8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.  20549

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report: October 16, 2006

SUMMIT BANCSHARES, INC.

(Exact name of registrant as specified in its charter)

Texas	0-11986	75-1694807
(State of Incorporation)	(Commission File Number)	(I.R.S. Employer ID No.)

3880 Hulen Street, Fort Worth, Texas 76107

(Address of principal executive offices)

(817) 336-6817

(Registrant’s telephone number, including area code)

N/A

(Former name or former address, if changed since last report.)

          Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instructions A.2. below):

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

ITEM 2.02. Results of Operations and Financial Conditions.

          On October 16, 2006, Summit Bancshares, Inc. (“Summit Bancshares”) issued a press release announcing its earnings for the third quarter of 2006.  A copy of Summit Bancshares’ press release is attached here to as Exhibit 99.1.  The press release is incorporated by reference into this Item 2.02 and the foregoing description of the press release is qualified in its entirety by reference to this exhibit.

ITEM 7.01. REGULATION F D DISCLOSURE

          See Item 2.02

ITEM 9.01. Financial Statements and Exhibits

(c)	Exhibits
	The following exhibits are furnished with this Form 8-K.
	99.1     Press Release dated October 16, 2006

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	SUMMIT BANCSHARES, INC.
DATE:  October 16, 2006	By:	/s/ Bob G. Scott
		Bob G. Scott, Chief Operating Officer

EXHIBIT INDEX

Exhibit Number	Description of Exhibit
99.1	Press Release dated October 16, 2006

EX-99.1

Exhibit 99.1

NEWS from Summit Bancshares, Inc.

For Immediate Release	For Information Contact:
October 16, 2006	Bob G. Scott, COO
	(817)877-2660

SUMMIT BANCSHARES REPORTS
THIRD QUARTER 2006 EARNINGS

Fort Worth, Texas—Summit Bancshares, Inc. (NASDAQ:SBIT), the bank holding company for Summit Bank, N.A., today reported net income for the third quarter of 2006 of $3,590,000, or $0.28 per diluted common share, compared to $3,456,000, or $0.27 per diluted common share, for the comparable 2005 period, a 3.7% increase in per share earnings.  For the nine months ended September 30, 2006, net income was $9,539,000, or $0.75 per diluted common share, a 1.3% decrease over the same period of the prior year.  This decrease for the nine months is attributable, in part, to the large provision for loan losses of $2,000,000 that was recorded in the first quarter of 2006.

Philip E. Norwood, Chairman, President and Chief Executive Officer stated, “We believe that the fundamentals of the Company remain strong with a 14.7% increase in net interest income (tax equivalent) for the third quarter of 2006 compared to the same period of the prior year.  Also, average loans and average deposits for the third quarter of 2006 increased 14.7% and 8.9%, respectively, from the third quarter of 2005.” 

He further stated, “We are excited about the pending merger with Cullen/Frost Bankers, Inc. that was announced on July 3, 2006.  The merger is expected to close on December 8, 2006.  We are looking forward to joining the current Frost employees in Tarrant County and around the state in providing additional new products and services to our customers.”

Net interest income (tax equivalent) for the third quarter of 2006 was $12.9 million compared to $11.3 million in the third quarter of last year, a 14.7% increase.  Contributing to this increase was an 11.6% increase in average earning assets and an increase in net interest margin of 13 basis points to 4.71%, comparing the third quarter of 2006 to the third quarter of 2005.  For the nine months ended September 30, 2006, net interest income (tax equivalent) was $37.8 million, an increase of 17.0% over the first nine months of 2005.  The Company believes that the increase in net interest margin reflects the increase in market interest rates that have occurred over the last twelve months and the Company’s sensitivity to changes in market interest rates as well as the 11.6% increase in average earning assets in the third quarter of 2006 versus the same quarter last year. 

