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UNITED STATES SECURITIES AND EXCHANGE COMMISSION


Washington, D.C. 20549





Form 10-Q


|                                         |  |                                                                                             
|---------------------------------------- |  | --------------------------------------------------------------------------------------------
|þ                                        |  | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934 
|                                        
|For the Quarter Ended September 30, 2005
|                                        
|or                                      
|                                        
|o                                        |  | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934

Commission file number: 000-22007





Amegy Bancorporation, Inc.


(Exact name of registrant as specified in its charter)


|                                |  |                    
|------------------------------- |  | -------------------
|Texas                           |  | 76-0519693         
|(State or other jurisdiction of |  | (I.R.S. Employer   
|incorporation or organization)  |  | Identification No.)

4400 Post Oak Parkway


Houston, Texas 77027


(Address of principal executive offices, including zip
code)


(713) 235-8800


(Registrants telephone number, including area code)





þ o





þ o


o þ












---










AMEGY BANCORPORATION, INC. AND SUBSIDIARIES


INDEX TO FORM 10-Q


|                                               |  |                                                                                                                                      |  |      |    | 
|---------------------------------------------- |  | ------------------------------------------------------------------------------------------------------------------------------------ |  | ---- | -- | 
|                                               |  |                                                                                                                                      |  | Page |   
|                                               |  |                                                                                                                                      |  |      |   
|PART I. FINANCIAL
    INFORMATION             
|Item 1.                                        |  | Financial Statements                                                                                                                 |  |      | 2  | 
|                                               |  | Report of Independent Registered Public
    Accounting Firm                                                                          |  |      | 2  | 
|                                               |  | Condensed Consolidated Balance Sheet as of
    September 30, 2005 and December 31, 2004
    (unaudited)                              |  |      | 3  | 
|                                               |  | Condensed Consolidated Statement of Income
    for the Three and Nine Months Ended September 30, 2005 and
    2004 (unaudited)       |  |      | 4  | 
|                                               |  | Condensed Consolidated Statement of Changes
    in Shareholders Equity for the Nine Months Ended
    September 30, 2005 (unaudited) |  |      | 5  | 
|                                               |  | Condensed Consolidated Statement of Cash
    Flows for the Nine Months Ended September 30, 2005 and 2004
    (unaudited)             |  |      | 6  | 
|                                               |  | Notes to Condensed Consolidated Financial
    Statements (unaudited)                                                                 |  |      | 7  | 
|Item 2.                                        |  | Managements Discussion and Analysis
    of Financial Condition and Results of Operations                                            |  |      | 20 | 
|Item 3.                                        |  | Quantitative and Qualitative Disclosures
    About Market Risk                                                                       |  |      | 48 | 
|Item 4.                                        |  | Controls and Procedures                                                                                                              |  |      | 48 | 
|PART II. OTHER INFORMATION                    
|Item 1.                                        |  | Legal Proceedings                                                                                                                    |  |      | 50 | 
|Item 2.                                        |  | Unregistered Sales of Equity Securities and
    Use of Proceeds                                                                      |  |      | 50 | 
|Item 3.                                        |  | Defaults upon Senior Securities                                                                                                      |  |      | 50 | 
|Item 4.                                        |  | Submission of Matters to a Vote of Security
    Holders                                                                              |  |      | 50 | 
|Item 5.                                        |  | Other Information                                                                                                                    |  |      | 50 | 
|Item 6.                                        |  | Exhibits                                                                                                                             |  |      | 50 | 
|Signatures                                     |  |                                                                                                                                      |  |      | 51 | 
|Awareness Letter of PricewaterhouseCoopers LLP
|Certification of CEO Pursuant to Section 302  
|Certification of CFO Pursuant to Section 302  
|Certification of CEO Pursuant to Section 906  
|Certification of CFO Pursuant to Section 906  



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##### Table of Contents






PART I. FINANCIAL INFORMATION







|        |                     
|------- | --------------------
|ITEM 1. | Financial Statements




REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM




















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AMEGY BANCORPORATION, INC. AND SUBSIDIARIES





CONDENSED CONSOLIDATED BALANCE SHEET


(unaudited)


|                                                                                         |                                                                                                                                                                                                               |                                            |           |           |              |   |           |           |           | 
|---------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------ | --------- | --------- | ------------ | - | --------- | --------- | --------- | 
|                                                                                         |                                                                                                                                                                                                               | September 30,                              |           |           | December 31, |  
|                                                                                         |                                                                                                                                                                                                               | 2005                                       |           |           | 2004         |  
|                                                                                         |                                                                                                                                                                                                               |                                            |           |           |              |  
|                                                                                         |                                                                                                                                                                                                               | (Dollars in thousands,                     |          
|                                                                                         |                                                                                                                                                                                                               | except per share amounts)                  |          
|ASSETS                                                                                  
|Cash and due from banks                                                                  |                                                                                                                                                                                                               | $                                          | 345,926   |           |              | $ | 327,558   |          
|Federal funds sold and other cash equivalents                                            |                                                                                                                                                                                                               |                                            | 48,135    |           |              |   | 14,417    |          
|                                                                                         |                                                                                                                                                                                                               |                                            |           |           |              |  
|                                                                                         |                                                                                                                                                                                                               | Total cash and cash equivalents            |           |           | 394,061      |   |           |           | 341,975   | 
|Securities available for sale (including $383,701 and $319,599
    pledged to creditors) |                                                                                                                                                                                                               |                                            | 1,845,884 |           |              |   | 1,927,204 |          
|Securities held to maturity (fair value of $46,835 and $58,569)                          |                                                                                                                                                                                                               |                                            | 47,005    |           |              |   | 58,033    |          
|Loans held for sale                                                                      |                                                                                                                                                                                                               |                                            | 103,423   |           |              |   | 107,404   |          
|Loans held for investment, net of allowance for loan losses of
    $49,189 and $49,408   |                                                                                                                                                                                                               |                                            | 4,857,108 |           |              |   | 4,490,170 |          
|Premises and equipment, net                                                              |                                                                                                                                                                                                               |                                            | 166,843   |           |              |   | 164,443   |          
|Accrued interest receivable                                                              |                                                                                                                                                                                                               |                                            | 36,949    |           |              |   | 30,200    |          
|Goodwill                                                                                 |                                                                                                                                                                                                               |                                            | 150,426   |           |              |   | 149,846   |          
|Core deposit intangibles                                                                 |                                                                                                                                                                                                               |                                            | 20,785    |           |              |   | 27,246    |          
|Other assets                                                                             |                                                                                                                                                                                                               |                                            | 271,887   |           |              |   | 209,082   |          
|                                                                                         |                                                                                                                                                                                                               |                                            |           |           |              |  
|                                                                                         |                                                                                                                                                                                                               | Total assets                               |           | $         | 7,894,371    |   |           | $         | 7,505,603 | 
|                                                                                         |                                                                                                                                                                                                               |                                            |           |           |              |  
|                                                                                        
|LIABILITIES AND SHAREHOLDERS EQUITY                                                    
|Deposits:                                                                                |                                                                                                                                                                                                               |                                            |           |           |              |   |           |          
|                                                                                         | Demand  noninterest-bearing                                                                                                                                                                                  |                                            | $         | 1,984,716 |              |   | $         | 1,871,228 |          
|                                                                                         | Demand  interest-bearing                                                                                                                                                                                     |                                            |           | 123,866   |              |   |           | 135,003   |          
|                                                                                         | Money market accounts                                                                                                                                                                                         |                                            |           | 2,167,935 |              |   |           | 2,091,624 |          
|                                                                                         | Savings                                                                                                                                                                                                       |                                            |           | 202,557   |              |   |           | 205,593   |          
|                                                                                         | Time, $100 and over                                                                                                                                                                                           |                                            |           | 1,493,457 |              |   |           | 944,283   |          
|                                                                                         | Other time                                                                                                                                                                                                    |                                            |           | 396,988   |              |   |           | 372,312   |          
|                                                                                         |                                                                                                                                                                                                               |                                            |           |           |              |  
|                                                                                         |                                                                                                                                                                                                               | Total deposits                             |           |           | 6,369,519    |   |           |           | 5,620,043 | 
|Federal funds purchased and securities sold under repurchase
    agreements              |                                                                                                                                                                                                               |                                            | 441,181   |           |              |   | 482,968   |          
|Other borrowings                                                                         |                                                                                                                                                                                                               |                                            | 208,048   |           |              |   | 560,410   |          
|Senior subordinated debenture                                                            |                                                                                                                                                                                                               |                                            | 75,000    |           |              |   | 75,000    |          
|Junior subordinated deferrable interest debentures                                       |                                                                                                                                                                                                               |                                            | 149,486   |           |              |   | 149,486   |          
|Accrued interest payable                                                                 |                                                                                                                                                                                                               |                                            | 3,676     |           |              |   | 2,902     |          
|Other liabilities                                                                        |                                                                                                                                                                                                               |                                            | 30,415    |           |              |   | 34,380    |          
|                                                                                         |                                                                                                                                                                                                               |                                            |           |           |              |  
|                                                                                         |                                                                                                                                                                                                               | Total liabilities                          |           |           | 7,277,325    |   |           |           | 6,925,189 | 
|                                                                                         |                                                                                                                                                                                                               |                                            |           |           |              |  
|Commitments and contingencies                                                            |                                                                                                                                                                                                               |                                            |           |           |              |   |           |          
|Shareholders equity:                                                                    |                                                                                                                                                                                                               |                                            |           |           |              |   |           |          
|                                                                                         | Preferred stock  $0.01 par value,
    1,000,000 shares authorized; 0 issued and outstanding at
    September 30, 2005 and December 31, 2004                                                                  |                                            |           |          |              |   |           |          |          
|                                                                                         | Common stock  $1 par value,
    300,000,000 shares authorized; 70,880,202 issued and
    70,767,938 outstanding at September 30, 2005; 70,198,456
    issued and 70,095,949 outstanding at December 31, 2004 |                                            |           | 70,880    |              |   |           | 70,198    |          
|                                                                                         | Additional paid-in capital                                                                                                                                                                                    |                                            |           | 101,926   |              |   |           | 92,330    |          
|                                                                                         | Retained earnings                                                                                                                                                                                             |                                            |           | 473,866   |              |   |           | 428,311   |          
|                                                                                         | Deferred compensation                                                                                                                                                                                         |                                            |           | (6,943    | )            |   |           | (5,469    | )        
|                                                                                         | Accumulated other comprehensive loss                                                                                                                                                                          |                                            |           | (20,870   | )            |   |           | (3,221    | )        
|                                                                                         | Treasury stock, at cost  112,264 shares and
    102,507 shares, respectively                                                                                                                                 |                                            |           | (1,813    | )            |   |           | (1,735    | )        
|                                                                                         |                                                                                                                                                                                                               |                                            |           |           |              |  
|                                                                                         |                                                                                                                                                                                                               | Total shareholders equity                 |           |           | 617,046      |   |           |           | 580,414   | 
|                                                                                         |                                                                                                                                                                                                               |                                            |           |           |              |  
|                                                                                         |                                                                                                                                                                                                               | Total liabilities and shareholders equity |           | $         | 7,894,371    |   |           | $         | 7,505,603 | 
|                                                                                         |                                                                                                                                                                                                               |                                            |           |           |              |  



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AMEGY BANCORPORATION, INC. AND SUBSIDIARIES





CONDENSED CONSOLIDATED STATEMENT OF INCOME


(unaudited)


