Encore Bancshares (EBTX) 8-K Results of Operations and Financial Condition

Exhibit 99.1

  FOR IMMEDIATE RELEASE 07-13   Contact:   L. Anderson Creel Chief Financial Officer 713.787.3138   James S. D’Agostino, Jr. Chairman and CEO 713.787.3103

ENCORE BANCSHARES REPORTS THIRD QUARTER 2007 NET EARNINGS

OF $2.2 MILLION OR $0.22 PER SHARE

HOUSTON – October 26, 2007 – Encore Bancshares, Inc. (NASDAQ: EBTX) today announced earnings for the third quarter of 2007.

Highlights:

• Net earnings grew 32% over third quarter of 2006

• Net interest margin improved 41 basis points over the prior year quarter

• Loans increased 20% compared with the third quarter of 2006

• Nonperforming assets dropped 27% compared with the second quarter of 2007

“We continued to make good progress in improving our net interest margin and profitability during the quarter,” said James S. D’Agostino, Jr., Chairman and Chief Executive Officer. “In addition, we reported a 38% increase in wealth management earnings, with assets under management up 16% to $2.8 billion. Further I am pleased that our credit quality metrics are improving.”

In the third quarter of 2007, we completed our initial public offering of 2,190,475 shares of common stock (including the underwriter’s over allotment), which priced at $21.00 per share on July 17, 2007. The net proceeds of the offering, approximately $41.7 million, contributed to total shareholders’ equity of $155.4 million as of September 30, 2007.

Earnings

For the three months ended September 30, 2007, net earnings were $2.2 million, or $0.22 per diluted share, compared with $1.7 million, or $0.21 per diluted share, for the same period of 2006. The 32.3% improvement in net earnings was due primarily to greater net interest income resulting from an improved asset and funding mix and growth in wealth management earnings.

For the nine months ended September 30, 2007, net earnings were $5.7 million, or $0.64 per diluted share, compared with $6.3 million, or $0.80 per diluted share, for the first nine months of 2006. The 10.0% decrease in net earnings, period over period, was due primarily to a decrease in mortgage banking income.

1

Net Interest Income

Net interest income for the third quarter of 2007 was $9.1 million, up $1.5 million, or 20.1%, compared with the third quarter of 2006. The net interest margin expanded 41 basis points to 2.86%, reflecting an improved asset and funding mix resulting from the replacement of lower yielding first mortgage loans and securities with higher yielding loans. For the nine months ended September 30, 2007, net interest income was $24.7 million, an increase of $2.0 million, or 8.6%, compared with the same period in 2006. The net interest margin increased 20 basis points to 2.69%, due primarily to improvements in the asset and funding mix. Linked quarter (compared with the immediately preceding quarter) net interest income rose $1.1 million, or 13.4%, and the net interest margin improved 19 basis points.

Noninterest Income

Noninterest income was $7.5 million in the third quarter of 2007, down $359,000, or 4.6%, compared with the third quarter of 2006. Noninterest income for the nine months ended September 30, 2007 was $24.7 million, a decrease of $2.1 million, or 8.0%, compared with the same period of 2006. The decrease in noninterest income for both periods was primarily attributable to reduced mortgage banking income, the majority of which was related to second mortgages. This reduction occurred due to the combined effects of a lower dollar volume of mortgage loans sold and lower pricing, which resulted from a slowdown in the housing market and changes in the market for mortgage loans.

As a result of the unfavorable mortgage market conditions that have developed, and giving consideration to our assessment that the credit quality of the mortgage loans we originate is strong and the yield is favorable, we intend to originate these loans for our portfolio. We began this practice with all new loans originated in the latter part of the third quarter. We anticipate that the near-term decrease in mortgage banking income resulting from this change in strategy will be mitigated in the long term by an increase in interest income as a result of the growth in the loan portfolio from the retained mortgage loans. In an effort to further mitigate the decrease in mortgage banking income, we initiated a cost reduction effort in the fourth quarter of 2007, which includes a staff consolidation of approximately 5%. We expect that these cost reductions will yield expense savings of approximately $2.0 million in 2008 which will mostly be reinvested in growing our business.

