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SECURITIES AND EXCHANGE COMMISSIONWASHINGTON, 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, 2004 or                                          
|  |                                                                                           
|o | 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.)

3880 Hulen St., Fort Worth, Texas
76107(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 authorized to file such reports), and
(2) has been subject to such filing requirements for the past 90 days.  YesxNoo

Indicate by check mark whether the registrant is an
accelerated filer (as defined in Rule 12b-2 of the Act).  Yesx
Noo

The number of shares of common stock, $1.25 par
value, outstand­ing at March 31, 2004 was 6,153,599 shares.

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SUMMIT BANCSHARES, INC.

INDEX

|                                 |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     | Page No.                                                                                  |      
|-------------------------------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ----------------------------------------------------------------------------------------- | -----
|                                 |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |                                                                                           |      
|PART I
  - FINANCIAL INFORMATION |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |                                                                                           |      
|                                 |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |                                                                                           |      
|                                 | Item
  1.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           | Financial
  Statements                                                                    |      
|                                 |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |                                                                                           |      
|                                 | Consolidated Balance Sheets at March 31, 2004 and 2003 and at December 31, 2003                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     | 3                                                                                         |      
|                                 |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |                                                                                           |      
|                                 | Consolidated Statements of Income for the
  Three Months Ended March 31, 2004 and 2003
  and for the Year Ended December 31, 2003                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   | 4                                                                                         |      
|                                 |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |                                                                                           |      
|                                 | Consolidated Statements of Changes in Shareholders
  Equity for the Three Months Ended March 31, 2004
  and 2003 and for the Year Ended December 31, 2003                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          | 5                                                                                         |      
|                                 |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |                                                                                           |      
|                                 | Consolidated Statements of Cash Flows for the Three
  Months Ended March 31, 2004 and 2003 and for
  the Year Ended December 31, 2003                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               | 6                                                                                         |      
|                                 |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |                                                                                           |      
|                                 | Notes to Consolidated Financial Statements for the
  Three
  Months Ended March 31, 2004 and 2003 and for the
  Year Ended December 31, 2003                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        | 7-18                                                                                      |      
|                                 |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |                                                                                           |      
|                                 | The March 31, 2004 and 2003 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. 
  The financial statements for the year ended December 31, 2003 included
  herein are headed unaudited.  These
  financial statements were reported as audited in our Annual Report on Form
  10-K for the year ended December 31, 2003 filed with the Securities and
  Exchange Commission but are required to be reflected herein as unaudited
  because of the absence of an independent auditors report. |                                                                                          
|                                 |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |                                                                                           |      
|                                 | Item
  2.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           | Managements
  Discussion and Analysis of Financial
  Condition and Results of Operations | 19-28
|                                 |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |                                                                                           |      
|                                 | Item
  3.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           | Quantitative
  and Qualitative Disclosures about Market Risk                              | 28   
|                                 |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |                                                                                           |      
|                                 | Item 4.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             | Controls and Procedures                                                                   | 28   
|                                 |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |                                                                                           |      
|PART II - OTHER INFORMATION      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |                                                                                           |      
|                                 |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |                                                                                           |      
|                                 | Item
  1.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           | Legal
  Proceedings                                                                       | 29   
|                                 |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |                                                                                           |      
|                                 | Item
  2.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           | Change
  in Securities and Use of Proceeds                                                | 29   
|                                 |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |                                                                                           |      
|                                 | Item
  3.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           | Defaults
  Upon Senior Securities                                                         | 29   
|                                 |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |                                                                                           |      
|                                 | Item
  4.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           | Submission
  of Matters to a Vote of Security Holders                                     | 29   
|                                 |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |                                                                                           |      
|                                 | Item
  5.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           | Other
  Information                                                                       | 29   
|                                 |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |                                                                                           |      
|                                 | Item
  6.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           | Exhibits
  and Reports on Form 8-K                                                        | 29   
|                                 |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |                                                                                           |      

2

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PART I - FINANCIAL INFORMATION

Item 1 - Financial Statements

SUMMIT BANCSHARES,
INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS

|                                                          |                                                                                                                                                                                                                    | (Unaudited)
  March 31, |         | (Unaudited)
  December 31,
  2003
|--------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ | ----------------------- | ------- | ---------------------------------
|                                                          |                                                                                                                                                                                                                    |                         |        
|                                                          |                                                                                                                                                                                                                    | 2004                    |         | 2003                             
|                                                          |                                                                                                                                                                                                                    |                         |         |                                  
|                                                          |                                                                                                                                                                                                                    | (In
  Thousands)       
|                                                          |                                                                                                                                                                                                                    |                        
|ASSETS                                                    |                                                                                                                                                                                                                    |                        
|                                                          |                                                                                                                                                                                                                    |                        
|CASH AND DUE FROM BANKS  NOTE 1                          |                                                                                                                                                                                                                    | $                       | 27,738  |                                  
|FEDERAL FUNDS SOLD & DUE FROM TIME                        |                                                                                                                                                                                                                    |                         | 43,243  |                                  
|INVESTMENT SECURITIES  NOTE 2                            |                                                                                                                                                                                                                    |                         |         |                                  
|                                                          | Securities Available-for-Sale, at fair value                                                                                                                                                                       |                         |         | 181,879                          
|LOANS  NOTES 3, 11 AND 17                                |                                                                                                                                                                                                                    |                         |         |                                  
|                                                          | Loans, Net of Unearned Discount                                                                                                                                                                                    |                         |         | 593,271                          
|                                                          | Allowance for Loan Losses                                                                                                                                                                                          |                         |         | (8,320                           
|                                                          |                                                                                                                                                                                                                    |                         |         |                                  
|                                                          | LOANS, NET                                                                                                                                                                                                         |                         |         | 584,951                          
|                                                          |                                                                                                                                                                                                                    |                         |         |                                  
|PREMISES AND EQUIPMENT  NOTE 4                           |                                                                                                                                                                                                                    |                         | 12,755  |                                  
|ACCRUED INCOME RECEIVABLE                                 |                                                                                                                                                                                                                    |                         | 3,631   |                                  
|OTHER REAL ESTATE  NOTE 5                                |                                                                                                                                                                                                                    |                         | -0-     |                                  
|OTHER ASSETS                                              |                                                                                                                                                                                                                    |                         | 6,164   |                                  
|                                                          |                                                                                                                                                                                                                    |                         |         |                                  
|                                                          |                                                                                                                                                                                                                    |                         |         |                                  
|                                                          | TOTAL ASSETS                                                                                                                                                                                                       |                         | $       | 860,361                          
|                                                          |                                                                                                                                                                                                                    |                         |         |                                  
|                                                          |                                                                                                                                                                                                                    |                         |         |                                  
|LIABILITIES AND
  SHAREHOLDERS EQUITY                    |                                                                                                                                                                                                                    |                         |         |                                  
|                                                          |                                                                                                                                                                                                                    |                         |         |                                  
|DEPOSITS  NOTE 6                                         |                                                                                                                                                                                                                    |                         |         |                                  
|                                                          | Noninterest-Bearing Demand                                                                                                                                                                                         |                         | $       | 186,198                          
|                                                          | Interest-Bearing                                                                                                                                                                                                   |                         |         | 470,186                          
|                                                          |                                                                                                                                                                                                                    |                         |         |                                  
|                                                          |                                                                                                                                                                                                                    |                         |         |                                  
|                                                          | TOTAL DEPOSITS                                                                                                                                                                                                     |                         |         | 656,384                          
|                                                          |                                                                                                                                                                                                                    |                         |         |                                  
|SHORT TERM BORROWINGS  NOTE 7                            |                                                                                                                                                                                                                    |                         | 129,691 |                                  
|ACCRUED INTEREST PAYABLE                                  |                                                                                                                                                                                                                    |                         | 320     |                                  
|OTHER LIABILITIES                                         |                                                                                                                                                                                                                    |                         | 2,391   |                                  
|                                                          |                                                                                                                                                                                                                    |                         |         |                                  
|                                                          |                                                                                                                                                                                                                    |                         |         |                                  
|                                                          | TOTAL LIABILITIES                                                                                                                                                                                                  |                         |         | 788,786                          
|                                                          |                                                                                                                                                                                                                    |                         |         |                                  
|                                                          |                                                                                                                                                                                                                    |                         |         |                                  
|COMMITMENTS AND CONTINGENCIES  NOTES 12, 14, 16 AND
  18 |                                                                                                                                                                                                                    |                         |         |                                  
|                                                          |                                                                                                                                                                                                                    |                         |         |                                  
|SHAREHOLDERS EQUITY  NOTES 13, 15 AND 19                |                                                                                                                                                                                                                    |                         |         |                                  
|                                                          | Common Stock - $1.25 Par Value; 20,000,000 shares
  authorized;
     6,153,599, 6,179,317 and 6,152,329 shares issued 
     and outstanding at March 31, 2004 and 2003 and at
     December 31, 2003, respectively |                         |         | 7,692                            
|                                                          | Capital Surplus                                                                                                                                                                                                    |                         |         | 7,453                            
|                                                          | Retained Earnings                                                                                                                                                                                                  |                         |         | 54,481                           
|                                                          | Accumulated Other Comprehensive Income  Unrealized
  Gain 
     on Available-for-Sale Investment Securities, Net of Tax                                                                                           |                         |         | 1,949                            
|                                                          | Treasury Stock at Cost (18,500 and 3,700 shares at 
     March 31, 2003 and at December 31, 2003,
     respectively)                                                                                               |                         |         | -0-                              
|                                                          |                                                                                                                                                                                                                    |                         |         |                                  
|                                                          |                                                                                                                                                                                                                    |                         |         |                                  
|                                                          | TOTAL SHAREHOLDERS EQUITY                                                                                                                                                                                         |                         |         | 71,575                           
|                                                          |                                                                                                                                                                                                                    |                         |         |                                  
|                                                          |                                                                                                                                                                                                                    |                         |         |                                  
|TOTAL LIABILITIES AND SHAREHOLDERS EQUITY                |                                                                                                                                                                                                                    | $                       | 860,361 |                                  
|                                                          |                                                                                                                                                                                                                    |                         |         |                                  
|                                                          |                                                                                                                                                                                                                    |                         |         |                                  

The accompanying
Notes should be read with these financial statements.

3

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SUMMIT BANCSHARES,
INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME

|                                         |                                                        | (Unaudited)
  For the Three Months Ended
  March 31, |  | (Unaudited)
  Year Ended
  December 31,2003
|---------------------------------------- | ------------------------------------------------------ | ---------------------------------------------------- |  | -------------------------------------------
|                                         |                                                        |                                                      | 
|                                         |                                                        | 2004                                                 |  | 2003                                       
|                                         |                                                        |                                                      |  |                                            
|                                         |                                                        | (In Thousands, Except Per Share
  Data)             
|                                         |                                                        |                                                     
|INTEREST INCOME                          |                                                        |                                                      |  |                                            
|                                         | Interest and Fees on Loans                             |                                                      |  | $                                          
|                                         | Interest and Dividends on Investment Securities:       |                                                      |  |                                            
|                                         | Taxable                                                |                                                      |  |                                            
|                                         | Exempt from Federal Income Taxes                       |                                                      |  |                                            
|                                         | Interest on Federal Funds Sold and Due From Time       |                                                      |  |                                            
|                                         |                                                        |                                                      |  |                                            
|                                         |                                                        |                                                      |  |                                            
|                                         | TOTAL INTEREST INCOME                                  |                                                      |  |                                            
|                                         |                                                        |                                                      |  |                                            
|                                         |                                                        |                                                      |  |                                            
|INTEREST EXPENSE                         |                                                        |                                                      |  |                                            
|                                         | Interest on Deposits                                   |                                                      |  |                                            
|                                         | Interest on Short Term Borrowings                      |                                                      |  |                                            
|                                         |                                                        |                                                      |  |                                            
|                                         |                                                        |                                                      |  |                                            
|                                         | TOTAL INTEREST EXPENSE                                 |                                                      |  |                                            
|                                         |                                                        |                                                      |  |                                            
|                                         |                                                        |                                                      |  |                                            
|                                         | NET INTEREST INCOME                                    |                                                      |  |                                            
|                                         |                                                        |                                                      |  |                                            
|LESS: PROVISION FOR LOAN LOSSES  NOTE 3 |                                                        |                                                      |  | 605                                        
|                                         |                                                        |                                                      |  |                                            
|                                         |                                                        |                                                      |  |                                            
|                                         | NET INTEREST INCOME AFTER 
  PROVISION FOR LOAN LOSSES |                                                      |  |                                            
|                                         |                                                        |                                                      |  |                                            
|                                         |                                                        |                                                      |  |                                            
|NON-INTEREST INCOME                      |                                                        |                                                      |  |                                            
|                                         | Service Charges and Fees on Deposits                   |                                                      |  |                                            
|                                         | Gain on Sale of Investment Securities                  |                                                      |  |                                            
|                                         | Other Income                                           |                                                      |  |                                            
|                                         |                                                        |                                                      |  |                                            
|                                         |                                                        |                                                      |  |                                            
|                                         | TOTAL NON-INTEREST INCOME                              |                                                      |  |                                            
|                                         |                                                        |                                                      |  |                                            
|                                         |                                                        |                                                      |  |                                            
|NON-INTEREST EXPENSE                     |                                                        |                                                      |  |                                            
|                                         | Salaries and Employee Benefits - NOTE 14               |                                                      |  |                                            
|                                         | Occupancy Expense - Net                                |                                                      |  |                                            
|                                         | Furniture and Equipment Expense                        |                                                      |  |                                            
|                                         | Other Real Estate Owned Expense - Net                  |                                                      |  |                                            
|                                         | Other Expense  NOTE 9                                 |                                                      |  |                                            
|                                         |                                                        |                                                      |  |                                            
|                                         |                                                        |                                                      |  |                                            
|                                         | TOTAL NON-INTEREST EXPENSE                             |                                                      |  |                                            
|                                         |                                                        |                                                      |  |                                            
|                                         |                                                        |                                                      |  |                                            
|                                         | INCOME BEFORE INCOME TAXES                             |                                                      |  |                                            
|                                         |                                                        |                                                      |  |                                            
|APPLICABLE INCOME TAXES  NOTE 10        |                                                        |                                                      |  | 1,264                                      
|                                         |                                                        |                                                      |  |                                            
|                                         |                                                        |                                                      |  |                                            
|                                         | NET INCOME                                             |                                                      |  | $                                          
|                                         |                                                        |                                                      |  |                                            
|                                         | NET INCOME PER SHARE  NOTE 15                         |                                                      |  |                                            
|                                         |                                                        | Basic                                                |  |                                            
|                                         |                                                        | Diluted                                              |  |                                            
|                                         |                                                        |                                                      |  |                                            