Non-interest income for the third quarter of 2006 was $2,101,000, a decrease of $75,000 over the third quarter of the prior year.  This decrease resulted primarily from an extraordinary gain on sale of assets in the third quarter of 2005 in the amount of $247,000.  In the third quarter of 2006 compared to the third quarter of 2005, there were positive increases in service charges on deposits, investment service fees, mortgage origination fees and debit card fees.  For the nine months ended September 30, 2006, non-interest income was $6,170,000, an increase of 1.3% over the first nine months of 2005.

Non-interest expenses of $8,957,000 for the third quarter of 2006 increased $1,320,000, or 17.3% compared to the third quarter of last year.  Included in the third quarter 2006 total non-interest expense was the expense impact of a $524,000 check fraud loss representing approximately 40% of the increase for the quarter.  Approximately 38% of the increase in non-interest expenses was due to increases in salaries and benefits of personnel and occupancy and equipment expenses directly related to the growth of the Company.  Also, in the third quarter of 2006, there was a 68% increase in legal and professional fees

compared to the third quarter of 2005.  A portion of this increase is attributable to legal and consulting fees incurred in connection with collection efforts related to a problem credit that was reported in January 2006.  Non-interest expense for the nine months ended September 30, 2006, was $25,377,000 compared to $22,447,000 for the same period in the prior year, an increase of 13.1%.  This increase in non-interest expense is primarily due to the check fraud loss noted above and increases in salary and benefits expense and occupancy equipment expense.

The provision for loan losses was $415,000 for the third quarter of 2006 compared to $315,000 for the same quarter of 2005.  This increase is primarily attributable to a 13.7% increase in period-end loans from September 30, 2005 to September 30, 2006.  In the first and second quarters of 2006, the Company recorded provisions for loan losses of $2.0 million and $1.1 million, respectively, in each case primarily related to the problem credit noted above.  In the second quarter of 2006, net loan charge-offs of $4.2 million were recorded, primarily related to this problem credit.  On October 5, 2006, the Company filed a report with the Securities and Exchange Commission reporting a $3.0 million loan charge-off recovery resulting from a cash payment of $4.5 million on this problem credit.  It is anticipated that the recovery will result in a reduction in the provision for loan losses in the fourth quarter of 2006.  The allowance for loan losses was 1.21% of total loans as of September 30, 2006.  As of September 30, 2006, non-accrual loans were $9.3 million, or 1.08% of total loans. 

The Company’s loans were $858 million at September 30, 2006, an increase of 13.7% over September 2005.  Deposits increased 7.2% to $929 million at September 30, 2006.  At September 30, 2006, shareholders’ equity was $88.8 million, a book value of $7.04 per outstanding share. 

Return on average assets and return on average shareholders’ equity was 1.23% and 16.40%, respectively, for the quarter ended September 30, 2006 and 1.12% and 15.08%, respectively, for the nine months ended September 30, 2006. 

Summit files annual, quarterly and current reports, proxy statements and other information with the SEC.  Investors may read and copy any of these reports, statements and other information at the SEC’s public reference room located at 450 Fifth Street, N.W., Washington, D.C. 20549.  Investors should call the SEC at 1-800-SEC-0330 for further information on the public reference room.  The reports, statements, and other information filed by Summit with the SEC are also available free at the SEC’s web site at http://www.sec.gov.  You can also obtain a free copy of these reports, statements and other information from Summit’s web site at http://www.summitbank.net.

Certain statements contained in this press release that 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 the Act.  We are including this statement for purposes of invoking these safe harbor provisions.  Forward-looking statements are 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 those expressed or implied in such forward-looking statements.  These risks and uncertainties are described from time to time in the Company’s filings with the Securities and Exchange Commission, including but not limited to, those set forth under the heading “Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2005.

