EXHIBIT 99.1
(TEXAS CAPITAL BANCSHARES, INC. LOGO)
FOR IMMEDIATE RELEASE
July 21, 2004
CONTACT
Tricia Linderman, 214.932.6798
tricia.linderman@texascapitalbank.com
TEXAS CAPITAL BANCSHARES ANNOUNCES STRONG SECOND QUARTER OPERATING RESULTS
Dallas, Texas - July 21, 2004 - Texas Capital Bancshares (Nasdaq: TCBI), the
parent company of Texas Capital Bank, announced earnings for the second quarter
of 2004.
On a comparative basis:
o Net income increased 88%
o EPS increased 55%
o Loans grew 25%
o Deposits grew 21%
"Our focus on the Texas market and the development of quality banking
relationships continues to produce strong results for us and our shareholders,"
said Jody Grant, Chairman and CEO. "As the economy improves and interest rates
move up, we are positioned for a substantial improvement in profitability."
FINANCIAL SUMMARY
(dollars and shares in thousands)
<Table>
<Caption>
Adjusted % %
Q2 2004 Q2 2003 Change Q2 2003 Change
------------ ------------ -------- ------------ ---------
OPERATING RESULTS
Net Income $ 4,360 $ 2,320 88% $ 3,857 13%
Diluted EPS $ .17 $ .11 55% $ .18 (6)%
ROA .77% .48% 60% .80% (.04)%
ROE 10.04% 7.23% 39% 12.03% (17)%
Diluted Shares 26,140 21,509 22% 21,509 22%
</Table>
<Table>
<Caption>
%
Q2 2004 Q2 2003 Change
------------ ------------ ---------
BALANCE SHEET
Total Assets $ 2,399,603 $ 2,003,818 20%
Total Deposits 1,628,397 1,340,322 21%
Loans Held for Investment 1,364,106 1,090,666 25%
Loans Held For Sale 58,058 157,176 (63)%
Stockholders' Equity 174,327 132,168 32%
</Table>
See Note (2) on page 5 for discussion of adjusted 2003 numbers. Loans Held for
Investment are stated net of unearned income.
1
DETAILED FINANCIALS
Texas Capital Bancshares, Inc. reported net income of $4.4 million for the
second quarter of 2004 and $8.3 million for the year to date. For the second
quarter and first half of 2003, the Company reported net income of $2.3 million
and $5.4 million, respectively, on an as adjusted basis. (See Note (2) on page 5
for the discussion of adjusted income for 2003). Net income for the second
quarter and first half of 2003 was reported as $3.9 million and $6.9 million
respectively. On a fully diluted basis, earnings per share were $.17 and $.32,
for the three and six month periods ended June 30, 2004, respectively. For 2003
the EPS comparisons for the three and six month periods were $.11 and $.25 (as
adjusted) and $.18 and $.32 (as reported).
Return on average equity was 10.04 percent and return on average assets was .77
percent for the second quarter of 2004 compared to 7.23 percent and .48 percent,
respectively, on an as adjusted basis for the second quarter of 2003. Return on
average equity and return on average assets for the second quarter of 2003 as
reported was 12.03 percent and .80 percent. The increase in net income and
improvement in return on assets in 2004 as compared to 2003 as adjusted 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 $17.3 million for the second quarter of 2004, compared
to $12.7 million for the second quarter of 2003. The increase was due to an
increase in average earning assets of $325.4 million over levels reported in the
second quarter of 2003 and an improvement in the net interest margin. The
increase in average earning assets included a $259.6 million increase in average
loans held for investment (core loans) and an increase of $145.8 million in
average securities. The average balance of loans held for sale decreased to
$68.9 million in the second quarter of 2004 from $141.4 million in 2003. The net
interest margin in the second quarter of 2004 was 3.23 percent, a 45 basis point
increase from the second quarter of 2003 and equal to the first quarter of 2004.
The improvement in the net interest margin resulted primarily from a stable
level of yield on earning assets coupled with a 51 basis point reduction in the
cost of interest bearing liabilities from the prior year.
