SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-Q

Mark One

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

      For the quarterly period ended March 31, 2003 or

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

      For the Transition period from _________________ to _________________.

                         Commission File Number 0-11986

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

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

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

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

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

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

The number of shares of common stock, $1.25 par value, outstanding at March 31,
2003 was 6,179,317 shares.

<PAGE>

                             SUMMIT BANCSHARES, INC.

                                      INDEX

      PART I - FINANCIAL INFORMATION                                    Page No.

      Item 1. Financial Statements

            Consolidated Balance Sheets at March 31, 2003
            and 2002 and at December 31, 2002                                  4

            Consolidated Statements of Income for the
            Three Months Ended March 31, 2003 and 2002
            and for the Year Ended December 31, 2002                           5

            Consolidated Statements of Changes in
            Shareholders' Equity for the Three Months Ended
            March 31, 2003 and 2002 and for the Year Ended
            December 31, 2002                                                  6

            Consolidated Statements of Cash Flows for the
            Three Months Ended March 31, 2003 and 2002 and
            for the Year Ended December 31, 2002                               7

            Notes to Consolidated Financial Statements for
            the Three Months Ended March 31, 2003 and 2002
            and for the Year Ended December 31, 2002                        8-19

      The March 31, 2003 and 2002 and the December 31, 2002 financial statements
      included herein are unaudited; however, such information reflects all
      adjustments (consisting solely of normal recurring adjustments), which
      are, in the opinion of management of the registrant, necessary to a fair
      statement of the results for the interim periods.

      Item 2. Management's Discussion and Analysis of
              Financial Condition and Results of Operations for the
              Three Months Ended March 31, 2003 and 2002                   20-26


                                       2
<PAGE>

      PART II - OTHER INFORMATION

      Item 1. Legal Proceedings

      Item 2. Change in Securities

      Item 3. Defaults Upon Senior Securities

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

      Item 5. Other Information

      Item 6. Exhibits and Reports on Form 8-K


                                       3
<PAGE>

PART I - FINANCIAL INFORMATION

Item 1 - Financial Statements

                    SUMMIT BANCSHARES, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                                       (Unaudited)
                                                                                        March 31,          (Unaudited)
                                                                                  ----------------------   December 31,
                                                                                    2003         2002         2002
                                                                                  ---------    ---------    ---------
<S>                                                                               <C>          <C>          <C>
ASSETS                                                                                       (In Thousands)

CASH AND DUE FROM BANKS - NOTE 1                                                  $  31,961    $  23,788    $  28,903

FEDERAL FUNDS SOLD & DUE FROM TIME                                                       76        4,246          262
INVESTMENT SECURITIES - NOTE 2
 Securities Available-for-Sale, at fair value                                       163,639      141,479      173,512
LOANS - NOTES 3 AND 11
  Loans, Net of Unearned Discount                                                   489,352      453,818      469,145
      Allowance for Loan Losses                                                      (7,365)      (6,534)      (6,706)
                                                                                  ---------    ---------    ---------
                LOANS, NET                                                          481,987      447,284      462,439

PREMISES AND EQUIPMENT - NOTE 4                                                      11,652        8,659       11,486
ACCRUED INCOME RECEIVABLE                                                             3,606        3,678        3,978
OTHER REAL ESTATE - NOTE 5                                                              -0-          -0-        1,142
OTHER ASSETS                                                                          4,972        5,772        6,011
                                                                                  ---------    ---------    ---------

                TOTAL ASSETS                                                      $ 697,893    $ 634,906    $ 687,733
                                                                                  =========    =========    =========

LIABILITIES AND SHAREHOLDERS' EQUITY

DEPOSITS - NOTE 6
  Noninterest-Bearing Demand                                                      $ 165,220    $ 151,236    $ 167,745
  Interest-Bearing                                                                  421,699      394,685      414,204
                                                                                  ---------    ---------    ---------

                TOTAL DEPOSITS                                                      586,919      545,921      581,949

SHORT TERM BORROWINGS - NOTE 7                                                       41,317       24,492       37,255
ACCRUED INTEREST PAYABLE                                                                373          501          354
OTHER LIABILITIES                                                                     2,704        2,488        3,237
                                                                                  ---------    ---------    ---------

                TOTAL LIABILITIES                                                   631,313      573,402      622,795
                                                                                  ---------    ---------    ---------

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; 6,179,317,
    6,269,861 and 6,158,542 shares issued and outstanding at March 31, 2003 and
    2002 and at December 31, 2002, respectively                                       7,724        7,837        7,698
  Capital Surplus                                                                     7,330        6,909        7,122
  Retained Earnings                                                                  48,974       45,683       47,660
  Accumulated Other Comprehensive Income - Unrealized Gain
    on Available-for-Sale Investment Securities, Net of Tax                           2,908        1,171        2,861
  Treasury Stock at Cost (18,500, 5,000 and 20,000 shares at
    March 31, 2003 and 2002 and at December 31, 2002,
    respectively)                                                                      (356)         (96)        (403)
                                                                                  ---------    ---------    ---------

                TOTAL SHAREHOLDERS' EQUITY                                           66,580       61,504       64,938
                                                                                  ---------    ---------    ---------

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY                                        $ 697,893    $ 634,906    $ 687,733
                                                                                  =========    =========    =========
</TABLE>

The accompanying Notes should be read with these financial statements.


                                       4
<PAGE>

                    SUMMIT BANCSHARES, INC. AND SUBSIDIARIES
                        CONSOLIDATED STATEMENTS OF INCOME

<TABLE>
<CAPTION>
                                                                                      (Unaudited)
                                                                              For the Three Months Ended    (Unaudited)
                                                                                        March 31,           Year Ended
                                                                              --------------------------   December 31,
                                                                                  2003           2002          2002
                                                                              ------------    ----------   ------------
                                                                                (In Thousands, Except Per Share Data)
<S>                                                                           <C>             <C>          <C>
INTEREST INCOME
  Interest and Fees on Loans                                                    $   7,489      $   7,664    $  31,283
  Interest and Dividends on Investment Securities:
    Taxable                                                                         1,711          1,848        7,046
    Exempt from Federal Income Taxes                                                   47             18          116
  Interest on Federal Funds Sold and Due From Time                                      4             19          212
                                                                                ---------      ---------    ---------
               TOTAL INTEREST INCOME                                                9,251          9,549       38,657
                                                                                ---------      ---------    ---------
INTEREST EXPENSE
  Interest on Deposits                                                              1,660          1,997        7,881
  Interest on Short Term Borrowings                                                   156            135          624
  Interest on Note Payable                                                            -0-            -0-            7
                                                                                ---------      ---------    ---------
               TOTAL INTEREST EXPENSE                                               1,816          2,132        8,512
                                                                                ---------      ---------    ---------
               NET INTEREST INCOME                                                  7,435          7,417       30,145
LESS: PROVISION FOR LOAN LOSSES - NOTE 3                                              300            545        3,140
                                                                                ---------      ---------    ---------
               NET INTEREST INCOME AFTER
               PROVISION FOR LOAN LOSSES                                            7,135          6,872       27,005
                                                                                ---------      ---------    ---------
NON-INTEREST INCOME
  Service Charges and Fees on Deposits                                                758            645        2,934
  Gain on Sale of Investment Securities                                               -0-            -0-          165
  Other Income                                                                        590            605        2,368
                                                                                ---------      ---------    ---------
               TOTAL NON-INTEREST INCOME                                            1,348          1,250        5,467
                                                                                ---------      ---------    ---------
NON-INTEREST EXPENSE
  Salaries and Employee Benefits - NOTE 14                                          2,905          2,867       11,078
  Occupancy Expense - Net                                                             293            252        1,136
  Furniture and Equipment Expense                                                     429            404        1,577
  Other Real Estate Owned Expense - Net                                               (15)            69          234
  Other Expense - NOTE 9                                                            1,185          1,051        4,284
                                                                                ---------      ---------    ---------
               TOTAL NON-INTEREST EXPENSE                                           4,797          4,643       18,309
                                                                                ---------      ---------    ---------
               INCOME BEFORE INCOME TAXES                                           3,686          3,479       14,163
APPLICABLE INCOME TAXES - NOTE 10                                                   1,253          1,193        4,846
                                                                                ---------      ---------    ---------
               NET INCOME                                                       $   2,433      $   2,286    $   9,317
                                                                                =========      =========    =========
               NET INCOME PER SHARE - NOTE 15
                       Basic                                                    $    0.39      $    0.37    $    1.50
                       Diluted                                                       0.39           0.36         1.46

</TABLE>

The accompanying Notes should be read with these financial statements.


