<PAGE>

                      SECURITIES AND EXCHANGE COMMISSION
                            WASHINGTON, D.C. 20549

                                   FORM 10-Q


Mark One

[X]  Quarterly report pursuant to section 13 or 15(d) of the Securities Exchange
     Act of 1934

     For the quarterly period ended March 31, 2000; or

[_]  Transition report pursuant to section 13 or 15(d) of the Securities
     Exchange Act of 1934

     For the Transition period from ____________ to _____________.


                        Commission File Number 0-11986

                            SUMMIT BANCSHARES, INC.
            ------------------------------------------------------
            (Exact name of registrant as specified in its charter)


          Texas                                         75-1694807
 ------------------------                  ------------------------------------
 (State of Incorporation)                  (I.R.S. Employer Identification No.)

                  1300 Summit Avenue, Fort Worth, Texas 76102
                  -------------------------------------------
                   (Address of principal executive offices)


                                (817) 336-6817
             ----------------------------------------------------
             (Registrant's telephone number, including area code)


                                   No Change
        --------------------------------------------------------------
        (Former name, former address and former fiscal year if changed
                              since last report)

Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes  X  No
                                              ---

The number of shares of common stock, $1.25 par value, outstanding at March 31,
2000 was 6,431,285 shares.
<PAGE>

                            SUMMIT BANCSHARES, INC.


                                     INDEX

<TABLE>
<CAPTION>
PART I - FINANCIAL INFORMATION                                                    Page No.
<S>                                                                               <C>
Item 1.  Financial Statements

         Consolidated Balance Sheets at March 31, 2000 and
         1999 and at December 31, 1999                                                 4

         Consolidated Statements of Income for the Three Months
         Ended March 31, 2000 and 1999 and for the Year Ended
         December 31, 1999                                                             5

         Consolidated Statements of Changes in Shareholders' Equity
         for the Three Months Ended March 31, 2000 and 1999 and
         for the Year Ended December 31, 1999                                          6

         Consolidated Statements of Cash Flows for the Three Months
         Ended March 31, 2000 and 1999 and for the Year Ended
         December 31, 1999                                                             7

         Notes to Consolidated Financial Statements for the Three
         Months Ended March 31, 2000 and 1999 and for the Year
         Ended December 31, 1999                                                    8-19

The March 31, 2000 and 1999 and the December 31, 1999 financial statements
included herein are unaudited; however, such information reflects all
adjustments (consisting solely of normal recurring adjustments), which are, in
the opinion of management of the registrant, necessary to a fair statement of
the results for the interim periods.

Item 2.  Management's Discussion and Analysis of Financial Condition
         and Results of Operations for the Three Months Ended
         March 31, 2000 and 1999                                                   21-26
</TABLE>

2
<PAGE>

PART II - OTHER INFORMATION

Item 1.  Legal Proceedings

Item 2.  Change in Securities

Item 3.  Defaults Upon Senior Securities

Item 4.  Submission of Matters to a Vote of Security Holders

Item 5.  Other Information

Item 6.  Exhibits and Reports on Form 8-K

                                                                               3
<PAGE>

PART I - FINANCIAL INFORMATION

Item 1 - Financial Statements
-----------------------------

                   SUMMIT BANCSHARES, INC. AND SUBSIDIARIES
                          CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                               (Unaudited)                    (Unaudited)
                                                                                 March 31,                    December 31,
                                                                  ------------------------------------
                                                                       2000                   1999               1999
                                                                  ----------------       -------------        -----------
ASSETS                                                                                   (In Thousands)
<S>                                                               <C>                    <C>                  <C>
CASH AND DUE FROM BANKS - NOTE 1                                  $   26,506             $    23,371          $   19,092
FEDERAL FUNDS SOLD                                                    25,820                  16,800              18,012
INVESTMENT SECURITIES - NOTE 2
 Securities Available-for-Sale, at fair value                        119,272                 117,953             129,116
 Securities Held-to-Maturity, at cost (fair value of
   $25,345,000, $30,424,000 and $26,739,000
   March 31, 2000 and 1999 and December 31, 1999,
   respectively)                                                      26,032                  30,344              27,324
LOANS - NOTE 3
  Loans, Net of Unearned Discount                                    370,125                 318,795             355,414
      Allowance for Loan Losses                                       (5,440)                 (4,749)             (5,169)
                                                                  ----------             -----------          ----------
         LOANS, NET                                                  364,685                 314,046             350,245

PREMISES AND EQUIPMENT - NOTE 4                                        8,442                   9,136               8,562
ACCRUED INCOME RECEIVABLE                                              4,557                   3,995               4,503
OTHER REAL ESTATE - NOTE 5                                             1,945                   1,711               1,947
OTHER ASSETS - NOTE 9                                                  5,287                   3,902               5,985
                                                                  ----------             -----------          ----------

         TOTAL ASSETS                                             $  582,546             $   521,258          $  564,786
                                                                  ==========             ===========          ==========

LIABILITIES AND SHAREHOLDERS' EQUITY

DEPOSITS - NOTE 6
  Noninterest-Bearing Demand                                      $  133,389             $   128,232          $  128,685
  Interest-Bearing                                                   368,435                 327,151             351,861
                                                                  ----------             -----------          ----------
         TOTAL DEPOSITS                                              501,824                 455,383             480,546

SHORT TERM BORROWINGS - NOTE 7                                        28,438                  16,533              32,091
ACCRUED INTEREST PAYABLE                                                 610                     603                 576
OTHER LIABILITIES                                                      2,091                   2,167               2,864
                                                                  ----------             -----------          ----------

         TOTAL LIABILITIES                                           532,963                 474,686             516,077
                                                                  ----------             -----------          ----------

COMMITMENTS AND CONTINGENCIES - NOTE 11, 13 and 17

SHAREHOLDERS' EQUITY - NOTES 12, 14 AND 18
 Common Stock - $1.25 Par Value;  20,000,000 shares
 authorized; 6,431,285 and 6,506,347 shares
 issued and outstanding at March 31, 2000 and 1999 and
 6,361,247 at December 31, 1999, respectively                          8,039                   8,133               7,952
Capital Surplus                                                        6,641                   6,412               6,469
Retained Earnings                                                     37,281                  32,835              35,474
Accumulated Other Comprehensive Income-Unrealized Gain (Loss)
 On Available-for-Sale Investment Securities, Net of Tax              (1,498)                    273              (1,186)
Treasury Stock at Cost (51,644 and 61,700 shares at
 March 31, 2000 and 1999, respectively)                                 (880)                 (1,081)                 -0-
                                                                  ----------             -----------          ----------

         TOTAL SHAREHOLDERS' EQUITY                                   49,583                  46,572              48,709
                                                                  ----------             -----------          ----------

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY                        $  582,546             $   521,258          $  564,786
                                                                  ==========             ===========          ==========
</TABLE>

The accompanying Notes should be read with these financial statements.

4
<PAGE>

                   SUMMIT BANCSHARES, INC. AND SUBSIDIARIES
                       CONSOLIDATED STATEMENTS OF INCOME

<TABLE>
<CAPTION>
                                                                           (Unaudited)                          (Unaudited)
                                                              For the Three Months Ended March 31,        Year Ended December 31,
                                                              ------------------------------------
                                                                   2000                 1999                       1999
                                                              ----------------   -----------------          -----------------
                                                                         (In Thousands, Except Per Share Data)
<S>                                                           <C>                <C>                        <C>
INTEREST INCOME
  Interest and Fees on Loans                                   $  8,681               $ 7,009                    $ 30,620
  Interest and Dividends on Investment Securities:
    Taxable                                                       2,287                 2,072                       8,495
    Exempt from Federal Income Taxes                                  6                    10                          35
  Interest on Federal Funds Sold                                    176                   303                       1,082
                                                               --------               -------                    --------

         TOTAL INTEREST INCOME                                   11,150                 9,394                      40,232
                                                               --------               -------                    --------
INTEREST EXPENSE
  Interest on Deposits                                            3,740                 3,094                      12,837
  Interest on Short Term Borrowings                                 351                   160                         926
  Interest on Note Payable                                           -0-                   -0-                          9
                                                               --------               -------                    --------

         TOTAL INTEREST EXPENSE                                   4,091                 3,254                      13,772
                                                               --------               -------                    --------

         NET INTEREST INCOME                                      7,059                 6,140                      26,460

LESS: PROVISION FOR LOAN LOSSES - NOTE 3                            232                   220                       1,001
                                                               --------               -------                    --------

         NET INTEREST INCOME AFTER
          PROVISION FOR LOAN LOSSES                               6,827                 5,920                      25,459
                                                               --------               -------                    --------

NON-INTEREST INCOME
  Service Charges and Fees on Deposits                              482                   478                       2,002
  Net Gain (Loss) on Sale of Investment Securities                   -0-                   -0-                         (3)
  Other Income                                                      426                   553                       1,881
                                                               --------               -------                    --------

         TOTAL NON-INTEREST INCOME                                  908                 1,031                       3,880
                                                               --------               -------                    --------

NON-INTEREST EXPENSE
  Salaries and Employee Benefits                                  2,357                 2,141                       9,226
  Occupancy Expense - Net                                           258                   245                       1,031
  Furniture and Equipment Expense                                   338                   283                       1,202
  Other Real Estate Owned (Income) Expense - Net                    (12)                   27                         107
  Other Expense - NOTE 8                                          1,052                 1,042                       3,658
                                                               --------               -------                    --------

         TOTAL NON-INTEREST EXPENSE                               3,993                 3,738                      15,224
                                                               --------               -------                    --------

         INCOME BEFORE INCOME TAXES                               3,742                 3,213                      14,115

APPLICABLE INCOME TAXES - NOTE 9                                  1,292                 1,117                       4,893
                                                               --------               -------                    --------

         NET INCOME                                            $  2,450               $ 2,096                    $  9,222
                                                               ========               =======                    ========

         NET INCOME PER SHARE - NOTE 14
               Basic                                           $    .38               $   .33                    $   1.44
               Diluted                                              .37                   .31                        1.39
</TABLE>

The accompanying Notes should be read with these financial statements.