|                           |                                              |                                                  |            |                                                     |                   |        |         |        |        |        |        |         |         |        |         |        |         |        |         | 
|-------------------------- | -------------------------------------------- | ------------------------------------------------ | ---------- | --------------------------------------------------- | ----------------- | ------ | ------- | ------ | ------ | ------ | ------ | ------- | ------- | ------ | ------- | ------ | ------- | ------ | ------- | 
|                           |                                              | Three Months Ended                               |            |                                                     | Nine Months Ended |       
|                           |                                              | September 30,                                    |            |                                                     | September 30,     |       
|                           |                                              |                                                  |            |                                                     |                   |       
|                           |                                              | 2005                                             |            |                                                     | 2004              |        |         | 2005   |        |        | 2004   |        
|                           |                                              |                                                  |            |                                                     |                   |        |         |        |        |        |        |        
|                           |                                              | (Dollars in thousands, except per share amounts) |           
|Interest income:           |                                              |                                                  |            |                                                     |                   |        |         |        |        |        |        |         |         |        |         |       
|                           |                                              | Loans                                            |            | $                                                   | 80,060            |        |         | $      | 55,282 |        |        | $       | 220,144 |        |         | $      | 154,632 |       
|                           |                                              | Securities:                                      |            |                                                     |                   |        |         |        |        |        |        |         |         |        |         |        |         |       
|                           |                                              |                                                  | Taxable    |                                                     |                   | 17,341 |         |        |        | 13,558 |        |         |         | 52,177 |         |        |         | 38,724 |        
|                           |                                              |                                                  | Tax-exempt |                                                     |                   | 2,737  |         |        |        | 2,585  |        |         |         | 8,042  |         |        |         | 6,646  |        
|                           |                                              | Federal funds sold and other                     |            |                                                     | 555               |        |         |        | 192    |        |        |         | 1,176   |        |         |        | 500     |       
|                           |                                              |                                                  |            |                                                     |                   |        |         |        |        |        |        |        
|                           |                                              |                                                  |            | Total interest income                               |                   |        | 100,693 |        |        |        | 71,617 |         |         |        | 281,539 |        |         |        | 200,502 | 
|                           |                                              |                                                  |            |                                                     |                   |        |         |        |        |        |        |        
|Interest expense:          |                                              |                                                  |            |                                                     |                   |        |         |        |        |        |        |         |         |        |         |       
|                           |                                              | Deposits                                         |            |                                                     | 25,740            |        |         |        | 10,028 |        |        |         | 61,722  |        |         |        | 26,506  |       
|                           |                                              | Interest on subordinated debentures              |            |                                                     | 3,108             |        |         |        | 698    |        |        |         | 8,463   |        |         |        | 1,793   |       
|                           |                                              | Interest on other borrowings                     |            |                                                     | 8,098             |        |         |        | 3,892  |        |        |         | 23,025  |        |         |        | 8,389   |       
|                           |                                              |                                                  |            |                                                     |                   |        |         |        |        |        |        |        
|                           |                                              |                                                  |            | Total interest expense                              |                   |        | 36,946  |        |        |        | 14,618 |         |         |        | 93,210  |        |         |        | 36,688  | 
|                           |                                              |                                                  |            |                                                     |                   |        |         |        |        |        |        |        
|                           |                                              |                                                  |            | Net interest income                                 |                   |        | 63,747  |        |        |        | 56,999 |         |         |        | 188,329 |        |         |        | 163,814 | 
|Provision for loan losses  |                                              |                                                  | 1,900      |                                                     |                   |        | 2,878   |        |        |        | 6,500  |         |         |        | 7,710   |       
|                           |                                              |                                                  |            |                                                     |                   |        |         |        |        |        |        |        
|                           |                                              |                                                  |            | Net interest income after provision for loan losses |                   |        | 61,847  |        |        |        | 54,121 |         |         |        | 181,829 |        |         |        | 156,104 | 
|                           |                                              |                                                  |            |                                                     |                   |        |         |        |        |        |        |        
|Noninterest income:        |                                              |                                                  |            |                                                     |                   |        |         |        |        |        |        |         |         |        |         |       
|                           | Service charges on deposit accounts          |                                                  |            | 10,959                                              |                   |        |         | 11,184 |        |        |        | 32,968  |         |        |         | 33,414 |        
|                           | Investment services                          |                                                  |            | 4,291                                               |                   |        |         | 3,164  |        |        |        | 12,538  |         |        |         | 9,019  |        
|                           | Other fee income                             |                                                  |            | 8,960                                               |                   |        |         | 5,907  |        |        |        | 24,315  |         |        |         | 15,780 |        
|                           | Bank-owned life insurance income             |                                                  |            | 2,567                                               |                   |        |         | 2,154  |        |        |        | 6,149   |         |        |         | 5,551  |        
|                           | Other operating income                       |                                                  |            | 2,698                                               |                   |        |         | 2,594  |        |        |        | 12,728  |         |        |         | 5,189  |        
|                           | Gain on sale of loans, net                   |                                                  |            | 18                                                  |                   |        |         | 368    |        |        |        | 1,147   |         |        |         | 818    |        
|                           | Gain (loss) on sale of securities, net       |                                                  |            | 1,170                                               |                   |        |         | (46    | )      |        |        | 1,156   |         |        |         | (45    | )      
|                           |                                              |                                                  |            |                                                     |                   |        |         |        |        |        |        |        
|                           |                                              |                                                  |            | Total noninterest income                            |                   |        | 30,663  |        |        |        | 25,325 |         |         |        | 91,001  |        |         |        | 69,726  | 
|                           |                                              |                                                  |            |                                                     |                   |        |         |        |        |        |        |        
|Noninterest expenses:      |                                              |                                                  |            |                                                     |                   |        |         |        |        |        |        |         |         |        |         |       
|                           | Salaries and employee benefits               |                                                  |            | 34,902                                              |                   |        |         | 28,829 |        |        |        | 104,370 |         |        |         | 85,267 |        
|                           | Occupancy expense                            |                                                  |            | 10,747                                              |                   |        |         | 9,395  |        |        |        | 32,132  |         |        |         | 26,540 |        
|                           | Marketing and advertising                    |                                                  |            | 885                                                 |                   |        |         | 1,052  |        |        |        | 4,925   |         |        |         | 3,146  |        
|                           | Professional services                        |                                                  |            | 3,482                                               |                   |        |         | 3,174  |        |        |        | 10,516  |         |        |         | 8,274  |        
|                           | Core deposit intangible amortization expense |                                                  |            | 2,042                                               |                   |        |         | 799    |        |        |        | 6,461   |         |        |         | 2,710  |        
|                           | Other operating expenses                     |                                                  |            | 10,455                                              |                   |        |         | 9,035  |        |        |        | 34,569  |         |        |         | 26,676 |        
|                           |                                              |                                                  |            |                                                     |                   |        |         |        |        |        |        |        
|                           |                                              |                                                  |            | Total noninterest expenses                          |                   |        | 62,513  |        |        |        | 52,284 |         |         |        | 192,973 |        |         |        | 152,613 | 
|                           |                                              |                                                  |            |                                                     |                   |        |         |        |        |        |        |        
|                           |                                              |                                                  |            | Income before income taxes                          |                   |        | 29,997  |        |        |        | 27,162 |         |         |        | 79,857  |        |         |        | 73,217  | 
|Provision for income taxes |                                              |                                                  | 8,549      |                                                     |                   |        | 7,496   |        |        |        | 22,308 |         |         |        | 22,043  |       
|                           |                                              |                                                  |            |                                                     |                   |        |         |        |        |        |        |        
|                           | Net income                                   |                                                  | $          | 21,448                                              |                   |        | $       | 19,666 |        |        | $      | 57,549  |         |        | $       | 51,174 |        
|                           |                                              |                                                  |            |                                                     |                   |        |         |        |        |        |        |        
|Earnings per common share: |                                              |                                                  |            |                                                     |                   |        |         |        |        |        |        |         |         |        |         |       
|                           |                                              |                                                  |            | Basic                                               |                   | $      | 0.30    |        |        | $      | 0.28   |         |         | $      | 0.82    |        |         | $      | 0.74    | 
|                           |                                              |                                                  |            |                                                     |                   |        |         |        |        |        |        |        
|                           |                                              |                                                  |            | Diluted                                             |                   | $      | 0.30    |        |        | $      | 0.28   |         |         | $      | 0.80    |        |         | $      | 0.73    | 
|                           |                                              |                                                  |            |                                                     |                   |        |         |        |        |        |        |        
|Dividends per common share |                                              | $                                                | 0.11       |                                                     |                   | $      | 0.03    |        |        | $      | 0.17   |         |         | $      | 0.09    |       
|                           |                                              |                                                  |            |                                                     |                   |        |         |        |        |        |        |        



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AMEGY BANCORPORATION, INC. AND SUBSIDIARIES





CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN
SHAREHOLDERS EQUITY


(unaudited)


|                            |                                                                                |                                                  |   |              |         |   |            |  |  |          |            |             |          |       |        |               |  |   |              |       |  |               |         |         |       |   |        |        |   |   |         |         |   |   |        |     |   |   |         |         |  
|--------------------------- | ------------------------------------------------------------------------------ | ------------------------------------------------ | - | ------------ | ------- | - | ---------- |  |  | -------- | ---------- | ----------- | -------- | ----- | ------ | ------------- |  | - | ------------ | ----- |  | ------------- | ------- | ------- | ----- | - | ------ | ------ | - | - | ------- | ------- | - | - | ------ | --- | - | - | ------- | ------- | -
|                            |                                                                                | Preferred                                        |   |              |         |   |            |  |  |          |            | Accumulated |          |       |        |               | 
|                            |                                                                                | Stock                                            |   | Common Stock |         |   | Additional |  |  |          |            |             |          | Other |        |               |  |   | Total        |      
|                            |                                                                                |                                                  |   |              |         |   | Paid-In    |  |  | Retained |            |             | Deferred |       |        | Comprehensive |  |   | Treasury     |       |  | Shareholders |        
|                            |                                                                                | Shares                                           |   |              | Dollars |   | Shares     |  |  | Dollars  |            |             | Capital  |       |        | Earnings      |  |   | Compensation |       |  | Loss          |         |         | Stock |   |        | Equity |  
|                            |                                                                                |                                                  |   |              |         |   |            |  |  |          |            |             |          |       |        |               |  |   |              |       |  |               |         |         |       |   |        |        |  
|                            |                                                                                | (Dollars in thousands, except per share amounts) |  
|BALANCE, DECEMBER 31, 2004  |                                                                                |                                                  |  |              |         | $ |           |  |  |          | 70,198,456 |             |          | $     | 70,198 |               |  | $ | 92,330       |       |  | $             | 428,311 |         |       | $ | (5,469 | )      |   | $ | (3,221  | )       |   | $ | (1,735 | )   |   | $ | 580,414 |        
|                            | Exercise of stock options                                                      |                                                  |   |              |         |   |            |  |  |          |            | 491,715     |          |       |        | 492           |  |   |              | 6,465 |  |               |         |         |       |   |        |        |   |   |         |         |   |   |        |     |   |   |         | 6,957   |  
|                            | Issuance of restricted common stock, net of shares forfeited
    into Treasury |                                                  |   |              |         |   |            |  |  |          |            | 186,384     |          |       |        | 186           |  |   |              | 3,062 |  |               |         |         |       |   |        | (3,243 | ) |   |         |         |   |   |        | (5  | ) |   |         |        |  
|                            | Issuance of non-employee director stock                                        |                                                  |   |              |         |   |            |  |  |          |            | 3,647       |          |       |        | 4             |  |   |              | 69    |  |               |         |         |       |   |        |        |   |   |         |         |   |   |        |     |   |   |         | 73      |  
|                            | Purchase of treasury stock                                                     |                                                  |   |              |         |   |            |  |  |          |            |             |          |       |        |               |  |   |              |       |  |               |         |         |       |   |        |        |   |   |         |         |   |   |        | (73 | ) |   |         | (73     | )
|                            | Deferred compensation amortization                                             |                                                  |   |              |         |   |            |  |  |          |            |             |          |       |        |               |  |   |              |       |  |               |         |         |       |   |        | 1,769  |   |   |         |         |   |   |        |     |   |   |         | 1,769   |  
|                            | Cash dividends, $0.17 per common share                                         |                                                  |   |              |         |   |            |  |  |          |            |             |          |       |        |               |  |   |              |       |  |               |         | (11,994 | )     |   |        |        |   |   |         |         |   |   |        |     |   |   |         | (11,994 | )
|                            | Comprehensive income (loss):                                                   |                                                  |   |              |         |   |            |  |  |          |            |             |          |       |        |               |  |   |              |       |  |               |         |         |       |   |        |        |   |   |         |         |   |   |        |     |   |   |         |         |  
|                            | Net income for the nine months ended September 30, 2005                        |                                                  |   |              |         |   |            |  |  |          |            |             |          |       |        |               |  |   |              |       |  |               |         | 57,549  |       |   |        |        |   |   |         |         |   |   |        |     |   |   |         | 57,549  |  
|                            | Other comprehensive loss                                                       |                                                  |   |              |         |   |            |  |  |          |            |             |          |       |        |               |  |   |              |       |  |               |         |         |       |   |        |        |   |   |         | (17,649 | ) |   |        |     |   |   |         | (17,649 | )
|                            |                                                                                |                                                  |   |              |         |   |            |  |  |          |            |             |          |       |        |               |  |   |              |       |  |               |         |         |       |   |        |        |   |  
|                            | Total comprehensive income                                                     |                                                  |   |              |         |   |            |  |  |          |            |             |          |       |        |               |  |   |              |       |  |               |         |         |       |   |        |        |   |   |         |         |   |   |        |     |   |   |         | 39,900  |  
|                            |                                                                                |                                                  |   |              |         |   |            |  |  |          |            |             |          |       |        |               |  |   |              |       |  |               |         |         |       |   |        |        |   |  
|BALANCE, SEPTEMBER 30, 2005 |                                                                                |                                                  |  |              |         | $ |           |  |  |          | 70,880,202 |             |          | $     | 70,880 |               |  | $ | 101,926      |       |  | $             | 473,866 |         |       | $ | (6,943 | )      |   | $ | (20,870 | )       |   | $ | (1,813 | )   |   | $ | 617,046 |        
|                            |                                                                                |                                                  |   |              |         |   |            |  |  |          |            |             |          |       |        |               |  |   |              |       |  |               |         |         |       |   |        |        |   |  