                                       5
<PAGE>

                    SUMMIT BANCSHARES, INC. AND SUBSIDIARIES
           CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
               FOR THE THREE MONTHS ENDED MARCH 31, 2003 AND 2002
                    AND FOR THE YEAR ENDED DECEMBER 31, 2002
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                                        Accumulated
                                                                                           Other
                                                                                        Comprehensive
                                                                                        Income - Net
                                                                                       Unrealized Gain                   Total
                                         Common Stock                                     (Loss) on                      Share-
                                   ------------------------    Capital       Retained     Investment     Treasury        Holders'
                                    Shares        Amount       Surplus       Earnings     Securities       Stock         Equity
-----------------------------------------------------------------------------------------------------------------------------------
                                                        (Dollars in Thousands, Except Per Share Data)
<S>                                <C>         <C>           <C>           <C>            <C>           <C>            <C>
Balance at January 1, 2002         6,262,961   $     7,829   $     6,865   $    44,166    $     1,694   $       (18)   $    60,536
Stock Options Exercised                7,900             9            44                                                        53
Purchases of Stock Held
  in Treasury                                                                                                   (96)           (96)
Retirement of Stock Held
  in Treasury                         (1,000)           (1)                        (17)                          18            -0-
Cash Dividend - $.12 Per Share                                                    (752)                                       (752)
Net Income for the
  Three Months Ended
  March 31, 2002                                                                 2,286                                       2,286
Securities Available-
  for-Sale Adjustment                                                                            (523)                        (523)
                                                                                                                       -----------
    Total Comprehensive
     Income NOTE 22                                                                                                          1,763
                                 -----------   -----------   -----------   -----------    -----------   -----------    -----------
Balance at March 31, 2002          6,269,861         7,837         6,909        45,683          1,171           (96)        61,504
Stock Options Exercised               31,625            40           213                                                       253
Purchases of Stock Held
  in Treasury                                                                                                (3,306)        (3,306)
Retirement of Stock Held
  in Treasury                       (142,944)         (179)                     (2,820)                       2,999            -0-
Cash Dividend - $.36 Per Share                                                  (2,234)                                     (2,234)
Net Income for the
  Nine Months Ended
   December 31, 2002                                                             7,031                                       7,031
Securities Available-
  for-Sale Adjustment                                                                           1,690                        1,690
                                                                                                                       -----------
    Total Comprehensive
     Income NOTE 22                                                                                                          8,721
                                 -----------   -----------   -----------   -----------    -----------   -----------    -----------
Balance at December 31, 2002       6,158,542         7,698         7,122        47,660          2,861          (403)        64,938
Stock Options Exercised               40,775            51           208                                                       259
Purchases of Stock Held
  in Treasury                                                                                                  (356)          (356)
Retirement of Stock Held
  in Treasury                        (20,000)          (25)                       (378)                         403            -0-
Cash Dividend - $.12 Per Share                                                    (741)                                       (741)
Net Income for the
  Three Months Ended
  March 31, 2003                                                                 2,433                                       2,433
Securities Available-
  for-Sale Adjustment                                                                              47                           47
                                                                                                                       -----------
    Total Comprehensive
     Income NOTE 22                                                                                                          2,480
                                 -----------   -----------   -----------   -----------    -----------   -----------    -----------
Balance at March 31, 2003          6,179,317   $     7,724   $     7,330   $    48,974    $     2,908   $      (356)   $    66,580
                                 ===========   ===========   ===========   ===========    ===========   ===========    ===========
</TABLE>

The accompanying Notes should be read with these financial statements.


                                       6
<PAGE>

<TABLE>
<CAPTION>
                                                                                      (Unaudited)
                                                                              For the Three Months Ended    (Unaudited)
                                                                                        March 31,           Year Ended
                                                                              --------------------------   December 31,
                                                                                  2003           2002          2002
                                                                              ------------    ----------   ------------
                                                                                            (In Thousands)
<S>                                                                           <C>             <C>          <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net Income                                                                    $   2,433      $   2,286    $   9,317
  Adjustments to Reconcile Net Income to Net
   Cash Provided by Operating Activities:
    Depreciation and Amortization                                                     298            265        1,094
    Net Premium Amortization of Investment Securities                                 360            210        1,026
    Provision for Loan Losses                                                         300            545        3,140
    Deferred Income Taxes Benefit                                                    (212)          (267)         (62)
    Net Gain on Sale of Investment Securites                                          -0-            -0-         (165)
    Net Gain From Sale of Other Real Estate                                           -0-            -0-         (358)
    Net Loss From Sale of Premises and Equipment                                      -0-              9            1
    Net Decrease in Accrued Income and Other Assets                                 1,619          2,217          632
    Net (Decrease) Increase in Accrued Expenses and
      and Other Liabilities                                                          (533)          (262)         340
                                                                                ---------      ---------    ---------
      Total Adjustments                                                             1,832          2,717        5,648
                                                                                ---------      ---------    ---------
      NET CASH PROVIDED BY OPERATING ACTIVITIES                                     4,265          5,003       14,965
                                                                                ---------      ---------    ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
  Net Decrease (Increase) in Federal Funds Sold and Due From Time                     186         (1,962)       2,022
  Proceeds from Matured and Prepaid Investment Securities
    -Available-for-Sale                                                             13,439         18,262       51,818
  Proceeds from Sales of Investment Securities                                        -0-            -0-      143,444
  Purchase of Investment Securities
    -Available-for-Sale                                                             (3,855)          (609)    (207,732)
  Loans Originated and Principal Repayments, Net                                  (20,287)       (23,103)     (42,962)
  Recoveries of Loans Previously Charged-Off                                          439             16          372
  Proceeds from Sale of Premises and Equipment                                         17             27           31
  Proceeds from Sale of Other Real Estate & Repossessed Assets                      1,142            347        1,293
  Purchases of Premises and Equipment                                                (482)          (820)      (4,479)
                                                                                ---------      ---------    ---------
      NET CASH USED BY INVESTING ACTIVITIES                                        (9,401)        (7,842)     (56,193)
                                                                                ---------      ---------    ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
  Net Increase in Demand Deposits, Savings Accounts
   and Interest Bearing Transaction Accounts                                           87          8,171       34,838
  Net Increase (Decrease) in Certificates of Deposit                                4,883         (6,053)       3,308
  Net Increase (Decrease) in Short Term Borrowings                                  4,062         (3,874)       8,889
  Payments of Cash Dividends                                                         (741)          (752)      (2,986)
  Proceeds from Stock Options Exercised                                               259             53          306
  Purchase of Treasury Stock                                                         (356)           (96)      (3,402)
                                                                                ---------      ---------    ---------
       NET CASH PROVIDED (USED) BY FINANCING ACTIVITIES                             8,194         (2,551)      40,953
                                                                                ---------      ---------    ---------
NET INCREASE (DECREASE) IN CASH AND DUE FROM BANKS                                  3,058         (5,390)        (275)
CASH AND DUE FROM BANKS AT BEGINNING OF PERIOD                                     28,903         29,178       29,178
                                                                                ---------      ---------    ---------
CASH AND DUE FROM BANKS AT END OF PERIOD                                        $  31,961      $  23,788    $  28,903
                                                                                =========      =========    =========
SUPPLEMENTAL SCHEDULE OF OPERATING AND INVESTING ACTIVITIES
  Interest Paid                                                                 $   1,797      $   2,236    $   8,763
  Income Taxes (Refunded) Paid                                                       (325)          (444)       4,762
  Other Real Estate Acquired and Other Assets Acquired
   in Settlement of Loans                                                             -0-            -0-         1579
</TABLE>

The accompanying Notes should be read with these financial statements.


                                       7
<PAGE>

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                    SUMMIT BANCSHARES, INC. AND SUBSIDIARIES
         FOR THE THREE MONTHS ENDED MARCH 31, 2003 AND 2002 (UNAUDITED)
              AND FOR THE YEAR ENDED DECEMBER 31, 2002 (UNAUDITED)

NOTE 1 - Summary of Significant Accounting 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. 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 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 2003, the average cash balance maintained at the Federal Reserve
Bank was $1,954,000. Compensating balances held at other correspondent banks, to
minimize service charges, averaged approximately $18,833,000 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 2003 and 2002, 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.