The accompanying
Notes should be read with these financial statements.

4

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SUMMIT BANCSHARES,
INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS EQUITY
FOR THE THREE MONTHS ENDED MARCH 31, 2004 AND 2003
AND FOR THE YEAR ENDED DECEMBER 31, 2003
(Unaudited)

|                                                                 |                                           |                                                 |           |                   |  |                     |       | Accumulated
  Other
  Comprehensive
  Income - Net
  Unrealized Gain
  (Loss on)
  Investment
  Securities |                  |  |                                    |      
|---------------------------------------------------------------- | ----------------------------------------- | ----------------------------------------------- | --------- | ----------------- |  | ------------------- | ----- | ---------------------------------------------------------------------------------------------------------- | ---------------- |  | ---------------------------------- | -----
|                                                                 |                                           |                                                 |           |                   |  |                     |       |                                                                                                            |                  |  |                                   
|                                                                 |                                           |                                                 |           |                   |  |                     |       |                                                                                                            |                  |  |                                   
|                                                                 |                                           |                                                 |           |                   |  |                     |       |                                                                                                            |                  |  |                                   
|                                                                 |                                           |                                                 |           |                   |  |                     |       |                                                                                                            |                  |  |                                   
|                                                                 |                                           |                                                 |           |                   |  |                     |       |                                                                                                            |                  |  | Total
  Share-
  Holders
  Equity
|                                                                 |                                           | Common
  Stock                                  |           | Capital
  Surplus |  | Retained
  Earnings |       |                                                                                                            | Treasury
  Stock | 
|                                                                 |                                           |                                                 |           |                   |  |                     |      
|                                                                 |                                           | Shares                                          |           | Amount            |  |                     |       |                                                                                                            |                 
|                                                                 |                                           |                                                 |           |                   |  |                     |       |                                                                                                            |                  |  |                                    |      
|                                                                 |                                           | (Dollars
  in Thousands, Except Per Share Data)
|Balance at January 1, 2003                                       |                                           |                                                 | 6,158,542 |                   |  | $                   | 7,698 |                                                                                                            |                  |  | $                                  | 7,122
|Stock Options Exercised                                          |                                           |                                                 | 40,775    |                   |  |                     | 51    |                                                                                                            |                  |  |                                    | 208  
|Purchases of Stock Held 
    in Treasury                         |                                           |                                                 |           |                   |  |                     |       |                                                                                                            |                  |  |                                    |      
|Retirement of Stock Held 
    in Treasury                        |                                           |                                                 | (20,000   | )                 |  |                     | (25   | )                                                                                                          |                  |  |                                    |      
|Cash Dividend - $.12 Per Share                                   |                                           |                                                 |           |                   |  |                     |       |                                                                                                            |                  |  |                                    |      
|Net Income for the
    Three Months Ended
    March 31, 2003     |                                           |                                                 |           |                   |  |                     |       |                                                                                                            |                  |  |                                    |      
|Securities Available-
    for-Sale Adjustment                    |                                           |                                                 |           |                   |  |                     |       |                                                                                                            |                  |  |                                    |      
|                                                                 |                                           |                                                 |           |                   |  |                     |       |                                                                                                            |                  |  |                                    |      
|                                                                 | Total Comprehensive 
    Income  NOTE 22 |                                                 |           |                   |  |                     |       |                                                                                                            |                  |  |                                    |      
|                                                                 |                                           |                                                 |           |                   |  |                     |       |                                                                                                            |                  |  |                                    |      
|Balance at March 31, 2003                                        |                                           |                                                 | 6,179,317 |                   |  |                     | 7,724 |                                                                                                            |                  |  |                                    | 7,330
|Stock Options Exercised                                          |                                           |                                                 | 12,450    |                   |  |                     | 15    |                                                                                                            |                  |  |                                    | 91   
|Purchases of Stock Held
    in Treasury                          |                                           |                                                 |           |                   |  |                     |       |                                                                                                            |                  |  |                                    |      
|Retirement of Stock Held 
    in Treasury                        |                                           |                                                 | (39,438   | )                 |  |                     | (49   | )                                                                                                          |                  |  |                                    |      
|Cash Dividend - $.40 Per Share                                   |                                           |                                                 |           |                   |  |                     |       |                                                                                                            |                  |  |                                    |      
|Net Income for the 
    Nine Months Ended 
    December 31, 2003 |                                           |                                                 |           |                   |  |                     |       |                                                                                                            |                  |  |                                    |      
|Securities Available-
    for-Sale Adjustment                    |                                           |                                                 |           |                   |  |                     |       |                                                                                                            |                  |  |                                    |      
|                                                                 |                                           |                                                 |           |                   |  |                     |       |                                                                                                            |                  |  |                                    |      
|                                                                 | Total Comprehensive 
    Income  NOTE 22 |                                                 |           |                   |  |                     |       |                                                                                                            |                  |  |                                    |      
|                                                                 |                                           |                                                 |           |                   |  |                     |       |                                                                                                            |                  |  |                                    |      
|Balance at December 31, 2003                                     |                                           |                                                 | 6,152,329 |                   |  |                     | 7,690 |                                                                                                            |                  |  |                                    | 7,421
|Stock Options Exercised                                          |                                           |                                                 | 4,970     |                   |  |                     | 7     |                                                                                                            |                  |  |                                    | 32   
|Purchases of Stock Held 
    in Treasury                         |                                           |                                                 |           |                   |  |                     |       |                                                                                                            |                  |  |                                    |      
|Retirement of Stock Held 
    in Treasury                        |                                           |                                                 | (3,700    | )                 |  |                     | (5    | )                                                                                                          |                  |  |                                    |      
|Cash Dividend - $.14 Per Share                                   |                                           |                                                 |           |                   |  |                     |       |                                                                                                            |                  |  |                                    |      
|Net Income for the
    Three Months Ended 
    March 31, 2004    |                                           |                                                 |           |                   |  |                     |       |                                                                                                            |                  |  |                                    |      
|Securities Available-
    for-Sale Adjustment                    |                                           |                                                 |           |                   |  |                     |       |                                                                                                            |                  |  |                                    |      
|                                                                 |                                           |                                                 |           |                   |  |                     |       |                                                                                                            |                  |  |                                    |      
|                                                                 | Total Comprehensive 
    Income  NOTE 22 |                                                 |           |                   |  |                     |       |                                                                                                            |                  |  |                                    |      
|                                                                 |                                           |                                                 |           |                   |  |                     |       |                                                                                                            |                  |  |                                    |      
|Balance at March 31, 2004                                        |                                           |                                                 | 6,153,599 |                   |  | $                   | 7,692 |                                                                                                            |                  |  | $                                  | 7,453
|                                                                 |                                           |                                                 |           |                   |  |                     |       |                                                                                                            |                  |  |                                    |      

The accompanying
Notes should be read with these financial statements.

5

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SUMMIT BANCSHARES, INC. AND
SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWSFOR THE
THREE MONTHS ENDED MARCH 31, 2004 AND 2003 AND FOR THE YEAR ENDED DECEMBER
31, 2003

|                                                             |                                                                                                   | (Unaudited)For the Three Months EndedMarch 31, |   | (Unaudited)Year EndedDecember 31,2003
|------------------------------------------------------------ | ------------------------------------------------------------------------------------------------- | ---------------------------------------------- | - | -------------------------------------
|                                                             |                                                                                                   |                                                |  
|                                                             |                                                                                                   | 2004                                           |   | 2003                                 
|                                                             |                                                                                                   |                                                |   |                                      
|                                                             |                                                                                                   | (In
  Thousands)                              
|CASH FLOWS FROM OPERATING
  ACTIVITIES:                      |                                                                                                   |                                                |   |                                      
|                                                             | Net Income                                                                                        |                                                |   | $                                    
|                                                             | Adjustments to Reconcile Net Income
  to Net                                                      |                                                |   |                                      
|                                                             | Cash Provided by Operating
  Activities:                                                          |                                                |   |                                      
|                                                             | Depreciation and
  Amortization                                                                   |                                                |   |                                      
|                                                             | Net Premium Amortization of
  Investment Securities                                               |                                                |   |                                      
|                                                             | Provision for Loan
  Losses                                                                       |                                                |   |                                      
|                                                             | Deferred Income Taxes Expense
  (Benefit)                                                         |                                                |   |                                      
|                                                             | Net Gain on Sale of Investment
  Securites                                                        |                                                |   |                                      
|                                                             | Net (Gain) Loss From Sale of Other
  Real Estate & Repossessed Assets                             |                                                |   |                                      
|                                                             | Net Gain From Sale of Premises and
  Equipment                                                    |                                                |   |                                      
|                                                             | Net (Increase) Decrease in Accrued
  Income and Other Assets                                      |                                                |   |                                      
|                                                             | Net Decrease in Accrued Expenses
  and Other Liabilities                                          |                                                |   |                                      
|                                                             |                                                                                                   |                                                |   |                                      
|                                                             | Total Adjustments                                                                                 |                                                |   |                                      
|                                                             |                                                                                                   |                                                |   |                                      
|                                                             | NET CASH PROVIDED BY OPERATING
  ACTIVITIES                                                       |                                                |   |                                      
|                                                             |                                                                                                   |                                                |   |                                      
|CASH FLOWS FROM INVESTING
  ACTIVITIES:                      |                                                                                                   |                                                |   |                                      
|                                                             | Net (Increase) Decrease in Federal
  Funds Sold and Due From Time                                 |                                                |   |                                      
|                                                             | Proceeds from Matured and Prepaid
  Investment Securities   - Available-for-Sale                  |                                                |   |                                      
|                                                             | Proceeds from Sales of Investment
  Securities                                                    |                                                |   |                                      
|                                                             | Purchase of Investment Securities
     - Available-for-Sale                                       |                                                |   |                                      
|                                                             | Loans Originated and Principal
  Repayments, Net                                                  |                                                |   |                                      
|                                                             | Recoveries of Loans Previously
  Charged-Off                                                      |                                                |   |                                      
|                                                             | Proceeds from Sale of Premises and
  Equipment                                                    |                                                |   |                                      
|                                                             | Proceeds from Sale of Other Real
  Estate & Repossessed Assets                                    |                                                |   |                                      
|                                                             | Purchases of Premises and
  Equipment                                                             |                                                |   |                                      
|                                                             |                                                                                                   |                                                |   |                                      
|                                                             | NET CASH USED BY INVESTING
  ACTIVITIES                                                           |                                                |   |                                      
|                                                             |                                                                                                   |                                                |   |                                      
|CASH FLOWS FROM FINANCING
  ACTIVITIES:                      |                                                                                                   |                                                |   |                                      
|                                                             | Net Increase in Demand Deposits,
  Savings Accounts   and Interest-Bearing Transaction
  Accounts |                                                |   |                                      
|                                                             | Net Increase in Certificates of
  Deposit                                                         |                                                |   |                                      
|                                                             | Net Increase in Short Term
  Borrowings                                                           |                                                |   |                                      
|                                                             | Payments of Cash
  Dividends                                                                      |                                                |   |                                      
|                                                             | Proceeds from Stock Options
  Exercised                                                           |                                                |   |                                      
|                                                             | Purchase of Treasury
  Stock                                                                      |                                                |   |                                      
|                                                             |                                                                                                   |                                                |   |                                      
|                                                             | NET CASH PROVIDED BY FINANCING
  ACTIVITIES                                                       |                                                |   |                                      
|                                                             |                                                                                                   |                                                |   |                                      
|NET (DECREASE) INCREASE IN CASH AND
  DUE FROM BANKS         |                                                                                                   |                                                |   | (882                                 
|CASH AND DUE FROM BANKS AT
  BEGINNING OF PERIOD             |                                                                                                   |                                                |   | 28,620                               
|                                                             |                                                                                                   |                                                |   |                                      
|CASH AND DUE FROM BANKS AT END OF
  PERIOD                   |                                                                                                   |                                                | $ | 27,738                               
|                                                             |                                                                                                   |                                                |   |                                      
|SUPPLEMENTAL SCHEDULE OF OPERATING AND INVESTING ACTIVITIES: |                                                                                                   |                                                |   |                                      
|                                                             | Interest Paid                                                                                     |                                                |   | $                                    
|                                                             | Income Taxes Paid
  (Refunded)                                                                    |                                                |   |                                      
|                                                             | Other Real Estate and Other Assets
  Acquired in Settlement of Loans                              |                                                |   |                                      
|                                                             |                                                                                                   |                                                |   |                                      

The accompanying Notes should be read
with these financial statements.