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AMEGY BANCORPORATION, INC. AND SUBSIDIARIES





CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS


(unaudited)


|                                                     |                                                                                       |                                                                           |                                   |                                           |        |        |          |            |        |       |          |  
|---------------------------------------------------- | ------------------------------------------------------------------------------------- | ------------------------------------------------------------------------- | --------------------------------- | ----------------------------------------- | ------ | ------ | -------- | ---------- | ------ | ----- | -------- | -
|                                                     |                                                                                       | Nine Months Ended                                                         |                                  
|                                                     |                                                                                       | September 30,                                                             |                                  
|                                                     |                                                                                       |                                                                           |                                  
|                                                     |                                                                                       | 2005                                                                      |                                   |                                           | 2004   |       
|                                                     |                                                                                       |                                                                           |                                   |                                           |        |       
|                                                     |                                                                                       | (Dollars in thousands)                                                    |                                  
|Cash flows from operating activities:                |                                                                                       |                                                                           |                                   |                                           |        |        |          |           
|                                                     | Net income                                                                            |                                                                           | $                                 | 57,549                                    |        |        | $        | 51,174     |       
|                                                     | Adjustments to reconcile net income to net cash provided by
    operating activities: |                                                                           |                                   |                                           |        |        |          |            |       
|                                                     |                                                                                       | Provision for loan losses                                                 |                                   |                                           | 6,500  |        |          |            | 7,710  |      
|                                                     |                                                                                       | Deferred tax benefit                                                      |                                   |                                           | (3,638 | )      |          |            | (1,487 | )    
|                                                     |                                                                                       | Depreciation                                                              |                                   |                                           | 13,061 |        |          |            | 10,707 |      
|                                                     |                                                                                       | Realized (gain) loss on securities available for sale, net                |                                   |                                           | (1,156 | )      |          |            | 45     |      
|                                                     |                                                                                       | Gain on sale of premises and equipment, net                               |                                   |                                           | (661   | )      |          |            | (2     | )    
|                                                     |                                                                                       | Amortization and accretion of securities premiums and
    discounts, net |                                   |                                           | 2,432  |        |          |            | 4,346  |      
|                                                     |                                                                                       | Amortization of mortgage servicing rights                                 |                                   |                                           | 1,273  |        |          |            | 1,677  |      
|                                                     |                                                                                       | Amortization of computer software                                         |                                   |                                           | 5,767  |        |          |            | 4,873  |      
|                                                     |                                                                                       | Amortization of core deposit intangibles                                  |                                   |                                           | 6,461  |        |          |            | 2,710  |      
|                                                     |                                                                                       | Other amortization                                                        |                                   |                                           | 1,769  |        |          |            | 1,248  |      
|                                                     |                                                                                       | Income tax benefit from exercise of stock options                         |                                   |                                           | 1,278  |        |          |            | 2,135  |      
|                                                     |                                                                                       | Net change in:                                                            |                                   |                                           |        |        |          |            |        |      
|                                                     |                                                                                       |                                                                           | Loans held for sale               |                                           |        | 3,981  |          |            |        | 877   |         
|                                                     |                                                                                       |                                                                           | Other assets and liabilities, net |                                           |        | (5,499 | )        |            |        | 4,871 |         
|                                                     |                                                                                       |                                                                           |                                   |                                           |        |       
|                                                     |                                                                                       |                                                                           |                                   | Net cash provided by operating activities |        |        | 89,117   |            |        |       | 90,884   |  
|                                                     |                                                                                       |                                                                           |                                   |                                           |        |       
|Cash flows from investing activities:                |                                                                                       |                                                                           |                                   |                                           |        |        |          |           
|                                                     | Proceeds from maturity and call of securities available for sale                      |                                                                           |                                   | 18,454                                    |        |        |          | 36,615     |       
|                                                     | Proceeds from sale of securities available for sale                                   |                                                                           |                                   | 369,599                                   |        |        |          | 794,031    |       
|                                                     | Principal paydowns of mortgage-backed securities available for
    sale               |                                                                           |                                   | 191,714                                   |        |        |          | 228,351    |       
|                                                     | Principal paydowns of mortgage-backed securities held to maturity                     |                                                                           |                                   | 11,002                                    |        |        |          |           |       
|                                                     | Purchase of securities available for sale                                             |                                                                           |                                   | (520,625                                  | )      |        |          | (1,176,021 | )     
|                                                     | Purchase of Federal Reserve Bank stock                                                |                                                                           |                                   | (6,729                                    | )      |        |          | (3,444     | )     
|                                                     | Purchase of Federal Home Loan Bank stock                                              |                                                                           |                                   | (40,264                                   | )      |        |          | (24,512    | )     
|                                                     | Proceeds from redemption of Federal Home Loan Bank stock                              |                                                                           |                                   | 40,779                                    |        |        |          | 15,102     |       
|                                                     | Net increase in loans held for investment                                             |                                                                           |                                   | (374,550                                  | )      |        |          | (492,923   | )     
|                                                     | Proceeds from sale of premises and equipment                                          |                                                                           |                                   | 2,565                                     |        |        |          | 733        |       
|                                                     | Purchase of premises and equipment                                                    |                                                                           |                                   | (23,132                                   | )      |        |          | (36,809    | )     
|                                                     | Purchase of mortgage servicing rights                                                 |                                                                           |                                   | (287                                      | )      |        |          |           |       
|                                                     | Purchase of Bank-owned life insurance policies                                        |                                                                           |                                   | (50,000                                   | )      |        |          |           |       
|                                                     | Purchase of Reunion Bancshares, Inc., net of cash acquired of
    $30,596             |                                                                           |                                   |                                          |        |        |          | (20,004    | )     
|                                                     | Investment in unconsolidated equity investees                                         |                                                                           |                                   | (4,496                                    | )      |        |          | (2,431     | )     
|                                                     |                                                                                       |                                                                           |                                   |                                           |        |       
|                                                     |                                                                                       |                                                                           |                                   | Net cash used in investing activities     |        |        | (385,970 | )          |        |       | (681,312 | )
|                                                     |                                                                                       |                                                                           |                                   |                                           |        |       
|Cash flows from financing activities:                |                                                                                       |                                                                           |                                   |                                           |        |        |          |           
|                                                     | Net increase in noninterest-bearing demand deposits                                   |                                                                           |                                   | 113,488                                   |        |        |          | 22,327     |       
|                                                     | Net increase in time deposits                                                         |                                                                           |                                   | 573,850                                   |        |        |          | 104,986    |       
|                                                     | Net increase in other interest-bearing deposits                                       |                                                                           |                                   | 62,138                                    |        |        |          | 66,845     |       
|                                                     | Issuance of junior subordinated deferrable interest debentures,
    net of cost       |                                                                           |                                   |                                          |        |        |          | 36,083     |       
|                                                     | Issuance of senior subordinated debentures                                            |                                                                           |                                   |                                          |        |        |          | 75,000     |       
|                                                     | Net increase (decrease) in short-term borrowings                                      |                                                                           |                                   | (391,787                                  | )      |        |          | 321,361    |       
|                                                     | Proceeds from long-term borrowings                                                    |                                                                           |                                   |                                          |        |        |          | 2,200      |       
|                                                     | Payments on long-term borrowings                                                      |                                                                           |                                   | (2,362                                    | )      |        |          | (200,332   | )     
|                                                     | Payments of cash dividends                                                            |                                                                           |                                   | (11,994                                   | )      |        |          | (6,195     | )     
|                                                     | Net proceeds from exercise of stock options                                           |                                                                           |                                   | 5,679                                     |        |        |          | 5,132      |       
|                                                     | Purchase of treasury stock                                                            |                                                                           |                                   | (73                                       | )      |        |          | (927       | )     
|                                                     |                                                                                       |                                                                           |                                   |                                           |        |       
|                                                     |                                                                                       |                                                                           |                                   | Net cash provided by financing activities |        |        | 348,939  |            |        |       | 426,480  |  
|                                                     |                                                                                       |                                                                           |                                   |                                           |        |       
|Net increase (decrease) in cash and cash equivalents |                                                                                       |                                                                           | 52,086                            |                                           |        |        | (163,948 | )         
|Cash and cash equivalents at beginning of period     |                                                                                       |                                                                           | 341,975                           |                                           |        |        | 485,798  |           
|                                                     |                                                                                       |                                                                           |                                   |                                           |        |       
|Cash and cash equivalents at end of period           |                                                                                       | $                                                                         | 394,061                           |                                           |        | $      | 321,850  |           
|                                                     |                                                                                       |                                                                           |                                   |                                           |        |       



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AMEGY BANCORPORATION, INC. AND SUBSIDIARIES





NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


(Unaudited)




|   |                      
|-- | ---------------------
|1. | Basis of Presentation













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AMEGY BANCORPORATION, INC. AND SUBSIDIARIES


NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




| |                  
| | -----------------
| | Reclassifications





| |                         
| | ------------------------
| | Stock-Based Compensation



Accounting for Stock-Based Compensation




|                                                   |             |                                                  |   |        |                   |  |   |        |  |  |      |        |  |  |   |        | 
|-------------------------------------------------- | ----------- | ------------------------------------------------ | - | ------ | ----------------- |  | - | ------ |  |  | ---- | ------ |  |  | - | ------ | 
|                                                   |             | Three Months Ended                               |   |        | Nine Months Ended | 
|                                                   |             | September 30,                                    |   |        | September 30,     | 
|                                                   |             |                                                  |   |        |                   | 
|                                                   |             | 2005                                             |   |        | 2004              |  |   | 2005   |  |  | 2004 |       
|                                                   |             |                                                  |   |        |                   |  |   |        |  |  |      |       
|                                                   |             | (Dollars in thousands, except per share amounts) |  
|Net income                                         |             |                                                  |   |        |                   |  |   |        |  |  |      |        |  |  |   |       
|                                                   | As reported |                                                  | $ | 21,448 |                   |  | $ | 19,666 |  |  | $    | 57,549 |  |  | $ | 51,174 | 
|                                                   | Pro forma   |                                                  | $ | 20,548 |                   |  | $ | 18,910 |  |  | $    | 55,183 |  |  | $ | 49,263 | 
|Stock-based compensation cost, net of income taxes |             |                                                  |   |        |                   |  |   |        |  |  |      |        |  |  |   |       
|                                                   | As reported |                                                  | $ | 463    |                   |  | $ | 338    |  |  | $    | 1,150  |  |  | $ | 811    | 
|                                                   | Pro forma   |                                                  | $ | 1,363  |                   |  | $ | 1,094  |  |  | $    | 3,516  |  |  | $ | 2,723  | 
|Basic earnings per common share                    |             |                                                  |   |        |                   |  |   |        |  |  |      |        |  |  |   |       
|                                                   | As reported |                                                  | $ | 0.30   |                   |  | $ | 0.28   |  |  | $    | 0.82   |  |  | $ | 0.74   | 
|                                                   | Pro forma   |                                                  | $ | 0.29   |                   |  | $ | 0.27   |  |  | $    | 0.78   |  |  | $ | 0.72   | 
|Diluted earnings per common share                  |             |                                                  |   |        |                   |  |   |        |  |  |      |        |  |  |   |       
|                                                   | As reported |                                                  | $ | 0.30   |                   |  | $ | 0.28   |  |  | $    | 0.80   |  |  | $ | 0.73   | 
|                                                   | Pro forma   |                                                  | $ | 0.28   |                   |  | $ | 0.27   |  |  | $    | 0.77   |  |  | $ | 0.70   | 



Share-Based
Payment


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AMEGY BANCORPORATION, INC. AND SUBSIDIARIES


NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




| |                              
| | -----------------------------
| | New Accounting Pronouncements

Accounting for Certain Loans or Debt Securities Acquired in a
Transfer


Stock-Based Compensation


The Meaning
of Other-Than-Temporary Impairment and Its Application to
Certain Investments. Accounting for
Certain Investments in Debt and Equity Securities, Accounting for
Noncurrent Marketable Equity Securities.


Accounting for Uncertain Tax
Positions  an Interpretation of FASB Statement
No. 109.


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AMEGY BANCORPORATION, INC. AND SUBSIDIARIES


NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|   |                        
|-- | -----------------------
|2. | Merger Related Activity

Goodwill and Other Intangible
Assets.








|                           |  |                        |          |   |            |   |          |  
|-------------------------- |  | ---------------------- | -------- | - | ---------- | - | -------- | -
|                           |  | Reunion                |          |   | Klein      |  
|                           |  | January 31,            |          |   | October 1, |  
|                           |  | 2004                   |          |   | 2004       |  
|                           |  |                        |          |   |            |  
|                           |  | (Dollars in thousands) |         
|Cash                       |  | $                      | 30,596   |   |            | $ | 78,060   |  
|Securities                 |  |                        | 30,946   |   |            |   | 329,864  |  
|Loans                      |  |                        | 163,822  |   |            |   | 163,086  |  
|Loan premium (discount)    |  |                        | (1,038   | ) |            |   | 5,574    |  
|Allowance for loan losses  |  |                        | (2,116   | ) |            |   | (1,354   | )
|Goodwill                   |  |                        | 29,755   |   |            |   | 94,827   |  
|Core deposit intangibles   |  |                        | 6,379    |   |            |   | 19,629   |  
|Other assets               |  |                        | 3,779    |   |            |   | 23,969   |  
|Deposits                   |  |                        | (207,026 | ) |            |   | (535,644 | )
|Deposit (premium) discount |  |                        | (39      | ) |            |   | 684      |  
|Borrowings                 |  |                        | (2,000   | ) |            |   |         |  
|Other liabilities          |  |                        | (2,458   | ) |            |   | (13,695  | )
|                           |  |                        |          |   |            |  
|Cost                       |  | $                      | 50,600   |   |            | $ | 165,000  |  
|                           |  |                        |          |   |            |  