                                       8
<PAGE>

NOTE 1 - Summary of Significant Accounting 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 as determined by management.
Management's evaluation is based on 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 from
management's current estimates. Adjustments to the allowance for loan losses
will be reported in the period such adjustments become known or are reasonably
estimable.

Premises and Equipment

      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 are defined as those amounts included in the balance sheet
caption "Cash and Due from Banks."

Reclassification

      Certain reclassifications have been made to the 2002 financial statements
to conform to the 2003 presentation.

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 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.


                                       9
<PAGE>

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

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.

Audited Financial Statements

      The consolidated balance sheet as of December 31, 2002, and the
consolidated statements of income, changes in shareholders' equity and cash
flows for the year ended December 31, 2002 are headed "unaudited" in these
financial statements. These statements were reported in the Securities Exchange
Commission Form 10-K as of December 31, 2002 as "audited" but are required to be
reflected in these statements as unaudited because of the absence of an
independent auditor's report.

NOTE 2 - Investment Securities

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

<TABLE>
<CAPTION>
                                                                          March 31, 2003
                                                     ----------------------------------------------------------
                                                                        Gross        Gross
                                                      Amortized      Unrealized    Unrealized         Fair
                                                         Cost           Gains        Losses           Value
                                                     ------------   ------------   ------------    ------------
<S>                                                  <C>            <C>            <C>             <C>
Investment Securities - Available-for-Sale
  U.S. Treasury Securities                           $        998   $          9   $        -0-    $      1,007
  U.S. Government Agencies
    and Corporations                                      114,306          3,793            -0-         118,099
  U.S. Government Agency Mortgage
    Backed Securities                                      33,788            426             (6)         34,208
  Obligations of States and Political Subdivisions          5,014            185            -0-           5,199
  Community Reinvestment Act Investment Fund                3,000            -0-            -0-           3,000
  Federal Reserve and Federal Home Loan Bank Stock          2,126            -0-            -0-           2,126
                                                     ------------   ------------   ------------    ------------
     Total Available-for-Sale Securities                  159,232          4,413             (6)        163,639
                                                     ------------   ------------   ------------    ------------
        Total Investment Securities                  $    159,232   $      4,413   $         (6)   $    163,639
                                                     ============   ============   ============    ============
</TABLE>

      All investment securities are carried on the consolidated balance sheet as
of March 31, 2003 at fair value. The net unrealized gain of $4,407,000 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, 2003 is $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 is required 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.


                                       10
<PAGE>

NOTE 2 - Investment Securities (cont'd.)

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

<TABLE>
<CAPTION>
                                                                          March 31, 2002
                                                     ----------------------------------------------------------
                                                                        Gross        Gross
                                                      Amortized      Unrealized    Unrealized         Fair
                                                         Cost           Gains        Losses           Value
                                                     ------------   ------------   ------------    ------------
<S>                                                  <C>            <C>            <C>             <C>
Investment Securities - Available-for-Sale
 U.S. Treasury Securities                            $      5,019   $        117           $-0-    $      5,136
 U.S. Government Agencies
  and Corporations                                        113,852          1,661           (131)        115,382
 U.S. Government Agency Mortgage
  Backed Securities                                        17,258            139            -0-          17,397
Obligations of States and Political Subdivisions            1,953              2            (14)          1,941
Federal Reserve and Federal Home Loan Bank Stock            1,623            -0-            -0-           1,623
                                                     ------------   ------------   ------------    ------------
    Total Available-for-Sale Securities                   139,705          1,919           (145)        141,479
                                                     ------------   ------------   ------------    ------------
      Total Investment Securities                    $    139,705   $      1,919   $       (145)   $    141,479
                                                     ============   ============   ============    ============
</TABLE>

      All investment securities were carried on the consolidated balance sheet
as of March 31, 2002 at fair value. The net unrealized gain of $1,774,000 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, 2002 was $1,303,000
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, 2002. The
Corporation is required 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):

<TABLE>
<CAPTION>
                                                         March 31,
                                                ----------------------------    December 31,
                                                    2003            2002            2002
                                                ------------    ------------    ------------
<S>                                             <C>             <C>             <C>
Commercial                                      $    202,448    $    189,511    $    195,120
Real Estate Mortgage - Commercial                    135,353         120,352         130,755
Real Estate Mortgage - Residential                    53,388          47,913          48,447
Real Estate Construction                              64,679          61,812          59,941
Loans to Individuals                                  33,484          34,235          34,882
Less:  Unearned Discount                                 -0-              (5)            -0-
                                                ------------    ------------    ------------
                                                     489,352         453,818         469,145
Allowance for Loan Losses                             (7,365)         (6,534)         (6,706)
                                                ------------    ------------    ------------
     Loans - Net                                $    481,987    $    447,284    $    462,439
                                                ============    ============    ============
</TABLE>


                                       11
<PAGE>

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

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

<TABLE>
<CAPTION>
                                                    Three Months Ended
                                                         March 31,               Year Ended
                                                ----------------------------    December 31,
                                                    2003            2002            2002
                                                ------------    ------------    ------------
<S>                                             <C>             <C>             <C>
Balance, Beginning of Period                    $      6,706    $      6,015    $      6,015
Provisions, Charged to Income                            300             545           3,140
Loans Charged-Off                                        (80)            (42)         (2,821)
Recoveries of Loans Previously
 Charged-Off                                             439              16             372
                                                ------------    ------------    ------------
          Net Loans Recovered (Charged-Off)              359             (26)         (2,449)
                                                ------------    ------------    ------------
Balance, End of Period                          $      7,365    $      6,534    $      6,706
                                                ============    ============    ============
</TABLE>

      The provisions for loan losses charged to operating expenses during the
three months ended March 31, 2003 and March 31, 2002 of $300,000 and $545,000,
respectively, were considered adequate to maintain the allowance in accordance
with the policy discussed in Note 1. For the year ended December 31, 2002, a
provision of $3,140,000 was recorded.

      At March 31, 2003, the recorded investment in loans that are considered to
be impaired under Statement of Financial Accounting Standards No. 114 was
$1,596,000 (of which $1,596,000 were on non-accrual status). The related
allowance for loan losses for these loans was $815,000. The average recorded
investment in impaired loans during the three months ended March 31, 2003 was
approximately $1,637,000. For this period, the Corporation recognized no
interest income on these impaired loans.

NOTE 4 - Premises and Equipment

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

<TABLE>
<CAPTION>
                                                                 March 31,
                                                        ----------------------------    December 31,
                                                            2003            2002            2002
                                                        ------------    ------------    ------------
<S>                                                     <C>             <C>             <C>
Land                                                    $      2,317    $      2,317    $      2,317
Buildings and Improvements                                    10,154           8,265           9,830
Furniture & Equipment                                          9,347           7,754           9,168
                                                        ------------    ------------    ------------
Total Cost                                                    21,818          18,336
                                                                                              21,315
Less: Accumulated Amortization and Depreciation               10,166           9,677           9,829
                                                        ------------    ------------    ------------
       Net Book Value                                   $     11,652    $      8,659    $     11,486
                                                        ============    ============    ============
</TABLE>

NOTE 5 - Other Real Estate

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

<TABLE>
<CAPTION>
                                                                 March 31,
                                                        ----------------------------    December 31,
                                                            2003            2002            2002
                                                        ------------    ------------    ------------
<S>                                                     <C>             <C>             <C>
Other Real Estate                                               $-0-            $-0-    $      1,142
                                                        ============    ============    ============
</TABLE>

      There were no direct write-downs of other real estate charged to income
for the three months ended March 31, 2003 or March 31, 2002. There were also no
direct write-downs of other real estate charged to income for the year ended
December 31, 2002.

      Included in Other Assets at March 31, 2003 and March 31, 2002 were
$125,000 and $97,000 of Other Foreclosed Assets. The 2003 assets were comprised
of motor vehicles and the 2002 assets were comprised of an inventory of
textbooks. There were no direct write-downs of these assets as of March 31, 2003
or for any period during 2002.