                                                                               5
<PAGE>

                   SUMMIT BANCSHARES, INC. AND SUBSIDIARIES
                 STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
                         CONSOLIDATED AND COMPANY ONLY
              FOR THE THREE MONTHS ENDED MARCH 31, 2000 AND 1999
                   AND FOR THE YEAR ENDED DECEMBER 31, 1999
                                  (Unaudited)

<TABLE>
<CAPTION>
                                                                                Accumulated
                                                                                   Other
                                                                               Comprehensive
                                                                                 Income -
                                                                               Net Unrealized
                                                                               Gain (Loss) on                   Total
                                Common Stock            Capital      Retained    Investment     Treasury     Shareholders'
                           -----------------------
                            Shares        Amount        Surplus      Earnings    Securities       Stock         Equity
--------------------------------------------------------------------------------------------------------------------------
                                           (Dollars in Thousands, Except Per Share Data)
<S>                       <C>           <C>           <C>           <C>        <C>             <C>           <C>
BALANCE AT
   JANUARY 1, 1999         6,471,827    $    8,090    $    6,329    $   31,271   $      560    $      (15)   $   46,235

Stock Options Exercised       35,320            44            83                                                    127
Purchases of Stock Held
   in Treasury                                                                                     (1,081)       (1,081)
Retirement of Stock
   Held in Treasury             (800)           (1)                        (14)                        15            -0-
Cash Dividend -
   $.08 Per Share                                                         (518)                                    (518)
Net Income for the
   Three Months Ended
   March 31, 1999                                                        2,096                                    2,096
Securities Available-
   for-Sale Adjustment                                                                 (287)                       (287)
                                                                                                             ----------
   Total Comprehensive
       Income                                                                                                     1,809
                          ----------    ----------    ----------    ----------   ----------    ----------    ----------
BALANCE AT
   MARCH 31, 1999          6,506,347         8,133         6,412        32,835          273        (1,081)       46,572

Stock Options Exercised       28,000            35            57                                                     92
Purchases of Stock Held
   in Treasury                                                                                     (2,088)       (2,088)
Retirement of Stock
   Held in Treasury         (173,100)         (216)                     (2,953)                     3,169            -0-
Cash Dividend -
   $.24 Per Share                                                       (1,534)                                  (1,534)
Net Income for the
   Nine Months Ended
   December 31, 1999                                                     7,126                                    7,126
Securities Available-
   for-Sale Adjustment                                                               (1,459)                     (1,459)
                                                                                                             ----------
Total Comprehensive
       Income                                                                                                     5,667
                          ----------    ----------    ----------    ----------   ----------    ----------    ----------

BALANCE AT
DECEMBER 31, 1999          6,361,247         7,952         6,469        35,474       (1,186)           -0-       48,709

Stock Options Exercised       70,038            87           172                                                    259
Purchases of Stock Held
   in Treasury                                                                                       (880)         (880)
Cash Dividend -
   $.10 Per Share                                                         (643)                                    (643)
Net Income for the
   Three Months Ended
    March 31, 2000                                                       2,450                                    2,450
Securities Available-
   for-Sale Adjustment                                                                 (312)                       (312)
                                                                                                             ----------
Total Comprehensive
       Income                                                                                                     2,138
                          ----------    ----------    ----------    ----------   ----------    ----------    ----------

BALANCE AT
   MARCH 31, 2000          6,431,285    $    8,039    $    6,641    $   37,281   $   (1,498)   $     (880)   $   49,583
                          ==========    ==========    ==========    ==========   ==========    ==========    ==========
</TABLE>

The accompanying Notes should be read with these financial statements.

6
<PAGE>

                     CONSOLIDATED STATEMENTS OF CASH FLOWS
              FOR THE THREE MONTHS ENDED MARCH 31, 2000 AND 1999
                   AND FOR THE YEAR ENDED DECEMBER 31, 1999


<TABLE>
<CAPTION>
                                                                                (Unaudited)                          (Unaudited)
                                                                                  March 31,                          December 31,
                                                                     ------------------------------------
                                                                         2000                   1999                    1999
                                                                     -------------           ------------            -------------
                                                                                         (In Thousands)
<S>                                                                  <C>                     <C>                         <C>
CASH FLOW FROM OPERATING ACTIVITIES:
  Net Income                                                         $    2,450              $   2,096                   $   9,222
                                                                     ----------              ---------                   ---------
  Adjustments to Reconcile Net Income to Net
   Cash Provided by Operating Activities:
    Depreciation and Amortization                                           264                    260                       1,081
    Net Discount Accretion of Investment Securities                         (15)                  (121)                        (39)
    Provision for Loan Losses                                               232                    220                       1,001
    Deferred Income Tax Benefit                                             (48)                   (10)                       (385)
    Net Loss on Sale of Investment Securities                                -0-                    -0-                          3
    Writedown of Other Real Estate                                            5                     -0-                         -0-
    Net Gain From Sale of Other Real Estate                                  -0-                    -0-                        (36)
    Net Gain on Sale of Premises and Equipment                               -0-                    -0-                       (105)
    Decrease (Increase) in Accrued Income and Other Assets                  900                  1,204                         (33)
    Increase (Decrease) in Accrued Expenses and Other Liabilities          (738)                  (420)                        250
                                                                     ----------              ---------                   ---------

      Total Adjustments                                                     600                  1,133                       1,737
                                                                     ----------              ---------                   ---------
      NET CASH PROVIDED BY OPERATING ACTIVITIES                           3,050                  3,229                      10,959
                                                                     ----------              ---------                   ---------

CASH FLOWS FROM INVESTING ACTIVITIES:
  Net (Increase) Decrease in Federal Funds Sold                          (7,808)                21,906                      20,694
  Proceeds from Matured and Prepaid Investment Securities
   .  Held-to-Maturity                                                      285                  2,280                       4,280
   .  Available-for-Sale                                                    625                 36,413                      63,531
  Proceeds from Sales of Investment Securities                           18,991                     -0-                     71,214
  Purchase of Investment Securities
   .  Held-to-Maturity                                                       -0-                (6,037)                     (6,037)
   .  Available-for-Sale                                                 (9,227)               (33,254)                   (144,026)
  Loans Originated and Principal Repayments, Net                        (14,788)               (14,731)                    (52,828)
  Recoveries of Loans Previously Charged-Off                                 70                     39                         171
  Proceeds from Sale of Premises and Equipment                               -0-                    -0-                        567
  Proceeds from Sale of Other Real Estate                                    -0-                    -0-                        559
  Purchases of Premises and Equipment                                      (145)                  (314)                     (1,023)
                                                                     ----------              ---------                   ---------

      NET CASH USED BY INVESTING ACTIVITIES                             (11,997)                (6,302)                    (42,898)
                                                                     ----------              ---------                   ---------

CASH FLOWS FROM FINANCING ACTIVITIES:
  Net Increase (Decrease) in Demand Deposits, Savings

   Accounts and Interest Bearing Transaction Accounts                    18,494                 (7,814)                      7,488
  Net Increase (Decrease)  in Certificates of Deposit                     2,784                 (2,303)                      7,558
  Net Increase (Decrease) in Short Term Borrowings                       (3,653)                (1,306)                     14,252
  Payments of Cash Dividends                                               (643)                  (518)                     (2,052)
  Proceeds from Stock Options Exercised                                     259                    127                         219
  Purchase of Treasury Stock                                               (880)                (1,081)                     (3,169)
                                                                     ----------              ---------                   ---------

       NET CASH PROVIDED (USED) BY FINANCING ACTIVITIES                  16,361                (12,895)                     24,296
                                                                     ----------              ---------                   ---------

NET INCREASE (DECREASE) IN CASH AND
 DUE FROM BANKS                                                           7,414                 (3,364)                     (7,643)

CASH AND DUE FROM BANKS AT BEGINNING
  OF PERIOD                                                              19,092                 26,735                      26,735
                                                                     ----------              ---------                   ---------

CASH AND DUE FROM BANKS AT END OF PERIOD                             $   26,506              $  23,371                   $  19,092
                                                                     ==========              =========                   =========


SUPPLEMENTAL SCHEDULE OF OPERATING AND INVESTING ACTIVITIES

  Interest Paid                                                      $    3,961              $   3,689                   $  14,232
  Income Taxes Paid                                                          75                     -0-                      5,198
  Other Real Estate Acquired in Settlement of Loans                           3                  1,430                       2,188
</TABLE>

                                                                               7
<PAGE>

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   SUMMIT BANCSHARES, INC. AND SUBSIDIARIES
        FOR THE THREE MONTHS ENDED MARCH 31, 2000 AND 1999 (UNAUDITED)
             AND FOR THE YEAR ENDED DECEMBER 31, 1999 (UNAUDITED)

NOTE 1 - Summary of Significant Accounting Policies

         The accounting and reporting policies of Summit Bancshares, Inc. (the
         "Corporation") and Subsidiaries are in accordance with the generally
         accepted accounting principles and the prevailing practices within the
         banking industry. A summary of the more significant policies follows:

         Basis of Presentation and Principles of Consolidation
         -----------------------------------------------------

         The consolidated financial statements of the Corporation include its
         accounts and those of its wholly-owned subsidiaries, Summit National
         Bank and Summit Community Bank, National Association (the "Subsidiary
         Banks") and Summit Bancservices, Inc., a wholly-owned operations
         subsidiary. All significant intercompany balances and transactions have
         been eliminated in consolidation.