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AMEGY BANCORPORATION, INC. AND SUBSIDIARIES


NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)






|                                                                               |  |                           |        |  |                    |   |         | 
|------------------------------------------------------------------------------ |  | ------------------------- | ------ |  | ------------------ | - | ------- | 
|                                                                               |  | Pro forma                 |        |  | Pro forma          |  
|                                                                               |  | Three Months Ended        |        |  | Nine Months Ended  |  
|                                                                               |  | September 30, 2004        |        |  | September 30, 2004 |  
|                                                                               |  |                           |        |  |                    |  
|                                                                               |  | (Dollars in thousands,    |       
|                                                                               |  | except per share amounts) |       
|Net interest income after provision for loan losses and
    noninterest income |  | $                         | 90,968 |  |                    | $ | 256,583 | 
|Income before income taxes                                                     |  |                           | 31,142 |  |                    |   | 81,413  | 
|Net income                                                                     |  |                           | 22,284 |  |                    |   | 56,569  | 
|Earnings per common share, basic                                               |  | $                         | 0.32   |  |                    | $ | 0.82    | 
|Earnings per common share, diluted                                             |  | $                         | 0.31   |  |                    | $ | 0.80    | 



|   |           
|-- | ----------
|3. | Securities



|                    |                                       |                                     |                                   |                  |                   |        |   |       |       |           |                  |         |         |      |   |           |           |        |   |           |           |        |            |       |        |     |   |         |         |   |   |           |           |        | 
|------------------- | ------------------------------------- | ----------------------------------- | --------------------------------- | ---------------- | ----------------- | ------ | - | ----- | ----- | --------- | ---------------- | ------- | ------- | ---- | - | --------- | --------- | ------ | - | --------- | --------- | ------ | ---------- | ----- | ------ | --- | - | ------- | ------- | - | - | --------- | --------- | ------ | 
|                    |                                       | September 30, 2005                  |                                   |                  | December 31, 2004 |       
|                    |                                       |                                     |                                   |                  |                   |       
|                    |                                       |                                     |                                   | Gross Unrealized |                   |        |   |       |       |           | Gross Unrealized |         |         |     
|                    |                                       | Amortized                           |                                   |                  |                   |        |   |       |       | Amortized |                  |         |         |      |   |          
|                    |                                       | Cost                                |                                   |                  | Gain              |        |   | Loss  |       |           | Fair Value       |         |         | Cost |   |           | Gain      |        |   | Loss      |           |        | Fair Value |      
|                    |                                       |                                     |                                   |                  |                   |        |   |       |       |           |                  |         |         |      |   |           |           |        |   |           |           |        |            |      
|                    |                                       | (Dollars in thousands)              |                                  
|Available for sale: |                                       |                                     |                                   |                  |                   |        |   |       |       |           |                  |         |         |      |   |           |           |        |   |           |           |        |            |       |        |     |   |         |         |   |   |          
|                    | U.S. Government and agency securities |                                     | $                                 | 447,494          |                   |        | $ |      |       |           | $                | (8,842  | )       |      | $ | 438,652   |           |        | $ | 388,061   |           |        | $          | 246   |        |     | $ | (2,623  | )       |   | $ | 385,684   |          
|                    | Mortgage-backed securities            |                                     |                                   | 1,108,250        |                   |        |   | 412   |       |           |                  | (25,997 | )       |      |   | 1,082,665 |           |        |   | 1,237,420 |           |        |            | 3,820 |        |     |   | (11,076 | )       |   |   | 1,230,164 |          
|                    | Municipal securities                  |                                     |                                   | 229,534          |                   |        |   | 4,868 |       |           |                  | (1,056  | )       |      |   | 233,346   |           |        |   | 246,705   |           |        |            | 7,564 |        |     |   | (1,392  | )       |   |   | 252,877   |          
|                    | Federal Reserve Bank stock            |                                     |                                   | 15,240           |                   |        |   |      |       |           |                  |        |         |      |   | 15,240    |           |        |   | 8,511     |           |        |            |      |        |     |   |        |         |   |   | 8,511     |          
|                    | Federal Home Loan Bank stock          |                                     |                                   | 32,259           |                   |        |   |      |       |           |                  |        |         |      |   | 32,259    |           |        |   | 32,772    |           |        |            |      |        |     |   |        |         |   |   | 32,772    |          
|                    | Other securities                      |                                     |                                   | 43,710           |                   |        |   | 12    |       |           |                  |        |         |      |   | 43,722    |           |        |   | 17,196    |           |        |            |      |        |     |   |        |         |   |   | 17,196    |          
|                    |                                       |                                     |                                   |                  |                   |        |   |       |       |           |                  |         |         |      |   |           |           |        |   |           |           |        |            |      
|                    |                                       | Total securities available for sale |                                   | $                | 1,876,487         |        |   | $     | 5,292 |           |                  | $       | (35,895 | )    |   | $         | 1,845,884 |        |   | $         | 1,930,665 |        |            | $     | 11,630 |     |   | $       | (15,091 | ) |   | $         | 1,927,204 |       
|                    |                                       |                                     |                                   |                  |                   |        |   |       |       |           |                  |         |         |      |   |           |           |        |   |           |           |        |            |      
|Held to maturity:   |                                       |                                     |                                   |                  |                   |        |   |       |       |           |                  |         |         |      |   |           |           |        |   |           |           |        |            |       |        |     |   |         |         |   |   |          
|                    | Mortgage-backed securities            |                                     | $                                 | 47,005           |                   |        | $ |      |       |           | $                | (170    | )       |      | $ | 46,835    |           |        | $ | 58,033    |           |        | $          | 536   |        |     | $ |        |         |   | $ | 58,569    |          
|                    |                                       |                                     |                                   |                  |                   |        |   |       |       |           |                  |         |         |      |   |           |           |        |   |           |           |        |            |      
|                    |                                       |                                     | Total securities held to maturity |                  | $                 | 47,005 |   |       | $     |          |                  |         | $       | (170 | ) |           | $         | 46,835 |   |           | $         | 58,033 |            |       | $      | 536 |   |         | $       |  |   |           | $         | 58,569 | 
|                    |                                       |                                     |                                   |                  |                   |        |   |       |       |           |                  |         |         |      |   |           |           |        |   |           |           |        |            |      

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AMEGY BANCORPORATION, INC. AND SUBSIDIARIES


NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|                    |                                       |                                     |   |            |                   |  |   |            |            |   |      |         |         |            |   |         |         |   |   |           |           |  |   |         |         |  
|------------------- | ------------------------------------- | ----------------------------------- | - | ---------- | ----------------- |  | - | ---------- | ---------- | - | ---- | ------- | ------- | ---------- | - | ------- | ------- | - | - | --------- | --------- |  | - | ------- | ------- | -
|                    |                                       | Less Than 12 Months                 |   |            | 12 Months or More |  |   | Total      |           
|                    |                                       |                                     |   |            |                   |  |   |            |           
|                    |                                       |                                     |   | Unrealized |                   |  |   |            | Unrealized |   |      |         |         | Unrealized |  
|                    |                                       | Fair Value                          |   |            | Loss              |  |   | Fair Value |            |   | Loss |         |         | Fair Value |   |         | Loss    |  
|                    |                                       |                                     |   |            |                   |  |   |            |            |   |      |         |         |            |   |         |         |  
|                    |                                       | (Dollars in thousands)              |  
|Available for sale: |                                       |                                     |   |            |                   |  |   |            |            |   |      |         |         |            |   |         |         |   |   |           |           |  |   |        
|                    | U.S. Government and agency securities |                                     | $ | 304,684    |                   |  | $ | (4,631     | )          |   | $    | 133,967 |         |            | $ | (4,211  | )       |   | $ | 438,651   |           |  | $ | (8,842  | )      
|                    | Mortgage-backed securities            |                                     |   | 543,763    |                   |  |   | (9,879     | )          |   |      | 518,710 |         |            |   | (16,118 | )       |   |   | 1,062,473 |           |  |   | (25,997 | )      
|                    | Municipal securities                  |                                     |   | 46,698     |                   |  |   | (359       | )          |   |      | 30,848  |         |            |   | (697    | )       |   |   | 77,546    |           |  |   | (1,056  | )      
|                    |                                       |                                     |   |            |                   |  |   |            |            |   |      |         |         |            |   |         |         |  
|                    |                                       | Total securities available for sale |   | $          | 895,145           |  |   | $          | (14,869    | ) |      | $       | 683,525 |            |   | $       | (21,026 | ) |   | $         | 1,578,670 |  |   | $       | (35,895 | )
|                    |                                       |                                     |   |            |                   |  |   |            |            |   |      |         |         |            |   |         |         |  
|Held to maturity:   |                                       |                                     |   |            |                   |  |   |            |            |   |      |         |         |            |   |         |         |   |   |           |           |  |   |        
|                    | Mortgage-backed securities            |                                     | $ | 46,835     |                   |  | $ | (170       | )          |   | $    |        |         |            | $ |        |         |   | $ | 46,835    |           |  | $ | (170    | )      
|                    |                                       |                                     |   |            |                   |  |   |            |            |   |      |         |         |            |   |         |         |  
|                    |                                       | Total securities held to maturity   |   | $          | 46,835            |  |   | $          | (170       | ) |      | $       |        |            |   | $       |        |   |   | $         | 46,835    |  |   | $       | (170    | )
|                    |                                       |                                     |   |            |                   |  |   |            |            |   |      |         |         |            |   |         |         |  





|   |                          
|-- | -------------------------
|4. | Allowance for Loan Losses







12



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AMEGY BANCORPORATION, INC. AND SUBSIDIARIES


NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|                                                    |                           |                                   |   |            |                   |  |  |        |            |   |             |        |        |  |  |       |        |  
|--------------------------------------------------- | ------------------------- | --------------------------------- | - | ---------- | ----------------- |  |  | ------ | ---------- | - | ----------- | ------ | ------ |  |  | ----- | ------ | -
|                                                    |                           | September 30, 2005                |   |            | December 31, 2004 | 
|                                                    |                           |                                   |   |            |                   | 
|                                                    |                           |                                   |   | Percent of |                   |  |  |        | Percent of |  
|                                                    |                           |                                   |   | Loans to   |                   |  |  |        | Loans to   |  
|                                                    |                           | Amount                            |   |            | Total Loans       |  |  | Amount |            |   | Total Loans |       
|                                                    |                           |                                   |   |            |                   |  |  |        |            |   |             |       
|                                                    |                           | (Dollars in thousands)            |  
|Balance of allowance for loan losses applicable to: |                           |                                   |   |            |                   |  |  |        |            |   |             |        |        |  |  |      
|                                                    | Commercial and industrial |                                   | $ | 27,807     |                   |  |  | 40.29  | %          |   | $           | 26,285 |        |  |  | 45.12 | %     
|                                                    | Real estate:              |                                   |   |            |                   |  |  |        |            |   |             |        |        |  |  |       |       
|                                                    |                           | Construction and land development |   |            | 5,730             |  |  |        | 20.70      |   |             |        | 7,547  |  |  |       | 17.55  |  
|                                                    |                           | 1-4 family residential            |   |            | 7,233             |  |  |        | 15.31      |   |             |        | 6,569  |  |  |       | 16.06  |  
|                                                    |                           | Commercial                        |   |            | 5,411             |  |  |        | 19.16      |   |             |        | 5,778  |  |  |       | 16.65  |  
|                                                    |                           | Farmland                          |   |            | 184               |  |  |        | 0.29       |   |             |        | 156    |  |  |       | 0.30   |  
|                                                    |                           | Other                             |   |            | 575               |  |  |        | 1.68       |   |             |        | 868    |  |  |       | 1.39   |  
|                                                    | Consumer                  |                                   |   | 2,249      |                   |  |  | 2.57   |            |   |             | 2,205  |        |  |  | 2.93  |       
|                                                    |                           |                                   |   |            |                   |  |  |        |            |   |             |       
|                                                    |                           | Total allowance for loan losses   |   | $          | 49,189            |  |  |        | 100.00     | % |             | $      | 49,408 |  |  |       | 100.00 | %
|                                                    |                           |                                   |   |            |                   |  |  |        |            |   |             |       



|   |                            
|-- | ---------------------------
|5. | Comprehensive Income (Loss)



|                                   |                                |                                                          |         |   |                   |   |         |      |        |   |         |   |         |   |        |   |        |  
|---------------------------------- | ------------------------------ | -------------------------------------------------------- | ------- | - | ----------------- | - | ------- | ---- | ------ | - | ------- | - | ------- | - | ------ | - | ------ | -
|                                   |                                | Three Months Ended                                       |         |   | Nine Months Ended |  
|                                   |                                | September 30,                                            |         |   | September 30,     |  
|                                   |                                |                                                          |         |   |                   |  
|                                   |                                | 2005                                                     |         |   | 2004              |   |         | 2005 |        |   | 2004    |  
|                                   |                                |                                                          |         |   |                   |   |         |      |        |   |         |  
|Other comprehensive income (loss): |                                |                                                          |         |   |                   |   |         |      |        |   |         |   |         |   |        |  
|                                   | Securities available for sale: |                                                          |         |   |                   |   |         |      |        |   |         |   |         |   |        |   |       
|                                   |                                | Change in fair value during the period                   |         | $ | (20,929           | ) |         | $    | 32,060 |   |         | $ | (26,326 | ) |        | $ | (3,007 | )
|                                   |                                | Reclassification adjustment for gains included in income |         |   | (1,005            | ) |         |      | (855   | ) |         |   | (816    | ) |        |   | (599   | )
|                                   |                                |                                                          |         |   |                   |   |         |      |        |   |         |  
|                                   |                                |                                                          | (21,934 | ) |                   |   | 31,205  |      |        |   | (27,142 | ) |         |   | (3,606 | )
|Deferred tax effect                |                                |                                                          | 7,677   |   |                   |   | (10,814 | )    |        |   | 9,493   |   |         |   | 1,371  |  
|                                   |                                |                                                          |         |   |                   |   |         |      |        |   |         |  
|                                   |                                | Net other comprehensive income (loss)                    |         | $ | (14,257           | ) |         | $    | 20,391 |   |         | $ | (17,649 | ) |        | $ | (2,235 | )
|                                   |                                |                                                          |         |   |                   |   |         |      |        |   |         |  



|                                                     |  |                        |         |   |              |   |        |  
|---------------------------------------------------- |  | ---------------------- | ------- | - | ------------ | - | ------ | -
|                                                     |  | September 30,          |         |   | December 31, |  
|                                                     |  | 2005                   |         |   | 2004         |  
|                                                     |  |                        |         |   |              |  
|                                                     |  | (Dollars in thousands) |        
|Net unrealized loss on securities available for sale |  | $                      | (19,899 | ) |              | $ | (2,250 | )
|Minimum pension liability                            |  |                        | (971    | ) |              |   | (971   | )
|                                                     |  |                        |         |   |              |  
|Total accumulated other comprehensive loss           |  | $                      | (20,870 | ) |              | $ | (3,221 | )
|                                                     |  |                        |         |   |              |  