6

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NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
SUMMIT BANCSHARES, INC. AND SUBSIDIARIES
FOR THE THREE MONTHS ENDED MARCH 31, 2004 AND 2003 (UNAUDITED)
AND FOR THE YEAR ENDED DECEMBER 31, 2003 (UNAUDITED)

NOTE 1 - Summary of Significant Accounting and
Reporting Policies

The
accounting and reporting policies of Summit Bancshares, Inc. are in accordance
with accounting principles generally accepted in the United States of America
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 Summit Bancshares, Inc. (hereinafter,
collectively with its subsidiaries, the Corporation), include its accounts
and its direct and indirect wholly-owned subsidiaries, Summit Delaware
Financial Corporation, Summit Bank, National Association (the Bank) and SIA
Insurance Agency, Inc. (SIA).  All
significant intercompany balances and transactions have been eliminated in
consolidation.

Use of Estimates

The
preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America 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 materially from those estimates.

Cash and Due From Banks

The
Bank is required to maintain certain noninterest-bearing cash balances at the
Federal Reserve Bank based on its level of deposits. During the first three
months of 2004, the average cash balance maintained at the Federal Reserve Bank
was $2,141,000. Compensating balances held at correspondent banks, to minimize
service charges, averaged approximately $19,324,000 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 2004 and 2003,
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.

Loans and Allowance for Loan Losses

Loans
are stated at the principal amount outstanding less unearned discount, deferred
fees 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.  Loan origination fee income,
net of direct loan origination costs, is deferred and amortized over the life
of the related loan.  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.

7

---

---

NOTE 1 - Summary of Significant Accounting and
Reporting Policies (contd.)

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 for certain loans when it is probable that
all amounts due pursuant to the contractual terms of the loan will not be
collected.  In these situations, a
reserve is recorded when the carrying amount of the loan exceeds the discounted
cash flows using the loans initial effective interest rate or the fair value
of the collateral for certain collateral dependent loans.  Income on impaired loans is recognized based
on the collectibility of the principal amount. 
Adjustments to the allowance for loan losses will be reported in the
period such adjustments become known or are reasonably estimable.

The
amount maintained in the allowance reflects managements continuing assessment
of the potential losses inherent in its loan portfolio based on its evaluation
of a number of factors, including the Banks 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
materially from managements current estimates.

Premises and Equipment

Land
is carried at cost.  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 ranging from three to forty years. 
Maintenance and repairs are charged to non-interest expense.  Renewals and betterments are added to the
asset accounts and depreciated over the periods benefited.  Depreciable assets sold or retired are
removed from the asset and related accumulated depreciation accounts and any
gain or loss is reflected in the income and expense accounts.

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 write-down 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 their 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
purposes.

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 include cash on hand, clearings and exchanges, and balances due
from correspondent banks.

Reclassification

Certain
reclassifications have been made to the 2003 financial statements to conform to
the 2004 presentation.

8

---

---

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

Earnings Per Common and Common Equivalent
Shares

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.

Stock-Based Compensation

The
Corporation accounts for stock-based compensation in accordance with the
intrinsic value based method recommended by Accounting Principles Board Opinion
No. 25, Accounting for Stock Issued to Employees.  Under the intrinsic value based method, compensation cost is the
excess, if any, of the quoted market price of the stock at grant date over the amount
an employee must pay to acquire the stock. 
The impact on the financial statements of using this method is disclosed
in Note 13, Stock Option Plans to the financial statements.

SFAS
No. 123, Accounting for Stock-Based Compensation, as amended by SFAS 148,
requires pro forma disclosures of net income and earnings per share for
companies not adopting its fair value accounting method for stock-based
compensation.  The pro forma disclosures
presented in Note 13, Stock Option Plans use the fair value method of SFAS
123 to measure compensation expense for stock-based compensation plans.

Comprehensive
Income

Comprehensive
income includes all changes in shareholders equity during a period, except
those resulting from investments by and distributions to owners and treasury
stock transactions.  Besides net income,
the other component of the Corporations comprehensive income is the after tax
effect of changes in the fair value of securities available for sale.  Comprehensive income for the periods ended
March 31, 2004 and 2003 and for the year ended December 31, 2003 is reported in
Note 22, Comprehensive Income.

Audited Financial Statements

The
consolidated balance sheet as of December 31, 2003, and the consolidated
statements of income, changes in shareholders equity and cash flows for the
year ended December 31, 2003 are headed unaudited in these financial
statements.  These statements were
reported as audited in our Annual Report of Form 10-K for the year ended
December 31, 2003 filed with the Securities and Exchange Commission 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 as of March 31, 2004 is as follows (in thousands):
| | -----------------------------------------------------------------------------------------------------------------------------------

|                                                        |  | March 31, 2004   |  
|------------------------------------------------------- |  | ---------------- | -
|                                                        |  |                  |  
|                                                        |  | Amortized
  Cost |  
|                                                        |  |                  |  
|                                                        |  |                  |  
|Investment Securities -
  Available-for-Sale            |  |                  |  
|U.S. Government Agencies 
     and Corporations         |  |                  | $
|U.S. Government Agency Mortgage 
     Backed Securities |  |                  |  
|Obligations of States and Political
  Subdivisions      |  |                  |  
|Community Reinvestment Act Investment
  Fund            |  |                  |  
|Federal Reserve and Federal Home Loan
  Bank Stock      |  |                  |  
|                                                        |  |                  |  
|                                                        |  |                  |  
|Total Available-for-Sale Securities                     |  |                  |  
|                                                        |  |                  |  
|                                                        |  |                  |  
|Total Investment Securities                             |  |                  | $
|                                                        |  |                  |  

9

---

---

NOTE 2 - Investment Securities (contd.)

All
investment securities are carried on the consolidated balance sheet as of March
31, 2004 at fair value.  The net
unrealized gain of $2,953,000 is included in the Available-for-Sale Investment
Securities balance.  The unrealized
gain, net of tax, is included in Shareholders Equity.

Included
in the Other Securities category at March 31, 2004 is $5,626,000 of Federal
Home Loan Bank Stock and $320,000 of Federal Reserve Stock which are classified
as restricted investment securities, carried at cost, and evaluated for
impairment.  No impairment losses were
recorded as of March 31, 2004.  The Corporation
is required to have stock holdings of Federal Home Loan Bank Stock equal to
..20% of the Corporations total assets as of the previous year end plus 4.25%
of its outstanding advancements from the Federal Home Loan Bank (FHLB).  The Corporation is also required to have
stock holdings of Federal Reserve Stock equal to 6% of its Capital Stock and
Surplus.

| | A summary of amortized cost and estimated
fair values of investment securities as of March 31, 2003 is as follows (in
thousands):
| | ---------------------------------------------------------------------------------------------------------------------------------

|                                                       |  | March 31, 2003   |  
|------------------------------------------------------ |  | ---------------- | -
|                                                       |  |                  |  
|                                                       |  | Amortized
  Cost |  
|                                                       |  |                  |  
|                                                       |  |                  |  
|Investment Securities -
  Available-for-Sale           |  |                  |  
|U.S. Treasury Securities                               |  |                  | $
|U.S. Government Agencies 
    and Corporations         |  |                  |  
|U.S. Government Agency Mortgage 
    Backed Securities |  |                  |  
|Obligations of States and Political
  Subdivisions     |  |                  |  
|Community Reinvestment Act Investment
  Fund           |  |                  |  
|Federal Reserve and Federal Home Loan
  Bank Stock     |  |                  |  
|                                                       |  |                  |  
|                                                       |  |                  |  
|Total Available-for-Sale Securities                    |  |                  |  
|                                                       |  |                  |  
|                                                       |  |                  |  
|Total Investment Securities                            |  |                  | $
|                                                       |  |                  |  

All
investment securities were carried on the consolidated balance sheet as of
March 31, 2003 at fair value.  The net
unrealized gain of $4,407,000 was included in the Available-for-Sale Investment
Securities balance.  The unrealized
gain, net of tax, was included in Shareholders Equity.

Included
in the Other Securities category at March 31, 2003 was $1,806,000 of Federal
Home Loan Bank Stock and $320,000 of Federal Reserve Stock which are classified
as restricted investment securities, carried at cost, and evaluated for
impairment.  No impairment losses were
recorded as of March 31, 2003.  The
Corporation was required at March 31, 2003 to have stock holdings of Federal
Home Loan Bank Stock equal to 5% of its outstanding advancements from the
FHLB.  The Corporation is also required
to have stock holdings of Federal Reserve Stock equal to 6% of its Capital
Stock and Surplus.

NOTE 3 - Loans and Allowance for Loan Losses

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

|                                   |             | March 31, |         | December 31,
  2003
|---------------------------------- | ----------- | --------- | ------- | -------------------
|                                   |             |           |        
|                                   |             | 2004      |         | 2003               
|                                   |             |           |         |                    
|                                   |             |           |         |                    
|Commercial and Industrial          |             | $         | 232,015 |                    
|Real Estate Mortgage - Commercial  |             |           | 169,376 |                    
|Real Estate Mortgage - Residential |             |           | 73,481  |                    
|Real Estate - Construction         |             |           | 86,315  |                    
|Loans to Individuals               |             |           | 32,084  |                    
|                                   |             |           |         |                    
|                                   |             |           | 593,271 |                    
|Allowance for Loan Losses          |             |           | (8,320  | )                  
|                                   |             |           |         |                    
|                                   |             |           |         |                    
|                                   | Loans - Net |           | $       | 584,951            
|                                   |             |           |         |                    
|                                   |             |           |         |                    

Loans
are net of unearned income of $742,000 and $562,000 at March 31, 2004 and 2003,
respectively, and $690,000 at December 31, 2003.

10

---

---

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

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

|                                                |                                   | Three Months Ended
  March 31, |   | Year Ended
  December 31,
  2003
|----------------------------------------------- | --------------------------------- | ------------------------------ | - | --------------------------------
|                                                |                                   |                                |  
|                                                |                                   | 2004                           |   | 2003                            
|                                                |                                   |                                |   |                                 
|                                                |                                   |                                |   |                                 
|Balance, Beginning of Period                    |                                   |                                | $ | 7,784                           
|Provisions, Charged to Income                   |                                   |                                |   | 605                             
|                                                |                                   |                                |   |                                 
|Loans Charged-Off                               |                                   |                                |   | (137                            
|Recoveries of Loans Previously 
    Charged-Off |                                   |                                |   | 68                              
|                                                |                                   |                                |   |                                 
|                                                |                                   |                                |   |                                 
|                                                | Net Loans (Charged-Off) Recovered |                                |   |                                 
|                                                |                                   |                                |   |                                 
|                                                |                                   |                                |   |                                 
|Balance, End of Period                          |                                   |                                | $ | 8,320                           
|                                                |                                   |                                |   |                                 
|                                                |                                   |                                |   |                                 

The
provisions for loan losses charged to operating expenses during the three
months ended March 31, 2004 and March 31, 2003 of $605,000 and $300,000,
respectively, were considered adequate to maintain the allowance in accordance
with the policy discussed in Note 1. 
For the year ended December 31, 2003, a provision of $880,000 was
recorded.