Average interest bearing liabilities increased $257.2 million from the second
quarter of 2003, which included a $176.7 million increase in interest bearing
deposits and a $79.4 million increase in other borrowings. The increase in
average borrowings was primarily related to an increase in securities sold under
repurchase agreements and was used to supplement deposits in funding the
purchase of securities and the growth in loans. For the same periods, the
average balance of demand deposits increased to $290.0 million from $246.8
million.
Key measures of credit quality showed improvement during the second quarter. In
the second quarter of 2004, net charge-offs of $96,000 represented only .03
percent of average loans, compared to net charge-offs of $219,000, or .08
percent of loans in second quarter 2003 and $466,000, or .15 percent in the
first quarter of 2004. The Company also reported a $2.4 million improvement in
the level of non-performing loans from first quarter 2004 levels, bringing the
ratio to .79 percent of total loans. Of the total of $10.8 million of
non-performing loans, $4.4 million was past due by more than 90 days and still
accruing interest. Of the past-due total of $4.4 million, $1.1 million is fully
guaranteed by the United States Government and $3.0 million was brought current
shortly after quarter-end. With the improvement in overall quality of the loan
portfolio, the provision for possible loan losses decreased to $363,000 from
$750,000 in the first quarter of 2004 and $1.6 million in the second quarter of
2003. 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.
2
Non-interest expense for the second quarter of 2004 increased $3.1 million or 30
percent, to $13.5 million from $10.4 million (net of $6.3 million in repurchase
penalties and $250,000 in separation expenses that are discussed in Note (2) on
page 5) in the second quarter of 2003. The increase is primarily related to a
$2.4 million increase in salaries and employee benefits to $8.0 million from
$5.6 million. The increase in salaries and employee benefits resulted from an
increase in the total number of employees related to general business growth,
staffing for the new Houston office and the start-up of the residential mortgage
lending division.
During the second quarter, the asset sensitivity position increased slightly and
will result in an expansion of net interest margins with rising interest rates
anticipated following the actions by the Federal Reserve on June 30, 2004.
Because of the timing of the increase in the federal funds rate, the Company did
not benefit from the rate increase during the second quarter.
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.
3
TEXAS CAPITAL BANCSHARES, INC.
SELECTED FINANCIAL HIGHLIGHTS
(Dollars in thousands except per share data)
<Table>
<Caption>
2nd Quarter 1st Quarter 4th Quarter 3rd Quarter 2nd Quarter
2004 2004 2003 2003 2003
------------- ------------- ------------- ------------- -------------
CONSOLIDATED STATEMENT OF OPERATIONS
Interest income $ 25,056 $ 24,274 $ 22,998 $ 20,977 $ 21,363
Interest expense 7,804 7,630 7,600 7,626 8,699
------------- ------------- ------------- ------------- -------------
Net interest income 17,252 16,644 15,398 13,351 12,664
Provision for loan losses 363 750 700 475 1,600
------------- ------------- ------------- ------------- -------------
Net interest income after provision for
loan losses 16,889 15,894 14,698 12,876 11,064
Non-interest income 3,116 3,315 2,255 2,512 2,473
Gain (loss) on sale of securities -- -- (20) -- 345