13



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##### Table of Contents



AMEGY BANCORPORATION, INC. AND SUBSIDIARIES


NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|   |                          
|-- | -------------------------
|6. | Mortgage Servicing Rights







|                             |              |                        |       |      |                   |   |       |      |   |   |       |        |   |   |       |        |  
|---------------------------- | ------------ | ---------------------- | ----- | ---- | ----------------- | - | ----- | ---- | - | - | ----- | ------ | - | - | ----- | ------ | -
|                             |              | Three Months Ended     |       |      | Nine Months Ended |  
|                             |              | September 30,          |       |      | September 30,     |  
|                             |              |                        |       |      |                   |  
|                             |              | 2005                   |       |      | 2004              |   |       | 2005 |   |   | 2004  |       
|                             |              |                        |       |      |                   |   |       |      |   |   |       |       
|                             |              | (Dollars in thousands) |      
|Balance, beginning of period |              | $                      | 7,253 |      |                   | $ | 7,593 |      |   | $ | 7,121 |        |   | $ | 8,299 |       
|                             | Originations |                        |       | 307  |                   |   |       | 257  |   |   |       | 1,010  |   |   |       | 757    |  
|                             | Purchases    |                        |       |     |                   |   |       |     |   |   |       | 287    |   |   |       |       |  
|                             | Amortization |                        |       | (415 | )                 |   |       | (471 | ) |   |       | (1,273 | ) |   |       | (1,677 | )
|                             |              |                        |       |      |                   |   |       |      |   |   |       |       
|Balance, end of period       |              | $                      | 7,145 |      |                   | $ | 7,379 |      |   | $ | 7,145 |        |   | $ | 7,379 |       
|                             |              |                        |       |      |                   |   |       |      |   |   |       |       



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AMEGY BANCORPORATION, INC. AND SUBSIDIARIES


NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|   |                          
|-- | -------------------------
|7. | Earnings Per Common Share



|                                                               |                                                            |                                          |        |        |                   |   |        |        |  |   |        |        |  |   |        |        | 
|-------------------------------------------------------------- | ---------------------------------------------------------- | ---------------------------------------- | ------ | ------ | ----------------- | - | ------ | ------ |  | - | ------ | ------ |  | - | ------ | ------ | 
|                                                               |                                                            | Three Months Ended                       |        |        | Nine Months Ended |  
|                                                               |                                                            | September 30,                            |        |        | September 30,     |  
|                                                               |                                                            |                                          |        |        |                   |  
|                                                               |                                                            | 2005                                     |        |        | 2004              |   |        | 2005   |  |   | 2004   |       
|                                                               |                                                            |                                          |        |        |                   |   |        |        |  |   |        |       
|                                                               |                                                            | (In thousands, except per share amounts) |       
|Net income                                                     |                                                            | $                                        | 21,448 |        |                   | $ | 19,666 |        |  | $ | 57,549 |        |  | $ | 51,174 |       
|                                                               |                                                            |                                          |        |        |                   |   |        |        |  |   |        |       
|Divided by average common shares and common share equivalents: |                                                            |                                          |        |        |                   |   |        |        |  |   |        |        |  |   |        |       
|                                                               | Average common shares outstanding                          |                                          |        | 70,646 |                   |   |        | 69,100 |  |   |        | 70,354 |  |   |        | 68,798 | 
|                                                               | Average common shares issuable under the stock option plan |                                          |        | 1,739  |                   |   |        | 1,730  |  |   |        | 1,490  |  |   |        | 1,746  | 
|                                                               |                                                            |                                          |        |        |                   |   |        |        |  |   |        |       
|                                                               | Total average common shares and common share equivalents   |                                          |        | 72,385 |                   |   |        | 70,830 |  |   |        | 71,844 |  |   |        | 70,544 | 
|                                                               |                                                            |                                          |        |        |                   |   |        |        |  |   |        |       
|Basic earnings per common share                                |                                                            | $                                        | 0.30   |        |                   | $ | 0.28   |        |  | $ | 0.82   |        |  | $ | 0.74   |       
|                                                               |                                                            |                                          |        |        |                   |   |        |        |  |   |        |       
|Diluted earnings per common share                              |                                                            | $                                        | 0.30   |        |                   | $ | 0.28   |        |  | $ | 0.80   |        |  | $ | 0.73   |       
|                                                               |                                                            |                                          |        |        |                   |   |        |        |  |   |        |       





|   |                    
|-- | -------------------
|8. | Segment Information





15



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AMEGY BANCORPORATION, INC. AND SUBSIDIARIES


NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|                           |  |                                  |        |  |          |   |       |              |  |   |              |   |  |      |         |  |          |   |        |              |  |   |              |  |  |   |        |   |  |   |        | 
|-------------------------- |  | -------------------------------- | ------ |  | -------- | - | ----- | ------------ |  | - | ------------ | - |  | ---- | ------- |  | -------- | - | ------ | ------------ |  | - | ------------ |  |  | - | ------ | - |  | - | ------ | 
|                           |  | Three Months Ended September 30, |       
|                           |  |                                  |       
|                           |  | 2005                             |        |  | 2004     |  
|                           |  |                                  |        |  |          |  
|                           |  | Bank                             |        |  | Mortgage |   |       | Eliminations |  |   | Consolidated |   |  | Bank |         |  | Mortgage |   |        | Eliminations |  |   | Consolidated | 
|                           |  |                                  |        |  |          |   |       |              |  |   |              |   |  |      |         |  |          |   |        |              |  |   |              | 
|                           |  | (Dollars in thousands)           |       
|Interest income            |  | $                                | 97,147 |  |          | $ | 7,063 |              |  | $ | (3,517       | ) |  | $    | 100,693 |  |          | $ | 69,287 |              |  | $ | 3,939        |  |  | $ | (1,609 | ) |  | $ | 71,617 | 
|Interest expense           |  |                                  | 36,946 |  |          |   | 3,517 |              |  |   | (3,517       | ) |  |      | 36,946  |  |          |   | 14,618 |              |  |   | 1,609        |  |  |   | (1,609 | ) |  |   | 14,618 | 
|                           |  |                                  |        |  |          |   |       |              |  |   |              |   |  |      |         |  |          |   |        |              |  |   |              | 
|Net interest income        |  |                                  | 60,201 |  |          |   | 3,546 |              |  |   |             |   |  |      | 63,747  |  |          |   | 54,669 |              |  |   | 2,330        |  |  |   |       |   |  |   | 56,999 | 
|Provision for loan losses  |  |                                  | 1,800  |  |          |   | 100   |              |  |   |             |   |  |      | 1,900   |  |          |   | 1,852  |              |  |   | 1,026        |  |  |   |       |   |  |   | 2,878  | 
|Noninterest income         |  |                                  | 29,009 |  |          |   | 1,654 |              |  |   |             |   |  |      | 30,663  |  |          |   | 24,059 |              |  |   | 1,266        |  |  |   |       |   |  |   | 25,325 | 
|Noninterest expenses       |  |                                  | 59,957 |  |          |   | 2,556 |              |  |   |             |   |  |      | 62,513  |  |          |   | 50,497 |              |  |   | 1,787        |  |  |   |       |   |  |   | 52,284 | 
|                           |  |                                  |        |  |          |   |       |              |  |   |              |   |  |      |         |  |          |   |        |              |  |   |              | 
|Income before income taxes |  | $                                | 27,453 |  |          | $ | 2,544 |              |  | $ |             |   |  | $    | 29,997  |  |          | $ | 26,379 |              |  | $ | 783          |  |  | $ |       |   |  | $ | 27,162 | 
|                           |  |                                  |        |  |          |   |       |              |  |   |              |   |  |      |         |  |          |   |        |              |  |   |              | 

|                           |  |                                 |           |  |          |   |         |              |  |   |              |   |  |      |           |  |          |   |           |              |  |   |              |  |  |   |          |   |  |   |           | 
|-------------------------- |  | ------------------------------- | --------- |  | -------- | - | ------- | ------------ |  | - | ------------ | - |  | ---- | --------- |  | -------- | - | --------- | ------------ |  | - | ------------ |  |  | - | -------- | - |  | - | --------- | 
|                           |  | Nine Months Ended September 30, |          
|                           |  |                                 |          
|                           |  | 2005                            |           |  | 2004     |  
|                           |  |                                 |           |  |          |  
|                           |  | Bank                            |           |  | Mortgage |   |         | Eliminations |  |   | Consolidated |   |  | Bank |           |  | Mortgage |   |           | Eliminations |  |   | Consolidated | 
|                           |  |                                 |           |  |          |   |         |              |  |   |              |   |  |      |           |  |          |   |           |              |  |   |              | 
|                           |  | (Dollars in thousands)          |          
|Interest income            |  | $                               | 270,631   |  |          | $ | 20,201  |              |  | $ | (9,293       | ) |  | $    | 281,539   |  |          | $ | 193,772   |              |  | $ | 10,988       |  |  | $ | (4,258   | ) |  | $ | 200,502   | 
|Interest expense           |  |                                 | 93,210    |  |          |   | 9,293   |              |  |   | (9,293       | ) |  |      | 93,210    |  |          |   | 36,688    |              |  |   | 4,258        |  |  |   | (4,258   | ) |  |   | 36,688    | 
|                           |  |                                 |           |  |          |   |         |              |  |   |              |   |  |      |           |  |          |   |           |              |  |   |              | 
|Net interest income        |  |                                 | 177,421   |  |          |   | 10,908  |              |  |   |             |   |  |      | 188,329   |  |          |   | 157,084   |              |  |   | 6,730        |  |  |   |         |   |  |   | 163,814   | 
|Provision for loan losses  |  |                                 | 6,105     |  |          |   | 395     |              |  |   |             |   |  |      | 6,500     |  |          |   | 5,596     |              |  |   | 2,114        |  |  |   |         |   |  |   | 7,710     | 
|Noninterest income         |  |                                 | 86,961    |  |          |   | 4,040   |              |  |   |             |   |  |      | 91,001    |  |          |   | 66,398    |              |  |   | 3,328        |  |  |   |         |   |  |   | 69,726    | 
|Noninterest expenses       |  |                                 | 184,744   |  |          |   | 8,229   |              |  |   |             |   |  |      | 192,973   |  |          |   | 147,234   |              |  |   | 5,379        |  |  |   |         |   |  |   | 152,613   | 
|                           |  |                                 |           |  |          |   |         |              |  |   |              |   |  |      |           |  |          |   |           |              |  |   |              | 
|Income before income taxes |  | $                               | 73,533    |  |          | $ | 6,324   |              |  | $ |             |   |  | $    | 79,857    |  |          | $ | 70,652    |              |  | $ | 2,565        |  |  | $ |         |   |  | $ | 73,217    | 
|                           |  |                                 |           |  |          |   |         |              |  |   |              |   |  |      |           |  |          |   |           |              |  |   |              | 
|Total assets               |  | $                               | 7,857,014 |  |          | $ | 452,903 |              |  | $ | (415,546     | ) |  | $    | 7,894,371 |  |          | $ | 6,601,850 |              |  | $ | 322,221      |  |  | $ | (290,701 | ) |  | $ | 6,633,370 | 
|                           |  |                                 |           |  |          |   |         |              |  |   |              |   |  |      |           |  |          |   |           |              |  |   |              | 





|   |                                     
|-- | ------------------------------------
|9. | Off-Balance Sheet Credit Commitments



16



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AMEGY BANCORPORATION, INC. AND SUBSIDIARIES


NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|                                                             |  |                        |           |  |              |   |           | 
|------------------------------------------------------------ |  | ---------------------- | --------- |  | ------------ | - | --------- | 
|                                                             |  | September 30,          |           |  | December 31, |  
|                                                             |  | 2005                   |           |  | 2004         |  
|                                                             |  | Contract               |           |  | Contract     |  
|                                                             |  | Amount                 |           |  | Amount       |  
|                                                             |  |                        |           |  |              |  
|                                                             |  | (Dollars in thousands) |          
|Unfunded loan commitments including unfunded lines of credit |  | $                      | 3,091,354 |  |              | $ | 2,720,246 | 
|Standby letters of credit                                    |  |                        | 404,486   |  |              |   | 352,555   | 
|Commercial letters of credit                                 |  |                        | 37,466    |  |              |   | 19,496    | 
|Unfunded commitments to unconsolidated investees             |  |                        | 21,980    |  |              |   | 12,621    | 





|    |                                      
|--- | -------------------------------------
|10. | Goodwill and Core Deposit Intangibles



|                            |                                    |                        |         |              |             |   |        |        |  
|--------------------------- | ---------------------------------- | ---------------------- | ------- | ------------ | ----------- | - | ------ | ------ | -
|                            |                                    |                        |         | Core Deposit |            
|                            |                                    | Goodwill               |         |              | Intangibles |  
|                            |                                    |                        |         |              |             |  
|                            |                                    | (Dollars in thousands) |        
|Balance, December 31, 2004  |                                    | $                      | 149,846 |              |             | $ | 27,246 |       
|                            | Adjustment to acquisition of Klein |                        |         | 580          |             |   |        |       |  
|                            | Amortization                       |                        |         |             |             |   |        | (6,461 | )
|                            |                                    |                        |         |              |             |  
|Balance, September 30, 2005 |                                    | $                      | 150,426 |              |             | $ | 20,785 |       
|                            |                                    |                        |         |              |             |  



|               |  |                        |       | 
|-------------- |  | ---------------------- | ----- | 
|               |  | Core Deposit           |      
|               |  | Intangibles            |      
|               |  |                        |      
|               |  | (Dollars in thousands) |      
|Remaining 2005 |  | $                      | 1,517 | 
|2006           |  |                        | 5,432 | 
|2007           |  |                        | 4,141 | 
|2008           |  |                        | 3,137 | 
|2009           |  |                        | 2,212 | 
|Thereafter     |  |                        | 4,346 | 