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

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

	Quarter Ended September 30,				% Change			Nine Months Ended September 30,				% Change
EARNINGS SUMMARY	2006		2005					2006		2005
Interest income	$	19,859	$	15,476		28.3	%	$	56,337	$	43,227		30.3	%
Interest expense		7,015		4,263		64.6	%		18,770		11,059		69.7	%
Net interest income		12,844		11,213		14.5	%		37,567		32,168		16.8	%
Provision for loan losses		415		315		31.7	%		3,515		765		359.5	%
Service charges on deposits		1,046		992		5.4	%		2,968		2,964		0.1	%
Gain on sale of investment securities		—		—		0.0	%		—		—		0.0	%
Other income		1,055		1,184		-10.9	%		3,202		3,127		2.4	%
Salaries and benefits expense		4,895		4,579		6.9	%		14,731		13,296		10.8	%
Occupancy and equipment expense		1,495		1,311		14.0	%		4,343		3,744		16.0	%
Other expense		2,567		1,747		46.9	%		6,303		5,407		16.6	%
Earnings before income taxes		5,573		5,437		2.5	%		14,845		15,047		-1.3	%
Provision for income taxes		1,983		1,981		0.1	%		5,306		5,387		-1.5	%
Net earnings	$	3,590	$	3,456		3.9	%	$	9,539	$	9,660		-1.3	%
Basic earnings per share	$	0.28	$	0.28		0.0	%	$	0.76	$	0.78		-2.6	%
Basic weighted average shares outstanding		12,591		12,420					12,533		12,405
Diluted earnings per share	$	0.28	$	0.27		3.7	%	$	0.75	$	0.76		-1.3	%
Diluted weighted average shares outstanding		12,882		12,664					12,800		12,705

	Average for Quarter Ended
BALANCE SHEET SUMMARY	September 30, 2006		June 30, 2006		March 31, 2006		December 31, 2005		September 30, 2005
Total loans	$	843,458	$	830,097	$	793,536	$	753,311	$	735,109
Total investment securities		242,428		242,468		253,197		252,508		226,441
Earning assets		1,087,761		1,073,869		1,048,192		1,017,095		974,844
Total assets		1,161,279		1,139,224		1,116,659		1,082,477		1,038,628
Noninterest bearing deposits		261,768		258,103		251,034		259,062		242,849
Interest bearing deposits		645,270		636,102		608,619		608,863		590,390
Total deposits		907,038		894,205		859,653		867,925		833,239
Other borrowings		161,058		155,510		169,405		128,368		121,435
Shareholders’ equity		86,863		84,121		82,609		80,684		79,053

	Average for Nine Months Ended September 30,				% Change
BALANCE SHEET SUMMARY	2006		2005
Total loans	$	822,546	$	721,952		13.9	%
Total investment securities		245,991		221,165		11.2	%
Earning assets		1,070,085		950,940		12.5	%
Total assets		1,139,217		1,013,320		12.4	%
Noninterest bearing deposits		257,008		235,896		8.9	%
Interest bearing deposits		630,131		569,827		10.6	%
Total deposits		887,139		805,723		10.1	%
Other borrowings		161,960		126,073		28.5	%
Shareholders’ equity		84,547		77,089		9.7	%

	Ending Balance
BALANCE SHEET SUMMARY	September 30, 2006			June 30, 2006			March 31, 2006			December 31, 2005			September 30, 2005
Total loans	$	857,840		$	841,961		$	808,606		$	774,886		$	754,153
Total investment securities		251,153			235,246			247,882			256,842			236,544
Total earning assets		1,110,008			1,084,382			1,058,892			1,032,620			1,006,368
Allowance for loan losses		(10,399	)		(9,958	)		(13,092	)		(11,208	)		(11,131	)
Premises and equipment		16,613			16,791			16,855			16,515			15,620
Total assets		1,177,313			1,160,731			1,121,269			1,099,735			1,074,261
Noninterest bearing deposits		270,863			262,264			262,087			263,027			258,644
Interest bearing deposits		657,935			643,036			627,810			615,749			607,384
Total deposits		928,798			905,300			889,897			878,776			866,028
Other borrowings		153,742			165,848			144,527			134,231			123,892
Total liabilities		1,088,546			1,076,480			1,038,928			1,018,402			994,534
Shareholders’ equity		88,767			84,251			82,341			81,333			79,727