Non-interest expense 13,496 13,332 11,618 10,483 16,901
------------- ------------- ------------- ------------- -------------
Income (loss) before income taxes 6,509 5,877 5,315 4,905 (3,019)
Income tax expense (benefit) 2,149 1,940 1,701 1,573 (6,876)
------------- ------------- ------------- ------------- -------------
Net income $ 4,360 $ 3,937 $ 3,614 $ 3,332 $ 3,857
============= ============= ============= ============= =============
Diluted EPS $ .17 $ .15 $ .14 $ .14 $ .18
Adjusted income(2) $ 4,360 $ 3,937 $ 3,614 $ 3,332 $ 2,320
============= ============= ============= ============= =============
Adjusted diluted EPS(2) $ .17 $ .15 $ .14 $ .14 $ .11
Diluted shares 26,140,080 26,075,754 25,808,258 23,670,626 21,509,249
CONSOLIDATED BALANCE SHEET DATA
Total assets $ 2,399,603 $ 2,233,135 $ 2,192,875 $ 2,151,128 $ 2,003,818
Loans held for investment 1,364,106 1,311,511 1,229,773 1,125,828 1,090,666
Loans held for sale 58,058 72,789 80,780 91,686 157,176
Securities 783,234 752,861 775,338 811,968 649,522
Deposits 1,628,397 1,495,891 1,445,030 1,427,107 1,340,322
Other borrowings 569,404 524,502 545,754 527,613 502,967
Long-term debt 20,620 20,620 20,620 20,620 20,620
Stockholders equity 174,327 182,587 171,756 165,080 132,168
End of period shares 25,259,574 25,145,617 25,009,525 24,814,282 21,370,749
Book Value 6.90 7.26 6.87 6.65 6.18
SELECTED FINANCIAL RATIOS
Net interest margin 3.23% 3.23% 3.07% 2.76% 2.78%
Return on average assets(2) .77% .71% .68% .64% .80%
Return on average equity(2) 10.04% 8.96% 8.55% 9.05% 12.03%
Non-interest expense to earning
assets(2) 2.52% 2.58% 2.31% 2.17% 3.71%
Efficiency ratio (excludes securities
gains)(2) 66.26% 66.80% 65.89% 66.08% 111.65%
Tier 1 capital ratio 11.44% 11.73% 12.03% 12.35% 10.27%
Total capital ratio 12.50% 12.84% 13.17% 13.53% 11.50%
Tier 1 leverage ratio 8.62% 8.67% 8.83% 8.81% 7.43%
ASSET QUALITY SUMMARY
Non-performing loans $ 10,816 $ 13,203 $ 10,224 $ 12,121 $ 12,690
Net charge-offs 96 466 249 473 219
Net charge-offs to average loans(1) .03% .15% .08% .17% .08%
Allowance to loans(1) 1.34% 1.37% 1.44% 1.53% 1.58%
Allowance to non-performing loans(1) 168.99% 136.42% 173.39% 142.53% 136.12%
Non-performing loans to loans (1) .79% 1.01% .83% 1.08% 1.16%
</Table>
(1) Excludes loans held for sale.
4
(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
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 percent
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.
<Table>
<Caption>
(Dollars in thousands except 2nd Quarter 1st Quarter 4th Quarter 3rd Quarter 2nd Quarter
per share data) 2004 2004 2003 2003 2003
----------- ----------- ----------- ----------- ----------
Net income before adjustments $ 4,360 $ 3,937 $ 3,614 $ 3,332 $ 3,857
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
---------- ---------- ---------- ---------- ----------
Adjusted income $ 4,360 $ 3,937 $ 3,614 $ 3,332 $ 2,320
========== ========== ========== ========== ==========
Adjusted diluted EPS $ .17 $ .15 $ .14 $ .14 $ .11
SELECTED FINANCIAL RATIOS
Return on average assets .77% .71% .68% .64% .80%
Adjusted return on average assets .77% .71% .68% .64% .48%
Return on average equity 10.04% 8.96% 8.55% 9.05% 12.03%
Adjusted return on average equity 10.04% 8.96% 8.55% 9.05% 7.23%
Non-interest expense to earning assets 2.52% 2.58% 2.31% 2.17% 3.71%
Adjusted non-interest expense to
earning assets 2.52% 2.58% 2.31% 2.17% 2.28%
Efficiency ratio(3) 66.26% 66.80% 65.89% 66.08% 111.65%
Adjusted efficiency ratio(3) 66.26% 66.80% 65.89% 66.08% 68.63%
</Table>
(3) Excludes securities gains.
5
TEXAS CAPITAL BANCSHARES, INC.