         Use of Estimates
         ----------------

         The preparation of financial statements in conformity with generally
         accepted accounting principles requires management to make estimates
         and assumptions that affect the reported amounts of assets and
         liabilities and disclosure of contingent assets and liabilities at the
         date of the financial statements and the reported amounts of revenues
         and expenses during the reporting periods. Actual results could differ
         from those estimates.

         Cash and Due From Banks
         -----------------------

         The Subsidiary Banks are required to maintain certain balances at the
         Federal Reserve Bank based on their levels of deposits. During the
         first three months of 2000 the average cash balance maintained at the
         Federal Reserve Bank was $1,088,000. Compensating balances held at
         correspondent banks, to minimize service charges, averaged
         approximately $17,981,000 during the same period.

         Investment Securities
         ---------------------

         The Corporation has adopted Statement of Financial Accounting Standards
         No. 115, Accounting for Certain Investments in Debt and Equity
         Securities ("SFAS 115"). At the date of purchase, the Corporation is
         required to classify debt and equity securities into one of three
         categories: held-to-maturity, trading or available-for-sale. At each
         reporting date, the appropriateness of the classification is
         reassessed. Investments in debt securities are classified as
         held-to-maturity and measured at amortized cost in the financial
         statements only if management has the positive intent and ability to
         hold those securities to maturity. Securities that are bought and held
         principally for the purpose of selling them in the near term are
         classified as trading and measured at fair value in the financial
         statements with unrealized gains and losses included in earnings.
         Investments not classified as either held-to-maturity or trading are
         classified as available-for-sale and measured at fair value in the
         financial statements with unrealized gains and losses reported, net of
         tax, in a separate component of shareholders' equity until realized.

         The Corporation has the ability and intent to hold to maturity its
         investment securities classified as held-to-maturity; accordingly, no
         adjustment has been made for the excess, if any, of amortized cost over
         market. In determining the investment category classifications at the
         time of purchase of securities, management considers its
         asset/liability strategy, changes in interest rates and prepayment
         risk, the need to increase capital and other factors. Under certain
         circumstances (including the deterioration of the issuer's
         creditworthiness, a change in tax law, or statutory or regulatory
         requirements), the Corporation may change the investment security
         classification. In the periods reported for 2000 and 1999 the
         Corporation held no securities that would have been classified as
         trading securities.

         All investment securities are adjusted for amortization of premiums and
         accretion of discounts. Amortization of premiums and accretion of
         discounts are recorded to income over the contractual maturity or
         estimated life of the individual investment on the level yield method.
         Gain or loss on sale of investments is based upon the specific
         identification method and the gain or loss is recorded in non-interest
         income. Income earned on the Corporation's investments in state and
         political subdivisions is not taxable.

8
<PAGE>

NOTE 1 - Summary of Significant Accounting Policies (cont'd.)

         Loans and Allowance for Loan Losses
         -----------------------------------

         Loans are stated at the principal amount outstanding less unearned
         discount and the allowance for loan losses. Unearned discount on
         installment loans is recognized as income over the terms of the loans
         by a method approximating the interest method. Interest income on all
         other loans is recognized based upon the principal amounts outstanding,
         the simple interest method. The accrual of interest on a loan is
         discontinued when, in the opinion of management, there is doubt about
         the ability of the borrower to pay interest or principal. Interest
         previously earned, but uncollected on such loans, is written off. After
         loans are placed on non-accrual all payments received are applied to
         principal and no interest income is recorded until the loan is returned
         to accrual status or the principal has been reduced to zero.

         The Corporation has adopted Statement of Financial Accounting Standards
         No. 114, "Accounting by Creditors for Impairment of a Loan," as amended
         by Statement of Financial Accounting Standards No. 118, "Accounting by
         Creditors for Impairment of a Loan - Income Recognition and
         Disclosure." Under this standard, the allowance for loan losses related
         to loans that are identified for evaluation in accordance with
         Statement No. 114 (impaired loans) is based on discounted cash flows
         using the loan's initial effective rate or the fair value of the
         collateral for certain collateral dependent loans.

         The allowance for loan losses is comprised of amounts charged against
         income in the form of a provision for loan losses as determined by
         management. Management's evaluation is based on a number of factors,
         including the Subsidiary Banks' loss experience in relation to
         outstanding loans and the existing level of the allowance, prevailing
         and prospective economic conditions, and management's continuing review
         of the discounted cash flow values of impaired loans and its evaluation
         of the quality of the loan portfolio. Loans are charged against the
         allowance for loan losses when management believes that the
         collectibility of the principal is unlikely.

         The evaluation of the adequacy of loan collateral is often based upon
         estimates and appraisals. Because of changing economic conditions, the
         valuations determined from such estimates and appraisals may also
         change. Accordingly, the Corporation may ultimately incur losses which
         vary from management's current estimates. Adjustments to the allowance
         for loan losses will be reported in the period such adjustments become
         known or are reasonably estimable.

         Premises and Equipment
         ----------------------

         Premises and equipment are stated at cost less accumulated depreciation
         and amortization. Depreciation expense is computed on the straight-line
         method based upon the estimated useful lives of the assets. Maintenance
         and repairs are charged to non-interest expenses. Renewals and
         betterments are added to the asset accounts and depreciated over the
         periods benefited.

         Other Real Estate
         -----------------

         Other real estate is foreclosed property held pending disposition and
         is valued at the lower of its fair value or the recorded investment in
         the related loan. At foreclosure, if the fair value, less estimated
         costs to sell, of the real estate acquired is less than the
         Corporation's recorded investment in the related loan, a writedown is
         recognized through a charge to the allowance for loan losses. Any
         subsequent reduction in value is recognized by a charge to income.
         Operating expenses of such properties, net of related income, and gains
         and losses on disposition are included in non-interest expense.

         Federal Income Taxes
         --------------------

         The Corporation joins with its Subsidiaries in filing a consolidated
         federal income tax return. The subsidiaries pay to the parent a charge
         equivalent to their current federal income tax based on the separate
         taxable income of the subsidiaries.

         The Corporation and the subsidiaries maintain their records for
         financial reporting and income tax reporting purposes on the accrual
         basis of accounting. Deferred income taxes are provided in accordance
         with Statement of Financial Accounting Standards No. 109, "Accounting
         for Income Taxes". Deferred income taxes are provided for accumulated
         temporary differences due to basic differences for assets and
         liabilities for financial reporting and income tax reporting.

         Realization of net deferred tax assets is dependent on generating
         sufficient future taxable income. Although realization is not assured,
         management believes it is more likely than not that all of the net
         deferred tax assets will be realized. The amount of the net deferred
         tax asset considered realizable, however, could be reduced in the near
         term if estimates of future taxable income are reduced.

         Cash and Cash Equivalents
         -------------------------

         For the purpose of presentation in the Statements of Cash Flows, cash
         and cash equivalents are defined as those amounts included in the
         balance sheet caption "Cash and Due from Banks."

                                                                               9
<PAGE>

NOTE 1 - Summary of Significant Accounting Policies (cont'd.)
----

         Reclassification
         ----------------

         Certain reclassifications have been made to the 1999 financial
         statements to conform to the 2000 presentation.

         Earnings Per Common and Common Equivalent Share
         -----------------------------------------------

         Statement of Financial Accounting Standards No. 128 ("SFAS 128"),
         "Earnings Per Share," requires presentation of basic and diluted
         earnings per share. Basic earnings per share has been computed by
         dividing net income available to common shareholders by the weighted
         average number of common shares outstanding for the reporting period.
         Diluted earnings per share reflects the potential dilution that could
         occur if securities or other contracts to issue common stock were
         exercised or converted into common stock. Net income per common share
         for all periods presented has been calculated in accordance with SFAS
         128. Outstanding stock options issued by the Corporation represent the
         only dilutive effect reflected in diluted weighted average shares.

         Audited Financial Statements
         ----------------------------
         The consolidated balance sheet as of December 31, 1999, and the
         consolidated statements of income, changes in shareholders' equity and
         cash flows for the year ended December 31, 1999 are headed "unaudited"
         in these financial statements. These statements were reported in the
         Securities Exchange Commission Form 10-K as of December 31, 1999 as
         "audited" but are required to be reflected in these statements as
         unaudited because of the absence of an independent auditor's report.

NOTE 2 - Investment Securities
------
         A summary of amortized cost and estimated fair values of investment
         securities is as follows (in thousands):

<TABLE>
<CAPTION>
                                                                                   March 31, 2000
                                                             ------------------------------------------------------
                                                                                Gross            Gross
                                                           Amortized         Unrealized        Unrealized         Fair
                                                             Cost               Gains            Losses           Value
                                                           ---------         ----------        ----------         -----
<S>                                                       <C>                <C>              <C>               <C>
Investment Securities - Held-to-Maturity

  U.S. Treasury Securities                                  $   7,997          $     2          $     (9)         $   7,990
  U.S. Government Agencies
   and Corporations                                            18,035              -0-              (680)            17,355
                                                             --------            -----            ------           --------

    Total Held-to-Maturity Securities                          26,032                2              (689)            25,345
                                                             --------            -----            ------           --------

Investment Securities - Available-for-Sale

  U.S.  Treasury Securities                                    16,997                5               (94)            16,908
  U.S. Government Agencies
    and Corporations                                           90,376                9            (2,022)            88,363
  U.S. Government Agency Mortgage
    Backed Securities                                          12,593               52              (222)            12,423
  Obligations of States and Political Subdivisions                350              -0-                (1)               349
  Federal Reserve and Federal Home Loan Bank Stock              1,229              -0-               -0-              1,229
                                                             --------            -----            ------           --------
     Total Available-for-Sale Securities                      121,545               66            (2,339)           119,272
                                                             --------            -----            ------           --------

        Total Investment Securities                         $ 147,577           $   68          $ (3,028)         $ 144,617
                                                             ========            =====            ======           ========
</TABLE>

