N E W S from Summit Bancshares, Inc.

For Immediate Release
January 21, 2004 For Information Contact:
Bob G. Scott, COO
(817) 877-2660

SUMMIT BANCSHARES ANNOUNCES
FOURTH QUARTER AND YEAR 2003 RESULTS

Fort Worth, Texas — Summit Bancshares, Inc. (Nasdaq:SBIT), a community-oriented bank holding company in Fort Worth, with assets of $795 million, reported fourth quarter earnings today. Philip E. Norwood, Chairman, President and Chief Executive Officer stated, “The financial performance of the Company for 2003 was somewhat mixed. The Company experienced good growth in average balances of loans and deposits of 8.9% and 8.2%, respectively. However the increase in net interest income of 3.1% for the year continued to reflect the very low interest rate environment that the Company has experienced since market rates began their rapid decline in 2001. As a Company more heavily focused on commercial lending we are more impacted by a low rate environment than other banks. However as a result of a 6.7% loan growth in the fourth quarter compared to the third quarter, net interest income increased 3.7% in the quarter which we feel is very positive. This growth in loans partially reflects the addition of seven lenders to our lending staff in the last half of 2003.”

He further stated, “Because of the Company’s continued improvement in asset quality, it was possible to significantly reduce the provisions for loan losses in 2003 compared to the provisions recorded in 2002. However, the Company did experience a significant increase in non-interest expenses due to the strategic investments made in 2002 and 2003 in new technology, new branches, new support facilities and additional personnel. These investments will provide a strong infrastructure to support the long-term growth of the Company which will leverage the investments for increased profits.”

Results of Operations

For the fourth quarter ended December 31, 2003, net income was $2,403,000 compared to $2,266,000 for the same period in 2002. Net income per diluted share was $0.38 for the three months ended December 31, 2003, compared to $0.36 for the three months ended December 31, 2002. Return on average assets and return on average shareholders’ equity for the fourth quarter of 2003 were 1.21% and 13.93%, respectively. The Company’s average shareholders’ equity-to-assets ratio of 8.7% for the quarter ended December 31, 2003, continues to reflect a very strong capital position for the Company.

Net income for the year ended December 31, 2003 was $9,768,000, or $1.55 per diluted share, compared to $9,317,000, or $1.46 per diluted share for the previous year, a 6.2% increase. Return on average assets and return on average shareholders’ equity for the year of 2003 were 1.32% and 14.43%, respectively. These measures of profitability, although below the historical levels for the Company, continue to compare favorably to the Company’s national peers.

Financial Results

Net interest income for the fourth quarter of 2003 was $8,167,000 compared to $7,623,000 for the fourth quarter of last year. The Company is somewhat more sensitive to market interest rate changes than other community banks, due to its heavier commercial lending focus, resulting in the net interest margin declining to 4.36% for the quarter compared to 4.67% for the fourth quarter of the prior year and 4.37% for the third quarter of 2003.

Net interest income totaled $31.1 million for the year ended December 31, 2003, compared to $30.1 million the previous year. This modest increase in net interest income reflects the interest rate compression previously mentioned and the low interest rate environment experienced for the year. Net interest margin averaged 4.48% for the year of 2003 compared to a margin of 4.80% for 2002. This decline resulted from a 61 basis point decline in the yield on average earning assets; the impact of this decline was partially offset by a 41 basis point decline in the cost of average interest-bearing liabilities.

Provision for loan losses was $294,000 in the fourth quarter compared to $775,000 in the same quarter of last year. For the year of 2003, the provision for loan losses was $880,000 compared to $3,140,000 the previous year. For the year of 2003, the Company had net recoveries from previously charged-off loans of $198,000.

Non interest income, excluding gains on sale of investment securities, of $1,371,000 reflected a modest increase for the current quarter compared to the same quarter in the prior year with a positive increase in service charges on deposit accounts offset by decreases in other fee based services, including mortgage brokerage fees.

For the year of 2003, non interest income, excluding gains on sale of investment securities, increased to $5.8 million, a 9.4% increase. Included in this increase was an increase in service charges on deposit accounts of 17.3%.

Non interest expenses of $5,754,000 for the quarter increased $979,000 compared to the fourth quarter of last year. The increase in expense in the fourth quarter reflected costs associated with the Company’s growth and included increases in salaries and benefits expense and occupancy and equipment expenses primarily related to strategic investments noted earlier. Non interest expenses increased 17.2% for the year of 2003 compared to 2002. For the year personnel expenses increased 16.7% and occupancy and equipment expenses increased 33.1%, each increase primarily related to the strategic investments.

Non performing assets totaled $2.4 million or .43% of loans and foreclosed assets at December 31, 2003, compared to $3.4 million or .73% at December 31, 2002. The allowance for loan losses was 1.41% of total loans and 324% of non-performing loans at December 31, 2003.