At
March 31, 2004, the recorded investment in loans that are considered to be
impaired under Statement of Financial Accounting Standards No. 114 was
$1,671,000 (of which $1,671,000 were on non-accrual status).  The related allowance for loan losses for
these loans was $390,000.  The average
recorded investment in impaired loans during the three months ended March 31,
2004 was approximately $1,606,000.  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):

|                                                  |  | March 31, |        | December 31,
  2003
|------------------------------------------------- |  | --------- | ------ | -------------------
|                                                  |  |           |       
|                                                  |  | 2004      |        | 2003               
|                                                  |  |           |        |                    
|                                                  |  |           |        |                    
|Land                                              |  | $         | 2,212  |                    
|Buildings and Improvements                        |  |           | 10,215 |                    
|Furniture & Equipment                             |  |           | 10,671 |                    
|                                                  |  |           |        |                    
|Total Cost                                        |  |           | 23,098 |                    
|                                                  |  |           |        |                    
|Less: Accumulated Amortization and
  Depreciation |  |           | 10,343 |                    
|                                                  |  |           |        |                    
|                                                  |  |           |        |                    
|Net Book Value                                    |  | $         | 12,755 |                    
|                                                  |  |           |        |                    

NOTE 5 - Other Real Estate

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

|                  |  | March 31, |     | December 31,
  2003
|----------------- |  | --------- | --- | -------------------
|                  |  |           |    
|                  |  | 2004      |     | 2003               
|                  |  |           |     |                    
|                  |  |           |     |                    
|Other Real Estate |  | $         | -0- |                    
|                  |  |           |     |                    

There were no
direct write-downs of other real estate charged to income for the three months
ended March 31, 2004 or March 31, 2003. 
There were also no direct write-downs of other real estate charged to
income for the year ended December 31, 2003.

Included
in Other Assets at March 31, 2004 and March 31, 2003 were $7,000 and $125,000,
respectively, of Other Foreclosed Assets. 
The 2004 and 2003 assets were comprised of motor vehicles.  There were no direct write-downs of these
assets as of March 31, 2004 or for any period during 2003.

11

---

---

NOTE 6 - Deposits

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

|                                    |                                                                   | March 31, |         | December 31,2003
|----------------------------------- | ----------------------------------------------------------------- | --------- | ------- | ----------------
|                                    |                                                                   |           |        
|                                    |                                                                   | 2004      |         | 2003            
|                                    |                                                                   |           |         |                 
|                                    |                                                                   |           |         |                 
|Noninterest-Bearing Demand Deposits |                                                                   | $         | 186,198 |                 
|Interest-Bearing Deposits:          |                                                                   |           |         |                 
|                                    | Interest-Bearing Transaction 
    Accounts and Money Market Funds |           |         | 205,434         
|                                    | Savings                                                           |           |         | 135,968         
|                                    | Certificates of Deposit under $100,000
  and IRAs                |           |         | 62,172          
|                                    | Certificates of Deposit $100,000 or
  more                        |           |         | 66,296          
|                                    | Other                                                             |           |         | 316             
|                                    |                                                                   |           |         |                 
|                                    | Total                                                             |           |         | 470,186         
|                                    |                                                                   |           |         |                 
|                                    | Total Deposits                                                    |           | $       | 656,384         
|                                    |                                                                   |           |         |                 
|                                    |                                                                   |           |         |                 

At March 31,
2004 and December 31, 2003, the Corporation had $991,000 of brokered
deposits.  At March 31, 2003, the
Corporation had no brokered deposits. 
There were no major deposit concentrations.  Demand deposit overdrafts that have been reclassified as loan
balances were $619,000 and $386,000 at March 31, 2004 and 2003, respectively,
and $873,000 at December 31, 2003.

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 and other borrowings are summarized as follows (in
thousands):

|                                               |                                         | Three Months EndedMarch 31, |   | Year EndedDecember 31,
  2003 |  
|---------------------------------------------- | --------------------------------------- | --------------------------- | - | ----------------------------- | -
|                                               |                                         |                             |   |                              
|                                               |                                         | 2004                        |   | 2003                          |  
|                                               |                                         |                             |   |                               |  
|Securities Sold Under Repurchase
  Agreements: |                                         |                             |   |                               |  
|                                               | Average Balance                         |                             | $ | 31,129                        |  
|                                               | Period-End Balance                      |                             |   | 29,691                        |  
|                                               | Maximum Month-End Balance During Period |                             |   | 31,083                        |  
|                                               | Interest Rate:                          |                             |   |                               |  
|                                               | Average                                 |                             |   | 0.50                          | %
|                                               | Period-End                              |                             |   | 0.54                          |  
|                                               |                                         |                             |   |                               |  
|Federal Home Loan Bank Advances:               |                                         |                             |   |                               |  
|                                               | Average Balance                         |                             | $ | 65,824                        |  
|                                               | Period-End Balance                      |                             |   | 100,000                       |  
|                                               | Maximum Month-End Balance During Period |                             |   | 100,000                       |  
|                                               | Interest Rate:                          |                             |   |                               |  
|                                               | Average                                 |                             |   | 1.35                          | %
|                                               | Period-End                              |                             |   | 1.26                          |  
|                                               |                                         |                             |   |                               |  
|Federal Funds Purchased:                       |                                         |                             |   |                               |  
|                                               | Average Balance                         |                             | $ | 4,396                         |  
|                                               | Period-End Balance                      |                             |   | -0-                           |  
|                                               | Maximum Month-End Balance During Period |                             |   | 16,425                        |  
|                                               | Interest Rate:                          |                             |   |                               |  
|                                               | Average                                 |                             |   | 1.28                          | %
|                                               | Period-End                              |                             |   | -0-                           |  
|                                               |                                         |                             |   |                               |  

The
Corporation has available a line of credit with the FHLB of Dallas which allows
it to borrow on a collateralized basis at a fixed term.  The borrowings are collateralized by a
blanket floating lien on all first mortgage loans, the FHLB capital stock owned
by the Corporation and any funds on deposit with FHLB.  At March 31, 2004, the Corporation had
$100.0 million of borrowings outstanding under the line of credit at a rate of
1.26%, $85.0 million of which matures in 2004 and the remaining $15.0 million
matures in  2005.  $30.0 million was borrowed for thirty days
on the last day of the quarter for the purpose of maximizing the borrowing
potential for the Corporation over the next year based on limits established by
the FHLB.  For the three months ended
March 31, 2004, the Corporation had average borrowings under the line of credit
of $65.8 million.  For the three months
ended March 31, 2003, the Corporation had $22.0 million of borrowings
outstanding under the line of credit at a rate of 1.65% which matured during
2003.  In addition, at March, 31, 2003,
the Corporation had $2,300,000 borrowed under a match funding agreement with
the FHLB at a rate of 4.41% which matured in June 2003.  At December 31, 2003, $50.0 million of
borrowings were outstanding at a rate of 1.52%, $45.0 million of which matures
during 2004 and $5.0 million of which matures in April 2005.  For the year ended December 31, 2003, the
Corporation had average borrowings of $30.5 million.

12

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---

NOTE 8
 Notes Payable

On
September 15, 2003, the Corporation obtained lines of credit from a bank under
which the Corporation may borrow $11,000,000 at prime rate.  The lines of credit are secured by stock of
the Bank and mature on September 15, 2004, whereupon, if balances are
outstanding, the lines convert to term notes having five year terms.  The Corporation will not pay a fee for any
unused portion of the lines.  As of
March 31, 2004, no funds had been borrowed under these lines nor were any
borrowings outstanding.

NOTE 9
- Other Non-Interest Expense

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

|                                |       | Three Months Ended
  March 31, |   | Year EndedDecember 31,
  2003
|------------------------------- | ----- | ------------------------------ | - | -----------------------------
|                                |       |                                |  
|                                |       | 2004                           |   | 2003                         
|                                |       |                                |   |                              
|                                |       |                                |   |                              
|Business Development            |       |                                | $ | 193                          
|Legal and Professional Fees     |       |                                |   | 179                          
|Item Processing                 |       |                                |   | 147                          
|Printing and Supplies           |       |                                |   | 95                           
|Regulatory Fees and Assessments |       |                                |   | 67                           
|Other                           |       |                                |   | 548                          
|                                |       |                                |   |                              
|                                |       |                                |   |                              
|                                | Total |                                |   | $                            
|                                |       |                                |   |                              
|                                |       |                                |   |                              

NOTE 10 - Income Taxes

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

|                              |                                              | March 31, |   |                    
|----------------------------- | -------------------------------------------- | --------- | - | -------------------
|                              |                                              |           |   | December 31,
  2003
|                              |                                              | 2004      |   | 2003               
|                              |                                              |           |   |                    
|Current Tax Asset (Liability) |                                              |           | $ | (1,495             
|Net Deferred Tax Asset        |                                              |           |   | 1,294              
|                              |                                              |           |   |                    
|                              |                                              |           |   |                    
|                              | Total Included in Other (Liabilities) Assets |           |   | $                  
|                              |                                              |           |   |                    
|                              |                                              |           |   |                    

The
net deferred tax asset at March 31, 2004 of $1,294,000 included $(1,004,000), a
deferred tax liability related to unrealized gains on Available-for-Sale
Securities.

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

|                           |                                  | Three Months Ended
  March 31, |   | Year Ended
  December 31,
  2003
|-------------------------- | -------------------------------- | ------------------------------ | - | --------------------------------
|                           |                                  |                                |  
|                           |                                  | 2004                           |   | 2003                            
|                           |                                  |                                |   |                                 
|Federal Income Tax Expense |                                  |                                |   |                                 
|Current                    |                                  |                                | $ | 1,532                           
|Deferred (Benefit)         |                                  |                                |   | (268                            
|                           |                                  |                                |   |                                 
|                           |                                  |                                |   |                                 
|                           | Total Federal Income Tax Expense |                                |   | $                               
|                           |                                  |                                |   |                                 
|                           |                                  |                                |   |                                 
|                           | Effective Tax Rates              |                                |   |                                 
|                           |                                  |                                |   |                                 

13

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---

NOTE 10 - Income Taxes (contd.)

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):

|                                                      |                                   | Three Months Ended
  March 31, |   | Year Ended
  December 31,
  2003
|----------------------------------------------------- | --------------------------------- | ------------------------------ | - | --------------------------------
|                                                      |                                   |                                |  
|                                                      |                                   | 2004                           |   | 2003                            
|                                                      |                                   |                                |   |                                 
|Federal Income Taxes at Statutory 
     Rate of 34.5% |                                   |                                | $ | 1,282                           
|Effect of Tax Exempt Interest Income                  |                                   |                                |   | (23                             
|Non-deductible Expenses                               |                                   |                                |   | 23                              
|Other                                                 |                                   |                                |   | (18                             
|                                                      |                                   |                                |   |                                 
|                                                      | Income Taxes Per Income Statement |                                |   | $                               
|                                                      |                                   |                                |   |                                 
|                                                      |                                   |                                |   |                                 

Deferred income tax expense (benefit) results from
differences between amounts of assets and liabilities as measured for income
tax return and financial reporting purposes. 
The significant components of federal deferred tax assets and
liabilities are in the following table (in thousands):

|                                  |                                                     | Three Months Ended
  March 31, |  | Year Ended
  December 31,
  2003
|--------------------------------- | --------------------------------------------------- | ------------------------------ |  | --------------------------------
|                                  |                                                     |                                | 
|                                  |                                                     | 2004                           |  | 2003                            
|                                  |                                                     |                                |  |                                 
|Federal Deferred Tax Assets:      |                                                     |                                |  |                                 
|                                  | Allowance for Loan Losses                           |                                |  | $                               
|                                  | Valuation Reserves - Other Real Estate              |                                |  |                                 
|                                  | Interest on Non-accrual Loans                       |                                |  |                                 
|                                  | Deferred Compensation                               |                                |  |                                 
|                                  |                                                     |                                |  |                                 
|                                  |                                                     |                                |  |                                 
|                                  | Gross Federal Deferred Tax Assets                   |                                |  |                                 
|                                  |                                                     |                                |  |                                 
|                                  |                                                     |                                |  |                                 
|Federal Deferred Tax Liabilities: |                                                     |                                |  |                                 
|                                  | Depreciation and Amortization                       |                                |  |                                 
|                                  | Accretion                                           |                                |  |                                 
|                                  | Unrealized Gains on Available-for-Sale
  Securities |                                |  |                                 
|                                  | Other                                               |                                |  |                                 
|                                  |                                                     |                                |  |                                 
|                                  |                                                     |                                |  |                                 
|                                  | Gross Federal Deferred Tax Liabilities              |                                |  |                                 
|                                  |                                                     |                                |  |                                 
|                                  | Net Deferred Tax Asset                              |                                |  | $                               
|                                  |                                                     |                                |  |                                 
|                                  |                                                     |                                |  |                                 

NOTE 11 - Related Party Transactions

The
Bank has made transactions in the ordinary course of business with certain of
its and the Corporations 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 and all loans are current as to
principal and interest payments.  Total
loans outstanding to such parties amounted to approximately $9,389,000 at
December 31, 2003.