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

NONPERFORMING ASSETS	September 30, 2006			June 30, 2006			March 31, 2006			December 31, 2005			September 30, 2005
Nonaccrual loans	$	9,289		$	6,058		$	11,164		$	3,000		$	4,989
Restructured loans		—			—			—			—			—
Other real estate & foreclosed assets		—			—			387			—			—
Total nonperforming assets	$	9,289		$	6,058		$	11,551		$	3,000		$	4,989
Total nonperforming assets as a percentage of loans and foreclosed assets		1.08	%		0.72	%		1.43	%		0.39	%		0.66	%
Accruing loans past due 90 days or more	$	638		$	—		$	—		$	—		$	2,178

	Quarter Ended
ALLOWANCE FOR LOAN LOSSES	September 30, 2006			June 30, 2006			March 31, 2006			December 31, 2005			September 30, 2005
Balance at beginning of period	$	9,958		$	13,092		$	11,208		$	11,131		$	10,798
Loans charged off		(22	)		(4,311	)		(257	)		(286	)		(25	)
Loan recoveries		48			77			141			23			43
Net (charge-offs) recoveries		26			(4,234	)		(116	)		(263	)		18
Provision for loan losses		415			1,100			2,000			340			315
Balance at end of period	$	10,399		$	9,958		$	13,092		$	11,208		$	11,131
Allowance for loan losses as a percentage of total loans		1.21	%		1.18	%		1.62	%		1.45	%		1.48	%
Allowance for loan losses as a percentage of nonperforming loans		111.95	%		164.38	%		117.27	%		373.66	%		223.11	%
Net charge-offs (recoveries) as a percentage of average loans		0.00	%		0.51	%		0.01	%		0.03	%		0.00	%
Provision for loan losses as a percentage of average loans		0.05	%		0.13	%		0.25	%		0.05	%		0.04	%

	Quarter Ended
SELECTED RATIOS	September 30, 2006			June 30, 2006			March 31, 2006			December 31, 2005			September 30, 2005
Return on average assets (annualized)		1.23	%		1.24	%		0.88	%		1.29	%		1.32	%
Return on average equity (annualized)		16.40	%		16.80	%		11.91	%		17.29	%		17.34	%
Average shareholders’ equity to average assets		7.48	%		7.38	%		7.40	%		7.45	%		7.61	%
Yield on earning assets		7.27	%		7.09	%		6.82	%		6.55	%		6.32	%
Cost of interest bearing funds		3.45	%		3.16	%		2.88	%		2.53	%		2.38	%
Net interest margin (tax equivalent)		4.71	%		4.76	%		4.68	%		4.71	%		4.58	%
Efficiency ratio		59.63	%		55.46	%		58.20	%		58.70	%		56.84	%
End of period book value per common share	$	7.04		$	6.68		$	6.60		$	6.54		$	6.41
End of period common shares outstanding		12,601			12,604			12,484			12,444			12,429

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

	Three Months Ended
	September 30, 2006								September 30, 2005
YIELD ANALYSIS	Average Balance			Interest		Yield			Average Balance			Interest		Yield
Interest Earning Assets:
Federal funds sold & interest bearing deposits	$	1,875		$	24		5.08	%	$	13,294		$	114		3.40	%
Investment securities (taxable)		227,135			2,389		4.21	%		216,541			2,073		3.83	%
Investment securities (tax-exempt)		15,293			213		5.57	%		9,900			133		5.37	%
Loans		843,458			17,308		8.14	%		735,109			13,203		7.13	%
Total Interest Earning Assets		1,087,761			19,934		7.27	%		974,844			15,523		6.32	%
Noninterest Earning Assets:
Cash and due from banks		34,114								30,876
Other assets		49,588								43,824
Allowance for loan losses		(10,184	)							(10,916	)
Total Noninterest Earning Assets		73,518								63,784
Total Assets	$	1,161,279							$	1,038,628
Interest Bearing Liabilities:
Transaction and money market accounts	$	255,760			1,475		2.29	%	$	232,640			886		1.51	%
Savings deposits		163,024			1,198		2.92	%		173,539			866		1.98	%
Certificates and other time deposits		226,486			2,330		4.08	%		184,211			1,433		3.09	%
Other borrowings		161,058			2,012		4.96	%		121,435			1,078		3.52	%
Total Interest Bearing Liabilities		806,328			7,015		3.45	%		711,825			4,263		2.38	%
Noninterest Bearing Liabilities:
Demand deposits		261,768								242,849
Other liabilities		6,320								4,901
Shareholders’ equity		86,863								79,053
Total Noninterest Bearing Liabilities		354,951								326,803
Total Liabilities and Shareholders’ Equity	$	1,161,279							$	1,038,628
Net Interest Income and Margin (tax equivalent)				$	12,919		4.71	%				$	11,260		4.58	%