Total assets on December 31, 2003, were $795 million, an increase of $107 million from $688 million on December 31, 2002. Loans on December 31, 2003, were $554 million, an increase of $85 million from $469 million at December 31, 2002. Total funding sources, including deposits and short-term borrowed funds, were $724 million at the end of the year, an increase of $104 million over the prior year-end.

The Company will host a fourth quarter earnings conference call Thursday, January 22nd at 10:30 a.m. CT. To participate, please call (800)289-0437 and enter confirmation code 656686. If you are unable to participate, an audio playback of the call will be available starting Thursday, January 22, 2004 at 1:30 p.m. (CT) through midnight February 5, 2004 (CT) by calling (888)203-1112 and entering code 656686.

Certain statements contained in this press release, which are not historical in nature, including statements regarding the Company’s and/or management’s intentions, strategies, beliefs, expectations, representations, plans, projections, or predictions of the future, are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and are intended to be covered by the safe harbor provisions for forward-looking statements contained in such Act. We are including this statement for purposes of invoking these safe harbor provisions. Forward-looking statements are made based on assumptions involving certain known and unknown risks and uncertainties, many of which are beyond the Company’s control, and other important factors that could cause actual results, performance or achievements to differ materially from the expectations expressed or implied by such forward-looking statements. These risk factors and uncertainties are listed from time to time in the Company’s filings with the Securities and Exchange Commission, including but not limited to the annual report on Form 10-K.

Summit Bancshares, Inc. · 3880 Hulen Street, Ste. 300 · Fort Worth, Texas 76107
Telephone (817) 336-6817 · FAX (817) 877-2672 · Web Site: www.summitbank.net

4th QTR-YREND.2004

SUMMIT BANCSHARES, INC.
(Unaudited)
(Dollars in thousands, except per share data)

	Quarter Ended December 31,							Twelve Months Ended December 31,
EARNINGS SUMMARY	2003		2002		% Change			2003		2002		% Change
Interest income	$	10,020	$	9,603		4.3	%	$	38,527	$	38,657		–0.3	%
Interest expense		1,853		1,980		–6.4	%		7,437		8,512		–12.6	%
Net interest income		8,167		7,623		7.1	%		31,090		30,145		3.1	%
Provision for loan losses		294		775		–62.1	%		880		3,140		–72.0	%
Service charges on deposits		881		774		13.8	%		3,443		2,934		17.3	%
Gain on sale of investment securities		129		–		100.0	%		230		165		39.4	%
Other Income		490		586		–16.4	%		2,355		2,368		–0.5	%
Salaries and benefits expense		3,594		2,570		39.8	%		12,926		11,078		16.7	%
Occupancy and equipment expense		983		698		40.8	%		3,611		2,713		33.1	%
Other Expense		1,177		1,507		–21.9	%		4,916		4,518		8.8	%
Earnings before income taxes		3,619		3,433		5.4	%		14,785		14,163		4.4	%
Provision for income taxes		1,216		1,167		4.2	%		5,017		4,846		3.5	%
Net earnings	$	2,403	$	2,266		6.0	%	$	9,768	$	9,317		4.8	%
Basic earnings per share	$	0.39	$	0.37		5.4	%	$	1.59	$	1.50		6.0	%
Basic weighted average shares outstanding		6,158		6,140					6,161		6,224
Diluted earnings per share	$	0.38	$	0.36		5.6	%	$	1.55	$	1.46		6.2	%
Diluted weighted average shares outstanding		6,344		6,287					6,318		6,396

 

	Average for Quarter Ended
BALANCE SHEET SUMMARY	December 31, 2003		September 30, 2003		June 30, 2003		March 31, 2003		December 31, 2002
Total loans	$	537,635	$	503,936	$	499,545	$	476,298	$	471,260
Total investment securities		205,162		199,367		165,600		170,609		166,980
Earning assets		746,066		718,601		676,834		648,193		650,995
Total assets		788,426		761,278		719,070		688,522		693,064
Noninterest bearing deposits		184,106		176,478		170,234		160,011		165,756
Interest bearing deposits		450,401		452,325		429,420		411,313		413,657
Total deposits		634,507		628,803		599,654		571,324		579,413
Other borrowings		82,160		61,199		48,866		48,012		44,487
Shareholders’ equity		68,399		68,273		67,739		66,253		64,369

 

	Average for Twelve Months Ended December 31,
BALANCE SHEET SUMMARY	2003		2002		% Change
Total loans	$	504,520	$	463,106		8.9	%
Total investment securities		185,318		153,764		20.5	%
Earning assets		697,750		629,859		10.8	%
Total assets		739,658		668,909		10.6	%
Noninterest bearing deposits		172,784		156,868		10.1	%
Interest bearing deposits		436,017		405,704		7.5	%
Total deposits		608,801		562,572		8.2	%
Other borrowings		60,156		39,453		52.5	%
Shareholders’ equity		67,673		63,189		7.1	%