NOTE 12
- 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, 2004, outstanding documentary and standby letters of credit totaled
$4,463,000 and commitments to extend credit totaled $149,455,000.

In
addition, the Corporation leases certain office facilities under operating
leases.  Rent expense for all operating
leases totaled $246,000 and $148,000 for the three months ended March 31, 2004
and 2003, respectively, and $981,000 for the year ended December 31, 2003.  There have been no material changes in the
future minimum lease payments payable by the Corporation since December 31,
2003.  See the 2003 Report on Form 10-K
for information regarding these commitments.

14

---

---

NOTE 13
- Stock Option Plans

The
Corporation has two Incentive Stock Option Plans, the 1993 Plan and the 1997
Plan, (each, a Plan, and, collectively, 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 the
Corporation and its subsidiary 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
following is a summary of transactions during the periods presented:

|                                               |                            | Shares Under Option                
|---------------------------------------------- | -------------------------- | -----------------------------------
|                                               |                            |                                    
|                                               |                            | Three Months Ended
  March 31, 2004
|                                               |                            |                                    
|Outstanding, Beginning of Period               |                            |                                    
|Additional Options Granted During the
  Period |                            |                                    
|Forfeited During the Period                    |                            |                                    
|Exercised During the Period                    |                            |                                    
|                                               |                            |                                    
|                                               |                            |                                    
|                                               | Outstanding, End of Period |                                    
|                                               |                            |                                    
|                                               |                            |                                    

Options
outstanding at March 31, 2004 ranged in price from $4.50 to $31.76 per share
with a weighted average exercise price of $13.89 and 305,749 shares exercisable.  At March 31, 2004, there remained 321,250
shares reserved for future grants of options under the 1997 Plan.

The
Corporation accounts for the Plans under the recognition and measurement
principles of Accounting  Principles
Board Opinion No. 25, Accounting for Stock Issued to Employees, under which
no compensation cost has been recognized for options granted.  The following table illustrates the effect
on net income and earnings per share if the Corporation had applied the fair
value recognition provisions of Financial Accounting Standards Board (FASB)
Statement No. 123, Accounting for Stock-Based Compensation, to stock-based
compensation.

|                                                                                                                                                                                 |                       | March 31, 2004 |   | December 31, 2003
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | --------------------- | -------------- | - | -----------------
|                                                                                                                                                                                 |                       |                |   |                  
|Net Income, as Reported                                                                                                                                                          |                       |                | $ | 2,451            
|                                                                                                                                                                                 |                       |                |   |                  
|Deduct: Total stock-based compensation
  expense
                   determined under fair value based
  method 
                    for all awards, net of related
  tax effects |                       |                |   | (30              
|                                                                                                                                                                                 |                       |                |   |                  
|Pro Forma Net Income                                                                                                                                                             |                       |                | $ | 2,421            
|                                                                                                                                                                                 |                       |                |   |                  
|Earnings Per Share:                                                                                                                                                              |                       |                |   |                  
|                                                                                                                                                                                 | Basic - as Reported   |                |   | $                
|                                                                                                                                                                                 | Basic - Pro Forma     |                |   |                  
|                                                                                                                                                                                 | Diluted - as Reported |                |   |                  
|                                                                                                                                                                                 | Diluted - Pro Forma   |                |   |                  

NOTE 14 - Employee Benefit Plans

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 1998 or 1999. 
In 2000 through 2003, the Corporation made matching contributions, not
to exceed 6% of the employees annual compensation, to the participants
deferrals of compensation up to 100% of the employee contributions.

The
amount expensed in support of the plan was $111,000 and $105,000 during the
first three months of 2004 and 2003, respectively, and $411,000 for the year
2003.

Supplemental Executive
Retirement Plan

In
2002, the Corporation established a Supplemental Executive Retirement Plan (the
Retirement Plan) to provide key employees with retirement, death or
disability benefits.  For currently
employed employees, the Retirement Plan replaces the previous Management
Security Plan.  The current Retirement
Plan is a defined contribution plan. 
The expense charged to earnings for such future obligations was $44,000
and $49,000 for the first three months of 2004 and 2003, respectively, and
$202,000 for the year 2003.

15

---

---

NOTE 14
- Employee Benefit Plans (contd.)

Employment Contracts

The
Chief Executive Officer of the Corporation has entered into a severance agreement
providing for salary and fringe benefits in the event of termination for other
than cause and under certain changes in control.

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).

NOTE 15
- 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 (dollars
in thousands):

|                                                                                                   |  | Three Months Ended
  March 31, |   | Year Ended
  December 31,
  2003
|-------------------------------------------------------------------------------------------------- |  | ------------------------------ | - | --------------------------------
|                                                                                                   |  |                                |  
|                                                                                                   |  | 2004                           |   | 2003                            
|                                                                                                   |  |                                |   |                                 
|Net income                                                                                         |  |                                | $ | 2,451                           
|                                                                                                   |  |                                |   |                                 
|Weighted average number of common
     shares used in Basic EPS                                    |  |                                |   | 6,152,105                       
|Effect of dilutive stock options                                                                   |  |                                |   | 193,967                         
|                                                                                                   |  |                                |   |                                 
|Weighted number of common shares
     and dilutive potential common
     stock used in Diluted EPS |  |                                |   | 6,346,072                       
|                                                                                                   |  |                                |   |                                 

NOTE 16 - 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, |  
|--------------------------------------------------------------------- | ----------------------------------------------------- | --------- | -
|                                                                      |                                                       |           |  
|                                                                      |                                                       | 2004      |  
|                                                                      |                                                       |           |  
|                                                                      |                                                       |           |  
|Financial Instruments Whose Contract
  Amounts Represent Credit Risk: |                                                       |           |  
|                                                                      | Loan Commitments Including Unfunded Lines
  of Credit |           | $
|                                                                      | Standby Letters of Credit                             |           |  

Loan
commitments are agreements to lend to a customer as long as there is no
customer violation of any condition established in the contract.  Commitments generally have fixed expiration
dates or other termination clauses and may require payment of a fee.  Standby letters of credit are conditional
commitments by the Corporation to guarantee the performance of a customer to a
third party.  The credit risk involved
in issuing letters of credit is essentially the same as that involved in
extending loan facilities to customers.

Since
many of the loan commitments and letters of credit 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.

16

---

---

NOTE 17
- Concentrations of Credit Risk

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

NOTE 18
- Litigation

The
Corporation is 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.

NOTE 19
- Stock Repurchase Plan

On
April 20, 2004, the Board of Directors of the Corporation approved a stock
repurchase plan.  The plan authorized
management to purchase up to 307,680 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 three months ended March 31, 2004, no shares were purchased by the
Corporation through a similar repurchase plan through the open market.

NOTE 20
- Subsequent Events

On
April 20, 2004, the Board of Directors of the Corporation approved a quarterly
dividend of $.14 per share to be paid on May 14, 2004 to shareholders of record
on May 3, 2004.

The
Corporation signed a definitive agreement on February 5, 2004 to acquire ANB
Financial Corporation, the parent company of Arlington National Bank.  This acquisition allows the Corporation to
expand its presence into the Arlington, Texas market in Tarrant County.  The Corporation will assume approximately
$55 million in loans and $80 million in deposits from ANB Financial
Corporation.  Completion of the
acquisition is expected to occur April 30, 2004 with an effective date of May
1, 2004, following regulatory approval, at which time the four Arlington
locations will become branches of Summit Bank, N.A.

The
Corporation on May 3, 2004, will establish Summit Bancshares, Inc. Statutory
Trust I (the Issuer Trust) as a wholly owned subsidiary of Summit Bancshares,
Inc.  The Issuer Trust will offer
$12,000,000 of Floating Rate (three-month LIBOR plus a margin of 2.65 percent)
Capital Securities (the Capital Securities), which represent beneficial interests
in the assets of the Issuer Trust.  The
Capital Securities will be offered and sold to qualified institutional buyers
(as defined in Rule 144A under the Securities Act of 1933, as amended).  The proceeds from the sale of the Capital
Securities will be used to fund a portion of the cash consideration for the
acquisition of ANB Financial Corporation discussed in the previous paragraph.

NOTE 21
- 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.                                                                                                                                                                                                                                                                                                                                                                                                                                    

NOTE 21 - Fair Values of Financial
Instruments (contd.)

17

---

---

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

|                                        |                                      | March 31,         |  
|--------------------------------------- | ------------------------------------ | ----------------- | -
|                                        |                                      |                   |  
|                                        |                                      | 2004              |  
|                                        |                                      |                   |  
|                                        |                                      | Carrying
  Amount |  
|                                        |                                      |                   |  
|Financial Assets                        |                                      |                   |  
|                                        | Cash and due from banks              |                   | $
|                                        | Federal funds sold and Due From Time |                   |  
|                                        | Securities                           |                   |  
|                                        | Loans                                |                   |  
|                                        | Allowance for loan losses            |                   |  
|                                        |                                      |                   |  
|Financial Liabilities                   |                                      |                   |  
|                                        | Deposits                             |                   |  
|                                        | Short Term Borrowings                |                   |  
|                                        |                                      |                   |  
|Off-balance Sheet Financial Instruments |                                      |                   |  
|                                        | Loan commitments                     |                   |  
|                                        | Letters of credit                    |                   |  

NOTE 22 - Comprehensive Income

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

|                                                                                                             |                      | Three Months Ended
  March 31, |   | Year Ended
  December 31,
  2003
|------------------------------------------------------------------------------------------------------------ | -------------------- | ------------------------------ | - | --------------------------------
|                                                                                                             |                      |                                |  
|                                                                                                             |                      | 2004                           |   | 2003                            
|                                                                                                             |                      |                                |   |                                 
|                                                                                                             |                      |                                |   |                                 
|Net Income                                                                                                   |                      |                                | $ | 2,451                           
|Other Comprehensive Income:
     Change in unrealized gain on securities
     available-for-sale, net of tax |                      |                                |   | 1,261                           
|                                                                                                             |                      |                                |   |                                 
|                                                                                                             |                      |                                |   |                                 
|                                                                                                             | Comprehensive Income |                                |   | $                               
|                                                                                                             |                      |                                |   |                                 

18

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

The
following discussion should be read in conjunction with the consolidated financial
statements, accompanying notes and selected financial data appearing elsewhere
in this Quarterly Report on Form 10-Q and in our Annual Report on Form 10-K and
may contain certain forward-looking statements that are based on current
management expectations.  Generally,
verbs in the future tense and the words believe, expect, anticipate,
estimate, intends, opinion, potential and similar expressions identify
forward-looking statements.  Examples of
this forward-looking information can be found in, but are not limited to, the
expected effects of accounting pronouncements and government regulation
applicable to our operations, the discussion of allowance for loan losses,
subsequent events and quantitative and qualitative disclosure about market
risk.  Our actual results could differ
materially from those management expectations. 
Further information concerning our business, including additional risk
factors and uncertainties that could cause actual results to differ materially
from the forward-looking statements contained in this Quarterly Report on Form
10-Q, are set forth below under the heading Factors That May Affect Future
Results.  These risks and uncertainties
should be considered in evaluating forward-looking statements and undue reliance
should not be placed on such statements. 
The forward-looking statements contained herein speak only as of the
date of this Quarterly Report on Form 10-Q and, except as may be required by
applicable law and regulation, we do not undertake, and specifically disclaim
any obligation to, publicly update or revise such statements to reflect events
or circumstances after the date of such statements or to reflect the occurrence
of anticipated or unanticipated events. 
Except as the context otherwise requires, references herein to the
Corporation, we, or our refer to the business of Summit Bancshares, Inc.
and its consolidated subsidiaries.

Overview

Our
business has been conducted primarily through our wholly-owned subsidiaries,
Summit Bank, National Association, (the Bank), Summit Delaware Financial
Corporation and SIA Insurance Agency, Inc. (SIA).  The Bank currently operates its branch offices in seven locations
in Fort Worth.

Our
results of operations are primarily dependent on net interest income, which is
the difference between the income earned on our loan and investment portfolios
and our cost of funds, consisting of the interest paid on deposits and
borrowings.  Results of operations are
also affected by our allowance for loan losses, investment activities, loan
servicing fees and other fees.  Our
non-interest expense principally consists of compensation and benefits,
occupancy and equipment expense, advertising costs, data processing expense and
other expenses.