                                       12
<PAGE>

NOTE 6 - Deposits

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

<TABLE>
<CAPTION>
                                                                 March 31,
                                                        ----------------------------    December 31,
                                                            2003            2002            2002
                                                        ------------    ------------    ------------
<S>                                                     <C>             <C>             <C>
Noninterest-Bearing Demand Deposits                     $    165,220    $    151,236    $    167,745
Interest-Bearing Deposits:
  Interest-Bearing Transaction
    Accounts and Money Market Funds                          185,055         178,617         184,458
  Savings                                                    115,962         109,631         113,948
  Certificates of Deposit under $100,000 and IRA's            62,959          61,339          63,432
  Certificates of Deposit $100,000 or more                    57,407          44,782          52,050
  Other                                                          316             316             316
                                                        ------------    ------------    ------------
       Total                                                 421,699         394,685         414,204
                                                        ------------    ------------    ------------
           Total Deposits                               $    586,919    $    545,921    $    581,949
                                                        ============    ============    ============
</TABLE>

NOTE 7 - Short Term Borrowings

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

<TABLE>
<CAPTION>
                                                            Three Months Ended
                                                                 March 31,               Year Ended
                                                        ----------------------------    December 31,
                                                            2003            2002            2002
                                                        ------------    ------------    ------------
<S>                                                     <C>             <C>             <C>
Securities Sold Under Repurchase Agreements:
     Average Balance                                    $     21,138    $     14,400    $     20,141
     Period-End Balance                                       17,017          13,437          22,955
     Maximum Month-End Balance During Period                  22,597          14,466          29,560
     Interest Rate:
         Average                                                0.54%           0.74%           0.87%
         Period-End                                             0.61            0.77            0.59
Federal Funds Purchased:
     Average Balance                                    $      4,908    $      2,865    $      1,178
     Period-End Balance                                          -0-             -0-             -0-
     Maximum Month-End Balance During Period                   1,075           1,657           8,650
     Interest Rate:
         Average                                                1.53%           2.01%           2.03%
         Period-End                                              -0-             -0-             -0-
</TABLE>

      The Corporation has available a line of credit with the Federal Home Loan
Bank 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, 2003, the Corporation had $22.0 million of
borrowings outstanding under the line of credit at a rate of 1.65%, $5.0 million
of which matures in May 2003, $10.0 matures in July 2003 and the remaining $7.0
million matures in October 2003. For the three months ended March 31, 2003, the
Corporation had average borrowings under the line of credit of $19.7 million. In
addition, at March 31, 2003, the Corporation had $2.3 million borrowed under a
match funding agreement with Federal Home Loan Bank at a rate of 4.41% which
matures in June 2003. For the three months ended March 31, 2002, the Corporation
had $10.0 million of borrowings outstanding under the line of credit at a rate
of 2.08% which matured in July 2002. For the three months ended March 31, 2002,
the Corporation had average borrowings under the line of credit of $18.5
million. In addition, at March, 31, 2002, the Corporation had $1,055,000
borrowed under the match funding agreement mentioned above. At December 31,
2002, $12.0 million of borrowings were outstanding at a rate of 2.11%, comprised
of the $5.0 million and $7.0 million increments described above. For the year
ended December 31, 2002, the Corporation had average borrowings of $16.5
million. The Corporation, at December 31, 2002, also had the same $2.3 million
borrowed under the match funding agreement with the Federal Home Loan Bank at
the rate of 4.41%.

NOTE 8 - Notes Payable

      On September 15, 2002, 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, 2003,
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, 2003, no funds had been borrowed under these lines
nor were any borrowings outstanding.


                                       13
<PAGE>

NOTE 9 - Other Non-Interest Expense

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

<TABLE>
<CAPTION>
                                                            Three Months Ended
                                                                 March 31,               Year Ended
                                                        ----------------------------    December 31,
                                                            2003            2002            2002
                                                        ------------    ------------    ------------
<S>                                                     <C>             <C>             <C>

Business Development                                    $        173    $        168    $        797
Legal and Professional Fees                                      169             173             774
Printing and Supplies                                            106              80             353
Regulatory Fees and Assessments                                   62              58             239
Other                                                            675             572           2,121
                                                        ------------    ------------    ------------
       Total                                            $      1,185    $      1,051    $      4,284
                                                        ============    ============    ============
</TABLE>

NOTE 10 - Income Taxes

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

<TABLE>
<CAPTION>
                                                                 March 31,
                                                        ----------------------------    December 31,
                                                            2003            2002            2002
                                                        ------------    ------------    ------------
<S>                                                     <C>             <C>             <C>
Current Tax Asset (Liability)                           $     (1,418)   $     (1,409)   $        347
Net Deferred Tax Asset                                         1,056           1,968             893
                                                        ------------    ------------    ------------
       Total Included in Other (Liabilities) Assets     $       (362)   $        559    $      1,240
                                                        ============    ============    ============
</TABLE>

      The net deferred tax asset at March 31, 2003 of $1,056,000, included
$(1,498,000), a deferred tax liability related to unrealized gains on
Available-for-Sale Securities.

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

<TABLE>
<CAPTION>
                                                            Three Months Ended
                                                                 March 31,               Year Ended
                                                        ----------------------------    December 31,
                                                            2003            2002            2002
                                                        ------------    ------------    ------------
<S>                                                     <C>             <C>             <C>
Federal Income Tax Expense
Current                                                 $      1,465    $      1,460    $      4,908
Deferred (benefit)                                              (212)           (267)            (62)
                                                        ------------    ------------    ------------
       Total Federal Income Tax Expense                 $      1,253    $      1,193    $      4,846
                                                        ============    ============    ============
                     Effective Tax Rates                       34.00%          34.30%          34.20%
</TABLE>

                                       14
<PAGE>

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):

<TABLE>
<CAPTION>
                                                            Three Months Ended
                                                                 March 31,               Year Ended
                                                        ----------------------------    December 31,
                                                            2003            2002            2002
                                                        ------------    ------------    ------------
<S>                                                     <C>             <C>             <C>
Federal Income Taxes at Statutory
  Rate of 34.5%                                         $      1,271    $      1,207    $      4,858
Effect of Tax Exempt Interest Income                             (23)            (11)            (68)
Non-deductible Expenses                                           17              15              67
Other                                                            (12)            (18)            (11)
                                                        ------------    ------------    ------------
     Income Taxes Per Income Statement                  $      1,253    $      1,193    $      4,846
                                                        ============    ============    ============
</TABLE>

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):

<TABLE>
<CAPTION>
                                                            Three Months Ended
                                                                 March 31,               Year Ended
                                                        ----------------------------    December 31,
                                                            2003            2002            2002
                                                        ------------    ------------    ------------
<S>                                                     <C>             <C>             <C>
Federal Deferred Tax Assets:
  Allowance for Loan Losses                             $      2,526    $      2,111    $      2,300
  Valuation Reserves - Other Real Estate                         -0-             106               2
  Interest on Non-accrual Loans                                  290             258             273
  Deferred Compensation                                          551             560             552
                                                        ------------    ------------    ------------
  Gross Federal Deferred Tax Assets                            3,367           3,035           3,127
                                                        ------------    ------------    ------------
Federal Deferred Tax Liabilities:
  Depreciation and Amortization                                  575             286             542
  Accretion                                                      191             150             182
  Unrealized Gains on Available-for-Sale Securities            1,498             603           1,474
  Other                                                           47              28              36
                                                        ------------    ------------    ------------
  Gross Federal Deferred Tax Liabilities                       2,311           1,067           2,234
                                                        ------------    ------------    ------------
           Net Deferred Tax Asset                       $      1,056    $      1,968    $        893
                                                        ============    ============    ============
</TABLE>

NOTE 11 - Related Party Transactions

      The Bank has made transactions in the ordinary course of business with
certain of its officers, directors and their affiliates. All loans included in
such transactions are made on substantially the same terms, including interest
rate and collateral, as those prevailing at the time for comparable transactions
with other persons. Total loans outstanding to such parties amounted to
approximately $8,864,000 at December 31, 2002.

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, 2003, outstanding documentary and standby letters of credit
totaled $9,720,000 and commitments to extend credit totaled $123,766,000.