2

Noninterest Expense

Noninterest expense was $12.5 million for the third quarter of 2007, up $420,000, or 3.5%, compared with the third quarter of 2006. Noninterest expense for the nine months ended September 30, 2007 was $38.2 million, up $551,000, or 1.5%, compared with the same period of 2006. The change in both periods was due primarily to the costs associated with opening two new private client offices. Partially offsetting these increased expenses were lower commissions paid as a result of the slowdown in mortgage origination and lower expenses due to the sale of certain trust related assets in June 2006. Linked quarter noninterest expense decreased $800,000, or 6.0%, as a result of a loss related to an early debt extinguishment in the second quarter of 2007 and increased cost deferrals associated with originating second mortgages for the loan portfolio.

Segment Earnings

On a segment basis, our banking net earnings were $1.3 million for the third quarter of 2007, an increase of $153,000, or 13.7%, compared with the same period of 2006, resulting from a rise in net interest income that was partially offset by a decline in mortgage banking income. Our wealth management group showed net earnings of $915,000 for the third quarter of 2007, an increase of $251,000, or 37.8%, over the prior year quarter. The growth in net earnings was due primarily to a 16.2% increase in assets under management. Our insurance group also reported earnings growth, with net earnings of $316,000 for the third quarter of 2007, an increase of $64,000, or 25.4% compared with the prior year quarter. The increased net earnings were due primarily to growth in commercial business lines.

Loans

Period end loans were $1.0 billion at September 30, 2007, an increase of $173.1 million, or 20.2%, from September 30, 2006, and up $77.3 million, or 8.1%, on a linked quarter basis. Average loans were $973.6 million for the third quarter of 2007, an increase of $133.0 million, or 15.8%, compared with the prior year quarter.

Deposits

Period end deposits were $1.0 billion, up $92.8 million, or 9.9%, from September 30, 2006 and up $11.9 million, or 1.2%, on a linked quarter basis. Noninterest-bearing deposits were $115.7 million, up $28.9 million, or 33.3%, from September 30, 2006. Average deposits were $1.0 billion for the third quarter of 2007, up $86.8 million, or 9.4%, compared with the prior year quarter.

3

Credit Quality

Net charge-offs for the third quarter of 2007 were $465,000, or 0.19% of average total loans on an annualized basis, compared with $182,000, or 0.09% of average total loans on an annualized basis, for the third quarter of 2006. The provision for loan losses was $1.0 million in the third quarter, an increase of $243,000, or 31.8%, compared with the prior year quarter, reflecting the growth in the loan portfolio. The allowance for loan losses was $10.7 million, or 1.04% of total loans at September 30, 2007, compared with $10.2 million, or 1.07% of total loans at June 30, 2007.

At September 30, 2007, nonperforming assets were $9.5 million, or 0.92% of total loans and investment in real estate, compared with $9.7 million, or 1.07% of total loans and investment in real estate at December 31, 2006. At September 30, 2007, non-accrual loans were $8.7 million compared with $9.1 million at June 30, 2007. Non-accrual loans consisted primarily of one loan in the amount of $6.3 million to a law firm. Loans 90 days past due and still accruing were $20,000 at September 30, 2007 compared with $2.2 million at June 30, 2007. The improvement is primarily attributable to a number of small commercial loans that were renewed or repaid. Investment in real estate decreased $1.1 million, due to the sale of a property that was originally acquired to be a private client office. We expect that nonperforming assets will be further reduced prior to year-end 2007.

Other Information

Effective October 1, 2007, Encore Bank’s Executive Vice President and Chief Credit Officer, John Fields, resigned from his position. Mr. Fields has been with Encore Bank since 2000 and has served in his current position since that time.

To ensure continuity of our strong credit culture as well as adherence to credit policies and practices, the duties of Chief Credit Officer have been assumed on an interim basis by Chairman and CEO, James D’Agostino, until a permanent replacement is named. In addition, Jim Riley, an experienced banker, who joined the bank in March 2007 as a credit consultant, will continue to support credit administration.

Conference Call

A conference call will be held on Friday, October 26, 2007 at 10 a.m., Central time to discuss third quarter 2007 results. A question and answer session will follow the prepared remarks. Individuals may access the call by dialing 1-800-289-0569 (Int’l callers dial 913-981-5542), or access the live webcast by visitingwww.encorebank.com/investorrelations.shtml orwww.bestcalls.com

4

About Encore Bancshares, Inc.