Net
income for the first quarter of 2004 was $2,451,000, an increase of $18,000, or
0.7%, compared with $2,433,000 recorded for the first quarter of 2003.  On a weighted average share basis, net
income for the first quarter of 2004 remained constant at $0.39 per diluted
share as compared to the same period from the prior year.  The increase in earnings during the first
quarter of 2004 was primarily due to an increase in net interest income of
$848,000 over the first quarter of 2003. 
The increase in net interest income was primarily due to growth in
average loans of 6.7% from the fourth quarter of 2003 and 20.5% compared to the
first quarter of 2003, which more than offset the impact of the low interest
rate environment and a lower net interest margin as compared to the first
quarter of 2003.  The increase in
non-interest expenses during the first quarter of 2004 compared to the first
quarter of 2003 was primarily attributable to expansion initiatives and
enhanced infrastructure.

Based
in part on an improving economy in our market area and our hiring of additional
commercial lending personnel, total loans at March 31, 2004 were $593.3
million, which represented an increase of $39.5 million, or 7.1%, over total
loans at December 31, 2003 and an increase of $103.9 million, or 21.2%, over
total loans at March 31, 2003.  We do
not expect to see loan growth rates from quarter to quarter to be as high as
they have the past two quarters but do expect double digit loan growth for the
full year of 2004.  Total deposits at
March 31, 2004 of $656.4 million increased $15.0 million, or 2.3% from December
31, 2003 and increased $69.5 million, or 11.8%, from $586.9 million at March
31, 2003.  Growth was experienced in
every category of deposits with the largest growth coming in demand deposits
and savings deposits which increased $21.0 million and $20.0 million,
respectively.  Shareholders equity was
$71.6 million at March 31, 2004, which represented an increase of $2.9 million,
or 4.2%, compared to December 31, 2003 and an increase of $5.0 million, or
7.5%, from March 31, 2003.

19

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The
following table shows selected performance ratios for the first quarters of
2004 and 2003 that management believes to be key indicators of our performance:

|                                                           |  | First Quarter |  
|---------------------------------------------------------- |  | ------------- | -
|                                                           |  |               |  
|                                                           |  | 2004          |  
|                                                           |  |               |  
|Annualized Return on Average Assets
  (ROAA)               |  | 1.22          | %
|Annualized Return on Average
  Shareholders Equity (ROAE) |  | 14.06         |  
|Shareholders Equity to Assets -
  Average                 |  | 8.68          |  
|Dividend Payout Ratio                                      |  | 35.09         |  
|Net Interest Margin (tax equivalent)                       |  | 4.36          |  
|Efficiency Ratio                                           |  | 55.94         |  

The
return on average assets ratio is calculated by dividing net income by average
total assets for the period.  Management
believes our return on average assets ratio of 1.22% for the first quarter of
2004 compares favorably to the return on average assets ratio of other
financial institutions in our peer group, which was 1.25% in the first quarter
of 2004.  Our peer group is comprised of
other publicly traded bank holding companies headquartered in Texas and was
selected by our management.

The
return on average shareholders equity ratio is calculated by dividing net
income by average shareholders equity for the period.  Management believes our return on average
shareholders equity ratio of 14.06% in the first quarter of 2004 compares
favorably to the return on average shareholders equity ratio of other
financial institutions in our peer group, which was 13.66% in the first quarter
of 2004.

The
shareholders equity to assets ratio is calculated by dividing average
shareholders equity by average total assets for the period.  Management believes our average
shareholders equity to average assets ratio of 8.68% in the first quarter of
2004 compares favorably to the average shareholders equity to average asset
ratio of other financial institutions in our peer group, which was 9.18% in the
first quarter of 2004.

The
dividend payout ratio is determined by dividing the total dividends paid by net
income for the period.  Our dividend
payout ratio results in a yield-to-market price return equal to or greater than
our peer group.

Net
interest margin is calculated by dividing net interest income on a tax
equivalent basis by average total earning assets.  Management believes our net interest margin of 4.36% in the first
quarter of 2004 compares favorably to the net interest margin ratio of other
financial institutions in our peer group, which was 4.05% in the first quarter
of 2004.

The
efficiency ratio is calculated by dividing non-interest expenses by the sum of
total non-interest income and net interest income for the period.  The efficiency ratio provides a measure of
the extent to which our revenues are absorbed by our non-interest
expenses.  Management believes our
efficiency ratio of 55.94% in the first quarter of 2004 compares favorably to
the average efficiency ratio of other financial institutions in our peer group,
which was 60.50% in the first quarter of 2004.

20

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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 2004 and 2003 (rates on tax equivalent basis):

|                                                               |                                                                    | Three Months Ended March 31,
|-------------------------------------------------------------- | ------------------------------------------------------------------ | ----------------------------
|                                                               |                                                                    |                             
|                                                               |                                                                    | 2004                        
|                                                               |                                                                    |                             
|                                                               |                                                                    | Average
  Balances          
|                                                               |                                                                    |                             
|                                                               |                                                                    | (Dollars in Thousands)      
|Earning Assets:                                                |                                                                    |                             
|                                                               | Federal Funds Sold & Due From Time                                 |                             
|                                                               | Investment Securities (Taxable)                                    |                             
|                                                               | Investment Securities (Tax-exempt)                                 |                             
|                                                               | Loans, Net of Unearned Discount(1)                                 |                             
|                                                               |                                                                    |                             
|                                                               | Total Earning Assets                                               |                             
|                                                               |                                                                    |                             
|Non-interest Earning Assets:                                   |                                                                    |                             
|                                                               | Cash and Due From Banks                                            |                             
|                                                               | Other Assets                                                       |                             
|                                                               | Allowance for Loan Losses                                          |                             
|                                                               |                                                                    |                             
|                                                               | Total Assets                                                       |                             
|                                                               |                                                                    |                             
|                                                               |                                                                    |                             
|Interest-Bearing Liabilities:                                  |                                                                    |                             
|                                                               | Interest-Bearing Transaction 
     Accounts and Money Market Funds |                             
|                                                               | Savings                                                            |                             
|                                                               | Certificates of Deposit under $100,000
     and IRAs              |                             
|                                                               | Certificates of Deposit 
     $100,000 or more                     |                             
|                                                               | Other Time                                                         |                             
|                                                               | Other Borrowings                                                   |                             
|                                                               |                                                                    |                             
|                                                               | Total Interest-Bearing Liabilities                                 |                             
|                                                               |                                                                    |                             
|                                                               |                                                                    |                             
|Non-interest Bearing Liabilities:                              |                                                                    |                             
|                                                               | Demand Deposits                                                    |                             
|                                                               | Other Liabilities                                                  |                             
|                                                               | Shareholders Equity                                               |                             
|                                                               |                                                                    |                             
|                                                               | Total Liabilities and Shareholders Equity                         |                             
|                                                               |                                                                    |                             
|Net Interest Income and Margin 
     (Tax-equivalent Basis)(2) |                                                                    |                             
|                                                               |                                                                    |                             
|                                                               |                                                                    |                             

(1)     Loan
interest income includes fees and loan volumes include loans on non-accrual.  The loan fees include loan origination fees
which are considered adjustments to interest income.  These fees aggregated $334,000 and $262,000 at March 31, 2004 and
2003, respectively, and $1,248,000 for the year ended December 31, 2003.  Related loan origination costs are not
separately allocated to loans, but are charged to non-interest expense.  For the purpose of calculating loan yields,
average loan balances include non-accrual loans with no related interest income.

(2)     Presented
on tax equivalent basis (T/E) using a federal income tax rate of
34% both years.

The
net interest margin was 4.36% for the first quarter of 2004, which represented
a decrease of 31 basis points from the first quarter of 2003.  This decrease in net interest margin
reflected a 45 basis point decrease in yield on earning assets from the first
quarter of 2003 to the first quarter of 2004, which was partially offset by a
21 basis point decrease in rates paid on interest-bearing liabilities from the
first quarter of 2003 to the first quarter of 2004.  The decrease in net interest margin also reflected less earned
income from our investment in earning assets of our non-interest fundings,
demand deposits and shareholders equity, in the first quarter of 2004 compared
to the first quarter of 2003 due to the lower interest rate environment during
the first quarter of 2004.

In
the event that our average loans continue to grow during 2004 and we are unable
to fund any such growth solely through the generation of additional deposits,
we may be required to obtain funding from secondary sources, such as the
Federal Home Loan Bank, which could have a negative impact on our net interest
margin.  Therefore, we may experience a
slightly lower net interest

21

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---

margin during the second
quarter of 2004 as a result of any such borrowings and as our investment
portfolio and maturing fixed rate loans reprice at lower rates.  Because of the composition of our balance
sheet and our emphasis on commercial lending, we are market interest rate
sensitive and expect to benefit from any market interest rate increases.

Net Interest Income

Net
interest income (tax equivalent) for the first quarter of 2004 was $8,319,000,
which represented an increase of $850,000, or 11.4%, compared to the first
quarter of 2003.  In the first quarter
of 2004, tax equivalent interest income increased $949,000, or 10.2%, while
interest expense increased $99,000, or 5.5%, compared to the first quarter of
2003.  The net increase in net interest
income resulted from a 18.4% growth in average earning assets for the first
quarter of 2004 compared to the first quarter of 2003, which offset a 25 basis
point decrease in market interest rates (as measured by average market rates
published in the Wall Street Journal) from the first of January 2003 through
March 2004.

The
table below analyzes the increase in net interest income on a fully tax
equivalent basis for the three month periods ended March 31, 2004 and 2003.  Non-accruing loans have been included in
assets for these computations, thereby reducing yields on total loans.  The changes in interest due to both rate and
volume in the rate/volume analysis table below have been allocated to volume or
rate change in proportion to the absolute amounts of the change in each.

|                                   |  | ANALYSIS OF CHANGES IN NET INTEREST INCOME(Dollars in
  Thousands)           |      
|---------------------------------- |  | ---------------------------------------------------------------------------- | -----
|                                   |  |                                                                              |      
|                                   |  | 1st Qtr. 2004 vs. 1st
  Qtr. 2003
  Increase (Decrease)
  Due to Changes in: |      
|                                   |  |                                                                              |      
|                                   |  | Volume                                                                       |      
|                                   |  |                                                                              |      
|Interest Earning Assets:           |  |                                                                              |      
|Federal Funds Sold                 |  | $                                                                            | 12   
|Investment Securities (Taxable)    |  |                                                                              | 156  
|Investment Securities (Tax-exempt) |  |                                                                              | 26   
|Loans, Net of Unearned Discount    |  |                                                                              | 1,549
|                                   |  |                                                                              |      
|                                   |  |                                                                              |      
|Total Interest Income              |  |                                                                              | 1,743
|                                   |  |                                                                              |      
|Interest-Bearing Liabilities:      |  |                                                                              |      
|Deposits                           |  |                                                                              | 159  
|Other Borrowings                   |  |                                                                              | 175  
|                                   |  |                                                                              |      
|                                   |  |                                                                              |      
|Total Interest Expense             |  |                                                                              | 334  
|                                   |  |                                                                              |      
|                                   |  |                                                                              |      
|Net Interest Income                |  | $                                                                            | 1,409
|                                   |  |                                                                              |      
|                                   |  |                                                                              |      

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):

|                                    |  | Three Months Ended
  March 31, |      
|----------------------------------- |  | ------------------------------ | -----
|                                    |  |                                |      
|                                    |  | 2004                           |      
|                                    |  |                                |      
|                                    |  |                                |      
|Service Charges on Deposit Accounts |  | $                              | 906  
|Non-recurring Income                |  |                                | 167  
|Other Non-interest Income           |  |                                | 494  
|                                    |  |                                |      
|                                    |  |                                |      
|Total Non-interest Income           |  | $                              | 1,567
|                                    |  |                                |      

The
decrease in other non-interest income in the first quarter of 2004 is primarily
due to decreases in mortgage brokerage/origination fees, letter of credit fees
and exchange fees.  Mortgage brokerage
fees declined due to a slowdown in mortgage re-financings compared to the
previous year.  The non-recurring income
in the first quarter of 2004 represented the gain on sale of assets previously
held in other assets.