                                       15
<PAGE>

NOTE 13 - Stock Option Plans

      The Corporation has two Incentive Stock Option Plans, the 1993 Plan and
the 1997 Plan, ("the Plans"). Each Plan has reserved 600,000 shares (adjusted
for two-for-one stock splits in 1995 and 1997) of common stock for grants
thereunder. The Plans provide for the granting to executive management and other
key employees of Summit Bancshares, Inc. and 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:

<TABLE>
<CAPTION>
                                                                                       Shares Under Option
                                                                        --------------------------------------------------
                                                                        Three Months Ended                   Year Ended
                                                                          March 31, 2003                 December 31, 2002
                                                                        ------------------               -----------------
<S>                                                                     <C>                              <C>
Outstanding, Beginning of Period                                                  418,934                         453,459
Additional Options Granted During the Period                                          -0-                          11,000
Forfeited During the Period                                                        (4,950)                         (6,000)
Exercised During the Period                                                       (40,775)                        (39,525)
                                                                          ---------------                 ---------------
     Outstanding, End of Period                                                   373,209                         418,934
                                                                          ===============                 ===============
</TABLE>

      Options outstanding at March 31, 2003 ranged in price from $3.00 to $21.05
per share with a weighted average exercise price of $12.78 and 290,499 shares
exercisable. At March 31, 2003, there remained 355,150 shares reserved for
future grants of options under the 1997 Plan.

      The Corporation accounts for this plan 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 FASB Statement No. 123, "Accounting for
Stock-Based Compensation," to stock-based compensation.

<TABLE>
<CAPTION>
                                                                        Three Months Ended            Year Ended
                                                                          March 31, 2003          December 31, 2002
                                                                        ------------------        -----------------
<S>                                                                     <C>                       <C>
Net Income, as Reported                                                   $         2,433          $         9,317
Deduct:  Total stock-based compensation expense
                  determined under fair value based method
                  for all awards, net of related tax effects                          (30)                    (124)
                                                                          ---------------          ---------------
Pro Forma Net Income                                                      $         2,403          $         9,193
                                                                          ===============          ===============
Earnings Per Share:
  Basic - as Reported                                                     $          0.39          $          1.50
  Basic - Pro Forma                                                                  0.39                     1.48
  Diluted - as Reported                                                              0.39                     1.46
  Diluted - Pro Forma                                                                0.38                     1.44
</TABLE>

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 1999 or 1998. In 2002, 2001 and 2000, the Corporation made matching
contributions to the participant's deferrals of compensation up to 100% of the
employee contributions not to exceed 6% of the employee's annual compensation.

      The amount expensed in support of the plan was $105,000 and $99,000 during
the first three months of 2003 and 2002, respectively, and $427,000 for the year
2002.

Supplemental Executive Retirement Plan

      In 2002, the Corporation established a Supplemental Executive Retirement
Plan to provide key employees with retirement, death or disability benefits. For
currently employed employees, the plan replaces the previous Management Security
Plan. The current plan is a defined contribution plan. The expense charged to
earnings for such future obligations was $46,000 for the first three months of
2003 and $180,000 for the year 2002. There was no expense recorded for the plan
during the first three months of 2002.


                                       16
<PAGE>

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):

<TABLE>
<CAPTION>
                                                            Three Months Ended
                                                                 March 31,               Year Ended
                                                        ----------------------------    December 31,
                                                            2003            2002            2002
                                                        ------------    ------------    ------------
<S>                                                     <C>             <C>             <C>
Net income                                              $      2,433    $      2,286    $      9,317
                                                        ============    ============    ============
Weighted average number of common
        shares used in Basic EPS                           6,166,000       6,263,193       6,224,028
Effect of dilutive stock options                             110,486         154,753         171,533
                                                        ------------    ------------    ------------
Weighted number of common shares
        and dilutive potential common
        stock used in Diluted EPS                          6,276,486       6,417,946       6,395,561
                                                        ============    ============    ============
</TABLE>

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):

<TABLE>
<CAPTION>
                                                                                         March 31,
                                                                          ----------------------------------------
                                                                                2003                     2002
                                                                          ---------------          ---------------
<S>                                                                       <C>                      <C>
Financial Instruments Whose Contract Amounts Represent Credit Risk:
            Loan Commitments Including Unfunded Lines of Credit           $       123,766          $       133,196
            Standby Letters of Credit                                               9,720                    7,315
</TABLE>

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

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

NOTE 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. 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.


                                       17
<PAGE>

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 15, 2003, the Board of Directors approved a stock repurchase
plan. The plan authorized management to purchase up to 308,900 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, 2003, 18,500 shares were purchased by
the Corporation through a similar repurchase plan through the open market.

NOTE 20 - Subsequent Event

      On April 15, 2003, the Board of Directors of the Corporation approved a
quarterly dividend of $.12 per share to be paid on May 15, 2003 to shareholders
of record on May 1, 2003.

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.

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

<TABLE>
<CAPTION>
                                                                            March 31,
                                                     ----------------------------------------------------------
                                                                2003                           2002
                                                     ---------------------------   ----------------------------
                                                       Carrying         Fair         Carrying         Fair
                                                        Amount          Value         Amount          Value
                                                     ------------   ------------   ------------    ------------
<S>                                                  <C>            <C>            <C>             <C>
Financial Assets
    Cash and due from banks                          $     31,961   $     31,961   $     23,788    $     23,788
    Federal funds sold and Due From Time                       76             76          4,246           4,248
    Securities                                            163,639        163,639        141,479         141,479
    Loans                                                 489,352        492,835        453,818         469,231
    Allowance for loan losses                              (7,365)        (7,365)        (6,534)         (6,534)
Financial Liabilities
    Deposits                                              586,919        588,636        545,921         547,253
    Short Term Borrowings                                  41,317         41,308         24,492          24,457
Off-balance Sheet Financial Instruments
    Loan commitments                                                     123,766                        133,196
    Letters of credit                                                      9,720                          7,315
</TABLE>


                                       18
<PAGE>

NOTE 22 - Comprehensive Income

      The Corporation has adopted Financial Accounting Standards Board ("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):

<TABLE>
<CAPTION>
                                                            Three Months Ended
                                                                 March 31,               Year Ended
                                                        ----------------------------    December 31,
                                                            2003            2002            2002
                                                        ------------    ------------    ------------
<S>                                                     <C>             <C>             <C>
Net Income                                              $      2,433    $      2,286    $      9,317
Other Comprehensive Income:
  Unrealized gain (loss) on securities
  available-for-sale, net of tax                                  47            (523)          1,167
                                                        ------------    ------------    ------------
    Comprehensive Income                                $      2,480    $      1,763    $     10,484
                                                        ============    ============    ============
</TABLE>


                                       19
<PAGE>

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

Summary

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

      Net income for the first quarter of 2003 was $2,433,000 or $.39 diluted
earnings per share, compared with $2,286,000, or $.36 diluted earnings per
share, for the first quarter of 2002. On a per share basis, diluted earnings per
share increased 8.3% over the first quarter of the prior year. Per share amounts
are based on average diluted shares outstanding of 6,276,486 for the first three
months of 2003 and 6,417,946 for the comparable period of 2002 adjusted to
reflect stock options granted.

      Outstanding loans at March 31, 2003 of $489.4 million represented an
increase of $35.5 million, or 7.8%, over March 31, 2002 and an increase of $20.2
million, or 4.3%, from December 31, 2002.

      Total deposits at March 31, 2003 of $586.9 million were up $41.0 million,
or 7.5% from $545.9 million at March 31, 2002. Growth was experienced in every
category of deposits with the largest growth coming in demand deposits and
certificates of deposit over $100,000 which were up $14.0 million and $12.6
million, respectively. Demand deposits made up 28.2% of total deposits at March
31, 2003. Deposits were also up $5.0 million, or .8% from December 31, 2002.