         In the above schedule the amortized cost of Total Held-to-Maturity
Securities of $26,032,000 and the estimated fair value of Total
Available-for-Sale Securities of $119,272,000 are reflected in Investment
Securities on the consolidated balance sheet as of March 31, 2000 for a total of
$145,304,000. A net unrealized loss of $2,273,000 is included in the
Available-for-Sale Investment Securities balance. The unrealized loss, net of
tax, is included in Shareholders' Equity.
<PAGE>

NOTE 2 - Investment Securities (cont'd)
------

         A summary of amortized cost and estimated fair values of investment
         securities is as follows (in thousands):

<TABLE>
<CAPTION>
                                                                                   March 31, 1999
                                                               ----------------------------------------------------
                                                                                Gross            Gross
                                                           Amortized         Unrealized        Unrealized          Fair
                                                             Cost               Gains            Losses           Value
                                                           ---------         ----------        ----------         -----
<S>                                                        <C>               <C>               <C>               <C>
Investment Securities - Held-to-Maturity

  U.S. Treasury Securities                                 $    9,991          $   184          $    -0-         $  10,175
  U.S. Government Agencies
   and Corporations                                            20,062               25              (132)           19,955
  Obligations of States and
   Political Subdivisions                                         291                3               -0-               294
                                                              -------              ---              ----           -------

    Total Held-to-Maturity Securities                          30,344              212              (132)           30,424
                                                              -------              ---              ----           -------

Investment Securities - Available-for-Sale

  U.S.  Treasury Securities                                    28,035              374                (1)           28,408
  U.S. Government Agencies
    and Corporations                                           70,813              133              (144)           70,802
  U.S. Government Agency Mortgage
    Backed Securities                                          17,057               71               (26)           17,102
  Obligations of States and Political Subdivisions                455                7                -0-              462
  Federal Reserve and Federal Home Loan Bank Stock              1,179              -0-                -0-            1,179
                                                              -------              ---              -----          -------

     Total Available-for-Sale Securities                      117,539              585              (171)          117,953
                                                              -------              ---              ----           -------

        Total Investment Securities                        $  147,883          $   797          $   (303)        $ 148,377
                                                              =======              ===              =====          =======
</TABLE>

         In the above schedule the amortized cost of Total Held-to-Maturity
Securities of $30,344,000 and the estimated fair value of Total
Available-for-Sale Securities of $117,953,000 are reflected in Investment
Securities on the consolidated balance sheet as of March 31, 1999 for a total of
$148,297,000. A net unrealized gain of $414,000 is included in the
Available-for-Sale Investment Securities balance. The unrealized gain, net of
tax, is included in Shareholders' Equity.

NOTE 3 - Loans and Allowance for Loan Losses

         The book values of loans by major type follow (in thousands):

<TABLE>
<CAPTION>
                                                               March 31,                     December 31,
                                                    ---------------------------------
                                                      2000                   1999                1999
                                                      ----                   ----            ------------
<S>                                               <C>                     <C>                <C>
Commercial                                        $ 164,383               $ 147,991             $ 156,847
Real Estate Mortgage                                124,158                 102,444               120,596
Real Estate Construction                             48,368                  36,917                43,875
Loans to Individuals                                 33,339                  31,836                34,261
Less:  Unearned Discount                               (123)                   (393)                 (165)
                                                    -------                 -------               -------
                                                    370,125                 318,795               355,414
Allowance for Loan Losses                            (5,440)                 (4,749)               (5,169)
                                                    -------                 -------               -------

     Loans - Net                                  $ 364,685               $ 314,046             $ 350,245
                                                    =======                 =======               =======
</TABLE>

                                                                              11
<PAGE>

NOTE 3 - Loans and Allowance for Loan Losses (cont'd.)
------

          Transactions in the allowance for loan losses are summarized as
follows (in thousands):

<TABLE>
<CAPTION>

                                                                                                  Year Ended
                                                       Three Months Ended March 31,               December 31,
                                                --------------------------------------
                                                    2000                      1999                    1999
                                                ------------              ------------            -----------
<S>                                             <C>                       <C>                     <C>
Balance, Beginning of Period                       $ 5,169                   $ 4,724                   $ 4,724
Provisions, Charged to Income                          232                       220                     1,001
Loans Charged-Off                                      (31)                     (234)                     (727)
Recoveries of Loans Previously
 Charged-Off                                            70                        39                       171
                                                   -------                   -------                   -------

          Net Charge-Offs/(Recoveries)                 (39)                      195                       556
                                                   -------                   -------                   -------

Balance, End of Period                             $ 5,440                   $ 4,749                   $ 5,169
                                                   =======                   =======                   =======
</TABLE>

          The provisions for loan losses charged to operating expenses during
the three months ended March 31, 2000 and March 31, 1999 of $232,000 and
$220,000, respectively, were considered adequate to maintain the allowance in
accordance with the policy discussed in Note 1. For the year ended December 31,
1999, a provision of $1,001,000 was recorded.

          At March 31, 2000, the recorded investment in loans that are
considered to be impaired under Statement of Financial Accounting Standards No.
114 was $2,462,000 (of which $2,462,000 were on non-accrual status). The related
allowance for loan losses for these loans was $865,000. The average recorded
investment in impaired loans during the three months ended March 31, 2000 was
approximately $2,374,000. For this period the Corporation recognized no interest
income on these impaired loans.

NOTE 4 - Premises and Equipment
------

          The investment in premises and equipment stated at cost and net of
accumulated amortization and depreciation is as follows (in thousands):

<TABLE>
<CAPTION>
                                                                        March 31,                           December 31,
                                                       -------------------------------------------
                                                             2000                       1999                    1999
                                                       ----------------           ----------------           ----------
<S>                                                    <C>                        <C>                        <C>
Land                                                        $   2,320                  $   2,783               $   2,320
Buildings and Improvements                                      7,783                      7,549                   7,715
Furniture & Equipment                                           8,010                      7,536                   8,003
                                                              -------                   --------                 -------
        Total Cost                                             18,113                     17,868                  18,038

Less:  Accumulated Amortization and Depreciation                9,671                      8,732                   9,476
                                                              -------                   --------                 -------

        Net Book Value                                      $   8,442                  $   9,136               $   8,562
                                                              =======                   ========                 =======
</TABLE>

NOTE 5 - Other Real Estate
------

        The carrying value of other real estate is as follows (in thousands):

<TABLE>
<CAPTION>
                                                                      March 31,                           December 31,
                                                       ---------------------------------------
                                                          2000                       1999                    1999
                                                       ------------               ------------            ---------
<S>                                                    <C>                        <C>                     <C>
Other Real Estate                                          $ 1,945                    $ 1,711                   1,947
                                                             =====                      =====                   =====

</TABLE>

12
<PAGE>

NOTE 5 - Other Real Estate (cont'd.)
------

        There were direct writedowns of other real estate charged to income for
the three months ended March 31, 2000 of $5,000. For the three months ended
March 31, 1999, or for the year ended December 31, 1999, respectively, there
were no direct writedowns.

NOTE 6 - Deposits
------

        The book values of deposits by major type follow (in thousands):

<TABLE>
<CAPTION>

                                                                       March 31,                  December 31,
                                                        ----------------------------------
                                                            2000                  1999               1999
                                                        ------------          ------------        ----------
<S>                                                     <C>                   <C>                 <C>
Noninterest-Bearing Demand Deposits                       $ 133,389            $ 128,232          $ 128,685
                                                            -------             --------           --------
Interest-Bearing Deposits:
   Interest-Bearing Transaction
     Accounts and Money Market Funds                        172,354              153,347            154,304
   Savings                                                   94,468               84,836             98,728
   Savings Certificates - Time                               59,164               52,665             58,973
   Certificates of Deposits $100,000 or more                 41,671               35,525             39,078
   Other                                                        778                  778                778
                                                            -------              -------            -------
   Total                                                    368,435              327,151            351,861
                                                            -------              -------            -------
       Total Deposits                                     $ 501,824            $ 455,383          $ 480,546
                                                            =======              =======            =======
</TABLE>

NOTE 7 - Short Term Borrowings
------

        Securities sold under repurchase agreements generally represent
borrowings with maturities ranging from one to thirty days. Information relating
to these borrowings is summarized as follows (in thousands):

<TABLE>
<CAPTION>
                                                                                                  Year Ended
                                                             Three Months Ended March 31,         December 31,
                                                          ----------------------------------
                                                              2000                1999                1999
                                                         --------------      --------------       -----------
<S>                                                      <C>                 <C>                  <C>
Securities Sold Under Repurchase Agreements:
        Average                                            $ 25,420             $ 17,235           $ 20,488
        Period-End                                           24,438               16,533             28,091
        Maximum Month-End Balance During Period              25,019               19,734             30,309
Interest Rate
        Average                                                4.66%                3.77%              4.04%
        Period-End                                             4.80                 4.10               3.38
</TABLE>

        The Corporation, through one of its subsidiaries, has available a line
of credit with the Federal Home Loan Bank of Dallas which allows the subsidiary
to borrow on a collateralized basis at a fixed term. At December 31, 1999, the
subsidiary had borrowed $4,000,000, bearing an interest rate of 5.43% and having
a maturity of April 2000 under the line of credit.