22

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Non-interest Expense

Non-interest
expenses include all expenses other than interest expense, the 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):

|                                                           |                               | Three Months Ended
  March 31,
|---------------------------------------------------------- | ----------------------------- | ------------------------------
|                                                           |                               |                               
|                                                           |                               | 2004                          
|                                                           |                               |                               
|Salaries & Employee Benefits                               |                               | $                             
|Occupancy Expense - Net                                    |                               |                               
|Furniture and Equipment Expense                            |                               |                               
|Other Real Estate and Foreclosed 
     Asset Expense - Net |                               |                               
|Other Expenses:                                            |                               |                               
|                                                           | Business Development          |                               
|                                                           | Insurance - Other             |                               
|                                                           | Legal & Professional Fees     |                               
|                                                           | Item Processing               |                               
|                                                           | Taxes - Other                 |                               
|                                                           | Postage & Courier             |                               
|                                                           | Printing & Supplies           |                               
|                                                           | Regulatory Fees & Assessments |                               
|                                                           | Other Operating Expenses      |                               
|                                                           |                               |                               
|                                                           |                               |                               
|                                                           | Total Other Expenses          |                               
|                                                           |                               |                               
|                                                           |                               |                               
|                                                           | Total Non-interest Expense    |                               
|                                                           |                               |                               
|                                                           |                               |                               

Total
non-interest expense increased 15.3% in the first quarter of 2004 over 2003,
reflecting increases in salaries and benefits, occupancy and equipment and
business development expenses, which were offset partially by a decline in item
processing expenses.   As a percent of
average assets, non-interest expenses were 2.75% in the first quarter of 2004
(annualized) and 2.83% in the same period of 2003.

The
increase in salaries and employee benefit expenses for the first quarter of
2004 was due to salary merit increases, the opening of a new branch location
during the second quarter of 2003 and several additions during the latter half
of 2003 to the lending staff.

The
increase in occupancy and equipment expense for the first three months of 2004
was due to the opening of the new branch mentioned above and the relocation and
centralization of the administrative, credit and data processing departments
into a new facility which was leased beginning in May 2003.

The
increase in business development expenses during the first quarter of 2004 was
related to the growth in loans and new business relationships.

The
decline in item processing expenses during the first quarter of 2004 was
achieved due to the Corporations chief technology officer renegotiating terms
of the data processing contract with the Corporations outside processing
company.

Allowance for Loan Losses
and Non-Performing Assets

Our
allowance for loan losses was $8,320,000, or 1.40% of total loans, as of March
31, 2004 compared to $7,365,000, or 1.50% of total loans, as of March 31,
2003.   For the three months ended March
31, 2004 and 2003, net charge-offs (recoveries) were .01% and (.07)% of loans,
respectively, not annualized.

23

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

|                                               |                         | Three Months Ended
  March 31, |      
|---------------------------------------------- | ----------------------- | ------------------------------ | -----
|                                               |                         |                                |      
|                                               |                         | 2004                           |      
|                                               |                         |                                |      
|Balance, Beginning of Period                   |                         | $                              | 7,784
|Provisions, Charged to Income                  |                         |                                | 605  
|                                               |                         |                                |      
|Loans Charged-Off                              |                         |                                | (137 
|Recoveries of Loans Previously
    Charged-Off |                         |                                | 68   
|                                               |                         |                                |      
|                                               |                         |                                |      
|                                               | Net Loans (Charged-Off) |                                |      
|                                               | Recovered               |                                |      
|                                               |                         |                                |      
|                                               |                         |                                |      
|Balance, End of Period                         |                         | $                              | 8,320
|                                               |                         |                                |      
|                                               |                         |                                |      

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

|                                                          |                                                           | March
  31,2004 |   | December
  31,2003 |       | September
  30,2003 |  | June
  30,2003 |       | March
  31,2003
|--------------------------------------------------------- | --------------------------------------------------------- | --------------- | - | ------------------ | ----- | ------------------- |  | -------------- | ----- | ---------------
|                                                          |                                                           |                 |   |                    |       |                     |  |                |       |                
|Non-Accrual Loans                                         |                                                           |                 | $ | 2,405              |       |                     |  | $              | 2,351 |                
|Renegotiated Loans                                        |                                                           |                 |   | -0-                |       |                     |  |                | -0-   |                
|Other Real Estate Owned and 
    Other Foreclosed Assets  |                                                           |                 |   | 7                  |       |                     |  |                | -0-   |                
|                                                          |                                                           |                 |   |                    |       |                     |  |                |       |                
|                                                          |                                                           |                 |   |                    |       |                     |  |                |       |                
|                                                          | Total Non-Performing Assets                               |                 |   | $                  | 2,412 |                     |  |                | $     | 2,351          
|                                                          |                                                           |                 |   |                    |       |                     |  |                |       |                
|                                                          |                                                           |                 |   |                    |       |                     |  |                |       |                
|As a Percent of:                                          |                                                           |                 |   |                    |       |                     |  |                |       |                
|                                                          | Total Assets                                              |                 |   |                    | 0.28  | %                   |  |                |       | 0.30           
|                                                          | Total Loans and Other Real Estate/
     Foreclosed Assets |                 |   |                    | 0.41  | %                   |  |                |       | 0.42           
|                                                          |                                                           |                 |   |                    |       |                     |  |                |       |                
|Loans Past Due 90 days or 
       More and Still Accruing |                                                           |                 | $ | -0-                |       |                     |  | $              | 55    |                

At
March 31, 2004 the ratio of non-accrual loans to total loans were .41% and
non-performing assets represented .41% of loans and other real estate
owned/foreclosed assets at the same date.

As
of March 31, 2004, non-accrual loans were comprised of $1,836,000 in commercial
loans, $351,000 in real estate mortgage loans, $65,000 in interim construction
loans and $153,000 in consumer loans.

As
of March 31, 2004, there was no other real estate owned.  However, the Corporation has $7,000 in Other
Foreclosed Assets which represents two motor vehicles.  These assets are in process of
liquidation.  The cost of liquidation
will be recorded as a current period expense.

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

|                                                |                      | March 312004, |   | December 31,2003 |     | September 30,2003 |  | June 30,2003 |        | March 312003,
|----------------------------------------------- | -------------------- | ------------- | - | ---------------- | --- | ----------------- |  | ------------ | ------ | -------------
|                                                |                      |               |   |                  |     |                   |  |              |        |              
|                                                |                      |               |   |                  |     |                   |  |              |        |              
|Non-Performing Loans                            |                      |               | $ | 2,405            |     |                   |  | $            | 2,351  |              
|Criticized Loans                                |                      |               |   | 26,888           |     |                   |  |              | 27,737 |              
|Allowance for Loan Losses                       |                      |               |   | 8,320            |     |                   |  |              | 7,784  |              
|Allowance for Loan Losses 
    as a Percent of: |                      |               |   |                  |     |                   |  |              |        |              
|                                                | Non-Performing Loans |               |   |                  | 346 | %                 |  |              |        | 331          
|                                                | Criticized Loans     |               |   |                  | 31  | %                 |  |              |        | 28           

24

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Loans
are graded on a system similar to that used by the banking industry
regulators.  The first level of
criticized loans is Other Assets Especially Mentioned (OAEM).  These loans are fundamentally sound but have
potential weaknesses which may, if not corrected, weaken the asset or
inadequately protect the banks credit position at some future date.  The second level is Substandard, which are
loans inadequately protected by current sound net worth, paying capacity or
pledged collateral of the borrower.  The
last level of criticized loans, before they are charged-off, is
Doubtful.  Doubtful loans are
considered to have inherent weaknesses because collection or liquidation in
full is highly questionable.  In
addition to the above grading system, the Corporation maintains a separate
watch list which further aids the Corporation in monitoring loan
quality.  Watch list loans show warning
elements where the present status portrays one or more deficiencies that
require attention in the short run or where pertinent ratios of the account
have weakened to a point where more frequent monitoring is warranted.

Criticized
loans, loans classified as OAEM, Substandard or Doubtful as noted above, have
increased in the past year.  A significant
portion of this increase is due to enhanced classification procedures and the employment
of a Chief Credit Officer in the third quarter of 2001 who is responsible for
monitoring loan quality by ensuring that the quality is sustained, that
individual loans perform as agreed and that the Bank receives an appropriate
return for the risk in the portfolio. 
The Corporation remains diligent in its efforts to identify any loan
that might reflect weakness of the borrower as soon as possible.  Management is not aware of any potential
loan problems that have not been disclosed, to which serious doubt exist as to
the ability of the borrower to substantially comply with the present repayment
terms.

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.

|                                                          |  | Matures or Reprices within: |         | Total
  Rate
  Sensitive 
  One Year 
  or Less |   | Repriced 
  After
  1 Year or 
  Non-interest
  Sensitive |    |   |         |      
|--------------------------------------------------------- |  | --------------------------- | ------- | ----------------------------------------------- | - | --------------------------------------------------------- | -- | - | ------- | -----
|                                                          |  |                             |         |                                                 |   |                                                           |   
|                                                          |  |                             |         |                                                 |   |                                                           |   
|                                                          |  |                             |         |                                                 |   |                                                           |   
|                                                          |  |                             |         |                                                 |   |                                                           |    |  
|                                                          |  | 30 Days 
  or Less          |         | 31-180
  Days                                   |   | 181 to 
  One Year                                        |    |   |         | Total
|                                                          |  |                             |         |                                                 |   |                                                           |    |   |         |      
|Earning Assets:                                           |  |                             |         |                                                 |   |                                                           |    |   |         |      
|Loans                                                     |  | $                           | 304,246 |                                                 | $ | 47,385                                                    |    | $ | 43,546  |      
|Investment Securities                                     |  |                             | 11,445  |                                                 |   | 18,073                                                    |    |   | 15,658  |      
|Federal Funds Sold and 
       Due From Time              |  |                             | 43,243  |                                                 |   | -0-                                                       |    |   | -0-     |      
|                                                          |  |                             |         |                                                 |   |                                                           |    |   |         |      
|                                                          |  |                             |         |                                                 |   |                                                           |    |   |         |      
|Total Earning Assets                                      |  |                             | 358,934 |                                                 |   | 65,458                                                    |    |   | 59,204  |      
|                                                          |  |                             |         |                                                 |   |                                                           |    |   |         |      
|                                                          |  |                             |         |                                                 |   |                                                           |    |   |         |      
|Interest Bearing Liabilities:                             |  |                             |         |                                                 |   |                                                           |    |   |         |      
|Interest-Bearing Transaction 
       Accounts and Savings |  |                             | 341,402 |                                                 |   | -0-                                                       |    |   | -0-     |      
|Certificates of Deposit under 
       $100,000 and IRAs  |  |                             | 5,903   |                                                 |   | 17,510                                                    |    |   | 13,454  |      
|Certificates of Deposit
       $100,000 or More           |  |                             | 4,695   |                                                 |   | 22,541                                                    |    |   | 13,359  |      
|Short Term Borrowings                                     |  |                             | 84,691  |                                                 |   | 15,000                                                    |    |   | 25,000  |      
|                                                          |  |                             |         |                                                 |   |                                                           |    |   |         |      
|                                                          |  |                             |         |                                                 |   |                                                           |    |   |         |      
|Total Interest Bearing 
            Liabilities           |  |                             | 436,691 |                                                 |   | 55,051                                                    |    |   | 51,813  |      
|                                                          |  |                             |         |                                                 |   |                                                           |    |   |         |      
|                                                          |  |                             |         |                                                 |   |                                                           |    |   |         |      
|Interest Sensitivity
    Gap                              |  | $                           | (77,757 | )                                               | $ | 10,407                                                    |    | $ | 7,391   |      
|                                                          |  |                             |         |                                                 |   |                                                           |    |   |         |      
|                                                          |  |                             |         |                                                 |   |                                                           |    |   |         |      
|Cumulative Gap                                            |  | $                           | (77,757 | )                                               | $ | (67,350                                                   | )  | $ | (59,959 | )    
|                                                          |  |                             |         |                                                 |   |                                                           |    |   |         |      
|                                                          |  |                             |         |                                                 |   |                                                           |    |   |         |      
|Periodic Gap to
    Total Assets                          |  |                             | (9.04   | )%                                              |   | 1.21                                                      | %  |   | 0.86    | %    
|                                                          |  |                             |         |                                                 |   |                                                           |    |   |         |      
|Cumulative Gap to
    Total Assets                        |  |                             | (9.04   | )%                                              |   | (7.83                                                     | )% |   | (6.97   | )%   
|                                                          |  |                             |         |                                                 |   |                                                           |    |   |         |      
|                                                          |  |                             |         |                                                 |   |                                                           |    |   |         |      

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.

25

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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 (6.97%) was
reversed to a positive 22.23%  beta
adjusted GAP position.  Management
feels that the beta adjusted GAP risk technique more accurately reflects the
Corporations GAP position.

Capital

At
March 31, 2004, shareholders equity totaled $71.6 million, an increase of $2.9
million, or 4.2%, compared to December 31, 2003, and an increase of $5.0
million, or 7.5%, compared to March 31, 2003. 
This increase reflected an increase is retained earnings and the impact
of the retirement of treasury stock. 
During the first quarter of 2004, we repurchased no shares of Common
Stock.  Our ability to repurchase shares
of Common Stock is subject to various banking laws, regulations and policies as
well as rules and regulations of the Securities and Exchange Commission.  Our board of directors has authorized the
repurchase of up to 5% of our outstanding Common Stock.