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(Dollars in thousands)
<Table>
<Caption>
June 30, June 30, %
2004 2003 Change
------------ ------------ ------------
ASSETS
Cash and due from banks $ 90,754 $ 65,145 39%
Federal funds sold 59,970 470 n/m
Securities, available-for-sale 783,234 649,522 21%
Loans held for sale 58,058 157,176 (63)%
Loans held for investment (net of unearned income) 1,364,106 1,090,666 25%
Less: Allowance for loan losses (18,278) (17,274) 6%
------------ ------------ ------------
Loans held for investment, net 1,345,828 1,073,392 25%
Premises and equipment, net 4,719 3,581 32%
Accrued interest receivable and other assets 55,544 53,036 5%
Goodwill, net 1,496 1,496 --
------------ ------------ ------------
Total assets $ 2,399,603 $ 2,003,818 20%
============ ============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Deposits:
Non-interest bearing $ 359,628 $ 330,015 9%
Interest bearing 1,174,284 1,010,307 16%
Interest bearing in foreign branches 94,485 -- 100%
------------ ------------ ------------
Total deposits 1,628,397 1,340,322 21%
Accrued interest payable 2,832 3,393 (17)%
Other liabilities 4,023 4,348 (7)%
Federal funds purchased 97,972 156,194 (37)%
Repurchase agreements 467,686 293,272 59%
Other borrowings 3,746 53,501 (93)%
Long-term debt 20,620 20,620 --
------------ ------------ ------------
Total liabilities 2,225,276 1,871,650 19%
Stockholders equity:
Series A convertible preferred stock, $.01 par value, 6%:
Authorized shares -- 10,000,000
Issued shares -- 1,057,142 at June 30, 2003 -- 11 (100)%
Common stock, $.01 par value:
Authorized shares -- 100,000,000
Issued shares -- 24,978,518 and 18,577,704 at June 30, 2004
and 2003, respectively 250 185 35%
Series A-1 non-voting common stock, $.01 par value:
Issued shares -- 281,056 and 691,733 at June 30, 2004 and
2003, respectively 3 7 (57)%
Additional paid-in capital 170,147 131,801 29%
Retained earnings (accumulated deficit) 8,784 (6,459) 236%
Treasury stock (shares at cost: 84,274 and 97,246 at June 30,
2004 and 2003, respectively) (573) (668) 14%
Deferred compensation 573 573 --
Accumulated other comprehensive income (loss), net (4,857) 6,718 (172)%
------------ ------------ ------------
Total stockholders' equity 174,327 132,168 32%
------------ ------------ ------------
Total liabilities and stockholders' equity $ 2,399,603 $ 2,003,818 20%
============ ============ ============
</Table>
6
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(In thousands except per share data)
<Table>
<Caption>
Three Months Ended June 30 Six Months Ended June 30
2004 2003 2004 2003
---------- ---------- ---------- ----------
INTEREST INCOME
Interest and fees on loans $ 17,498 $ 15,981 $ 34,204 $ 30,677
Securities 7,536 5,329 15,087 10,685
Federal funds sold 18 43 33 130
Deposits in other banks 4 4 6 7
---------- ---------- ---------- ----------
Total interest income 25,056 21,357 49,330 41,499
INTEREST EXPENSE
Deposits 4,948 5,597 9,691 10,979
Federal funds purchased 294 469 614 909
Repurchase agreements 2,250 -- 4,335 --
Other borrowings 56 2,380 282 4,825
Long-term debt 256 247 512 380
---------- ---------- ---------- ----------
Total interest expense 7,804 8,693 15,434 17,093
---------- ---------- ---------- ----------
NET INTEREST INCOME 17,252 12,664 33,896 24,406
PROVISION FOR LOAN LOSSES 363 1,600 1,113 2,850
---------- ---------- ---------- ----------
NET INTEREST INCOME AFTER PROVISION FOR
LOAN LOSSES 16,889 11,064 32,783 21,556
NON-INTEREST INCOME
Service charges on deposit accounts 891 897 1,748 1,740
Trust fee income 454 306 891 587
Gain on sale of securities -- 345 -- 686
Cash processing fees -- 73 587 973
Bank owned life insurance (BOLI) income 329 428 650 842
Mortgage warehouse fees 274 424 512 703
Gain on sale of mortgage loans 729 -- 1,192 --
Other 439 345 851 614
---------- ---------- ---------- ----------
Total non-interest income 3,116 2,818 6,431 6,145
NON-INTEREST EXPENSE
Salaries and employee benefits 7,964 5,857 16,094 11,236
Net occupancy expense 1,341 1,199 2,675 2,386
Advertising 296 199 581 392
Legal and professional 779 930 1,572 1,509
Communications and data processing 995 736 1,854 1,456
Franchise taxes 56 37 153 74
Repurchase agreement penalties -- 6,262 -- 6,262
Other 2,065 1,681 3,899 2,964
---------- ---------- ---------- ----------
Total non-interest expense 13,496 16,901 26,828 26,279
---------- ---------- ---------- ----------
INCOME (LOSS) BEFORE INCOME TAXES 6,509 (3,019) 12,386 1,422
Income tax expense (benefit) 2,149 (6,876) 4,089 (5,466)
---------- ---------- ---------- ----------
NET INCOME 4,360 3,857 8,297 6,888
Preferred stock dividends -- (276) -- (550)
---------- ---------- ---------- ----------
INCOME AVAILABLE TO COMMON STOCKHOLDERS $ 4,360 $ 3,581 $ 8,297 $ 6,338
========== ========== ========== ==========
EARNINGS PER SHARE:
Basic $ .17 $ .19 $ .33 $ .33
Diluted $ .17 $ .18 $ .32 $ .32
</Table>
7
TEXAS CAPITAL BANCSHARES, INC.