                                                                              13
<PAGE>

NOTE 8 - Other Non-Interest Expense

     The significant components of other non-interest expense are as follows (in
thousands):

<TABLE>
<CAPTION>
                                                                                                       Year Ended
                                                        Three Months Ended March 31,                   December 31,
                                                    ------------------------------------
                                                       2000                     1999                      1999
                                                    -----------              -----------               ----------
<S>                                                 <C>                      <C>                       <C>
Business Development                                 $   176                    $   124                    $   602
Legal and Professional Fees                              188                        167                        619
Printing and Supplies                                    100                        105                        379
Regulatory Fees and Assessments                           60                         46                        183
Other                                                    528                        600                      1,875
                                                     -------                    -------                    -------

     Total                                           $ 1,052                    $ 1,042                    $ 3,658
                                                     =======                    =======                    =======
</TABLE>

NOTE 9 - Income Taxes

     Federal income taxes included in the consolidated balance sheets were as
follows (in thousands):

<TABLE>
<CAPTION>
                                                                  March 31,                     December 31,
                                                   -------------------------------
                                                       2000               1999                      1999
                                                   -----------        ------------               ----------
<S>                                                <C>                <C>                        <C>
Current Tax Asset (Liability)                      $ (1,335)           $ (1,117)                 $     (70)
Deferred Tax Asset                                    2,470               1,130                      2,257
                                                     ------              ------                      -----

     Total Included in Other Assets/
         (Other Liabilities)                       $  1,135            $     13                  $   2,187
                                                     ======              ======                      =====
</TABLE>

     The deferred tax asset at March 31, 2000 of $2,470,000 included $776,000
related to unrealized losses on Available-for-Sale Securities.

     The components of income tax expense were as follows (in thousands):

<TABLE>
<CAPTION>
                                                                                                  Year Ended
                                                   Three Months Ended March 31,                   December 31,
                                                   ----------------------------
                                                      2000                1999                        1999
                                                   ---------           ---------                   ----------
<S>                                                <C>                 <C>                         <C>
Federal Income Tax Expense
   Current                                         $ 1,340             $  1,127                    $ 5,278
   Deferred                                            (48)                 (10)                      (385)
                                                    ------              -------                     ------

       Total Federal Income Tax Expense            $ 1,292             $  1,117                    $ 4,893
                                                    ======              =======                     ======

       Effective Tax Rates                            34.5%                34.7%                      34.7%
                                                    ======              =======                     ======
</TABLE>

        The reasons for the difference between income tax expense and the amount
computed by applying the statutory federal income tax rate to operating earnings
are as follows (in thousands):

<TABLE>
<CAPTION>
                                                                                                  Year Ended
                                                    Three Months Ended March 31,                  December 31,
                                                   ------------------------------
                                                      2000                1999                        1999
                                                   -----------         ----------                  ----------
<S>                                                <C>                 <C>                         <C>
Federal Income Taxes at Statutory
   Rate of 34.3%                                   $ 1,285              $ 1,102                    $ 4,847
Effect of Tax Exempt Interest Income                    (2)                  (4)                       (12)
Non-deductible Expenses                                 15                   12                         64
Other                                                   (6)                   7                         (6)
                                                   -------              -------                   --------

   Income Taxes Per Income Statement               $ 1,292              $ 1,117                    $ 4,893
                                                   =======              =======                   ========
</TABLE>

14
<PAGE>

NOTE 9 - Income Taxes (con't)
------

<TABLE>
<CAPTION>
                                                                                                  Year Ended
                                                          Three Months Ended March 31,            December 31,
                                                         ------------------------------
                                                            2000                1999                  1999
                                                         ---------            ---------            ----------
<S>                                                      <C>                  <C>                  <C>
Federal Deferred Tax Assets:
    Allowance for Loan Losses                              $ 1,437              $ 1,183             $ 1,357
    Valuation Reserves - Other Real Estate                       2                  -0-                 -0-
    Interest on Non-accrual Loans                              180                  166                 189
    Deferred Compensation                                      455                  411                 458
    Unrealized Losses on Available-for-Sale Securities         775                  -0-                 611
    Other                                                       18                   19                  19
                                                          --------             --------         -----------


    Gross Federal Deferred Tax Assets                        2,867                1,779               2,634
                                                          --------             --------         -----------

Federal Deferred Tax Liabilities:
    Depreciation and Amortization                              325                  298                 321
    Accretion                                                   72                   68                  56
    Unrealized Gains on Available-for-Sale Securities          -0-                  141                 -0-
    Other                                                      -0-                  142                 -0-
                                                          --------             --------         -----------

    Gross Federal Deferred Tax Liabilities                     397                  649                 377
                                                          --------             --------         -----------

    Net Deferred Tax Asset                                 $ 2,470              $ 1,130             $ 2,257
                                                          ========             ========         ===========
</TABLE>

NOTE 10 - Related Party Transactions

         The Subsidiary Banks have transactions made in the ordinary course of
business with certain of its officers, directors and their affiliates. All loans
included in such transactions are made on substantially the same terms,
including interest rate and collateral, as those prevailing at the time for
comparable transactions with other persons. Total loans outstanding to such
parties amounted to approximately $3,488,000 at December 31, 1999.

NOTE 11 - Commitments and Contingent Liabilities

         In the normal course of business, there are various outstanding
commitments and contingent liabilities, such as guarantees and commitments to
extend credit, which are not reflected in the financial statements. No losses
are anticipated as a result of these transactions. Commitments are most
frequently extended for real estate, commercial and industrial loans.

         At March 31, 2000, outstanding documentary and standby letters of
credit totaled $3,353,000 and commitments to extend credit totaled $113,787,000.

NOTE 12 - Stock Option Plans

         The Corporation has two Incentive Stock Option Plans, the 1993 Plan and
the 1997 Plan, ("the Plans"). Each Plan has reserved 600,000 shares (adjusted
for two-for-one stock splits in 1995 and 1997) of common stock for grants
thereunder. The Plans provide for the granting to executive management and other
key employees of Summit Bancshares, Inc. and subsidiaries incentive stock
options, as defined under the current tax law. The options under the Plans will
be exercisable for ten years from the date of grant and generally vest ratably
over a five year period. Options will be and have been granted at prices which
will not be less than 100-110% of the fair market value of the underlying common
stock at the date of grant.

         The Corporation applies APB Opinion No. 25 and related Interpretations
in accounting for its plans. Since the option prices are considered to
approximate fair market value at date of grant, no compensation expense has been
reported. Had compensation cost for these plans been determined consistent with
Statement of Financial Accounting Standards No. 123, "Accounting for Stock-Based
Compensation" the Corporation's net income and earnings per share would have
been reduced by insignificant amounts on a proforma basis for the year ended
December 31, 1999, or the three months ended March 31, 2000.

                                                                              15
<PAGE>

NOTE 12 - Stock Option Plans (con't)
-------

         The following is a summary of transactions during the periods
presented:

                                                 Shares Under Option
                                      ----------------------------------------
                                       Three Months
                                           Ended                Year Ended
                                      March 31, 2000         December 31, 1999
                                      ---------------        -----------------

Outstanding, Beginning of Period           445,497                461,717
Additional Options Granted During
  the Period                                    -0-                49,500
Forfeited During the Period                 (2,000)                (2,400)
Exercised During the Period                (70,038)               (63,320)
                                           -------                -------

  Outstanding, End of Period               373,459                445,497
                                           =======                =======

         Options outstanding at March 31, 2000 ranged in price from $3.00 to
$19.25 per share with a weighted average exercise price of $9.59 and 290,027
shares exercisable. At March 31, 2000, there remained 484,800 shares reserved
for future grants of options under the 1997 Plan. There are no shares available
for grant under the 1993 Plan.

NOTE 13 - Employee Benefit Plans
-------

Pension Plan
------------

         The Corporation had a defined benefit pension plan covering
substantially all of its employees. The benefits were based on years of service
and the employee's compensation history. The employee's compensation used in the
benefit calculation were the highest average for any five consecutive years of
employment within the employee's last ten years of employment.

         Effective August 31, 1998, the accrual of benefits under this plan were
suspended. In February 1999, the Board of Directors chose to terminate the plan
effective April 15, 1999. The assets held in trust were distributed to the plan
participants in mid-1999 under terms of the plan.

         During 1999 the Corporation expensed $321,000 in support of the plan.

401(k) Plan
-----------

         The Corporation implemented a 401(k) plan in December 1997 covering
substantially all employees. The Corporation made no contribution to this plan
in 1999 or 1998. In 2000, the Corporation will make matching contributions to
the participant's deferrals of compensation up to 100% of the employee
contributions not to exceed 6% of the employee's annual compensation. For the
first three months of 2000, the Corporation expensed $93,000 in support of the
plan.

Management Security Plan
------------------------

         In 1992, the Corporation established a Management Security Plan to
provide key employees with retirement, death or disability benefits in addition
to those provided by the Pension Plan. The expense charged to operations for
such future obligations was $50,000 and $54,000 during the first three months of
2000 and 1999, respectively, and $223,000 for the year 1999.

Other Post Retirement Benefits
------------------------------

         The Corporation provides certain health care benefits for certain
retired employees who bear all costs of these benefits. These benefits are
covered under the "Consolidated Omnibus Budget Reconciliation Act" (COBRA).

16
<PAGE>

NOTE 14 - Earnings per Share
-------

         The following data shows the amounts used in computing earnings per
share and the weighted average number of shares of dilutive potential common
stock.

<TABLE>
<CAPTION>
                                                               March 31,                          December 31,
                                                  ------------------------------------
                                                      2000                    1999                   1999
                                                  ------------            ------------            ------------
<S>                                               <C>                     <C>                     <C>
Net income                                        $      2,450            $      2,096            $      9,222
                                                  ============            ============            ============
Weighted average number of common
    shares used in Basic EPS                         6,384,238               6,460,003               6,410,762
Effect of dilutive stock options                       163,669                 254,682                 244,787
                                                  ------------            ------------            ------------
Weighted number of common shares
    and dilutive potential common
    stock used in Diluted EPS                        6,547,907               6,714,685               6,655,549
                                                  ============            ============            ============
</TABLE>

NOTE 15 - Financial Instruments with Off-Balance Sheet Risk
-------

         The Corporation is a party to financial instruments with off-balance
sheet risk in the normal course of business to meet the financing needs of its
customers. These financial instruments include loan commitments, standby letters
of credit and documentary letters of credit. The instruments involve, to varying
degrees, elements of credit and interest rate risk in excess of the amount
recognized in the financial statements.