 

	Ending Balance
BALANCE SHEET SUMMARY	December 31, 2003			September 30, 2003			June 30, 2003			March 31, 2003			December 31, 2002
Total loans	$	553,769		$	517,994		$	500,040		$	489,352		$	469,145
Total investment securities		195,959			210,048			178,241			163,639			173,512
Total earning assets		751,063			728,766			693,257			653,066			642,919
Allowance for loan losses		(7,784	)		(7,483	)		(7,412	)		(7,365	)		(6,706	)
Premises and equipment		12,920			13,237			13,391			11,652			11,486
Total assets		795,478			777,558			738,916			697,893			687,733
Noninterest bearing deposits		192,877			180,765			176,603			165,220			167,745
Interest bearing deposits		448,504			456,706			435,143			421,699			414,204
Total deposits		641,381			637,471			611,746			586,919			581,949
Other borrowings		82,234			69,230			55,627			41,317			37,255
Total liabilities		726,794			709,546			670,187			631,313			622,795
Shareholders’ equity		68,684			68,012			68,729			66,580			64,938

 

SUMMIT BANCSHARES, INC.
(Unaudited)
(Dollars in thousands)

NONPERFORMING ASSETS	December 31, 2003			September 30, 2003			June 30, 2003			March 31, 2003			December 31, 2002
Nonaccrual loans	$	2,351		$	1,514		$	1,458		$	2,226		$	2,135
Restructured loans		–			–			–			–			–
Other real estate & foreclosed assets		–			–			125			125			1,268
Accruing loans past due 90 days or more		55			–			14			80			16
Total nonperforming assets	$	2,406		$	1,514		$	1,597		$	2,431		$	3,419
Total nonperforming assets as a percentage of loans and foreclosed assets		0.43	%		0.29	%		0.32	%		0.50	%		0.73	%

 

	Quarter Ended
ALLOWANCE FOR LOAN LOSSES	December 31, 2003			September 30, 2003			June 30, 2003			March 31, 2003			December 31, 2002
Balance at beginning of period	$	7,483		$	7,412		$	7,365		$	6,706		$	6,334
Loans charged off		(163	)		(24	)		(272	)		(80	)		(637	)
Loan recoveries		170			49			79			439			234
Net (charge-offs) recoveries		7			25			(193	)		359			(403	)
Provision for loan losses		294			46			240			300			775
Balance at end of period	$	7,784		$	7,483		$	7,412		$	7,365		$	6,706
Allowance for loan losses as a percentage of total loans		1.41	%		1.45	%		1.48	%		1.50	%		1.43	%
Allowance for loan losses as a percentage of nonperforming loans		323.57	%		494.39	%		503.53	%		319.38	%		311.76	%
Net charge-offs as a percentage of average loans		0.00	%		–0.01	%		0.04	%		–0.07	%		0.09	%
Provision for loan losses as a percentage of average loans		0.05	%		0.01	%		0.05	%		0.06	%		0.16	%

 

	Quarter Ended
SELECTED RATIOS	Dectember 31, 2003			September 30, 2003			June 30, 2003			March 31, 2003			December 31, 2002
Return on average assets (annualized)		1.21	%		1.29	%		1.37	%		1.43	%		1.30	%
Return on average equity (annualized)		13.93	%		14.38	%		14.55	%		14.89	%		13.96	%
Average shareholder’s equity to average assets		8.68	%		8.97	%		9.42	%		9.62	%		9.29	%
Yield on earning assets		5.35	%		5.38	%		5.68	%		5.81	%		5.87	%
Cost of interest bearing funds		1.38	%		1.42	%		1.62	%		1.60	%		1.71	%
Net interest margin (tax equivalent)		4.36	%		4.37	%		4.53	%		4.67	%		4.67	%
Efficiency ratio		59.29	%		59.57	%		56.74	%		54.41	%		52.95	%
End of period book value per common share		$11.17			$11.04		$	11.15		$	10.81		$	10.58
End of period common shares outstanding		6,152			6,165			6,166			6,179			6,159

 

SUMMIT BANCSHARES, INC.
(Unaudited)
(Dollars in thousands)