Encore Bancshares, Inc. is a bank holding company headquartered in Houston, Texas, with $1.4 billion in consolidated assets. Encore builds relationships with professional firms, privately-owned businesses, investors and affluent individuals. We offer a full range of business and personal banking products and services, as well as financial planning, wealth management, trust and insurance products through Encore Bank, N.A. and its subsidiaries Linscomb & Williams and Town & Country Insurance. Encore Bank operates eleven private client offices in Houston and six in southwest Florida. Encore Bancshares’ common stock is listed on the NASDAQ Global Market under the symbol “EBTX.”

This press release contains certain forward-looking information about Encore Bancshares that is intended to be covered by the safe harbor for “forward-looking statements” provided by the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical fact are forward-looking statements. Such statements involve risks and uncertainties that may cause actual results to differ materially from those expressed in or implied by such forward-looking statements. Risks and uncertainties include, but are not limited to: competitive pressure among financial institutions; our ability to expand and grow our businesses and operations and to realize the cost savings and revenue enhancements expected from such activities; a deterioration of credit quality or a reduced demand for credit; changes in the interest rate environment; the continued service of key management personnel; our ability to attract, motivate and retain key employees; general economic conditions, either nationally, regionally or in the market areas in which we operate; legislative or regulatory developments or changes in laws; changes in the securities markets and other risks that are described in our public filings with the Securities and Exchange Commission.

Encore Bancshares, Inc. | Nine Greenway Plaza, Suite 1000 | Houston, Texas 77046

www.encorebank.com

5

Encore Bancshares, Inc. and Subsidiaries

FINANCIAL HIGHLIGHTS

(Unaudited, dollars in thousands, except per share data)

	As of and for the Three Months Ended September 30,						As of and for the Nine Months Ended September 30,
	2007			2006			2007			2006
Earnings Statement Data:
Interest income	$	21,032		$	19,513		$	60,187		$	56,220
Interest expense		11,966			11,963			35,443			33,435
Net interest income		9,066			7,550			24,744			22,785
Provision for loan losses		1,008			765			2,853			2,287
Net interest income after provision for loan losses		8,058			6,785			21,891			20,498
Noninterest income		7,521			7,880			24,697			26,839
Noninterest expense		12,489			12,069			38,240			37,689
Net earnings before income taxes		3,090			2,596			8,348			9,648
Income tax expense		842			897			2,667			3,334
Net earnings	$	2,248		$	1,699		$	5,681		$	6,314
Common Share Data:
Basic earnings per share	$	0.24		$	0.23		$	0.70		$	0.84
Diluted earnings per share		0.22			0.21			0.64			0.80
Book value per share		15.36			13.34			15.36			13.34
Tangible book value per share		11.91			8.85			11.91			8.85
Weighted average shares outstanding
(basic)		9,347,162			7,503,526			8,160,116			7,500,999
Weighted average shares outstanding
(diluted)		10,156,090			7,934,716			8,836,428			7,906,746
Shares outstanding at end of period		10,120,440			7,781,709			10,120,440			7,781,709
Selected Performance Ratios:
Return on average assets		0.66	%		0.51	%		0.58	%		0.64	%
Return on average equity		6.20	%		6.60	%		6.31	%		8.44	%
Return on average tangible equity		8.20	%		10.05	%		8.93	%		13.03	%
Net interest margin		2.86	%		2.45	%		2.69	%		2.49	%
Efficiency ratio		74.03	%		76.68	%		75.80	%		74.50	%
Noninterest income to total revenue		45.34	%		51.07	%		49.95	%		54.08	%

6

Encore Bancshares, Inc. and Subsidiaries

CONSOLIDATED BALANCE SHEETS

(Unaudited, dollars in thousands, except per share data)