17



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AMEGY BANCORPORATION, INC. AND SUBSIDIARIES


NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|    |                        
|--- | -----------------------
|11. | Subordinated Debentures



| |                                                   
| | --------------------------------------------------
| | Junior Subordinated Deferrable Interest Debentures



|                       |  |          |            |  |          |           |            |             |              |   |            |  |  |               |         |               |      |  |                         |      |  |  |      |   |  |  |            | 
|---------------------- |  | -------- | ---------- |  | -------- | --------- | ---------- | ----------- | ------------ | - | ---------- |  |  | ------------- | ------- | ------------- | ---- |  | ----------------------- | ---- |  |  | ---- | - |  |  | ---------- | 
|                       |  |          |            |  |          | Trust     |            |             | Junior       |   |            |  |  | Interest      |         |               |     
|                       |  |          |            |  |          | Preferred |            |             | Subordinated |   |            |  |  | Rate at       |         |               |     
|                       |  | Issuance |            |  | Maturity |           |            | Securities  |              |   | Debt Owned |  |  |               |         | September 30, |      |  | Redemption              |     
|Description            |  | Date     |            |  | Date     |           |            | Outstanding |              |   | by Trust   |  |  | Interest Rate |         |               | 2005 |  |                         | Date | 
|                       |  |          |            |  |          |           |            |             |              |   |            |  |  |               |         |               |      |  |                         |      | 
|(Dollars in thousands) | 
|Statutory Trust I      |  |          | 10/7/2003  |  |          |           | 12/17/2033 |             |              | $ | 50,000     |  |  | $             | 51,547  |               |      |  | 3-month LIBOR plus 2.85 | %    |  |  | 6.74 | % |  |  | 12/17/2008 | 
|Statutory Trust II     |  |          | 9/24/2004  |  |          |           | 10/7/2034  |             |              |   | 35,000     |  |  |               | 36,083  |               |      |  | 3-month LIBOR plus 1.90 | %    |  |  | 5.50 | % |  |  | 10/7/2009  | 
|Statutory Trust III    |  |          | 12/13/2004 |  |          |           | 12/15/2034 |             |              |   | 60,000     |  |  |               | 61,856  |               |      |  | 3-month LIBOR plus 1.78 | %    |  |  | 5.65 | % |  |  | 12/15/2009 | 
|                       |  |          |            |  |          |           |            |             |              |   |            |  |  |               |         |               |      |  |                         |      | 
|                       |  |          |            |  |          |           |            |             |              | $ | 145,000    |  |  | $             | 149,486 |               |      |  |                         |      |  |  |      |   |  |  |            | 
|                       |  |          |            |  |          |           |            |             |              |   |            |  |  |               |         |               |      |  |                         |      | 









| |                               
| | ------------------------------
| | Senior Subordinated Debentures



18



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AMEGY BANCORPORATION, INC. AND SUBSIDIARIES


NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)






|    |                           
|--- | --------------------------
|12. | Common Stock Cash Dividend





|    |                   
|--- | ------------------
|13. | Common Stock Split





|    |                                   
|--- | ----------------------------------
|14. | Supplemental Cash Flow Information



|                                |                     |             |         |         | 
|------------------------------- | ------------------- | ----------- | ------- | ------- | 
|                                |                     | Reunion     |        
|                                |                     | January 31, |        
|                                |                     | 2004        |        
|                                |                     |             |        
|                                |                     | (Dollars in |        
|                                |                     | thousands)  |        
|Fair value of assets acquired   |                     | $           | 261,523 |        
|Cash paid for the capital stock |                     |             | (50,000 | )      
|                                |                     |             |        
|                                | Liabilities assumed |             | $       | 211,523 | 
|                                |                     |             |        



|    |                  
|--- | -----------------
|15. | Subsequent Events



19



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|        |                                                                                          
|------- | -----------------------------------------------------------------------------------------
|ITEM 2. | Managements Discussion and Analysis of Financial
    Condition and Results of Operations

SPECIAL CAUTIONARY NOTICE REGARDING FORWARD-LOOKING
STATEMENTS








Overview




20



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Results of Operations




|                                              |  |                    |        |   |                   |   |        |               |  |   |               |   |  |   |         |  
|--------------------------------------------- |  | ------------------ | ------ | - | ----------------- | - | ------ | ------------- |  | - | ------------- | - |  | - | ------- | -
|                                              |  | Three Months Ended |        |   | Nine Months Ended |  
|                                              |  |                    |        |   |                   |  
|                                              |  | September 30,      |        |   | September 30,     |   |        | September 30, |  |   | September 30, |  
|                                              |  | 2005               |        |   | 2004              |   |        | 2005          |  |   | 2004          |  
|                                              |  |                    |        |   |                   |   |        |               |  |   |               |  
|Taxable-equivalent net interest income        |  | $                  | 65,352 |   |                   | $ | 58,537 |               |  | $ | 193,040       |   |  | $ | 167,796 |  
|Taxable-equivalent adjustment                 |  |                    | (1,605 | ) |                   |   | (1,538 | )             |  |   | (4,711        | ) |  |   | (3,982  | )
|                                              |  |                    |        |   |                   |   |        |               |  |   |               |  
|Net interest income, as reported              |  |                    | 63,747 |   |                   |   | 56,999 |               |  |   | 188,329       |   |  |   | 163,814 |  
|Provision for loan losses                     |  |                    | 1,900  |   |                   |   | 2,878  |               |  |   | 6,500         |   |  |   | 7,710   |  
|Noninterest income                            |  |                    | 30,663 |   |                   |   | 25,325 |               |  |   | 91,001        |   |  |   | 69,726  |  
|Noninterest expenses                          |  |                    | 62,513 |   |                   |   | 52,284 |               |  |   | 192,973       |   |  |   | 152,613 |  
|                                              |  |                    |        |   |                   |   |        |               |  |   |               |  
|Income before income taxes                    |  |                    | 29,997 |   |                   |   | 27,162 |               |  |   | 79,857        |   |  |   | 73,217  |  
|Provision for income taxes                    |  |                    | 8,549  |   |                   |   | 7,496  |               |  |   | 22,308        |   |  |   | 22,043  |  
|                                              |  |                    |        |   |                   |   |        |               |  |   |               |  
|Net income                                    |  | $                  | 21,448 |   |                   | $ | 19,666 |               |  | $ | 57,549        |   |  | $ | 51,174  |  
|                                              |  |                    |        |   |                   |   |        |               |  |   |               |  
|Basic earnings per common share               |  | $                  | 0.30   |   |                   | $ | 0.28   |               |  | $ | 0.82          |   |  | $ | 0.74    |  
|Diluted earnings per common share             |  | $                  | 0.30   |   |                   | $ | 0.28   |               |  | $ | 0.80          |   |  | $ | 0.73    |  
|Return on average assets                      |  |                    | 1.08   | % |                   |   | 1.21   | %             |  |   | 1.00          | % |  |   | 1.10    | %
|Return on average common shareholders equity |  |                    | 13.79  | % |                   |   | 14.79  | %             |  |   | 12.80         | % |  |   | 13.19   | %







21



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22



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







23



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24



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|                                       |                                                |                                            |           |           |           |   |        |         |         |  |             |      |      |          |           |           |           |   |        |        |        |  |      |      |      |  
|-------------------------------------- | ---------------------------------------------- | ------------------------------------------ | --------- | --------- | --------- | - | ------ | ------- | ------- |  | ----------- | ---- | ---- | -------- | --------- | --------- | --------- | - | ------ | ------ | ------ |  | ---- | ---- | ---- | -
|                                       |                                                | Three Months Ended September 30,           |          
|                                       |                                                |                                            |          
|                                       |                                                | 2005                                       |           |           | 2004      |  
|                                       |                                                |                                            |           |           |           |  
|                                       |                                                | Average                                    |           |           | Interest  |   |        | Average |         |  | Average     |      |      | Interest |           |           | Average   |  
|                                       |                                                | Outstanding                                |           |           | Earned/   |   |        | Yield/  |         |  | Outstanding |      |      | Earned/  |           |           | Yield/    |  
|                                       |                                                | Balance                                    |           |           | Paid(1)   |   |        | Rate    |         |  | Balance     |      |      | Paid(1)  |           |           | Rate      |  
|                                       |                                                |                                            |           |           |           |   |        |         |         |  |             |      |      |          |           |           |           |  
|                                       |                                                | (Dollars in thousands)                     |          
|Interest-earning assets:               |                                                |                                            |           |           |           |   |        |         |         |  |             |      |      |          |           |           |           |   |        |        |        |  |      |     
|                                       | Loans                                          |                                            | $         | 4,922,460 |           |   | $      | 80,321  |         |  |             | 6.47 | %    |          | $         | 4,123,462 |           |   | $      | 55,486 |        |  |      | 5.35 | %   
|                                       | Securities                                     |                                            |           | 1,976,986 |           |   |        | 21,422  |         |  |             | 4.30 |      |          |           | 1,691,472 |           |   |        | 17,477 |        |  |      | 4.11 |     
|                                       | Federal funds sold and other                   |                                            |           | 60,670    |           |   |        | 555     |         |  |             | 3.63 |      |          |           | 52,573    |           |   |        | 192    |        |  |      | 1.45 |     
|                                       |                                                |                                            |           |           |           |   |        |         |         |  |             |      |      |          |           |           |           |  
|                                       |                                                | Total interest-earning assets              |           |           | 6,960,116 |   |        |         | 102,298 |  |             |      | 5.83 | %        |           |           | 5,867,507 |   |        |        | 73,155 |  |      |      | 4.96 | %
|                                       |                                                |                                            |           |           |           |   |        |         |         |  |             |      |      |          |           |           |           |  
|Less allowance for loan losses         |                                                |                                            | (50,285   | )         |           |   |        |         |         |  |             |      |      |          | (49,422   | )         |           |   |        |        |        |  |      |     
|                                       |                                                |                                            |           |           |           |   |        |         |         |  |             |      |      |          |           |           |           |  
|                                       |                                                |                                            | 6,909,831 |           |           |   |        |         |         |  |             |      |      |          | 5,818,085 |           |           |   |        |        |        |  |      |     
|Noninterest-earning assets             |                                                |                                            | 945,725   |           |           |   |        |         |         |  |             |      |      |          | 672,530   |           |           |   |        |        |        |  |      |     
|                                       |                                                |                                            |           |           |           |   |        |         |         |  |             |      |      |          |           |           |           |  
|                                       |                                                | Total assets                               |           | $         | 7,855,556 |   |        |         |         |  |             |      |      |          |           | $         | 6,490,615 |   |        |        |        |  |      |      |      |  
|                                       |                                                |                                            |           |           |           |   |        |         |         |  |             |      |      |          |           |           |           |  
|Interest-bearing liabilities:          |                                                |                                            |           |           |           |   |        |         |         |  |             |      |      |          |           |           |           |   |        |        |        |  |      |     
|                                       | Money market and savings deposits              |                                            | $         | 2,442,665 |           |   |        | 11,640  |         |  |             | 1.89 | %    |          | $         | 2,084,393 |           |   |        | 4,445  |        |  |      | 0.85 | %   
|                                       | Time deposits                                  |                                            |           | 1,685,633 |           |   |        | 14,100  |         |  |             | 3.32 |      |          |           | 1,088,302 |           |   |        | 5,583  |        |  |      | 2.04 |     
|                                       | Repurchase agreements and other borrowed funds |                                            |           | 1,235,131 |           |   |        | 11,206  |         |  |             | 3.60 |      |          |           | 1,173,762 |           |   |        | 4,590  |        |  |      | 1.56 |     
|                                       |                                                |                                            |           |           |           |   |        |         |         |  |             |      |      |          |           |           |           |  
|                                       |                                                | Total interest-bearing liabilities         |           |           | 5,363,429 |   |        |         | 36,946  |  |             |      | 2.73 | %        |           |           | 4,346,457 |   |        |        | 14,618 |  |      |      | 1.34 | %
|                                       |                                                |                                            |           |           |           |   |        |         |         |  |             |      |      |          |           |           |           |  
|Noninterest-bearing liabilities:       |                                                |                                            |           |           |           |   |        |         |         |  |             |      |      |          |           |           |           |   |        |        |        |  |      |     
|                                       | Noninterest-bearing demand deposits            |                                            |           | 1,831,827 |           |   |        |         |         |  |             |      |      |          |           | 1,587,990 |           |   |        |        |        |  |      |      |     
|                                       | Other liabilities                              |                                            |           | 43,237    |           |   |        |         |         |  |             |      |      |          |           | 27,246    |           |   |        |        |        |  |      |      |     
|                                       |                                                |                                            |           |           |           |   |        |         |         |  |             |      |      |          |           |           |           |  
|                                       |                                                | Total liabilities                          |           |           | 7,238,493 |   |        |         |         |  |             |      |      |          |           |           | 5,961,693 |   |        |        |        |  |      |      |      |  
|Shareholders equity                   |                                                |                                            | 617,063   |           |           |   |        |         |         |  |             |      |      |          | 528,922   |           |           |   |        |        |        |  |      |     
|                                       |                                                |                                            |           |           |           |   |        |         |         |  |             |      |      |          |           |           |           |  
|                                       |                                                | Total liabilities and shareholders equity |           | $         | 7,855,556 |   |        |         |         |  |             |      |      |          |           | $         | 6,490,615 |   |        |        |        |  |      |      |      |  
|                                       |                                                |                                            |           |           |           |   |        |         |         |  |             |      |      |          |           |           |           |  
|Taxable-equivalent net interest income |                                                |                                            |           |           |           | $ | 65,352 |         |         |  |             |      |      |          |           |           |           | $ | 58,537 |        |        |  |      |     
|                                       |                                                |                                            |           |           |           |   |        |         |         |  |             |      |      |          |           |           |           |  
|Taxable-equivalent net interest spread |                                                |                                            |           |           |           |   |        |         |         |  | 3.10        | %    |      |          |           |           |           |   |        |        |        |  | 3.62 | %   
|                                       |                                                |                                            |           |           |           |   |        |         |         |  |             |      |      |          |           |           |           |  
|Taxable-equivalent net interest margin |                                                |                                            |           |           |           |   |        |         |         |  | 3.73        | %    |      |          |           |           |           |   |        |        |        |  | 3.97 | %   
|                                       |                                                |                                            |           |           |           |   |        |         |         |  |             |      |      |          |           |           |           |  