      The following table summarizes the Corporation's performance for the three
months ended March 31, 2003 and 2002 (tax equivalent basis and dollars in
thousands):

<TABLE>
<CAPTION>
                                                                                     Three Months Ended
                                                                                          March 31,
                                                                          ----------------------------------------
                                                                                2003                     2002
                                                                          ---------------          ---------------
<S>                                                                       <C>                      <C>
Interest Income                                                           $         9,285          $         9,566
Interest Expense                                                                    1,816                    2,132
                                                                          ---------------          ---------------
        Net Interest Income                                                         7,469                    7,434
Provision for Loan Loss                                                               300                      545
                                                                          ---------------          ---------------
        Net Interest Income After
              Provision for Loan Loss                                               7,169                    6,889
Non-Interest Income                                                                 1,348                    1,250
Non-Interest Expense                                                                4,797                    4,643
                                                                          ---------------          ---------------
        Income Before Income Tax                                                    3,720                    3,496
Income Tax Expense                                                                  1,287                    1,210
                                                                          ---------------          ---------------
               Net Income                                                 $         2,433          $         2,286
                                                                          ===============          ===============
Net Income per Share-
    Basic                                                                 $          0.39          $          0.37
    Diluted                                                                          0.39                     0.36
Return on Average Assets                                                             1.43%                    1.45%
Return on Average Stockholders' Equity                                              14.89%                   15.00%
</TABLE>


                                       20
<PAGE>

Summary of Earning Assets and Interest-Bearing Liabilities

      The following schedule presents average balance sheets that highlight
earning assets and interest-bearing liabilities and their related rates earned
and paid for the first quarter of 2003 and 2002 (rates on tax equivalent basis):

<TABLE>
<CAPTION>
                                                                       Three Months Ended March 31,
                                           ------------------------------------------------------------------------------------
                                                              2003                                       2002
                                           ----------------------------------------    ----------------------------------------
                                             Average                      Average        Average                     Average
                                             Balances       Interest     Yield/Rate      Balances      Interest     Yield/Rate
                                           -----------    -----------   -----------    -----------    -----------   -----------
                                                                         (Dollars in Thousands)
<S>                                        <C>            <C>           <C>            <C>            <C>           <C>
Earning Assets:
  Federal Funds Sold & Due From Time       $     1,286    $         4          1.18%   $     3,554    $        19          2.18%
  Investment Securities (Taxable)              165,615          1,711          4.19%       150,269          1,848          4.99%
  Investment Securities (Tax-exempt)             4,994             71          5.77%         1,894             28          5.98%
  Loans, Net of Unearned Discount(1)           476,298          7,499          6.39%       446,440          7,671          6.97%
                                           -----------    -----------   -----------    -----------    -----------   -----------
    Total Earning Assets                       648,193          9,285          5.81%       602,157          9,566          6.44%
                                                          -----------                                 -----------
Non-interest Earning Assets:
  Cash and Due From Banks                       25,639                                      24,102
  Other Assets                                  21,686                                      18,823
  Allowance for Loan Losses                     (6,996)                                     (6,207)
                                           -----------                                 -----------
    Total Assets                           $   688,522                                 $   638,875
                                           ===========                                 ===========
Interest-Bearing Liabilities:
  Interest-Bearing Transaction
    Accounts and Money Market Funds        $   177,053            462          1.06%   $   173,484            565          1.32%
  Savings                                      116,568            397          1.38%       108,793            475          1.77%
  Certificates of Deposit under $100,000
    and IRA's                                   63,026            426          2.74%        62,552            544          3.53%
  Certificates of Deposit
    $100,000 or more                            54,350            373          2.78%        45,724            409          3.63%
  Other Time                                       316              2          2.25%           411              4          3.78%
  Other Borrowings                              48,012            156          1.32%        36,033            135          1.52%
                                           -----------    -----------   -----------    -----------    -----------   -----------
    Total Interest-Bearing Liabilities         459,325          1,816          1.60%       426,997          2,132          2.02%
                                                          -----------                                 -----------
Non-interest Bearing Liabilities:
  Demand Deposits                              160,011                                     146,785
  Other Liabilities                              2,933                                       3,263
  Shareholders' Equity                          66,253                                      61,830
                                           -----------                                 -----------
    Total Liabilities and
      Shareholders' Equity                 $   688,522                                 $   638,875
                                           ===========                                 ===========
Net Interest Income and Margin
 (Tax-equivalent Basis)(2)                                $     7,469          4.67%                  $     7,434          5.01%
                                                          ===========                                 ===========
</TABLE>

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


                                       21
<PAGE>

Net Interest Income

      Net interest income (tax equivalent) for the first quarter of 2003 was
$7,469,000 which represented an increase of $35,000 or .5%, over the first
quarter of 2002. In this same period, total interest income declined 2.9% and
total interest expense declined 14.8% and reflects a 50 basis point decrease in
market interest rates from the first of January 2002 to March 2003.

      The following table summarizes the effects of changes in interest rates,
average volumes of earning assets and interest bearing liabilities on net
interest income (tax equivalent) for the periods ended March 31, 2003 and 2002:

                   ANALYSIS OF CHANGES IN NET INTEREST INCOME
                             (Dollars in Thousands)

<TABLE>
<CAPTION>
                                                1st Qtr. 2003 vs. 1st Qtr. 2002            1st Qtr. 2002 vs. 1st Qtr. 2001
                                                      Increase (Decrease)                         Increase (Decrease)
                                                       Due to Changes in:                         Due to Changes in:
                                           ----------------------------------------    ----------------------------------------
                                             Volume           Rate         Total         Volume           Rate         Total
                                           -----------    -----------   -----------    -----------    -----------   -----------
<S>                                        <C>            <C>           <C>            <C>            <C>           <C>
Interest Earning Assets:
     Federal Funds Sold                    $       (12)   $        (3)  $       (15)   $      (807)   $       (28)  $      (835)
     Investment Securities (Taxable)               188           (325)         (137)           199           (496)         (297)
     Investment Securities (Tax-exempt)             46             (3)           43             31             (8)           23
     Loans, Net of Unearned Discount               513           (685)         (172)         1,537         (2,950)       (1,413)
                                           -----------    -----------   -----------    -----------    -----------   -----------
     Total Interest Income                         735         (1,016)         (281)           960         (3,482)       (2,522)
                                           -----------    -----------   -----------    -----------    -----------   -----------
Interest-Bearing Liabilities:
     Deposits                                      126           (463)         (337)          (402)        (2,290)       (2,692)
     Other Borrowings                               45            (24)           21            195           (271)          (76)
                                           -----------    -----------   -----------    -----------    -----------   -----------
     Total Interest Expense                        171           (487)         (316)          (207)        (2,561)       (2,768)
                                           -----------    -----------   -----------    -----------    -----------   -----------
Net Interest Income                        $       564    $      (529)  $        35    $     1,167    $      (921)  $       246
                                           ===========    ===========   ===========    ===========    ===========   ===========
</TABLE>

Allowance for Loan Losses and Non-Performing Assets

      The Corporation's allowance for loan losses was $7,365,000, or 1.50% of
total loans, as of March 31, 2003 compared to $6,534,000, or 1.44% of total
loans, as of March 31, 2002.

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

<TABLE>
<CAPTION>
                                                                                     Three Months Ended
                                                                                          March 31,
                                                                          ----------------------------------------
                                                                                2003                     2002
                                                                          ---------------          ---------------
<S>                                                                       <C>                      <C>
Balance, Beginning of Period                                              $         6,706          $         6,015
Provisions, Charged to Income                                                         300                      545
Loans Charged-Off                                                                     (80)                     (42)
Recoveries of Loans Previously
  Charged-Off                                                                         439                       16
                                                                          ---------------          ---------------
          Net Loans Recovered
           (Charged-Off)                                                              359                      (26)
                                                                          ---------------          ---------------
Balance, End of Period                                                    $         7,365          $         6,534
                                                                          ===============          ===============
</TABLE>

      For the three months ended March 31, 2003 and 2002, net recoveries
(charge-offs) were .07% and (.01%) of loans, respectively, not annualized.


                                       22
<PAGE>

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

<TABLE>
<CAPTION>
                                             March 31,       December 31,    September 30,      June 30,        March 31,
                                               2003             2002             2002             2002             2002
                                           -------------    -------------    -------------    -------------    -------------
<S>                                        <C>              <C>              <C>              <C>              <C>
Non-Accrual Loans                          $       2,226    $       2,135    $       4,635    $       3,870    $       3,458
Renegotiated Loans                                   -0-              -0-              -0-              -0-              -0-
Other Real Estate Owned and
  Other Foreclosed Assets                            125            1,268              288               56               97
                                           -------------    -------------    -------------    -------------    -------------
    Total Non-Performing Assets            $       2,351    $       3,403    $       4,923    $       3,926    $       3,555
                                           =============    =============    =============    =============    =============
As a Percent of:
    Total Assets                                    0.34%            0.49%            0.72%            0.58%            0.55%
    Total Loans and Other Real Estate/
        Foreclosed Assets                           0.48%            0.72%            1.04%            0.84%            0.78%
Loans Past Due 90 days or
    More and Still Accruing                $          80    $          16    $          37    $          13    $         228
</TABLE>

      Non-accrual loans to total loans were .45% at March 31, 2003 and
non-performing assets were .48% of loans and other real estate owned/foreclosed
assets at the same date.