         The Corporation's exposure to credit loss in the event of
non-performance by the other party of these loan commitments and standby letters
of credit is represented by the contractual amount of those instruments. The
Corporation uses the same credit policies in making commitments and conditional
obligations as it does for on-balance sheet instruments.

         The total contractual amounts of financial instruments with off-balance
sheet risk are as follows (in thousands):

                                                     March 31,
                                             -------------------------
                                               2000            1999
                                             ---------       ---------

Financial Instruments Whose
     Contract Amounts Represent
          Credit Risk:

          Commitments to Extend Credit        $113,787       $104,189

          Documentary and Standby
             Letters of Credit                   3,353          3,790

         Since many of the loan commitments may expire without being drawn upon,
the total commitment amount does not necessarily represent future cash
requirements. The Corporation evaluates each customer's credit worthiness on a
case-by-case basis. The amount of collateral obtained, if deemed necessary by
the Corporation upon extension of credit, is based on management's credit
evaluation of the counterparty. Collateral held varies but may include accounts
receivable, inventory, property, plant and equipment, owner occupied real estate
and income-producing commercial properties.

         The credit risk involved in issuing letters of credit is essentially
the same as that involved in extending loan facilities to customers.

NOTE 16 - Concentrations of Credit Risk
-------

         The Subsidiary Banks grant commercial, consumer and real estate loans
in their direct market which is defined as Fort Worth and its surrounding area.
The Board of Directors of each Subsidiary Bank monitors concentrations of credit
by purpose, collateral and industry at least quarterly. Certain limitations for
concentration are set by the Boards. Additional loans in excess of these limits
must have prior approval of the bank's directors' loan committee. Although its
Subsidiary Banks have diversified loan portfolios, a substantial portion of its
debtors' abilities to honor their contracts is dependent upon the strength of
the local and state economy.

NOTE 17 - Litigation
-------

         Certain of the Subsidiary Banks are involved in legal actions arising
in the ordinary course of business. It is the opinion of management, after
reviewing such actions with outside legal counsel, that the settlement of these
matters will not materially affect the Corporation's financial position.

                                                                              17
<PAGE>

NOTE 18 - Stock Repurchase Plan
-------

         On April 18, 2000, the Board of Directors approved a stock repurchase
plan. The plan authorized management to purchase up to 318,982 shares of the
Corporation's common stock over the next twelve months through the open market
or in privately negotiated transactions in accordance with all applicable state
and federal laws and regulations.

         In the first three months of 2000, 51,644 shares were purchased by the
Corporation through a similar repurchase plan through the open market.

NOTE 19 - Subsequent Event
-------

         On April 18, 2000, the Board of Directors of the Corporation approved a
quarterly dividend of $.10 per share to be paid on May 15, 2000 to shareholders
of record on May 1, 2000.

NOTE 20 - Fair Values of Financial Instruments
-------

         The following methods and assumptions were used by the Corporation in
estimating its fair value disclosures for financial instruments:

         Cash and cash equivalents: The carrying amounts reported in the balance
         sheet for cash and due from banks and federal funds sold approximate
         those assets' fair values. Investment securities (including
         mortgage-backed securities): Fair values for investment securities are
         based on quoted market prices, where available. If quoted market prices
         are not available, fair values are based on quoted market prices of
         comparable instruments.

         Loans: For variable-rate loans, fair values are based on carrying
         values. The fair values for fixed rate loans such as mortgage loans
         (e.g., one-to-four family residential) and installment loans are
         estimated using discounted cash flow analysis. The carrying amount of
         accrued interest receivable approximates its fair value.

         Deposit liabilities: The fair value disclosed for interest bearing and
         noninterest-bearing demand deposits, passbook savings, and certain
         types of money market accounts are, by definition, equal to the amount
         payable on demand at the reporting date or their carrying amounts. Fair
         values for fixed-rate certificates of deposit are estimated using a
         discounted cash flow calculation that applies interest rates currently
         being offered on certificates to a schedule of aggregated expected
         monthly maturities on time deposits.

         Short-term borrowings: The carrying amounts of borrowings under
         repurchase agreements approximate their fair values.

18
<PAGE>

NOTE 20 - Fair Values of Financial Instruments (cont'd.)
-------

       The estimated fair values of the Corporation's financial instruments are
as follows (in thousands):

<TABLE>
<CAPTION>
                                                                                March 31,
                                                      -----------------------------------------------------------
                                                              2000                                     1999
                                                    ------------------------                  ---------------------
                                                    Carrying             Fair                Carrying           Fair
                                                     Amount              Value                Amount            Value
                                                     ------              -----                ------            -----
       <S>                                          <C>                <C>                   <C>             <C>
       Financial Assets
         Cash and due from banks                    $ 26,506           $ 26,506              $ 23,371        $ 23,371
         Federal funds sold                           25,820             25,820                16,800          16,800
         Securities                                  145,304            144,617               148,297         148,377
         Loans                                       370,125            366,096               317,795         321,144
         Reserve for loan losses                      (5,440)            (5,440)               (4,749)         (4,749)

       Financial Liabilities
         Deposits                                    501,824            501,362               455,383         455,868
         Short Term Borrowings                        28,438             28,441                16,533          16,533

       Off-balance Sheet Financial Instruments
         Loan commitments                                               113,787                               104,189
         Letters of credit                                                3,353                                 3,790
</TABLE>

NOTE 21 - Comprehensive Income
-------

       The Corporation has adopted Financial Accounting Standards Board ("FASB")
Statement of Financial Accounting Standards No. 130 "Reporting Comprehensive
Income". This new standard requires an entity to report and display
comprehensive income and its components. Comprehensive income is as follows (in
thousands):

<TABLE>
<CAPTION>
                                                     For the Three Months Ended March 31,               Year Ended
                                                     ------------------------------------
                                                             2000            1999                    December 31, 1999
                                                           --------        --------                  -----------------
       <S>                                           <C>                  <C>                        <C>
       Net Income                                         $ 2,450         $ 2,096                        $   9,222
       Other Comprehensive Income:
         Unrealized gain (loss) on
         Available-for-Sale securities, net of tax           (312)           (287)                          (1,746)
                                                          -------         -------                        ---------

           Comprehensive Income                           $ 2,138         $ 1,809                        $   7,476
                                                          =======         =======                        =========
</TABLE>

                                                                              19
<PAGE>

Item 2 - Management's Discussion and Analysis of Financial Condition and Results
--------------------------------------------------------------------------------
of Operations
-------------

Summary
-------

         Management's Discussion and Analysis of Financial Condition and Results
of Operations of the Corporation analyzes the major elements of the
Corporation's consolidated balance sheets and statements of income. This
discussion should be read in conjunction with the consolidated financial
statements and accompanying notes.

         Net income for the first quarter of 2000 was $2,450,000, or $.37
diluted earnings per share, compared with $2,096,000, or $.31 diluted earnings
per share, for the first quarter of 1999. Per share amounts are based on average
shares outstanding of 6,547,907 for the first quarter of 2000 and 6,714,685 for
the comparable period of 1999 adjusted to reflect stock options granted. On a
per share basis, diluted earnings per share increased 19.4% over the first
quarter of the prior year.

         Outstanding loans at March 31, 2000 of $370.1 million represented an
increase of $51.3 million, or 16.1%, over March 31, 1999 and an increase of
$14.7 million, or 4.1%, from December 31, 1999.

         Total deposits at March 31, 2000 of $501.8 million represented an
increase of $46.4 million, or 10.2%, over March 31, 1999 and an increase of
$21.3 million, or 4.4%, from December 31, 1999.

         In the first quarter, net interest income increased 14.9% over the
previous year. An increase in non-interest expense of 6.8% partially offset the
increase in net interest income.

         The following table summarizes the Corporation's performance for the
three months ended March 31, 2000 and 1999 (tax equivalent basis and dollars in
thousands).

<TABLE>
<CAPTION>
                                                              Three Months Ended
                                                                   March 31,
                                                         ----------------------------
                                                          2000                  1999
                                                          ----                  ----
<S>                                                   <C>                   <C>
Interest Income                                       $ 11,153              $  9,399
Interest Expense                                         4,091                 3,254
                                                        ------                ------

    Net Interest Income                                  7,062                 6,145
Provision for Loan Loss                                    232                   220
                                                        ------                ------

    Net Interest Income After
       Provision for Loan Loss                           6,830                 5,925
Non-Interest Income                                        908                 1,031
Non-Interest Expense                                     3,993                 3,738
                                                        ------                ------

    Income Before Income Tax                             3,745                 3,218
Income Tax Expense                                       1,295                 1,122
                                                        ------                ------
       Net Income                                     $  2,450               $ 2,096
                                                        ======                ======

Net Income per Share -
    Basic                                             $    .38               $   .33
    Diluted                                                .37                   .31

Return on Average Assets                                  1.74%                 1.63%

Return on Average Shareholders' Equity                   20.06%                18.27%
</TABLE>

20
<PAGE>

Summary of Earning Assets and Interest-Bearing Liabilities

         The following schedule presents average balance sheets that highlight
earning assets and interest-bearing liabilities and their related rates earned
and paid for the first quarter of 2000 and 1999 (rates on tax equivalent basis).