	Sept 30, 2007			June 30, 2007			March 31, 2007			Dec 31, 2006			Sept 30, 2006
ASSETS
Cash and due from banks	$	19,044		$	23,972		$	23,912		$	27,428		$	24,143
Interest-bearing deposits in banks		1,804			2,903			7,122			2,904			3,924
Federal funds sold and other		100,630			9,862			888			8,764			18,398
Cash and cash equivalents		121,478			36,737			31,922			39,096			46,465
Securities available-for-sale, at estimated fair value		12,205			15,298			51,439			83,701			88,193
Securities held-to-maturity, at amortized cost		140,507			148,983			156,472			172,555			180,967
Mortgages held-for-sale		2,244			54,004			45,954			57,769			51,916
Loans receivable		1,030,133			952,838			932,793			908,368			857,005
Allowance for loan losses		(10,711	)		(10,168	)		(9,790	)		(9,056	)		(10,123	)
Net loans receivable		1,019,422			942,670			923,003			899,312			846,882
Federal Home Loan Bank of Dallas stock, at cost		5,805			6,424			6,611			7,719			9,416
Investments in real estate		731			1,785			1,785			235			450
Premises and equipment, net		15,814			15,790			13,051			12,639			12,337
Goodwill		27,922			27,905			27,894			27,869			27,085
Other intangible assets, net		6,991			7,200			7,408			7,618			7,855
Cash surrender value of life insurance policies		13,951			13,818			13,684			13,551			13,419
Accrued interest receivable and other assets		16,062			16,587			15,764			14,779			13,967
	$	1,383,132		$	1,287,201		$	1,294,987		$	1,336,843		$	1,298,952
LIABILITIES AND SHAREHOLDERS’ EQUITY
Deposits:
Noninterest-bearing	$	115,742		$	106,064		$	112,585		$	131,476		$	86,845
Interest-bearing		916,442			914,208			884,713			899,335			852,563
Total deposits		1,032,184			1,020,272			997,298			1,030,811			939,408
Borrowings and repurchase agreements		166,359			125,753			157,505			171,732			227,455
Junior subordinated debentures		20,619			20,619			20,619			20,619			20,619
Accrued interest payable and other liabilities		8,538			9,447			10,621			8,004			7,648
Total liabilities		1,227,700			1,176,091			1,186,043			1,231,166			1,195,130
Commitments and contingencies		—			—			—			—			—
Puttable common stock		—			—			—			774			774
Puttable common stock in excess of par		—			—			—			9,492			9,492
Total puttable common stock		—			—			—			10,266			10,266
Shareholders’ equity:
Preferred stock		—			—			—			—			—
Common stock		10,124			7,925			7,901			7,016			7,014
Additional paid-in capital		107,954			68,188			67,670			57,585			57,248
Retained earnings		38,060			35,812			34,154			32,529			31,365
Common stock in treasury, at cost		(69	)		(69	)		(69	)		(69	)		(104	)
Accumulated other comprehensive loss		(637	)		(746	)		(712	)		(1,650	)		(1,967	)
Total shareholders’ equity		155,432			111,110			108,944			95,411			93,556
	$	1,383,132		$	1,287,201		$	1,294,987		$	1,336,843		$	1,298,952
Ratios:
Leverage ratio		10.71	%		7.66	%		7.40	%		6.35	%		6.26	%
Tier 1 risk-based capital ratio		14.20	%		10.31	%		10.28	%		9.20	%		9.56	%
Total risk-based capital ratio		15.28	%		11.40	%		11.35	%		11.37	%		11.99	%
Book value per share	$	15.36		$	14.03		$	13.80		$	13.57		$	13.34
Tangible book value per share		11.91			9.60			9.33			9.01			8.85
Tangible common equity to tangible assets		8.94	%		6.07	%		5.85	%		5.39	%		5.45	%

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Encore Bancshares, Inc. and Subsidiaries

CONSOLIDATED STATEMENTS OF EARNINGS

(Unaudited, dollars in thousands, except per share data)