      As of March 31, 2003, non-accrual loans were comprised of $1,632,000 in
commercial loans, $345,000 in real estate mortgage loans and $249,000 in
consumer loans.

      As of March 31, 2003, there was no other real estate owned. However, the
Corporation has $125,000 in Other Foreclosed Assets which represents several
motor vehicles. These assets are in process of liquidation; however the process
is expected to take several months. 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):

<TABLE>
<CAPTION>
                                             March 31,       December 31,    September 30,      June 30,        March 31,
                                               2003             2002             2002             2002             2002
                                           -------------    -------------    -------------    -------------    -------------
<S>                                        <C>              <C>              <C>              <C>              <C>
Non-Performing Loans                       $       2,226    $       2,135    $       4,635    $       3,870    $       3,458
Criticized Loans                                  23,061           23,067           22,284           25,398           23,043
Allowance for Loan Losses                          7,365            6,706            6,334            6,394            6,534
Allowance for Loan Losses
       as a Percent of:
          Non-Performing Loans                       331%             314%             137%             165%             189%
          Criticized Loans                            32%              29%              28%              25%              28%
</TABLE>


                                       23
<PAGE>

Non-Interest Income

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

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

<TABLE>
<CAPTION>
                                                                    Three Months Ended
                                                                         March 31,
                                                        --------------------------------------------
                                                            2003            2002          %Change
                                                        ------------    ------------    ------------
<S>                                                     <C>             <C>                     <C>
Service Charges on Deposit Accounts                     $        758    $        645            17.5%
Non-recurring Income                                             -0-              51              --
Other Non-interest Income                                        590             554             6.5
                                                        ------------    ------------    ------------
  Total Non-interest Income                             $      1,348    $      1,250             7.8%
                                                        ============    ============    ============
</TABLE>

      The increase in other non-interest income in the first quarter of 2003 is
primarily due to increases in mortgage brokerage/origination fees, letter of
credit fees and debit card service fees. The non-recurring income in the first
quarter of 2002 represented the gain on sale of assets previously held in other
assets.

Non-interest Expense

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

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

<TABLE>
<CAPTION>
                                                                    Three Months Ended
                                                                         March 31,
                                                        --------------------------------------------
                                                            2003            2002          %Change
                                                        ------------    ------------    ------------
<S>                                                     <C>             <C>                     <C>
Salaries & Employee Benefits                            $      2,905    $      2,867             1.3%
Occupancy Expense - Net                                          293             252            16.3
Furniture and Equipment Expense                                  429             404             6.2
Other Real Estate Expense - Net                                  (15)             69              --
Other Expenses:
     Business Development                                        173             168             3.0
     Insurance - Other                                            60              33            81.8
     Legal & Professional Fees                                   169             173            (2.3)
     Item Processing                                             170              74           129.7
     Taxes - Other                                                10              14           (28.6)
     Postage & Courier                                            86              87            (1.1)
     Printing & Supplies                                         106              80            32.5
     Regulatory Fees & Assessments                                62              58             6.9
     Other Operating Expenses                                    349             364            (4.1)
                                                        ------------    ------------    ------------
        Total Other Expenses                                   1,185           1,051            12.7
                                                        ------------    ------------    ------------
        Total Non-interest Expense                      $      4,797    $      4,643             3.3%
                                                        ============    ============    ============
</TABLE>

       Total non-interest expense increased 3.3% in the first quarter of 2003
over 2002, reflecting increases in salaries and benefits, occupancy and
equipment, data processing and supplies expenses. As a percent of average
assets, non-interest expenses were 2.83% in the first quarter of 2003
(annualized) and 2.94% in the same period of 2002. The "efficiency ratio"
(non-interest expenses divided by total non-interest income plus net interest
income) was 54.41% for the first quarter of 2003 compared to 53.47% for the
first quarter of 2002.

      The increase in occupancy expense and supplies expense are both primarily
associated with the opening of a new branch facility in January 2003.

      The increase in equipment expense and item processing expense are both
related to the core system conversion the Corporation experienced in the fourth
quarter of 2002. New equipment was purchased and item processing was outsourced
at the time of conversion.


                                       24
<PAGE>

Interest Rate Sensitivity

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

      The following table, commonly referred to as a "static GAP report",
indicates the interest rate sensitivity position at March 31, 2003 and may not
be reflective of positions in subsequent periods (dollars in thousands):

<TABLE>
<CAPTION>
                                                                              Total      Repriced
                                       Matures or Reprices within:            Rate        After
                                  -------------------------------------     Sensitive   1 Year or
                                   30 Days       31-180         181 to       One Year  Non-interest
                                   or Less        Days         One Year      or Less     Sensitive     Total
                                  ---------     ---------     ---------     ---------  ------------  ---------
<S>                               <C>           <C>           <C>           <C>          <C>         <C>
Earning Assets:
  Loans                           $ 253,267     $  38,925     $  32,694     $ 324,886    $ 164,466   $ 489,352
  Investment Securities              10,045        21,498        40,346        71,889       91,750     163,639
  Federal Funds Sold and
    Due From Time                        76           -0-           -0-            76          -0-          76
                                  ---------     ---------     ---------     ---------    ---------   ---------
   Total Earning Assets             263,388        60,423        73,040       396,851      256,216     653,067
                                  ---------     ---------     ---------     ---------    ---------   ---------
Interest Bearing Liabilities:
  Interest-Bearing Transaction
    Accounts and Savings            301,017           -0-           -0-       301,017          -0-     301,017
  Certificates of Deposit under
    $100,000 and IRA's                8,022        21,066        15,195        44,283       18,676      62,959
  Certificates of Deposit
    $100,000 or More                  5,282        20,686        10,055        36,023       21,700      57,723
  Short Term Borrowings              17,017        17,300         7,000        41,317          -0-      41,317
                                  ---------     ---------     ---------     ---------    ---------   ---------
   Total Interest Bearing
    Liabilities                     331,338        59,052        32,250       422,640       40,376     463,016
                                  ---------     ---------     ---------     ---------    ---------   ---------
Interest Sensitivity
 Gap                              $ (67,950)    $   1,371     $  40,790     $ (25,789)   $ 215,840   $ 190,051
                                  =========     =========     =========     =========    =========   =========
Cumulative Gap                    $ (67,950)    $ (66,579)    $ (25,789)
                                  =========     =========     =========
Periodic Gap to
 Total Assets                         (9.74%)        0.20%         5.84%
Cumulative Gap to
 Total Assets                         (9.74%)       (9.54%)       (3.70%)
</TABLE>

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

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

      As a result of applying the beta factors established by management to the
earning assets and interest bearing liabilities in the static gap report via a
simulation model, the negative cumulative GAP to total assets ratio at one year
of (3.70%) was reversed to a positive 23.80% "beta adjusted" GAP position.

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


                                       25
<PAGE>

Capital

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

      The Federal Reserve Board and Comptroller of the Currency also have
risk-adjusted capital adequacy guidelines. Capital under these new guidelines is
defined as Tier I and Tier II. At Summit Bancshares, Inc. the only components of
Tier I and Tier II capital are shareholders' equity and a portion of the
allowance for loan losses, respectively. The guidelines also stipulate that four
categories of risk weights (0, 20, 50 and 100 percent), primarily based on the
relative credit risk of the counterparty, be applied to the different types of
balance sheet assets. Risk weights for all off-balance sheet exposures are
determined by a two-step process whereby the face value of the off-balance sheet
item is converted to a "credit equivalent amount" and that amount is assigned to
the appropriate risk category.

      The regulatory minimum ratio for total qualifying capital is 8.00% of
which 4.00% must be Tier I capital. At March 31, 2003, the Corporation's Tier I
capital represented 12.09% of risk weighted assets and total qualifying capital
(Tier I and Tier II) represented 13.34% of risk weighted assets. Both ratios are
well above current regulatory guidelines.