	Three Months Ended
	December 31, 2003								December 31, 2002
YIELD ANALYSIS	Average Balance			Interest		Yield			Average Balance			Interest		Yield
Interest Earning Assets:
Federal funds sold & Due from time	$	3,269		$	6		0.76	%	$	12,755		$	42		1.30	%
Investment securities (taxable)		198,302			1,932		3.87	%		162,195			1,762		4.31	%
Investment securities (tax-exempt)		6,860			90		5.20	%		4,785			67		5.61	%
Loans		537,635			8,031		5.93	%		471,260			7,766		6.54	%
Total Interest Earning Assets		746,066			10,059		5.35	%		650,995			9,637		5.87	%
Noninterest Earning Assets:
Cash and due from banks		25,387								27,345
Other assets		24,555								21,264
Allowance for loan losses		(7,582	)							(6,540	)
Total Noninterest Earning Assets		42,360								42,069
Total Assets	$	788,426							$	693,064
Interest Bearing Liabilities:
Transaction and money market accounts	$	197,375			509		1.02	%	$	182,083			525		1.15	%
Savings deposits		128,319			394		1.22	%		118,261			447		1.50	%
Certificates and other time deposits		124,707			740		2.36	%		113,313			844		2.95	%
Other borrowings		82,160			209		1.01	%		44,487			164		1.46	%
Total Interest Bearing Liabilities		532,561			1,852		1.38	%		458,144			1,980		1.71	%
Noninterest Bearing Liabilities:
Demand deposits		184,106								165,756
Other liabilities		3,360								4,795
Shareholders’ Equity		68,399								64,369
Total Noninterest Bearing Liabilities		255,865								234,920
Total Liabilities and Shareholders’ Equity	$	788,426							$	693,064
Net Interest Income and Margin (tax equivalent)				$	8,207		4.36	%				$	7,657		4.67	%

 

SUMMIT BANCSHARES, INC.
(Unaudited)
(Dollars in thousands)

	Twelve Months Ended
	December 31, 2003								December 31, 2002
YIELD ANALYSIS	Average Balance			Interest		Yield			Average Balance			Interest		Yield
Interest Earning Assets:
Federal funds sold & Due from time	$	7,912		$	81		1.02	%	$	12,989		$	212		1.63	%
Investment securities (taxable)		179,539			7,106		3.96	%		150,704			7,046		4.68	%
Investment securities (tax-exempt)		5,779			314		5.43	%		3,060			177		5.77	%
Loans		504,520			31,171		6.18	%		463,106			31,326		6.76	%
Total Interest Earning Assets		697,750			38,672		5.54	%		629,859			38,761		6.15	%
Noninterest Earning Assets:
Cash and due from banks		26,295								25,728
Other assets		22,964								19,760
Allowance for loan losses		(7,351	)							(6,438	)
Total Noninterest Earning Assets		41,908								39,050
Total Assets	$	739,658							$	668,909
Interest Bearing Liabilities:
Transaction and money market accounts	$	193,841			2,108		1.09	%	$	180,060			2,378		1.32	%
Savings deposits		119,851			1,581		1.32	%		112,977			1,909		1.69	%
Certificates and other time deposits		122,325			3,121		2.55	%		112,667			3,594		3.19	%
Other borrowings		60,156			627		1.04	%		39,453			631		1.60	%
Total Interest Bearing Liabilities		496,173			7,437		1.50	%		445,157			8,512		1.91	%
Noninterest Bearing Liabilities:
Demand deposits		172,784								156,868
Other liabilities		3,028								3,695
Shareholders’ Equity		67,673								63,189
Total Noninterest Bearing Liabilities		243,485								223,752
Total Liabilities and Shareholders’ Equity	$	739,658							$	668,909
Net Interest Income and Margin (tax equivalent)				$	31,235		4.48	%				$	30,249		4.80	%

 

SUMMIT BANCSHARES, INC.
(Unaudited)
(Dollars in thousands, except per share data)

LOAN PORTFOLIO	December 31, 2003		%			December 31, 2002		%
Commercial and industrial	$	219,805		39.7	%	$	195,120		41.6	%
Real estate:
Commercial		159,082		28.7	%		130,755		27.9	%
Residential		67,635		12.2	%		48,447		10.3	%
Construction and development		74,069		13.4	%		59,941		12.8	%
Consumer		33,178		6.0	%		34,882		7.4	%
Total loans (gross)		553,769		100.0	%		469,145		100.0	%
Unearned discounts		–		0.0	%		–		0.0	%
Total loans (net)		553,769		100.0	%		469,145		100.0	%

 

REGULATORY CAPITAL DATA	December 31, 2003			December 31, 2002
Tier 1 Capital	$	67,996		$	62,076
Tier 1 Ratio		11.45	%		12.16	%
Total Capital (Tier 1 + Tier 2)	$	75,426		$	68,463
Total Capital Ratio		12.70	%		13.41	%
Total Risk-Adjusted Assets	$	594,044		$	510,639
Tier 1 Leverage Ratio		8.62	%		8.96	%

 

OTHER DATA	December 31, 2003		December 31, 2002
Full Time Equivalent Employees (FTE’s)		225		205
Stock Price Range (For the Quarter Ended):
High	$	28.95	$	21.21
Low	$	26.45	$	18.77
Close	$	27.61	$	19.50