			16,990			12,492
Net occupancy expense		1,265			1,214			3,651			3,767
Advertising and affinity payments		213			448			605			1,010
Legal and professional		744			724			2,253			2,175
Communications and data processing		767			717			2,223			2,117
Franchise taxes		37			34			111			81
Repurchase agreement penalties		–			–			6,262			–
Other		1,703			1,263			4,667			3,701
Total non-interest expense		10,483			8,563			36,762			25,343
Income (loss) before income taxes		4,905			2,794			6,327			7,299
Income tax expense (benefit)		1,573			700			(3,893	)		1,828
Net income		3,332			2,094			10,220			5,471
Preferred stock dividends		(149	)		(280	)		(699	)		(817	)
Income available to common stockholders	$	3,183		$	1,814		$	9,521		$	4,654
Earnings per share:
Basic	$	.15		$	.09		$	.47		$	.24
Diluted	$	.14		$	.09		$	.45		$	.24

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TEXAS CAPITAL BANCSHARES, INC.

SUMMARY OF LOAN LOSS EXPERIENCE
(Dollars in thousands)

		3rd			2nd			1st			4th			3rd
		Quarter			Quarter			Quarter			Quarter			Quarter
		2003			2003			2003			2002			2002
Beginning balance		$	17,274		$	15,893		$	14,538		$	13,844		$	12,096
Loans charged-off:
	Commercial		33			17			–			11			85
	Real estate		200			2			–			–			–
	Consumer		–			–			–			5			–
	Leases		261			237			13			698			557
Total			494			256			13			714			642
Recoveries:
	Commercial		–			–			78			31			–
	Consumer		–			–			–			–			1
	Leases		21			37			40			107			9
Total recoveries			21			37			118			138			10
Net charge-offs (recoveries)			473			219			(105	)		576			632
Provision for loan losses			475			1,600			1,250			1,270			2,380
Ending balance		$	17,276		$	17,274		$	15,893		$	14,538		$	13,844
Reserve for loan losses to loans outstanding at end of period			1.41	%		1.38	%		1.35	%		1.30	%		1.31	%
Net charge-offs to average loans(1)			.15	%		.07	%		(.04	%)		.21	%		.25	%
Provision for loan losses to average loans(1)			.15	%		.53	%		.45	%		.47	%		.94	%
Recoveries to gross charge-offs			4.25	%		14.45	%		907.69	%		19.33	%		1.56	%
Reserve as a multiple of net
charge-offs			36.5x			78.9x			–			25.2x			21.9x
Non-performing and renegotiated loans:
	Loans past due (90 days)	$	1,095		$	1,145		$	38		$	135		$	1,686
	Non-accrual		11,026			11,545			3,769			2,776			6,474
Total		$	12,121		$	12,690		$	3,807		$	2,911		$	8,160
Reserve as a percent of non-performing and renegotiated loans			142.53	%		136.12	%		417.47	%		499.42	%		169.66	%

(1) Interim period ratios are annualized.

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TEXAS CAPITAL BANCSHARES, INC.

CONSOLIDATED STATEMENT OF OPERATIONS
(Dollars in thousands)

	3rd			2nd			1st			4th			3rd
	Quarter			Quarter			Quarter			Quarter			Quarter
	2003			2003			2003			2002			2002
Interest income
Interest and fees on loans	$	16,114		$	15,981		$	14,696		$	14,842		$	14,219
Securities		4,832			5,329			5,356			5,164			3,815
Federal funds sold		20			43			87			39			25
Deposits in other banks		4			4			3			22			3
Total interest income		20,970			21,357			20,142			20,067			18,062
Interest expense
Deposits		5,041			5,597			5,382			5,573			5,617
Federal funds purchased		348			469			440			395			402
Other borrowings		1,980			2,380			2,445			2,270			1,169
Long-term debt		250			247			133			65			–
Total interest expense		7,619			8,693			8,400			8,303			7,188
Net interest income		13,351			12,664			11,742			11,764			10,874
Provision for loan losses		475			1,600			1,250			1,270			2,380
Net interest income after provision for loan losses		12,876			11,064			10,492			10,494			8,494
Non-interest income
Service charges on deposit accounts		856			897			843			717			710
Trust fee income		350			306			281			260			235
Gain on sale of securities		–			345			341			–			1,375
Cash processing fees		–			73			900			–			–
Bank owned life insurance (BOLI) income		451			428			414			591			144
Mortgage warehouse fees		545			424			279			250			188
Other		310			345			269			288			211
Total non-interest income		2,512			2,818			3,327			2,106			2,863
Non-interest expense
Salaries and employee benefits		5,754			5,857			5,379			4,265			4,163
Net occupancy expense		1,265			1,199			1,187			1,234			1,214
Advertising and affinity payments		213			199			193			226			448
Legal and professional		744			930			579			863			724
Communications and data processing		767			736			720			722			717
Franchise taxes		37			37			37			27			34
Repurchase agreement penalties		–			6,262			–			–			–
IPO expenses		–			–			–			1,190			–
Other		1,703			1,681			1,283			1,500			1,263
Total non-interest expense		10,483			16,901			9,378			10,027			8,563
Income (loss) before income taxes		4,905			(3,019	)		4,441			2,573			2,794
Income tax expense (benefit)		1,573			(6,876	)		1,410			701			700
Net income		3,332			3,857			3,031			1,872			2,094
Preferred stock dividends		(149	)		(276	)		(274	)		(280	)		(280	)
Income available to common stockholders	$	3,183		$	3,581		$	2,757		$	1,592		$	1,814