	Three Months Ended													Nine Months Ended September 30,
	Sept 30, 2007		June 30, 2007			March 31, 2007			Dec 31, 2006			Sept 30, 2006
														2007			2006
Interest income:
Loans, including fees	$	17,309	$	16,346		$	15,808		$	15,283		$	14,651	$	49,463		$	41,470
Mortgages held-for-sale		1,346		1,202			1,121			1,442			1,787		3,669			5,104
Securities		1,463		1,745			2,273			2,583			2,705		5,481			8,656
Federal funds sold and other		914		382			278			282			370		1,574			990
Total interest income		21,032		19,675			19,480			19,590			19,513		60,187			56,220
Interest expense:
Deposits		9,947		9,525			9,456			9,441			8,603		28,928			21,079
Borrowings and repurchase agreements		1,651		1,779			1,889			2,318			2,898		5,319			11,060
Junior subordinated debentures		368		373			455			443			462		1,196			1,296
Total interest expense		11,966		11,677			11,800			12,202			11,963		35,443			33,435
Net interest income		9,066		7,998			7,680			7,388			7,550		24,744			22,785
Provision for loan losses		1,008		945			900			1,204			765		2,853			2,287
Net interest income after provision for loan losses		8,058		7,053			6,780			6,184			6,785		21,891			20,498
Noninterest income:
Trust and investment management fees		4,501		4,268			4,244			4,159			3,899		13,013			13,156
Mortgage banking		1,167		2,052			2,192			2,643			2,243		5,411			8,018
Insurance commissions and fees		1,450		1,562			1,713			1,114			1,364		4,725			4,342
Real estate operations, including net gain on sales		178		107			18			(21	)		81		303			355
Net loss on sale of available-for-sale securities		—		(32	)		(149	)		—			—		(181	)		—
Other		225		764			437			349			293		1,426			968
Total noninterest income		7,521		8,721			8,455			8,244			7,880		24,697			26,839
Noninterest expense:
Compensation		7,318		7,855			7,863			7,272			7,482		23,036			23,775
Occupancy		1,438		1,499			1,399			1,634			1,236		4,336			3,831
Equipment		506		497			520			516			511		1,523			1,534
Advertising and promotion		328		271			196			374			227		795			718
Outside data processing		884		904			808			834			861		2,596			2,419
Professional fees		401		458			390			405			497		1,249			1,404
Intangible amortization		209		211			209			236			237		629			719
Loss on early debt extinguishment		—		391			—			—			—		391			—
Other		1,405		1,203			1,077			1,378			1,018		3,685			3,289
Total noninterest expense		12,489		13,289			12,462			12,649			12,069		38,240			37,689
Net earnings before income taxes		3,090		2,485			2,773			1,779			2,596		8,348			9,648
Income tax expense		842		827			998			615			897		2,667			3,334
NET EARNINGS	$	2,248	$	1,658		$	1,775		$	1,164		$	1,699	$	5,681		$	6,314
Earnings Per Common Share:
Basic	$	0.24	$	0.22		$	0.23		$	0.16		$	0.23	$	0.70		$	0.84
Diluted		0.22		0.20			0.22			0.15			0.21		0.64			0.80
Average common shares outstanding		9,347,162		7,558,597			7,554,893			7,501,526			7,503,526		8,160,116			7,500,999
Diluted average common shares outstanding		10,156,090		8,199,564			8,131,379			7,981,883			7,934,716		8,836,428			7,906,746

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Encore Bancshares, Inc. and Subsidiaries

AVERAGE CONSOLIDATED BALANCE SHEETS

(Unaudited, dollars in thousands)

	Three Months Ended
	Sept 30, 2007			June 30, 2007			March 31, 2007			Dec 31, 2006			Sept 30, 2006
Assets:
Interest-earning assets:
Loans	$	973,641		$	938,356		$	916,523		$	887,439		$	840,674
Mortgages held-for-sale		60,959			53,926			52,273			59,042			80,951
Securities		156,159			183,008			232,154			262,873			277,854
Federal funds sold and other		68,347			27,755			19,412			18,448			25,248
Total interest-earning assets		1,259,106			1,203,045			1,220,362			1,227,802			1,224,727
Less: Allowance for loan losses		(10,391	)		(9,843	)		(9,268	)		(10,110	)		(9,726	)
Noninterest-earning assets		102,667			103,512			102,234			104,350			100,204
Total assets	$	1,351,382		$	1,296,714		$	1,313,328		$	1,322,042		$	1,315,205
Liabilities, shareholders’ equity and puttable common stock:
Interest-bearing liabilities:
Interest checking	$	169,860		$	167,956		$	183,335		$	175,640		$	168,222
Money market and savings		358,732			340,950			334,971			331,517			294,911
Time deposits		375,896			373,669			374,389			369,385			373,687
Total interest-bearing deposits		904,488			882,575			892,695			876,542			836,820
Borrowings and repurchase agreements		158,203			161,698			172,660			205,667			252,416
Junior subordinated debentures		20,619			20,930			20,619			20,619			20,619
Total interest-bearing liabilities		1,083,310			1,065,203			1,085,974			1,102,828			1,109,855
Noninterest-bearing liabilities:
Noninterest-bearing deposits		108,168			109,753			105,950			100,773			89,038
Other liabilities		16,128			12,127			13,685			14,091			14,161
Total liabilities		1,207,606			1,187,083			1,205,609			1,217,692			1,213,054
Shareholders’ equity and puttable common stock		143,776			109,631			107,719			104,350			102,151
Total liabilities, shareholders’ equity and puttable common stock	$	1,351,382		$	1,296,714		$	1,313,328		$	1,322,042		$	1,315,205