<TABLE>
<CAPTION>
                                                              Three Months ended March 31,
                                              ---------------------------------------------------------------
                                                     2000                                        1999
                                         ---------------------------                 ---------------------------
                                       Average                 Average              Average                 Average
                                      Balances    Interest   Yield/Rate            Balances     Interest   Yield/Rate
                                      --------    --------   ----------           ----------    --------   ----------
                                                                 (Dollars in Thousands)
<S>                                   <C>         <C>        <C>                  <C>           <C>         <C>
Earning Assets:
  Federal Funds Sold                  $  13,068   $    184      5.68%             $  25,408     $    303       4.84%
  Investment Securities (Taxable)       148,404      2,279      6.18                145,391        2,072       5.78
  Investment Securities (Tax-exempt)        491          9      7.29                    890           15       7.06
  Loans, Net of Unearned Discount(1)    364,750      8,681      9.57                311,326        7,009       9.13
                                      ---------   --------                        ---------      -------
    Total Earning Assets                526,713     11,153      8.52                483,015        9,399       7.89
                                                  --------                                       -------

Non-interest Earning Assets:
  Cash and Due From Banks                24,115                                      23,278
  Other Assets                           19,293                                      18,890
  Allowance for Loan Losses              (5,309)                                     (4,789)
                                      ---------                                   ---------
    Total Assets                      $ 564,812                                   $ 520,394
                                      =========                                   =========

Interest-Bearing Liabilities:
  Interest-Bearing Transaction
    Accounts and Money Market Funds   $ 159,846      1,432      3.60              $ 154,753        1,212       3.18
  Savings                                96,059      1,059      4.43                 82,923          815       3.99
  Savings Certificates                   58,607        727      4.99                 53,227          614       4.68
  Certificates of Deposit
    $100,000 or more                     39,275        512      5.24                 36,099          443       4.98
  Other Time                                778         10      5.38                    778           10       5.22
  Other Borrowings                       29,483        351      4.79                 17,235          160       3.77
                                      ---------     ------                        ---------       ------
    Total Interest-Bearing Liabilities  384,048      4,091      4.28                345,015        3,254       3.83
                                                    ------                                        ------

Non-interest Bearing Liabilities:
  Demand Deposits                       130,197                                     126,505
  Other Liabilities                       1,460                                       2,360
  Shareholders' Equity                   49,107                                      46,514
                                      ---------                                   ---------
    Total Liabilities and
      Shareholders' Equity            $ 564,812                                   $ 520,394
                                      =========                                   =========
Net Interest Income and Margin

 (Tax-equivalent Basis)(2)                          $7,062      5.39                              $6,145       5.16
                                                    ======                                        ======
</TABLE>

(1)  Loan interest income includes fees and loan volumes include loans on non-
     accrual.
(2)  Presented on a tax equivalent basis ("T/E") using a federal income tax rate
     of 34% in both years.

                                                                              21
<PAGE>

Net Interest Income
-------------------

     Net interest income (tax equivalent) for the first quarter of 2000 was
$7,062,000 which represented an increase of $917,000, or 14.9%, over the first
quarter of 1999. This increase was heavily contributed to by a 17.2% increase in
average loans for the first quarter of 2000 versus the same quarter last year.
This increase reflects a 23 basis point increase in net interest margin for the
period compared to the first quarter of 1999.

     The following table summarizes the effects of changes in interest rates,
average volumes of earning assets and interest bearing liabilities on net
interest income ( tax equivalent) for the periods ended March 31, 2000 and 1999.

<TABLE>
<CAPTION>
                                                                    ANALYSIS OF CHANGES IN NET INTEREST INCOME
                                                                              (Dollars in Thousands)

                                                       1st Qtr. 2000 vs. 1st Qtr. 1999         1st Qtr. 1999 vs. 1st Qtr. 1998
                                                             Increase (Decrease)                     Increase (Decrease)
                                                             Due to Changes in:                      Due to Changes in:
                                                    ------------------------------------     -----------------------------------
                                                      Volume       Rate          Total        Volume        Rate         Total
                                                      ------       ----          -----        ------        ----         -----
<S>                                                 <C>         <C>           <C>         <C>            <C>          <C>
Interest Earning Assets:
   Federal Funds Sold                               $  (403)    $   284       $   (119)   $      (194)   $   (62)     $   (256)
   Investment Securities (Taxable)                       48         159            207          1,115       (666)          449
   Investment Securities (Tax-exempt)                    (9)          3             (6)            (4)        (1)           (5)
   Loans, Net of Unearned Discount                    1,304         368          1,672          2,555     (2,225)          330
                                                    -------     -------       --------    -----------    -------      --------

   Total Interest Income                                940         814          1,754          3,472     (2,954)          518
                                                    -------     -------       --------    -----------    -------      --------

Interest-Bearing Liabilities:
   Deposits                                             312         334            646          1,310     (1,302)            8
   Other Borrowings                                     138          53            191            132       (135)           (3)
                                                    -------     -------       --------    -----------    -------      --------


   Total Interest Expense                               450         387            837          1,442     (1,437)            5
                                                    -------     -------       --------    -----------    -------      --------

Net Interest Income                                 $   490     $   427       $    917    $     2,030    $(1,517)     $    513
                                                    =======     =======       ========    ===========    =======      ========
</TABLE>


Allowance for Loan Losses and Non-Performing Assets
---------------------------------------------------

     The Corporation's allowance for loan losses was $5,440,000, or 1.47% of
total loans, as of March 31, 2000 compared to $4,749,000, or 1.49% of total
loans, as of March 31, 1999.

     Transactions in the allowance for loan losses are summarized as follows (in
thousands):

<TABLE>
<CAPTION>
                                                          Three Months Ended
                                                              March 31,
                                                     ---------------------------
                                                        2000            1999
                                                     ----------       ----------
<S>                                                  <C>              <C>
Balance, Beginning of Period                         $    5,169       $    4,724
Provisions, Charged to Income                               232              220

Loans Charged-Off                                           (31)            (234)
Recoveries of Loans Previously
      Charged-Off                                            70               39
                                                     ----------       ----------
              Net Charge-Off's (Recoveries)                 (39)             195
                                                     ----------       ----------

Balance, End of Period                               $    5,440       $    4,749
                                                     ==========       ==========
</TABLE>

     For the three months ended March 31, 2000 and 1999, net charge-off's
(recoveries) were (.01)% and .06%, respectively, not annualized.

     The following table summarizes the non-performing assets as of the end of
the last five quarters (in thousands).

<TABLE>
<CAPTION>
                                   March 31,       December 31,      September 30,       June 30,        March 31,
                                     2000              1999              1999              1999            1999
                                   ---------       ------------      -------------       --------        ---------
<S>                                <C>             <C>               <C>                 <C>             <C>
Non-Accrual Loans                    $ 2,518           $ 2,450            $ 2,899         $  2,952        $  4,207
Renegotiated Loans                         2                 3
Other Real Estate Owned                1,945             1,947              1,494            1,467           1,711
                                     -------           -------            -------         --------         -------

  Total Non-Performing Assets        $ 4,465           $ 4,400            $ 4,393         $  4,419         $ 5,918
                                     =======           =======            =======         ========         =======
</TABLE>

22
<PAGE>

Allowance for Loan Losses and Non-Performing Assets (con't)
---------------------------------------------------

<TABLE>
<CAPTION>
                                      March 31,         December 31,        September 30,       June 30,           March 31,
                                        2000                1999                1999              1999               1999
                                      ---------         ------------        -------------       --------           ---------
<S>                                   <C>               <C>                 <C>                 <C>                <C>
As a Percent of:
   Total Assets                           .77%                .78%                 .80%               .84%             1.14%
   Total Loans and Other Assets          1.20                1.23                 1.26               1.30              1.85

Loans Past Due 90 days or

   More and Still Accruing             $  105             $   -0-              $   -0-           $     17            $    7
</TABLE>

        Non-accrual loans to total loans were .68% at March 31, 2000 and non-
performing assets were 1.20% of loans and other real estate owned at the same
date.

        As of March 31, 2000, loans to three borrowers represent approximately
88% of the loans on non-accrual and the largest of these borrowers is current as
to payment of principal and interest on its loan. The other two credits have
significant SBA guarantees.

        The following table summarizes the relationship between non-performing
loans, criticized loans and the allowance for loan losses (dollars in
thousands).

<TABLE>
<CAPTION>
                                      March 31,         December 31,        September 30,       June 30,           March 31,
                                        2000                1999                1999              1999               1999
                                      ---------         ------------        -------------       --------           ---------
<S>                                   <C>               <C>                 <C>                 <C>                <C>
Non-Performing Loans                  $ 2,520           $   2,453            $   2,899          $   2,952           $ 4,207
Criticized Loans                       12,367              11,804                9,196              9,755             9,597
Allowance for Loan Losses               5,440               5,169                5,044              4,895             4,749
Allowance for Loan Losses
    as a Percent of:
      Non-Performing Loans                216%                211%                 174%               166%              129%
      Criticized Loans                     44                  44                   55                 50                50
</TABLE>

Non-interest Income

        The major component of non-interest income is service charges on
deposits. Other service fees are the majority of other non-interest income.

         The following table reflects the changes in non-interest income during
the periods presented (dollars in thousands).

<TABLE>
<CAPTION>
                                                            Three Months Ended March 31,
                                                       --------------------------------------
                                                        2000           1999          % Change
                                                       -------       --------        --------
<S>                                                    <C>           <C>             <C>
Service Charges on Deposit Accounts                    $   482        $   478            .8%
Non-recurring Income                                        61            198            --
Other Non-interest Income                                  365            355           2.8
                                                           ---            ---

  Total Non-interest Income                            $   908        $ 1,031         (11.9%)
                                                        ======          =====
</TABLE>

        Non-recurring income in the current quarter is primarily interest
recovered on non-accrual loans of prior years of which interest was collected in
the current quarter.

                                                                              23
<PAGE>

Non-interest Expense

       Non-interest expenses include all expenses other than interest expense,
provision for loan losses and income tax expense.

       The following table summarizes the changes in non-interest expense during
the periods presented (dollars in thousands).