|    |                                                                                                                                                                                                                                                                                    
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | For analytical purposes, income from tax-exempt assets,
    primarily securities issued by state and local governments or
    authorities, is adjusted by an increment that equates tax-exempt
    income to income from taxable assets assuming a 35% federal
    income tax rate.

25



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|                                       |                                  |                        |        |        |      |   |        |        | 
|-------------------------------------- | -------------------------------- | ---------------------- | ------ | ------ | ---- | - | ------ | ------ | 
|                                       |                                  | Three Months Ended     |       
|                                       |                                  | September 30,          |       
|                                       |                                  |                        |       
|                                       |                                  | 2005                   |        |        | 2004 |  
|                                       |                                  |                        |        |        |      |  
|                                       |                                  | (Dollars in thousands) |       
|Taxable-equivalent net interest income |                                  | $                      | 65,352 |        |      | $ | 58,537 |       
|Taxable-equivalent adjustment          |                                  |                        | (1,605 | )      |      |   | (1,538 | )     
|                                       |                                  |                        |        |        |      |  
|                                       | Net interest income, as reported |                        | $      | 63,747 |      |   | $      | 56,999 | 
|                                       |                                  |                        |        |        |      |  

|                                       |                                                |                                            |           |           |           |   |         |         |         |  |             |      |      |          |           |           |           |   |         |        |         |  |      |      |      |  
|-------------------------------------- | ---------------------------------------------- | ------------------------------------------ | --------- | --------- | --------- | - | ------- | ------- | ------- |  | ----------- | ---- | ---- | -------- | --------- | --------- | --------- | - | ------- | ------ | ------- |  | ---- | ---- | ---- | -
|                                       |                                                | Nine Months Ended September 30,            |          
|                                       |                                                |                                            |          
|                                       |                                                | 2005                                       |           |           | 2004      |  
|                                       |                                                |                                            |           |           |           |  
|                                       |                                                | Average                                    |           |           | Interest  |   |         | Average |         |  | Average     |      |      | Interest |           |           | Average   |  
|                                       |                                                | Outstanding                                |           |           | Earned/   |   |         | Yield/  |         |  | Outstanding |      |      | Earned/  |           |           | Yield/    |  
|                                       |                                                | Balance                                    |           |           | Paid(1)   |   |         | Rate    |         |  | Balance     |      |      | Paid(1)  |           |           | Rate      |  
|                                       |                                                |                                            |           |           |           |   |         |         |         |  |             |      |      |          |           |           |           |  
|                                       |                                                | (Dollars in thousands)                     |          
|Interest-earning assets:               |                                                |                                            |           |           |           |   |         |         |         |  |             |      |      |          |           |           |           |   |         |        |         |  |      |     
|Loans                                  |                                                | $                                          | 4,789,713 |           |           | $ | 220,848 |         |         |  | 6.16        | %    |      | $        | 3,898,787 |           |           | $ | 155,164 |        |         |  | 5.32 | %   
|                                       | Securities                                     |                                            |           | 1,976,910 |           |   |         | 64,226  |         |  |             | 4.34 |      |          |           | 1,625,592 |           |   |         | 48,820 |         |  |      | 4.01 |     
|                                       | Federal funds sold and other                   |                                            |           | 49,503    |           |   |         | 1,176   |         |  |             | 3.18 |      |          |           | 56,498    |           |   |         | 500    |         |  |      | 1.18 |     
|                                       |                                                |                                            |           |           |           |   |         |         |         |  |             |      |      |          |           |           |           |  
|                                       |                                                | Total interest-earning assets              |           |           | 6,816,126 |   |         |         | 286,250 |  |             |      | 5.61 | %        |           |           | 5,580,877 |   |         |        | 204,484 |  |      |      | 4.89 | %
|                                       |                                                |                                            |           |           |           |   |         |         |         |  |             |      |      |          |           |           |           |  
|Less allowance for loan losses         |                                                |                                            | (50,592   | )         |           |   |         |         |         |  |             |      |      |          | (48,288   | )         |           |   |         |        |         |  |      |     
|                                       |                                                |                                            |           |           |           |   |         |         |         |  |             |      |      |          |           |           |           |  
|                                       |                                                |                                            | 6,765,534 |           |           |   |         |         |         |  |             |      |      |          | 5,532,589 |           |           |   |         |        |         |  |      |     
|Noninterest-earning assets             |                                                |                                            | 925,033   |           |           |   |         |         |         |  |             |      |      |          | 694,669   |           |           |   |         |        |         |  |      |     
|                                       |                                                |                                            |           |           |           |   |         |         |         |  |             |      |      |          |           |           |           |  
|                                       |                                                | Total assets                               |           | $         | 7,690,567 |   |         |         |         |  |             |      |      |          |           | $         | 6,227,258 |   |         |        |         |  |      |      |      |  
|                                       |                                                |                                            |           |           |           |   |         |         |         |  |             |      |      |          |           |           |           |  
|Interest-bearing liabilities:          |                                                |                                            |           |           |           |   |         |         |         |  |             |      |      |          |           |           |           |   |         |        |         |  |      |     
|                                       | Money market and savings deposits              |                                            | $         | 2,375,275 |           |   |         | 27,693  |         |  |             | 1.56 | %    |          | $         | 2,036,791 |           |   |         | 11,006 |         |  |      | 0.72 | %   
|                                       | Time deposits                                  |                                            |           | 1,527,692 |           |   |         | 34,029  |         |  |             | 2.98 |      |          |           | 1,053,271 |           |   |         | 15,500 |         |  |      | 1.97 |     
|                                       | Repurchase agreements and other borrowed funds |                                            |           | 1,361,626 |           |   |         | 31,488  |         |  |             | 3.09 |      |          |           | 1,041,204 |           |   |         | 10,182 |         |  |      | 1.31 |     
|                                       |                                                |                                            |           |           |           |   |         |         |         |  |             |      |      |          |           |           |           |  
|                                       |                                                | Total interest-bearing liabilities         |           |           | 5,264,593 |   |         |         | 93,210  |  |             |      | 2.37 | %        |           |           | 4,131,266 |   |         |        | 36,688  |  |      |      | 1.19 | %
|                                       |                                                |                                            |           |           |           |   |         |         |         |  |             |      |      |          |           |           |           |  
|Noninterest-bearing liabilities:       |                                                |                                            |           |           |           |   |         |         |         |  |             |      |      |          |           |           |           |   |         |        |         |  |      |     
|                                       | Noninterest-bearing demand deposits            |                                            |           | 1,786,069 |           |   |         |         |         |  |             |      |      |          |           | 1,551,178 |           |   |         |        |         |  |      |      |     
|                                       | Other liabilities                              |                                            |           | 38,854    |           |   |         |         |         |  |             |      |      |          |           | 26,463    |           |   |         |        |         |  |      |      |     
|                                       |                                                |                                            |           |           |           |   |         |         |         |  |             |      |      |          |           |           |           |  
|                                       |                                                | Total liabilities                          |           |           | 7,089,516 |   |         |         |         |  |             |      |      |          |           |           | 5,708,907 |   |         |        |         |  |      |      |      |  
|Shareholders equity                   |                                                |                                            | 601,051   |           |           |   |         |         |         |  |             |      |      |          | 518,351   |           |           |   |         |        |         |  |      |     
|                                       |                                                |                                            |           |           |           |   |         |         |         |  |             |      |      |          |           |           |           |  
|                                       |                                                | Total liabilities and shareholders equity |           | $         | 7,690,567 |   |         |         |         |  |             |      |      |          |           | $         | 6,227,258 |   |         |        |         |  |      |      |      |  
|                                       |                                                |                                            |           |           |           |   |         |         |         |  |             |      |      |          |           |           |           |  
|Taxable-equivalent net interest income |                                                |                                            |           |           |           | $ | 193,040 |         |         |  |             |      |      |          |           |           |           | $ | 167,796 |        |         |  |      |     
|                                       |                                                |                                            |           |           |           |   |         |         |         |  |             |      |      |          |           |           |           |  
|Taxable-equivalent net interest spread |                                                |                                            |           |           |           |   |         |         |         |  | 3.24        | %    |      |          |           |           |           |   |         |        |         |  | 3.70 | %   
|                                       |                                                |                                            |           |           |           |   |         |         |         |  |             |      |      |          |           |           |           |  
|Taxable-equivalent net interest margin |                                                |                                            |           |           |           |   |         |         |         |  | 3.79        | %    |      |          |           |           |           |   |         |        |         |  | 4.02 | %   
|                                       |                                                |                                            |           |           |           |   |         |         |         |  |             |      |      |          |           |           |           |  






|    |                                                                                                                                                                                                                                                                                    
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | For analytical purposes, income from tax-exempt assets,
    primarily securities issued by state and local governments or
    authorities, is adjusted by an increment that equates tax-exempt
    income to income from taxable assets assuming a 35% federal
    income tax rate.

26



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|                                       |                                  |                        |         |         |      |   |         |         | 
|-------------------------------------- | -------------------------------- | ---------------------- | ------- | ------- | ---- | - | ------- | ------- | 
|                                       |                                  | Nine Months Ended      |        
|                                       |                                  | September 30,          |        
|                                       |                                  |                        |        
|                                       |                                  | 2005                   |         |         | 2004 |  
|                                       |                                  |                        |         |         |      |  
|                                       |                                  | (Dollars in thousands) |        
|Taxable-equivalent net interest income |                                  | $                      | 193,040 |         |      | $ | 167,796 |        
|Taxable-equivalent adjustment          |                                  |                        | (4,711  | )       |      |   | (3,982  | )      
|                                       |                                  |                        |         |         |      |  
|                                       | Net interest income, as reported |                        | $       | 188,329 |      |   | $       | 163,814 | 
|                                       |                                  |                        |         |         |      |  