SUMMARY OF LOAN LOSS EXPERIENCE
(Dollars in thousands)
<Table>
<Caption>
2nd Quarter 1st Quarter 4th Quarter 3rd Quarter 2nd Quarter
2004 2004 2003 2003 2003
----------- ----------- ----------- ----------- -----------
Beginning balance $ 18,011 $ 17,727 $ 17,276 $ 17,274 $ 15,893
Loans charged-off:
Commercial -- -- -- 33 17
Real estate -- -- 200 200 2
Consumer 6 -- 5 -- --
Leases 266 493 107 261 237
--------- --------- --------- --------- ---------
Total 272 493 312 494 256
Recoveries:
Commercial -- -- -- -- --
Consumer -- -- -- -- --
Leases 176 27 63 21 37
--------- --------- --------- --------- ---------
Total recoveries 176 27 63 21 37
--------- --------- --------- --------- ---------
Net charge-offs 96 466 249 473 219
Provision for loan losses 363 750 700 475 1,600
--------- --------- --------- --------- ---------
Ending balance $ 18,278 $ 18,011 $ 17,727 $ 17,276 $ 17,274
========= ========= ========= ========= =========
Reserve to loans held for investment(2) 1.34% 1.37% 1.44% 1.53% 1.58%
Net charge-offs to average loans(1)(2) .03% .15% .08% .17% .08%
Provision for loan losses to average loans(1)(2) .11% .24% .24% .17% .60%
Recoveries to gross charge-offs 64.71% 5.48% 20.19% 4.25% 14.45%
Reserve as a multiple of net charge-offs 190.40x 38.65x 71.19x 36.5x 78.9x
Non-performing loans:
Loans past due (90 days) $ 4,423 $ 6,250 $ 7 $ 1,095 $ 1,145
Non-accrual 6,393 6,953 10,217 11,026 11,545
--------- --------- --------- --------- ---------
Total $ 10,816 $ 13,203 $ 10,224 $ 12,121 $ 12,690
========= ========= ========= ========= =========
Reserve as a percent of non-performing
loans(2) 168.99% 136.42% 173.39% 142.53% 136.12%
</Table>
(1) Interim period ratios are annualized.
(2) Excludes loans held for sale.