We
and the Bank are subject to capital adequacy guidelines established by the
Federal Reserve Board and other regulatory authorities.  The table below illustrates the Banks and
our compliance with the capital adequacy guidelines as of March 31, 2004
and2003 (dollars in thousands):

|                                     |                | March 31, 2004                  |   | March 31, 2003   
|------------------------------------ | -------------- | ------------------------------- | - | -----------------
|                                     |                | The Consolidated 
  Corporation |   | Summit Bank, N.A.
|                                     |                |                                 |   |                  
|Total Assets                         |                |                                 | $ | 860,361          
|Risk Weighted Assets                 |                |                                 |   | 632,617          
|                                     |                |                                 |   |                  
|Equity Capital (Tier 1)              |                |                                 |   | 69,626           
|Qualifying Allowance for Loan Losses |                |                                 |   | 7,913            
|                                     |                |                                 |   |                  
|                                     | Total Capital  |                                 |   |                  
|                                     |                |                                 |   |                  
|                                     |                |                                 |   |                  
|Leverage Ratio                       |                |                                 |   | 8.62             
|Risk Capital Ratio:                  |                |                                 |   |                  
|                                     | Tier I Capital |                                 |   |                  
|                                     | Total Capital  |                                 |   |                  

As
of March 31, 2004, we and the Bank exceeded our risk-based capital and leverage
requirements set by regulatory authorities and satisfied the criteria for
classification as a well capitalized institution under the rules of the
Federal Deposit Insurance Corporation Improvement Act of 1991.

Liquidity

Our
primary internal sources of liquidity consist of the federal funds that we
sell and our portfolio of marketable investment securities, particularly those
with shorter maturities.  Federal funds
sold and investment securities maturing within 30 days represented $41.7
million, or 4.9%, of total assets as of March 31, 2004.  Additionally, our ability to sell loan
participations, purchase federal funds and obtain advances from the Federal
Home Loan Bank serve as secondary sources of liquidity.  The Bank has approved federal funds lines at
other banks.

Our
liquidity is enhanced by the fact that 89.9% our total deposits at March 31,
2004 were core deposits.  For this
purpose, core deposits are defined as total deposits less public funds and
certificates of deposit greater than $100,000.   Our loan to deposit ratio averaged 90.6% for the three month
period ended March 31, 2004.

In
the event that our average loans continue to grow during 2004 and we are unable
to fund any such growth solely through the generation of additional deposits,
we may be required to obtain funding from secondary sources, including
purchasing federal funds, obtaining advances from the Federal Home Loan Bank or
other secondary sources.  In such event,
our business, results of operations and financial condition could be negatively
impacted.

Our
income, which provides funds for the payment of dividends to our shareholders
and for other corporate purposes, is derived from our investment in the Bank.

26

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Subsequent
Events

On
April 20, 2004, the Board of Directors of the Corporation approved a quarterly
dividend of $.14 per share to be paid on May 14, 2004 to shareholders of record
on May 3, 2004.

The
Corporation signed a definitive agreement on February 5, 2004 to acquire ANB
Financial Corporation, the parent company of Arlington National Bank.  This acquisition allows the Corporation to
expand its presence into the Arlington, Texas market in Tarrant County.  The Corporation will assume approximately
$55 million in loans and $80 million in deposits from ANB Financial
Corporation.  Completion of the
acquisition is expected to occur April 30, 2004 with an effective date of May
1, 2004, following regulatory approval, at which time the four Arlington
locations will become branches of Summit Bank, N.A.

The
Corporation on May 3, 2004, will establish Summit Bancshares, Inc. Statutory
Trust I (the Issuer Trust) as a wholly owned subsidiary of Summit Bancshares,
Inc.  The Issuer Trust will offer
$12,000,000 of Floating Rate (three-month LIBOR plus a margin of 2.65 percent)
Capital Securities (the Capital Securities), which represent beneficial
interests in the assets of the Issuer Trust. 
The Capital Securities will be offered and sold to qualified
institutional buyers (as defined in Rule 144A under the Securities Act of
1933, as amended).  The proceeds from
the sale of the Capital Securities will be used to fund a portion of the cash
consideration for the acquisition of ANB Financial Corporation discussed in the
previous paragraph.

Critical
Accounting Policies

Our
accounting policies are fundamental to understanding managements discussion
and analysis of results of operations and financial condition.  We have identified our policy with respect to
allowance for loan losses as critical because it requires management to make
particularly difficult, subjective or complex judgments about matters that are
inherently uncertain and because of the likelihood that materially different
amounts would be reported under different conditions or using different
assumptions.  There have been no
material changes in our application of accounting policies since December 31,
2003.  We, in consultation with our
Audit Committee of the Board of Directors, have reviewed and approved this
critical accounting policy, which is further described under the captions Loan
and Allowance for Loan Losses in Note 1 (Summary of Significant Accounting
Policies) to the Financial Statements.

These evaluations are
inherently subjective because, even though they are based on objective data, it
is managements interpretation of that data that determines the amount of the
appropriate allowance.  Therefore, from
time to time (but at least quarterly), management reviews the actual performance
and write-off history of the loan portfolio and compares that to previously
determined allowance coverage percentages. 
In this manner, management evaluates the impact the previously mentioned
variables may have had on the loan portfolio to determine which changes, if
any, should be made to the assumptions and analyses.  Recent analysis has indicated that projections of estimated
losses inherent in the loan portfolio has approximated actual write-off
experience during the current economic environment.

Actual
results could differ materially from estimates as a result of changes in
economic or market conditions and other factors.  Changes in our evaluations and the assumptions underlying these
evaluations could result in a material change in the allowance.  While we believe that the allowance for loan
losses has been established and maintained at levels adequate to reflect the
risks inherent in the loan portfolio, future increases may be necessary if
economic or market conditions and other factors differ substantially from the
conditions that existed at the time of the initial determination.

Factors
That May Affect Future Results

This
Quarterly Report on Form 10-Q contains forward-looking statements concerning
the business, results of operations and financial condition of us and our
subsidiaries.  The forward-looking
statements are based upon managements current expectations and assumptions
about future events.  Such expectations
and assumptions have been expressed in good faith, and management believes that
there is a reasonable basis for them.

A
number of risks and uncertainties could cause our actual results to differ
materially from the forward-looking statements contained in this Quarterly
Report on Form 10-Q.  These risks and
uncertainties include, without limitation:

| |  | Changes in, or the
  effects of, competition for our products and services;                                                                                                   
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                               
| |  | Our ability to
  effectively manage interest rate risk and other market, credit and operation
  risks;                                                                        
| |   |                                                                                                                                                                               
| |  | Our ability to develop
  competitive new products and services in a timely manner and the acceptance
  of such products and services by our customers and potential customers;
| |   |                                                                                                                                                                               
| |  | The costs and effects of
  litigation involving us and of unexpected or adverse outcomes in such
  litigation;                                                                
| |   |                                                                                                                                                                               
| |  | Our ability to
  successfully integrate, and to achieve anticipated cost savings and revenue
  enhancements with respect to, acquired businesses and operations;              
| |   |                                                                                                                                                                               
| |  | Our ability to attract
  and retain key employees;                                                                                                                            
| |   |                                                                                                                                                                               
| |  | Changes in general local,
  regional and international economic conditions;                                                                                                   
| |   |                                                                                                                                                                               

27

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| |  | Changes in, or the
  effects of, trade, monetary and fiscal policies, laws and regulations,
  including interest rate policies, of the Federal Reserve Board and other
  regulatory authorities;
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                                 
| |  | Changes in consumer and
  business spending, borrowing and saving habits;                                                                                                                       
| |   |                                                                                                                                                                                                 
| |  | Changes in laws,
  regulations and policies applicable to us; and                                                                                                                               
| |   |                                                                                                                                                                                                 
| |  | Political instability and
  acts of war or terrorism.                                                                                                                                           

Item 3 
Quantitative and Qualitative Disclosure about Market Risk

There
have been no material changes in market risks faced by the Corporation since
December 31, 2003.  For more information
regarding quantitative and qualitative disclosures about market risk, please
refer to the Corporations Annual Report on Form 10-K as of and for the year
ended December 31, 2003, and in particular, Item 7 Managements Discussion and
Analysis of Financial Condition and Results of Operations  Interest Rate
Sensitivity and Liquidity.

Item 4  Controls and Procedures

The
Corporations management, including the Corporations principal executive
officer and principal financial officer, has evaluated the effectiveness of the
Corporations disclosure controls and procedures (as defined in Rules 13a-15(e)
and 15d-15(e) under the Securities Exchange Act of 1934) as of the end of the
Corporations fiscal quarter ended March 31, 2004.  Based on that evaluation, the Corporations principal executive
officer and principal financial officer have concluded that the Corporations
disclosure controls and procedures were effective as of the end of the
Corporations fiscal quarter ended March 31, 2004.

There
were no changes in the Corporations internal control over financial reporting
that occurred during the Corporations fiscal quarter ended March 31, 2004 that
have materially affected, or are reasonably likely to materially affect, the
Corporations internal control over financial reporting.

28

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PART II - OTHER INFORMATION

Item 1.   Legal Proceedings

Not
applicable

Item 2.  Change in Securities and Use of
Proceeds

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                          
| |     |                             
| |     | 31.1                        
| |     |                             
| |     | 31.2                        
| |     |                             
| |     | 32.1                        
| |     |                             
| |     | 32.1                        
| |     |                             
| | (b) | Current Reports on Form 8-K:

The
Corporation furnished a Current Report on Form 8-K under Items 2 and 7 on May
4, 2004 relating to the completion of its merger with ANB Financial Corporation
and its subsidiary, Arlington National Bank. 
In conjunction with the merger, the Corporation also announced that
through Summit Bancshares, Statutory Trust I, a Delaware statutory trust and
wholly owned subsidiary of Summit Bancshares, Inc., $12,000,000 of Floating
Rate Capital Securities would be issued.

The
Corporation furnished a Current Report on Form 8-K under Items 7 and 12 on
April 14, 2004 relating to its issuance of a press release announcing its
earnings for the first quarter of 2004.

The
Corporation filed a Current Report on Form 8-K on February 6, 2004 announcing
that it had entered into a definitive agreement to acquire ANB Financial
Corporation and its subsidiary, Arlington National Bank, in a cash transaction.

The
Corporation furnished a Current Report on Form 8-K under Items 7 and 12 on
January 26, 2004 relating to its issuance of a press release announcing its
earnings for the fourth quarter of 2003.

29

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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:      04-22-04 |  | By: /s/ Philip E. Norwood                                            | 
|                    |  |                                                                      | 
|                    |  | Philip E. Norwood, Chairman, President
  and Chief Executive Officer | 
|                    |  |                                                                      | 
|                    |  |                                                                      | 
|Date:      04-22-04 |  | By: /s/ Bob G. Scott                                                 | 
|                    |  |                                                                      | 
|                    |  | Bob G. Scott, Executive Vice President
  and Chief Operating Officer | 
|                    |  | (Chief Financial Officer)                                            | 
|                    |  |                                                                      | 
|                    |  |                                                                      | 

30

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EXHIBIT
INDEX

|Exhibit |  | Description                                                                                                                                                                                                                    
|------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|        |  |                                                                                                                                                                                                                                
|        |  |                                                                                                                                                                                                                                
|        |  |                                                                                                                                                                                                                                
|11      |  | Computation of Earnings Per Common Share                                                                                                                                                                                       
|        |  |                                                                                                                                                                                                                                
|31.1    |  | Certification of Principle Executive Officer of
  Summit Bancshares, Inc. pursuant to Rule 13a-14(a) of the Securities
  Exchange Act of 1934.                                                                                 
|        |  |                                                                                                                                                                                                                                
|31.2    |  | Certification of Principle Financial Officer of
  Summit Bancshares, Inc. pursuant to Rule 13a-14(a) of the Securities
  Exchange Act of 1934.                                                                                 
|        |  |                                                                                                                                                                                                                                
|32.1    |  | Certification of
  Principle Executive Officer of Summit Bancshares, Inc. pursuant to Section
  1350, Chapter 63 of Title 18 of the United States Code, as adopted pursuant
  to Section 906 of the Sarbanes-Oxley Act of 2002.
|        |  |                                                                                                                                                                                                                                
|32.1    |  | Certification of
  Principle Financial Officer of Summit Bancshares, Inc. pursuant to Section
  1350, Chapter 63 of Title 18 of the United States Code, as adopted pursuant
  to Section 906 of the Sarbanes-Oxley Act of 2002.

31

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