9

Encore Bancshares, Inc. and Subsidiaries

SELECTED FINANCIAL DATA

(Unaudited, dollars in thousands)

	Sept 30, 2007			June 30, 2007			March 31, 2007			Dec 31, 2006			Sept 30, 2006
Loan Portfolio:
Commercial:
Commercial	$	111,072		$	113,370		$	115,896		$	113,526		$	106,201
Commercial real estate		249,576			225,985			210,992			190,550			169,811
Real estate construction		132,557			130,168			134,781			121,848			109,761
Total commercial		493,205			469,523			461,669			425,924			385,773
Consumer:
Residential real estate		411,260			355,279			334,156			336,077			317,390
Home equity lines		76,096			76,452			78,430			78,158			75,038
Consumer installment - indirect		29,210			33,622			39,204			44,360			50,020
Consumer other		20,362			17,962			19,334			23,849			28,784
Total consumer		536,928			483,315			471,124			482,444			471,232
Total loans receivable	$	1,030,133		$	952,838		$	932,793		$	908,368		$	857,005
Nonperforming Assets:
Nonaccrual loans	$	8,734		$	9,111		$	8,446		$	9,411		$	4,453
Accruing loans past due 90 days or more		20			2,178			100			96			870
Restructured loans		—			—			—			—			—
Total nonperforming loans		8,754			11,289			8,546			9,507			5,323
Investment in real estate		731			1,785			1,785			235			450
Total nonperforming assets	$	9,485		$	13,074		$	10,331		$	9,742		$	5,773
Asset Quality Ratios:
Nonperforming assets to total loans and investment in real estate		0.92	%		1.37	%		1.11	%		1.07	%		0.67	%
Net charge-offs to average loans		0.19	%		0.24	%		0.07	%		1.02	%		0.09	%
Allowance for loan losses to period-end loans		1.04	%		1.07	%		1.05	%		1.00	%		1.18	%
Allowance for loan losses to nonperforming loans		122.36	%		90.07	%		114.56	%		95.26	%		190.17	%
Deposits:
Noninterest-bearing deposits	$	115,742		$	106,064		$	112,585		$	131,476		$	86,845
Interest checking		169,646			172,079			174,602			191,683			162,172
Money market and savings		362,289			368,682			329,414			332,605			323,724
Time deposits less than $100,000		175,071			166,482			174,281			178,216			173,340
Core deposits		822,748			813,307			790,882			833,980			746,081
Time deposits $100,000 and greater		194,619			188,075			195,894			187,864			184,339
Brokered deposits		14,817			18,890			10,522			8,967			8,988
Total deposits	$	1,032,184		$	1,020,272		$	997,298		$	1,030,811		$	939,408
Assets Under Management	$	2,792,894		$	2,683,841		$	2,609,893		$	2,509,185		$	2,403,681

10

Encore Bancshares, Inc. and Subsidiaries

ALLOWANCE FOR LOAN LOSSES

(Unaudited, dollars in thousands)

	Three Months Ended
	Sept 30,			June 30,			March 31,			Dec 31,			Sept 30,
	2007			2007			2007			2006			2006
Allowance for loan losses at beginning of quarter	$	10,168		$	9,790		$	9,056		$	10,123		$	9,540
Charge-offs:
Commercial:
Commercial		(42	)		—			—			(1,488	)		—
Commercial real estate		—			—			—			—			—
Real estate construction		—			—			—			—			—
Total commercial		(42	)		—			—			(1,488	)		—
Consumer:
Residential real estate		(340	)		(416	)		(84	)		(66	)		(27	)
Home equity lines		(25	)		—			(10	)		(61	)		(71	)
Consumer installment - indirect		(307	)		(215	)		(80	)		(439	)		(174	)
Consumer other		(13	)		(24	)		(144	)		(340	)		(76	)
Total consumer		(685	)		(655	)		(318	)		(906	)		(348	)
Total charge-offs		(727	)		(655	)		(318	)		(2,394	)		(348	)
Recoveries:
Commercial:
Commercial		6			—			—			—			—
Commercial real estate		—			—			—			—			—
Real estate construction		—			—			—			—			—
Total commercial		6			—			—			—			—
Consumer:
Residential real estate		157			7			26			3			99
Home equity lines		—			—			43			—			1
Consumer installment - indirect		76			45			64			100			43
Consumer other		23			36			19			20			23
Total consumer		256			88			152			123			166
Total recoveries		262			88			152			123			166
Net charge-offs		(465	)		(567	)		(166	)		(2,271	)		(182	)
Provision for loan losses		1,008			945			900			1,204			765
Allowance for loan losses at end of quarter	$	10,711		$	10,168		$	9,790		$	9,056		$	10,123