8
TEXAS CAPITAL BANCSHARES, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
(Dollars in thousands)
<Table>
<Caption>
2nd Quarter 1st Quarter 4th Quarter 3rd Quarter 2nd Quarter
2004 2004 2003 2003 2003
----------- ----------- ----------- ----------- -----------
INTEREST INCOME
Interest and fees on loans $ 17,498 $ 16,706 $ 15,660 $ 16,114 $ 15,981
Securities 7,536 7,551 7,319 4,839 5,335
Federal funds sold 18 15 16 20 43
Deposits in other banks 4 2 3 4 4
--------- --------- --------- --------- ---------
Total interest income 25,056 24,274 22,998 20,977 21,363
INTEREST EXPENSE
Deposits 4,948 4,743 4,911 5,041 5,597
Federal funds purchased 294 320 293 348 469
Repurchase agreements 2,250 2,085 2,106 1,835 2,320
Other borrowings 56 226 32 145 60
Long-term debt 256 256 258 257 253
--------- --------- --------- --------- ---------
Total interest expense 7,804 7,630 7,600 7,626 8,699
--------- --------- --------- --------- ---------
NET INTEREST INCOME 17,252 16,644 15,398 13,351 12,664
PROVISION FOR LOAN LOSSES 363 750 700 475 1,600
--------- --------- --------- --------- ---------
NET INTEREST INCOME AFTER PROVISION FOR LOAN
LOSSES 16,889 15,894 14,698 12,876 11,064
NON-INTEREST INCOME
Service charges on deposit accounts 891 857 850 856 897
Trust fee income 454 437 376 350 306
Gain (loss) on sale of securities -- -- (20) -- 345
Cash processing fees -- 587 -- -- 73
Bank owned life insurance (BOLI) income 329 321 326 451 428
Mortgage warehouse fees 274 238 276 545 424
Gain on sale of mortgage loans 729 463 120 -- --
Other 439 412 307 310 345
--------- --------- --------- --------- ---------
Total non-interest income 3,116 3,315 2,235 2,512 2,818
NON-INTEREST EXPENSE
Salaries and employee benefits 7,964 8,130 6,614 5,754 5,857
Net occupancy expense 1,341 1,334 1,336 1,265 1,199
Advertising and affinity payments 296 285 214 213 199
Legal and professional 779 793 614 744 930
Communications and data processing 995 859 819 767 736
Franchise taxes 56 97 13 37 37
Repurchase agreement penalties -- -- -- -- 6,262
Other 2,065 1,834 2,008 1,703 1,681
--------- --------- --------- --------- ---------
Total non-interest expense 13,496 13,332 11,618 10,483 16,901
--------- --------- --------- --------- ---------
INCOME (LOSS) BEFORE INCOME TAXES 6,509 5,877 5,315 4,905 (3,019)
Income tax expense (benefit) 2,149 1,940 1,701 1,573 (6,876)
--------- --------- --------- --------- ---------
NET INCOME 4,360 3,937 3,614 3,332 3,857
Preferred stock dividends -- -- -- (149) (276)
--------- --------- --------- --------- ---------
INCOME AVAILABLE TO COMMON STOCKHOLDERS $ 4,360 $ 3,937 $ 3,614 $ 3,183 $ 3,581
========= ========= ========= ========= =========
</Table>
9
QUARTERLY FINANCIAL SUMMARY -- UNAUDITED
Consolidated Daily Average Balances, Average Yields and Rates
(Dollars in thousands)
<Table>
<Caption>
2nd Quarter 2004 1st Quarter 2004
------------------------------------- --------------------------------------
Average Revenue/ Yield/ Average Revenue/ Yield/
Balance Expense (1) Rate Balance Expense (1) Rate
----------- ----------- --------- ----------- ----------- ----------
ASSETS
Securities $ 766,007 $ 7,536 3.96% $ 758,966 $ 7,551 4.00%
Federal funds sold 7,686 18 0.94% 6,058 15 1.00%
Deposits in other banks 995 4 1.62% 829 2 0.97%
Loans held for sale 68,922 1,456 8.50% 61,177 1,157 7.61%
Loans held for investment 1,326,066 16,042 4.87% 1,265,840 15,549 4.94%
Less reserve for loan losses 18,205 -- -- 17,720 -- --
----------- --------- ------- ----------- --------- ---------
Loans, net of reserve 1,376,783 17,498 5.11% 1,309,297 16,706 5.13%
----------- --------- ------- ----------- --------- ---------
Total earning assets 2,151,471 25,056 4.68% 2,075,150 24,274 4.70%
Cash and other assets 138,399 146,414
----------- -----------
Total assets $ 2,289,870 $ 2,221,564
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Transaction deposits $ 95,031 $ 140 0.59% $ 88,635 $ 132 0.60%
Savings deposits 560,182 1,639 1.18% 504,530 1,499 1.19%