11

QUARTERLY FINANCIAL SUMMARY – UNAUDITED
Consolidated Daily Average Balances, Average Yields and Rates
(Dollars in thousands)

		3rd Quarter 2003							2nd Quarter 2003
		Average		Revenue/		Yield/			Average		Revenue/		Yield/
		Balance		Expense(1)		Rate			Balance		Expense(1)		Rate
Assets
Taxable securities		$	652,082	$	4,832		2.94	%	$	620,239	$	5,329		3.45	%
Federal funds sold			8,090		20		0.98	%		13,220		43		1.30	%
Deposits in other banks			1,118		4		1.42	%		923		4		1.74	%
Loans			1,275,311		16,114		5.01	%		1,207,815		15,981		5.31	%
	Less reserve for loan losses		17,573		–		–			16,100		–		–
Loans, net of reserve			1,257,738		16,114		5.08	%		1,191,715		15,981		5.38	%
Total earning assets			1,919,028		20,970		4.34	%		1,826,097		21,357		4.69	%
Cash and other assets			143,765							120,388
Total assets		$	2,062,793						$	1,946,485
Liabilities and Stockholders’ Equity
Transaction deposits		$	64,137	$	102		0.63	%	$	62,476	$	121		0.78	%
Savings deposits			477,158		1,466		1.22	%		407,081		1,629		1.61	%
Time deposits			548,288		3,473		2.51	%		575,325		3,847		2.68	%
Total interest bearing deposits			1,089,583		5,041		1.84	%		1,044,882		5,597		2.15	%
Other borrowings			527,658		2,328		1.75	%		495,511		2,849		2.31	%
Long-term debt			20,000		250		4.96	%		19,011		247		5.21	%
Total interest bearing liabilities			1,637,241		7,619		1.85	%		1,559,404		8,693		2.24	%
Demand deposits			269,891							246,822
Other liabilities			9,592							11,619
Stockholders’ equity			146,069							128,640
Total liabilities and stockholders’ equity		$	2,062,793						$	1,946,485
Net interest income				$	13,351						$	12,664
Net interest income to earning assets							2.76	%						2.78	%

[Additional columns below]

[Continued from above table, first column(s) repeated]

		1st Quarter 2003							4th Quarter 2002
		Average		Revenue/		Yield/			Average		Revenue/		Yield/
		Balance		Expense(1)		Rate			Balance		Expense(1)		Rate
Assets
Taxable securities		$	546,120	$	5,356		3.98	%	$	485,869	$	5,164		4.22	%
Federal funds sold			29,394		87		1.20	%		12,087		39		1.28	%
Deposits in other banks			213		3		1.90	%		1,276		22		6.84	%
Loans			1,119,684		14,696		5.32	%		1,082,775		14,842		5.44	%
	Less reserve for loan losses		14,944		–		–			14,187		—		—
Loans, net of reserve			1,104,740		14,696		5.39	%		1,068,588		14,842		5.51	%
Total earning assets			1,680,467		20,142		4.86	%		1,567,820		20,067		5.08	%
Cash and other assets			144,661							100,015
Total assets		$	1,825,128						$	1,667,835
Liabilities and Stockholders’ Equity
Transaction deposits		$	59,584	$	112		0.76	%	$	58,024	$	125		0.85	%
Savings deposits			381,587		1,640		1.74	%		374,120		1,690		1.79	%
Time deposits			524,622		3,630		2.81	%		491,056		3,758		3.04	%
Total interest bearing deposits			965,793		5,382		2.26	%		923,200		5,573		2.39	%
Other borrowings			496,617		2,885		2.36	%		413,064	��	2,665		2.56	%
Long-term debt			10,000		133		5.39	%		4,674		65		5.52	%
Total interest bearing liabilities			1,472,410		8,400		2.31	%		1,340,938		8,303		2.46	%
Demand deposits			213,991							194,371
Other liabilities			11,784							10,077
Stockholders’ equity			126,943							122,449
Total liabilities and stockholders’ equity		$	1,825,128						$	1,667,835
Net interest income				$	11,742						$	11,764
Net interest income to earning assets							2.83	%						2.98	%

[Additional columns below]

[Continued from above table, first column(s) repeated]

		3rd Quarter 2002
		Average		Revenue/		Yield/
		Balance		Expense(1)		Rate
Assets
Taxable securities		$	304,724	$	3,815		4.97	%
Federal funds sold			5,903		25		1.68	%
Deposits in other banks			621		3		1.92	%
Loans			1,000,356		14,219		5.64	%
	Less reserve for loan losses		12,871		–		–
Loans, net of reserve			987,485		14,219		5.71	%
Total earning assets			1,298,733		18,062		5.52	%
Cash and other assets			69,876
Total assets		$	1,368,609
Liabilities and Stockholders’ Equity
Transaction deposits		$	52,478	$	123		0.93	%
Savings deposits			352,364		1,880		2.12	%
Time deposits			451,391		3,614		3.18	%
Total interest bearing deposits			856,233		5,617		2.60	%
Other borrowings			227,420		1,571		2.74	%
Long-term debt			–		–		–
Total interest bearing liabilities			1,083,653		7,188		2.63	%
Demand deposits			156,950
Other liabilities			8,417
Stockholders’ equity			119,589
Total liabilities and stockholders’ equity		$	1,368,609
Net interest income				$	10,874
Net interest income to earning assets							3.32	%

12