<TABLE>
<CAPTION>
                                                          Three Months Ended March 31,
                                                    ----------------------------------------
                                                      2000            1999          % Change
                                                    --------         -------        --------
<S>                                                 <C>              <C>            <C>
Salaries & Employee Benefits                        $ 2,357          $ 2,141           10.1%
Occupancy Expense - Net                                 258              245            5.3
Furniture and Equipment Expense                         338              283           19.4
Other Real Estate (Income) Expense - Net                (12)              27             --
Other Expenses:
    Business Development                                 176             124           41.9
    Insurance - Other                                     27              35          (22.9)
    Legal & Professional Fees                            188             167           12.6
    Taxes - Other                                         56              65          (13.8)
    Postage & Courier                                     83              78            6.4
    Printing & Supplies                                  100             105           (5.0)
    Regulatory Fees & Assessments                         60              46           30.4
    Other Operating Expenses                             362             422          (14.2)
                                                    --------         -------          -----

      Total Other Expenses                             1,052           1,042            1.0
                                                    --------         -------          -----

      Total Non-interest Expense                    $  3,993         $ 3,738            6.8%
                                                    ========         =======          =====
</TABLE>

       Total non-interest expense increased 6.8% in the first quarter of 2000
over 1999, reflecting increases in salaries and benefits, furniture and
equipment expense, business development expense and legal and professional
expense. As a percent of average assets, non-interest expenses annualized were
2.83% in the first quarter of 2000 and 2.87% in the same period of 1999. The
"efficiency ratio" (non-interest expenses divided by total non-interest income
plus net interest income) was 50.1% for the first quarter of 2000. These
measures of operating efficiency compare very favorably to other financial
institutions in the Corporation's peer group.

       The increase in salaries and employee benefits for the first quarter of
2000 is due to salary merit increases and additions to staff. The average number
of full-time equivalent employees increased by 9.5 to an average full-time
equivalent of 179 from the number in the first quarter of last year. This
increase in number of employees was required because of growth of the Company
over the past year.

       The increase in furniture and equipment expense is primarily due to
increased repairs and increased expense for service contracts.

       Legal and professional fees increased due to increases in audit fees and
various consultant fees.

       The increase in business development expense is due to increased
advertising expense.

24
<PAGE>

Interest Rate Sensitivity
-------------------------

     Interest rate sensitivity is the relationship between changes in market
interest rates and net interest income due to the repricing characteristics of
assets and liabilities.

     The following table, commonly referred to as a "static gap report",
indicates the interest rate sensitivity position at March 31, 2000 and may not
be reflective of positions in subsequent periods (dollars in thousands):

<TABLE>
<CAPTION>
                                                                                   Total             Repriced
                                                                                    Rate                After
                                            Matures or Reprices within:           Sensitive           1 Year or
                                     -------------------------------------
                                       30 Days       31-180       181 to           One Year         Non-interest
                                       or Less        Days       One Year           or Less           Sensitive           Total
                                     ---------    ---------      --------         ---------         ----------        ----------
<S>                                  <C>          <C>            <C>              <C>               <C>                <C>
Earning Assets:
  Loans                              $ 211,763    $  20,183      $ 17,661         $ 249,607         $   120,518        $ 370,125
  Investment Securities                  3,602        6,764        16,832            27,198             118,106          145,304
  Federal Funds Sold                    25,820          -0-           -0-            25,820                 -0-           25,820
                                     ---------    ---------      --------         ---------         -----------        ---------

   Total Earning Assets                241,185       26,947        34,493           302,625             238,624          541,249
                                     ---------    ---------      --------         ---------         -----------        ---------

Interest Bearing Liabilities:
  Interest-Bearing Transaction
    Accounts and Savings               266,822          -0-           -0-           266,822                 -0-          266,822
  Certificate of Deposits
    >$100,000                            7,616       18,785         8,253            34,654               7,018           41,672
  Other Time Deposits                    6,440       23,521        15,144            45,105              14,836           59,941
  Short Term Borrowings                 28,438          -0-           -0-            28,438                 -0-           28,438
                                     ---------    ---------      --------         ---------         -----------        ---------

   Total Interest Bearing
    Liabilities                        309,316       42,306        23,397           375,019              21,854          396,873
                                     ---------    ---------      --------         ---------         -----------        ---------

Interest Sensitivity
 Gap                                 $ (68,131)   $ (15,359)     $ 11,096         $ (72,394)        $   216,770        $ 144,376
                                     ==========   =========      ========         =========         ===========        =========
Cumulative Gap                       $ (68,131)   $ (83,490)     $(72,394)
                                     ==========   =========      ========

Cumulative Gap to
 Total Earning Assets                    (12.6%)      (15.4%)       (13.4%)

Cumulative Gap to
 Total Assets                            (11.7%)      (14.3%)       (12.4%)
</TABLE>

     The preceding static gap report reflects a cumulative liability sensitive
position during the one year horizon. An inherent weakness of this report is
that it ignores the relative volatility any one category may have in relation to
other categories or market rates in general. For instance, the rate paid on NOW
accounts typically moves slower than the three month T-Bill. Management attempts
to capture this relative volatility by utilizing a simulation model with a "beta
factor" adjustment which estimates the volatility of rate sensitive assets
and/or liabilities in relation to other market rates.

     Beta factors are an estimation of the long term, multiple interest rate
environment relation between an individual account and market rates in general.
For instance, NOW, savings and money market accounts, which are repriceable
within 30 days will have considerably lower beta factors than variable rate
loans and most investment categories. Taking this into consideration, it is
quite possible for a bank with a negative cumulative gap to total asset ratio to
have a positive "beta adjusted" gap risk position.

     As a result of applying the beta factors established by management to the
earning assets and interest bearing liabilities in the static gap report via a
simulation model, the negative cumulative gap to total assets ratio at one year
of (12.4%) was reversed to a positive 8.6% "beta adjusted" gap position.

     Management feels that the "beta adjusted" gap risk technique more
accurately reflects the Corporation's gap position.

Capital
-------

     The Federal Reserve Board has guidelines for capital to total assets
(leverage) and capital standards for bank holding companies. The Comptroller of
the Currency also has similar guidelines for national banks. These guidelines
require a minimum level of Tier I capital to total assets of 3 percent. A
banking organization operating at or near these levels is expected to have well-
diversified risk, excellent asset quality, high liquidity, good earnings and in
general be considered a strong banking organization. Organizations not meeting
these characteristics are expected to operate well above these minimum capital
standards. Thus, for all but the most highly rated organizations, the minimum
Tier I leverage ratio is to be 3 percent plus minimum additional cushions of at
least 100 to 200 basis points. At the discretion of the regulatory authorities,
additional capital may be required.

                                                                              25
<PAGE>

Capital (con't)
-------

     At March 31, 2000, total capital to total assets was 8.51%.

     The Federal Reserve Board and Comptroller of the Currency also have risk-
adjusted capital adequacy guidelines. Capital under these new guidelines is
defined as Tier I and Tier II. At Summit Bancshares, Inc. the only components of
Tier I and Tier II capital are shareholders' equity and a portion of the
allowance for loan losses, respectively.

     The guidelines also stipulate that four categories of risk weights (0, 20,
50 and 100 percent), primarily based on the relative credit risk of the
counterparty, be applied to the different types of balance sheet assets. Risk
weights for all off-balance sheet exposures are determined by a two-step process
whereby the face value of the off-balance sheet item is converted to a "credit
equivalent amount" and that amount is assigned to the appropriate risk category.

     The regulatory minimum ratio for total qualifying capital is 8.00% of which
4.00% must be Tier I capital. At March 31, 2000, the Corporation's Tier I
capital represented 13.3% of risk weighted assets and total qualifying capital
(Tier I and Tier II) represented 14.5% of risk weighted assets. Both ratios are
well above current regulatory guidelines.

     Also, as of March 31, 2000, the Corporation and its Subsidiary Banks met
the criteria for classification as a "well-capitalized" institution under the
rules of the Federal Deposit Insurance Corporation Improvement Act of 1991
("FDICIA").

Forward-Looking Statements
--------------------------

     The Corporation may from time to time make forward-looking statements
(within the meaning of the Private Securities Litigation Reform Act of 1995)
with respect to earnings per share, credit quality, expected Year 2000
compliance program, corporate objectives and other financial and business
matters. The Corporation cautions the reader that these forward-looking
statements are subject to numerous assumptions, risks and uncertainties,
including economic conditions; actions taken by the Federal Reserve Board;
legislative and regulatory actions and reforms; competition; as well as other
reasons, all of which change over time. Actual results may differ materially
from forward-looking statements.

26
<PAGE>

                          PART II - OTHER INFORMATION

Item 1.  Legal Proceedings

         Not applicable

Item 2.  Change in Securities

         Not applicable

Item 3.  Defaults Upon Senior Securities

         Not applicable

Item 4.  Submission of Matters to a Vote of Security Holders

         Not applicable

Item 5.  Other Information

         Not applicable

Item 6.  Exhibits and Reports on Form 8-K

         (a)  Exhibits

         11   Computation of Earnings Per Common Share

         27   Financial Data Schedule

         (b)  No Reports on Form 8-K were filed during the period ending
              March 31, 2000

                                                                              27
<PAGE>

                                  SIGNATURES


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.
                                               Registrant


Date: April 28, 2000                By: /s/  Philip E. Norwood
      --------------                    ---------------------------
                                        Philip E. Norwood, Chairman

Date: April 28, 2000                By: /s/  Bob G. Scott
      --------------                    ---------------------------
                                        Bob G. Scott, Executive Vice President
                                            and Chief Operating Officer
                                            (Chief Accounting Officer)

28
<PAGE>

                                 EXHIBIT INDEX

Exhibit                                                                 Page No.
-------                                                                 --------

11             Computation of Earnings Per Common Share

27             Financial Data Schedule