Time deposits 566,369 3,169 2.25% 534,981 3,112 2.34%
----------- --------- ------- ----------- --------- ---------
Total interest bearing deposits 1,221,582 4,948 1.63% 1,128,146 4,743 1.69%
Other borrowings 574,942 2,600 1.82% 620,982 2,631 1.70%
Long-term debt 20,620 256 4.99% 20,620 256 4.99%
----------- --------- ------- ----------- --------- ---------
Total interest bearing liabilities 1,817,144 7,804 1.73% 1,769,748 7,630 1.73%
Demand deposits 289,973 265,039
Other liabilities 8,047 10,013
Stockholders' equity 174,706 176,764
----------- -----------
Total liabilities and
stockholders' equity $ 2,289,870 $ 2,221,564
=========== ===========
Net interest income $ 17,252 $ 16,644
Net interest income to earning
assets 3.23% 3.23%
<Caption>
4th Quarter 2003 3rd Quarter 2003
------------------------------------ ------------------------------------
Average Revenue/ Yield/ Average Revenue/ Yield/
Balance Expense (1) Rate Balance Expense (1) Rate
----------- ----------- ---------- ----------- ----------- --------
ASSETS
Securities $ 758,629 $ 7,319 3.83% $ 652,082 $ 4,839 2.94%
Federal funds sold 6,746 16 0.94% 8,090 20 0.98%
Deposits in other banks 1,081 3 1.10% 1,118 4 1.42%
Loans held for sale 71,413 1,159 6.44% 171,971 2,227 5.14%
Loans held for investment 1,171,395 14,501 4.91% 1,103,340 13,887 4.99%
Less reserve for loan losses 17,394 -- -- 17,573 -- --
----------- --------- --------- ----------- ---------- --------
Loans, net of reserve 1,225,414 15,660 5.07% 1,257,738 16,114 5.08%
----------- --------- --------- ----------- ---------- --------
Total earning assets 1,991,870 22,998 4.58% 1,919,028 20,977 4.34%
Cash and other assets 129,068 144,385
----------- -----------
Total assets $ 2,120,938 $ 2,063,413
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Transaction deposits $ 75,723 $ 116 0.61% $ 64,137 $ 102 0.63%
Savings deposits 504,839 1,505 1.18% 477,158 1,466 1.22%
Time deposits 544,190 3,290 2.40% 548,288 3,473 2.51%
----------- --------- --------- ----------- ---------- --------
Total interest bearing deposits 1,124,752 4,911 1.73% 1,089,583 5,041 1.84%
Other borrowings 531,402 2,431 1.81% 527,658 2,328 1.75%
Long-term debt 20,620 258 4.96% 20,620 257 4.94%
----------- --------- --------- ----------- ---------- --------
Total interest bearing liabilities 1,676,774 7,600 1.80% 1,637,861 7,626 1.85%
Demand deposits 267,614 269,891
Other liabilities 8,914 9,592
Stockholders' equity 167,636 146,069
----------- -----------
Total liabilities and
stockholders' equity $ 2,120,938 $ 2,063,413
=========== ===========
Net interest income $ 15,398 $ 13,351
Net interest income to earning
assets 3.07% 2.76%
<Caption>
2nd Quarter 2003
----------------------------------
Average Revenue/ Yield/
Balance Expense (1) Rate
----------- ----------- ---------
ASSETS
Securities $ 620,239 $ 5,335 3.45%
Federal funds sold 13,220 43 1.30%
Deposits in other banks 923 4 1.74%
Loans held for sale 141,375 1,944 5.52%
Loans held for investment 1,066,440 14,037 5.28%
Less reserve for loan losses 16,100 -- --
----------- -------- --------
Loans, net of reserve 1,191,715 15,981 5.38%
----------- -------- --------
Total earning assets 1,826,097 21,363 4.69%
Cash and other assets 120,977
-----------
Total assets $ 1,947,074
===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Transaction deposits $ 62,476 $ 121 0.78%
Savings deposits 407,081 1,629 1.61%
Time deposits 575,325 3,847 2.68%
----------- -------- --------
Total interest bearing deposits 1,044,882 5,597 2.15%
Other borrowings 495,511 2,849 2.31%
Long-term debt 19,600 253 5.18%
----------- -------- --------
Total interest bearing liabilities 1,559,993 8,699 2.24%
Demand deposits 246,822
Other liabilities 11,619
Stockholders' equity 128,640
-----------
Total liabilities and
stockholders' equity $ 1,947,074
===========
Net interest income $ 12,664
Net interest income to earning
assets 2.78%
</Table>
(1) The loan averages include loans on which the accrual of interest has
been discontinued and are stated net of unearned income.
10