11

Encore Bancshares, Inc. and Subsidiaries

SEGMENT OPERATIONS

(Unaudited, dollars in thousands)

	As of and for the Three Months Ended
	Sept 30, 2007			June 30, 2007			March 31, 2007			Dec 31, 2006			Sept 30, 2006
Banking
Net interest income	$	9,315		$	8,258		$	8,035		$	7,732		$	7,927
Provision for loan losses		1,008			945			900			1,204			765
Noninterest income		1,559			2,807			2,481			2,978			2,620
Noninterest expense		8,338			8,853			8,453			8,522			8,223
Earnings before income taxes		1,528			1,267			1,163			984			1,559
Income tax expense		261			370			396			373			445
Net earnings	$	1,267		$	897		$	767		$	611		$	1,114
Total assets at quarter end	$	1,392,156		$	1,292,112		$	1,301,562		$	1,342,446		$	1,304,825
Wealth Management
Net interest income	$	82		$	77		$	73		$	73		$	66
Noninterest income		4,501			4,268			4,244			4,160			3,898
Noninterest expense		3,137			2,988			3,027			3,190			2,860
Earnings before income taxes		1,446			1,357			1,290			1,043			1,104
Income tax expense		531			483			467			344			440
Net earnings	$	915		$	874		$	823		$	699		$	664
Total assets at quarter end	$	45,425		$	44,395		$	43,935		$	42,684		$	41,419
Insurance
Net interest income	$	37		$	36		$	27		$	26		$	19
Noninterest income		1,460			1,637			1,716			1,117			1,352
Noninterest expense		1,014			1,057			982			937			986
Earnings before income taxes		483			616			761			206			385
Income tax expense		167			232			272			195			133
Net earnings	$	316		$	384		$	489		$	11		$	252
Total assets at quarter end	$	9,219		$	9,101		$	9,278		$	8,231		$	8,219
Other
Net interest expense	$	(368	)	$	(373	)	$	(455	)	$	(443	)	$	(462	)
Noninterest income		1			9			14			(11	)		10
Noninterest expense		—			391			—			—			—
Loss before income taxes		(367	)		(755	)		(441	)		(454	)		(452	)
Income tax benefit		(117	)		(258	)		(137	)		(297	)		(121	)
Net loss	$	(250	)	$	(497	)	$	(304	)	$	(157	)	$	(331	)
Total assets at quarter end	$	(63,668	)	$	(58,407	)	$	(59,788	)	$	(56,518	)	$	(55,511	)
Consolidated
Net interest income	$	9,066		$	7,998		$	7,680		$	7,388		$	7,550
Provision for loan losses		1,008			945			900			1,204			765
Noninterest income		7,521			8,721			8,455			8,244			7,880
Noninterest expense		12,489			13,289			12,462			12,649			12,069
Earnings before income taxes		3,090			2,485			2,773			1,779			2,596
Income tax expense		842			827			998			615			897
Net earnings	$	2,248		$	1,658		$	1,775		$	1,164		$	1,699
Total assets at quarter end	$	1,383,132		$	1,287,201		$	1,294,987		$	1,336,843		$	1,298,952

12

Encore Bancshares, Inc. and Subsidiaries

YIELD ANALYSIS

(Unaudited, dollars in thousands)