      Also, as of March 31, 2003, the Corporation and the Bank met the criteria
for classification as a "well-capitalized" institution under the rules of the
Federal Deposit Insurance Corporation Improvement Act of 1991 ("FDICIA").

      The Corporation and the Banks' regulatory capital positions as of March
31, 2003, were as follows:

<TABLE>
<CAPTION>
                                                                                                            To Be Well
                                                                                                         Capitalized Under
                                                                               For Capital               Prompt Corrective
                                                     Actual                 Adequacy Purposes            Action Provisions
                                           -------------------------    -------------------------    -------------------------
                                             Amount         Ratio          Amount        Ratio         Amount         Ratio
                                           -----------   -----------    -----------   -----------    -----------   -----------
<S>                                        <C>           <C>            <C>           <C>            <C>           <C>
CONSOLIDATED:
As of March 31, 2003
Total Capital (to Risk Weighted Assets)    $    70,264         13.34%   $    42,133          8.00%
Tier I Capital (to Risk Weighted Assets)        63,672         12.09         21,066          4.00
Tier I Capital (to Average Assets)              63,672          9.04         21,135          3.00
SUMMIT BANK, N.A.:
As of March 31, 2003
Total Capital (to Risk Weighted Assets)    $    68,968         13.10%   $    42,132          8.00%   $    52,665         10.00%
Tier I Capital (to Risk Weighted Assets)        62,376         11.84         21,066          4.00         31,599          6.00
Tier I Capital (to Average Assets)              62,376          8.85         21,134          3.00         35,223          5.00
</TABLE>

Forward-Looking Statements

      The Corporation may from time to time make forward-looking statements
(within the meaning of the Private Securities Litigation Reform Act of 1995)
with respect to earnings per share, credit quality, expected Year 2003
compliance program, corporate objectives and other financial and business
matters. The Corporation cautions the reader that these forward-looking
statements are subject to numerous assumptions, risks and uncertainties,
including economic conditions; actions taken by the Federal Reserve Board;
legislative and regulatory actions and reforms; competition; as well as other
reasons, all of which change over time. Actual results may differ materially
from forward-looking statements.


                                       26
<PAGE>

                        PART II - OTHER INFORMATION

Item 1. Legal Proceedings

            Not applicable

Item 2. Change in Securities

            Not applicable

Item 3. Defaults Upon Senior Securities

            Not applicable

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

            Not applicable

Item 5. Other Information

            Not applicable

Item 6. Exhibits and Reports on Form 8-K

            (a)   Exhibits

                  11    Computation of Earnings Per Common Share

                  99.1  Certification of Chief Executive Officer of Summit
                        Bancshares, Inc.

                  99.2  Certification of Chief Financial Officer of Summit
                        Bancshares, Inc.

            (b)   On April 11, 2003, a report on Form 8-K was filed reporting
                  the press release of April 10, 2003, as Summit Bancshares,
                  Inc. announced the results of operations and financial
                  condition for the first quarter of 2003.


                                       27
<PAGE>

                                   SIGNATURES

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

                                          SUMMIT BANCSHARES, INC.
                                                  Registrant

Date: 04-23-03                            By: /s/ Philip E. Norwood
     -------------                           -----------------------------------
                                          Philip E. Norwood, Chairman, President
                                          and Chief Executive Officer

Date: 04-23-03                            By: /s/ Bob G. Scott
     -------------                           -----------------------------------
                                          Bob G. Scott, Executive Vice President
                                          and Chief Operating Officer
                                          (Chief Accounting Officer)


                                       28
<PAGE>

                                  EXHIBIT INDEX

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

        11      Computation of Earnings Per Common Share                   30


                                       29
<PAGE>

I, Philip E. Norwood, certify that:

1.    I have reviewed this quarterly report on Form 10-Q of Summit Bancshares,
      Inc;

2.    Based on my knowledge, this quarterly report does not contain any untrue
      statement of a material fact or omit to state a material fact necessary to
      make the statements made, in light of the circumstances under which such
      statements were made, not misleading with respect to the period covered by
      this quarterly report;

3.    Based on my knowledge, the financial statements, and other financial
      information included in this quarterly report, fairly present in all
      material respects the financial condition, results of operations and cash
      flows of the registrant as of, and for, the periods presented in this
      quarterly report;

4.    The registrant's other certifying officers and I are responsible for
      establishing and maintaining disclosure controls and procedures (as
      defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we
      have:

      a)    designed such disclosure controls and procedures to ensure that
            material information relating to the registrant, including its
            consolidated subsidiaries, is made known to us by others within
            those entities, particularly during the period in which this
            quarterly report is being prepared:

      b)    evaluated the effectiveness of the registrant's disclosure controls
            and procedures as of a date within 90 days prior to the filing date
            of this quarterly report (the "Evaluation Date"); and

      c)    presented in this quarterly report our conclusions about the
            effectiveness of the disclosure controls and procedures based on our
            evaluation as of the Evaluation Date.

5.    The registrant's other certifying officers and I have disclosed, based on
      our most recent evaluations, to the registrant's auditors and the audit
      committee of registrant's board of directors (or persons performing the
      equivalent function):

      a)    all significant deficiencies in the design or operation of internal
            controls which could adversely affect the registrant's ability to
            record, process, summarize and report financial data and have
            identified for the registrant's auditors any material weaknesses in
            internal controls; and

      b)    any fraud, whether or not material, that involves management or
            other employees who have a significant role in the registrant's
            internal controls; and

6.    The registrant's other certifying officers and I have indicated in this
      quarterly report whether or not there were significant changes in internal
      controls or in other factors that could significantly affect internal
      controls subsequent to the date of our most recent evaluation, including
      any corrective actions with regard to significant deficiencies and
      material weaknesses.

Date:  05-01-03                             By:  /s/ Philip E. Norwood
       -------------                             -----------------------
                                                 Philip E. Norwood
                                                 Chairman, President and Chief
                                                 Executive Officer


                                       30
<PAGE>

I, Bob G. Scott, certify that:

1.    I have reviewed this quarterly report on Form 10-Q of Summit Bancshares,
      Inc;

2.    Based on my knowledge, this quarterly report does not contain any untrue
      statement of a material fact or omit to state a material fact necessary to
      make the statements made, in light of the circumstances under which such
      statements were made, not misleading with respect to the period covered by
      this quarterly report;

3.    Based on my knowledge, the financial statements, and other financial
      information included in this quarterly report, fairly present in all
      material respects the financial condition, results of operations and cash
      flows of the registrant as of, and for, the periods presented in this
      quarterly report;

4.    The registrant's other certifying officers and I are responsible for
      establishing and maintaining disclosure controls and procedures (as
      defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we
      have:

      a)    designed such disclosure controls and procedures to ensure that
            material information relating to the registrant, including its
            consolidated subsidiaries, is made known to us by others within
            those entities, particularly during the period in which this
            quarterly report is being prepared:

      b)    evaluated the effectiveness of the registrant's disclosure controls
            and procedures as of a date within 90 days prior to the filing date
            of this quarterly report (the "Evaluation Date"); and

      c)    presented in this quarterly report our conclusions about the
            effectiveness of the disclosure controls and procedures based on our
            evaluation as of the Evaluation Date.

5.    The registrant's other certifying officers and I have disclosed, based on
      our most recent evaluations, to the registrant's auditors and the audit
      committee of registrant's board of directors (or persons performing the
      equivalent function):

      a)    all significant deficiencies in the design or operation of internal
            controls which could adversely affect the registrant's ability to
            record, process, summarize and report financial data and have
            identified for the registrant's auditors any material weaknesses in
            internal controls; and

      b)    any fraud, whether or not material, that involves management or
            other employees who have a significant role in the registrant's
            internal controls; and

7.    The registrant's other certifying officers and I have indicated in this
      quarterly report whether or not there were significant changes in internal
      controls or in other factors that could significantly affect internal
      controls subsequent to the date of our most recent evaluation, including
      any corrective actions with regard to significant deficiencies and
      material weaknesses.

Date:  05-01-03                                 By:/s/ Bob G. Scott
       -------------                               ----------------------------
                                                   Bob G. Scott
                                                   Executive Vice President and
                                                   Chief Operating Officer
                                                   (Chief Accounting Officer)


                                       31