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

	Nine Months Ended
	September 30, 2006								September 30, 2005
YIELD ANALYSIS	Average Balance			Interest		Yield			Average Balance			Interest		Yield
Interest Earning Assets:
Federal funds sold & interest bearing deposits	$	1,548		$	56		4.84	%	$	7,823		$	181		3.09	%
Investment securities (taxable)		232,074			7,084		4.07	%		212,369			5,913		3.71	%
Investment securities (tax-exempt)		13,917			569		5.45	%		8,796			349		5.29	%
Loans		822,546			48,827		7.94	%		721,952			36,905		6.83	%
Total Interest Earning Assets		1,070,085			56,536		7.06	%		950,940			43,348		6.09	%
Noninterest Earning Assets:
Cash and due from banks		32,633								30,361
Other assets		48,262								42,663
Allowance for loan losses		(11,763	)							(10,644	)
Total Noninterest Earning Assets		69,132								62,380
Total Assets	$	1,139,217							$	1,013,320
Interest Bearing Liabilities:
Transaction and money market accounts	$	259,503			4,041		2.08	%	$	233,203			2,400		1.38	%
Savings deposits		155,337			3,032		2.61	%		168,002			2,206		1.76	%
Certificates and other time deposits		215,291			6,136		3.81	%		168,622			3,563		2.83	%
Other borrowings		161,960			5,561		4.59	%		126,073			2,890		3.06	%
Total Interest Bearing Liabilities		792,091			18,770		3.17	%		695,900			11,059		2.12	%
Noninterest Bearing Liabilities:
Demand deposits		257,008								235,896
Other liabilities		5,571								4,435
Shareholders’ equity		84,547								77,089
Total Noninterest Bearing Liabilities		347,126								317,420
Total Liabilities and Shareholders’ Equity	$	1,139,217							$	1,013,320
Net Interest Income and Margin (tax equivalent)				$	37,766		4.72	%				$	32,289		4.54	%

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

LOAN PORTFOLIO	September 30, 2006		%			September 30, 2005		%
Commercial and industrial	$	310,236		36.2	%	$	270,807		35.9	%
Real estate:
Commercial		281,107		32.8	%		244,966		32.5	%
Residential		93,764		10.9	%		89,487		11.9	%
Construction and development		135,992		15.8	%		109,431		14.5	%
Consumer		36,741		4.3	%		39,462		5.2	%
Total loans (gross)	$	857,840		100.0	%	$	754,153		100.0	%

REGULATORY CAPITAL DATA	September 30, 2006			September 30, 2005
Tier 1 Capital	$	93,120		$	82,621
Tier 1 Ratio		10.96	%		10.45	%
Total Capital (Tier 1 + Tier 2)	$	103,519		$	92,520
Total Capital Ratio		12.18	%		11.70	%
Total Risk-Adjusted Assets	$	849,874		$	790,653
Tier 1 Leverage Ratio		8.10	%		8.04	%

OTHER DATA	September 30, 2006		September 30, 2005
Full Time Equivalent Employees (FTE’s)		252		264
Stock Price Range (For the Quarter Ended):
High	$	28.94	$	19.28
Low	$	26.69	$	17.16
Close	$	28.12	$	18.37