	For the Three Months Ended September 30,
	2007							2006
	Average Outstanding Balance			Interest Earned/ Paid		Average Yield/ Rate		Average Outstanding Balance			Interest Earned/ Paid		Average Yield/ Rate
Assets:
Interest-earning assets:
Loans	$	973,641		$	17,309	7.05	%	$	840,674		$	14,651	6.91	%
Mortgages held-for-sale		60,959			1,346	8.76	%		80,951			1,787	8.76	%
Securities		156,159			1,463	3.72	%		277,854			2,705	3.86	%
Federal funds sold and other		68,347			914	5.31	%		25,248			370	5.81	%
Total interest-earning assets		1,259,106			21,032	6.63	%		1,224,727			19,513	6.32	%
Less: Allowance for loan losses		(10,391	)						(9,726	)
Noninterest-earning assets		102,667							100,204
Total assets	$	1,351,382						$	1,315,205
Liabilities, shareholders’ equity and puttable common stock:
Interest-bearing liabilities:
Interest checking	$	169,860		$	1,347	3.15	%	$	168,222		$	1,184	2.79	%
Money market and savings		358,732			3,907	4.32	%		294,911			3,206	4.31	%
Time deposits		375,896			4,693	4.95	%		373,687			4,213	4.47	%
Total interest-bearing deposits		904,488			9,947	4.36	%		836,820			8,603	4.08	%
Borrowings and repurchase agreements		158,203			1,651	4.14	%		252,416			2,898	4.55	%
Junior subordinated debentures		20,619			368	7.08	%		20,619			462	8.89	%
Total interest-bearing liabilities		1,083,310			11,966	4.38	%		1,109,855			11,963	4.28	%
Noninterest-bearing liabilities:
Noninterest-bearing deposits		108,168							89,038
Other liabilities		16,128							14,161
Total liabilities		1,207,606							1,213,054
Shareholders’ equity and puttable common stock		143,776							102,151
Total liabilities, shareholders’ equity and puttable common stock	$	1,351,382						$	1,315,205
Net interest income				$	9,066						$	7,550
Net interest spread						2.25	%						2.04	%
Net interest margin						2.86	%						2.45	%

13

Encore Bancshares, Inc. and Subsidiaries

YIELD ANALYSIS

(Unaudited, dollars in thousands)

	For the Nine Months Ended September 30,
	2007							2006
	Average Outstanding Balance			Interest Earned/ Paid		Average Yield/ Rate		Average Outstanding Balance			Interest Earned/ Paid		Average Yield/ Rate
Assets:
Interest-earning assets:
Loans	$	943,048		$	49,463	7.01	%	$	824,456		$	41,470	6.73	%
Mortgages held-for-sale		55,753			3,669	8.80	%		77,673			5,104	8.79	%
Securities		190,165			5,481	3.85	%		296,578			8,656	3.90	%
Federal funds sold and other		38,746			1,574	5.43	%		25,951			990	5.10	%
Total interest-earning assets		1,227,712			60,187	6.55	%		1,224,658			56,220	6.14	%
Less: Allowance for loan losses		(9,838	)						(9,217	)
Noninterest-earning assets		102,592							99,339
Total assets	$	1,320,466						$	1,314,780
Liabilities, shareholders’ equity and puttable common stock:
Interest-bearing liabilities:
Interest checking	$	173,671		$	3,915	3.01	%	$	166,603		$	2,969	2.38	%
Money market and savings		344,978			11,203	4.34	%		241,540			6,738	3.73	%
Time deposits		374,654			13,810	4.93	%		359,101			11,372	4.23	%
Total interest-bearing deposits		893,303			28,928	4.33	%		767,244			21,079	3.67	%
Borrowings and repurchase agreements		164,133			5,319	4.33	%		330,328			11,060	4.48	%
Junior subordinated debentures		20,743			1,196	7.71	%		20,619			1,296	8.40	%
Total interest-bearing liabilities		1,078,179			35,443	4.40	%		1,118,191			33,435	4.00	%
Noninterest-bearing liabilities:
Noninterest-bearing deposits		107,965							83,416
Other liabilities		14,015							13,099
Total liabilities		1,200,159							1,214,706
Shareholders’ equity and puttable common stock		120,307							100,074
Total liabilities, shareholders’ equity and puttable common stock	$	1,320,466						$	1,314,780
Net interest income				$	24,744						$	22,785
Net interest spread						2.15	%						2.14	%
Net interest margin						2.69	%						2.49	%

14