|                                                              |                                                                 |                             |        |        |                             |   |        |        |  |   |        |        |  |      |        |        |      |   |        |        |  |   |      |      |   |   |        |        | 
|------------------------------------------------------------- | --------------------------------------------------------------- | --------------------------- | ------ | ------ | --------------------------- | - | ------ | ------ |  | - | ------ | ------ |  | ---- | ------ | ------ | ---- | - | ------ | ------ |  | - | ---- | ---- | - | - | ------ | ------ | 
|                                                              |                                                                 | Three Months Ended          |        |        | Nine Months Ended           |  
|                                                              |                                                                 | September 30, 2005 vs. 2004 |        |        | September 30, 2005 vs. 2004 |  
|                                                              |                                                                 | Increase (Decrease) Due to  |        |        | Increase (Decrease) Due to  |  
|                                                              |                                                                 |                             |        |        |                             |  
|                                                              |                                                                 | Volume                      |        |        | Rate                        |   |        | Total  |  |   | Volume |        |  | Rate |        |        | Days |   |        | Total  | 
|                                                              |                                                                 |                             |        |        |                             |   |        |        |  |   |        |        |  |      |        |        |      |   |        |        | 
|                                                              |                                                                 | (Dollars in thousands)      |       
|Interest-earning assets:                                      |                                                                 |                             |        |        |                             |   |        |        |  |   |        |        |  |      |        |        |      |   |        |        |  |   |      |      |   |   |        |       
|Loans                                                         |                                                                 | $                           | 10,847 |        |                             | $ | 13,988 |        |  | $ | 24,835 |        |  | $    | 35,652 |        |      | $ | 30,598 |        |  | $ | (566 | )    |   | $ | 65,684 |       
|Securities                                                    |                                                                 |                             | 2,994  |        |                             |   | 951    |        |  |   | 3,945  |        |  |      | 10,632 |        |      |   | 4,952  |        |  |   | (178 | )    |   |   | 15,406 |       
|Federal funds sold and other                                  |                                                                 |                             | 30     |        |                             |   | 333    |        |  |   | 363    |        |  |      | (62    | )      |      |   | 740    |        |  |   | (2   | )    |   |   | 676    |       
|                                                              |                                                                 |                             |        |        |                             |   |        |        |  |   |        |        |  |      |        |        |      |   |        |        | 
|                                                              | Total increase (decrease) in taxable-equivalent interest income |                             |        | 13,871 |                             |   |        | 15,272 |  |   |        | 29,143 |  |      |        | 46,222 |      |   |        | 36,290 |  |   |      | (746 | ) |   |        | 81,766 | 
|                                                              |                                                                 |                             |        |        |                             |   |        |        |  |   |        |        |  |      |        |        |      |   |        |        | 
|Interest-bearing liabilities:                                 |                                                                 |                             |        |        |                             |   |        |        |  |   |        |        |  |      |        |        |      |   |        |        |  |   |      |      |   |   |        |       
|Money market and savings deposits                             |                                                                 |                             | 767    |        |                             |   | 6,428  |        |  |   | 7,195  |        |  |      | 1,830  |        |      |   | 14,897 |        |  |   | (40  | )    |   |   | 16,687 |       
|Time deposits                                                 |                                                                 |                             | 3,078  |        |                             |   | 5,439  |        |  |   | 8,517  |        |  |      | 6,991  |        |      |   | 11,595 |        |  |   | (57  | )    |   |   | 18,529 |       
|Repurchase agreements and borrowed funds                      |                                                                 |                             | 241    |        |                             |   | 6,375  |        |  |   | 6,616  |        |  |      | 3,135  |        |      |   | 18,208 |        |  |   | (37  | )    |   |   | 21,306 |       
|                                                              |                                                                 |                             |        |        |                             |   |        |        |  |   |        |        |  |      |        |        |      |   |        |        | 
|                                                              | Total increase (decrease) in interest expense                   |                             |        | 4,086  |                             |   |        | 18,242 |  |   |        | 22,328 |  |      |        | 11,956 |      |   |        | 44,700 |  |   |      | (134 | ) |   |        | 56,522 | 
|                                                              |                                                                 |                             |        |        |                             |   |        |        |  |   |        |        |  |      |        |        |      |   |        |        | 
|Increase (decrease) in taxable-equivalent net interest income |                                                                 | $                           | 9,785  |        |                             | $ | (2,970 | )      |  | $ | 6,815  |        |  | $    | 34,266 |        |      | $ | (8,410 | )      |  | $ | (612 | )    |   | $ | 25,244 |       
|                                                              |                                                                 |                             |        |        |                             |   |        |        |  |   |        |        |  |      |        |        |      |   |        |        | 



| |                          
| | -------------------------
| | Provision for Loan Losses



27



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##### Table of Contents





| |                   
| | ------------------
| | Noninterest Income



|                                             |  |                                  |        |   |                                 |   |       |          |  |   |        |  |  |          |        |   |          |   |       |      |  |   |          |   |  |          |        |  |      |   |       |          |  |   |          |  |  |   |        |   |  |   |       |  |  |   |        |  
|-------------------------------------------- |  | -------------------------------- | ------ | - | ------------------------------- | - | ----- | -------- |  | - | ------ |  |  | -------- | ------ | - | -------- | - | ----- | ---- |  | - | -------- | - |  | -------- | ------ |  | ---- | - | ----- | -------- |  | - | -------- |  |  | - | ------ | - |  | - | ----- |  |  | - | ------ | -
|                                             |  | Three Months Ended September 30, |        |   | Nine Months Ended September 30, |  
|                                             |  |                                  |        |   |                                 |  
|                                             |  | 2005                             |        |   | 2004                            |   |       | 2005     |  |   | 2004   | 
|                                             |  |                                  |        |   |                                 |   |       |          |  |   |        | 
|                                             |  | Bank                             |        |   | Mortgage                        |   |       | Combined |  |   | Bank   |  |  | Mortgage |        |   | Combined |   |       | Bank |  |   | Mortgage |   |  | Combined |        |  | Bank |   |       | Mortgage |  |   | Combined | 
|                                             |  |                                  |        |   |                                 |   |       |          |  |   |        |  |  |          |        |   |          |   |       |      |  |   |          |   |  |          |        |  |      |   |       |          |  |   |          | 
|                                             |  | (Dollars in thousands)           |       
|Service charges on deposit accounts          |  | $                                | 10,959 |   |                                 | $ |      |          |  | $ | 10,959 |  |  | $        | 11,184 |   |          | $ |      |      |  | $ | 11,184   |   |  | $        | 32,968 |  |      | $ |      |          |  | $ | 32,968   |  |  | $ | 33,414 |   |  | $ |      |  |  | $ | 33,414 |  
|Investment services                          |  |                                  | 4,291  |   |                                 |   |      |          |  |   | 4,291  |  |  |          | 3,164  |   |          |   |      |      |  |   | 3,164    |   |  |          | 12,538 |  |      |   |      |          |  |   | 12,538   |  |  |   | 9,019  |   |  |   |      |  |  |   | 9,019  |  
|Factoring fee income                         |  |                                  | 1,188  |   |                                 |   |      |          |  |   | 1,188  |  |  |          | 803    |   |          |   |      |      |  |   | 803      |   |  |          | 3,515  |  |      |   |      |          |  |   | 3,515    |  |  |   | 2,648  |   |  |   |      |  |  |   | 2,648  |  
|Loan fee income                              |  |                                  | 2,184  |   |                                 |   | 1,104 |          |  |   | 3,288  |  |  |          | 1,402  |   |          |   | 459   |      |  |   | 1,861    |   |  |          | 5,319  |  |      |   | 2,384 |          |  |   | 7,703    |  |  |   | 2,827  |   |  |   | 1,310 |  |  |   | 4,137  |  
|Bank-owned life insurance income             |  |                                  | 2,567  |   |                                 |   |      |          |  |   | 2,567  |  |  |          | 2,154  |   |          |   |      |      |  |   | 2,154    |   |  |          | 6,149  |  |      |   |      |          |  |   | 6,149    |  |  |   | 5,551  |   |  |   |      |  |  |   | 5,551  |  
|Letters of credit fee income                 |  |                                  | 1,641  |   |                                 |   |      |          |  |   | 1,641  |  |  |          | 1,086  |   |          |   |      |      |  |   | 1,086    |   |  |          | 4,435  |  |      |   |      |          |  |   | 4,435    |  |  |   | 2,954  |   |  |   |      |  |  |   | 2,954  |  
|Mortgage servicing fees, net of amortization |  |                                  | 8      |   |                                 |   | 403   |          |  |   | 411    |  |  |          |       |   |          |   | 311   |      |  |   | 311      |   |  |          | 16     |  |      |   | 1,182 |          |  |   | 1,198    |  |  |   |       |   |  |   | 670   |  |  |   | 670    |  
|Gain (loss) on sale of loans, net            |  |                                  | (4     | ) |                                 |   | 22    |          |  |   | 18     |  |  |          |       |   |          |   | 368   |      |  |   | 368      |   |  |          | 1,023  |  |      |   | 124   |          |  |   | 1,147    |  |  |   | 66     |   |  |   | 752   |  |  |   | 818    |  
|Gain (loss) on sale of securities, net       |  |                                  | 1,170  |   |                                 |   |      |          |  |   | 1,170  |  |  |          | (46    | ) |          |   |      |      |  |   | (46      | ) |  |          | 1,156  |  |      |   |      |          |  |   | 1,156    |  |  |   | (45    | ) |  |   |      |  |  |   | (45    | )
|Other income                                 |  |                                  | 5,005  |   |                                 |   | 125   |          |  |   | 5,130  |  |  |          | 4,311  |   |          |   | 129   |      |  |   | 4,440    |   |  |          | 19,841 |  |      |   | 351   |          |  |   | 20,192   |  |  |   | 9,965  |   |  |   | 595   |  |  |   | 10,560 |  
|                                             |  |                                  |        |   |                                 |   |       |          |  |   |        |  |  |          |        |   |          |   |       |      |  |   |          |   |  |          |        |  |      |   |       |          |  |   |          | 
|Total noninterest income                     |  | $                                | 29,009 |   |                                 | $ | 1,654 |          |  | $ | 30,663 |  |  | $        | 24,058 |   |          | $ | 1,267 |      |  | $ | 25,325   |   |  | $        | 86,960 |  |      | $ | 4,041 |          |  | $ | 91,001   |  |  | $ | 66,399 |   |  | $ | 3,327 |  |  | $ | 69,726 |  
|                                             |  |                                  |        |   |                                 |   |       |          |  |   |        |  |  |          |        |   |          |   |       |      |  |   |          |   |  |          |        |  |      |   |       |          |  |   |          | 

Banking Segment.






28



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Mortgage Segment.






| |                     
| | --------------------
| | Noninterest Expenses



|                                             |                            |                    |        |        |                   |   |        |        |  |   |         |         |  |   |        |         | 
|-------------------------------------------- | -------------------------- | ------------------ | ------ | ------ | ----------------- | - | ------ | ------ |  | - | ------- | ------- |  | - | ------ | ------- | 
|                                             |                            | Three Months Ended |        |        | Nine Months Ended |  
|                                             |                            | September 30,      |        |        | September 30,     |  
|                                             |                            |                    |        |        |                   |  
|                                             |                            | 2005               |        |        | 2004              |   |        | 2005   |  |   | 2004    |        
|                                             |                            |                    |        |        |                   |   |        |        |  |   |         |        
|Salaries and employee benefits               |                            | $                  | 34,902 |        |                   | $ | 28,829 |        |  | $ | 104,370 |         |  | $ | 85,267 |        
|Occupancy expense                            |                            |                    | 10,747 |        |                   |   | 9,395  |        |  |   | 32,132  |         |  |   | 26,540 |        
|Marketing and advertising                    |                            |                    | 885    |        |                   |   | 1,052  |        |  |   | 4,925   |         |  |   | 3,146  |        
|Professional services                        |                            |                    | 3,482  |        |                   |   | 3,174  |        |  |   | 10,516  |         |  |   | 8,274  |        
|Core deposit intangible amortization expense |                            |                    | 2,042  |        |                   |   | 799    |        |  |   | 6,461   |         |  |   | 2,710  |        
|Other operating expenses                     |                            |                    | 10,455 |        |                   |   | 9,035  |        |  |   | 34,569  |         |  |   | 26,676 |        
|                                             |                            |                    |        |        |                   |   |        |        |  |   |         |        
|                                             | Total noninterest expenses |                    | $      | 62,513 |                   |   | $      | 52,284 |  |   | $       | 192,973 |  |   | $      | 152,613 | 
|                                             |                            |                    |        |        |                   |   |        |        |  |   |         |        



29



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30



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##### Table of Contents







| |             
| | ------------
| | Income Taxes



Financial Condition




| |                          
| | -------------------------
| | Loans Held for Investment





|                          |                                   |                                 |           |           |                   |  |       |        |        |   |           |         |           |  |       |       |        |  
|------------------------- | --------------------------------- | ------------------------------- | --------- | --------- | ----------------- |  | ----- | ------ | ------ | - | --------- | ------- | --------- |  | ----- | ----- | ------ | -
|                          |                                   | September 30, 2005              |           |           | December 31, 2004 | 
|                          |                                   |                                 |           |           |                   | 
|                          |                                   | Amount                          |           |           | Percent           |  |       | Amount |        |   | Percent   |        
|                          |                                   |                                 |           |           |                   |  |       |        |        |   |           |        
|                          |                                   | (Dollars in thousands)          |          
|Commercial and industrial |                                   | $                               | 1,976,404 |           |                   |  | 40.29 | %      |        | $ | 2,048,460 |         |           |  | 45.12 | %    
|Real estate:              |                                   |                                 |           |           |                   |  |       |        |        |   |           |         |           |  |       |      
|                          | Construction and land development |                                 |           | 1,015,796 |                   |  |       | 20.70  |        |   |           | 796,541 |           |  |       | 17.55 |       
|                          | 1-4 family residential            |                                 |           | 750,963   |                   |  |       | 15.31  |        |   |           | 729,173 |           |  |       | 16.06 |       
|                          | Commercial                        |                                 |           | 940,237   |                   |  |       | 19.16  |        |   |           | 755,929 |           |  |       | 16.65 |       
|                          | Farmland                          |                                 |           | 14,380    |                   |  |       | 0.29   |        |   |           | 13,414  |           |  |       | 0.30  |       
|                          | Other                             |                                 |           | 82,359    |                   |  |       | 1.68   |        |   |           | 62,889  |           |  |       | 1.39  |       
|Consumer                  |                                   |                                 | 126,158   |           |                   |  | 2.57  |        |        |   | 133,172   |         |           |  | 2.93  |      
|                          |                                   |                                 |           |           |                   |  |       |        |        |   |           |        
|                          |                                   | Total loans held for investment |           | $         | 4,906,297         |  |       |        | 100.00 | % |           | $       | 4,539,578 |  |       |       | 100.00 | %
|                          |                                   |                                 |           |           |                   |  |       |        |        |   |           |        



31



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32



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|                                              |       |                        |           |           |            |   |           |            |  |   |         |         |  |   |           |           | 
|--------------------------------------------- | ----- | ---------------------- | --------- | --------- | ---------- | - | --------- | ---------- |  | - | ------- | ------- |  | - | --------- | --------- | 
|                                              |       | September 30, 2005     |          
|                                              |       |                        |          
|                                              |       |                        |           | After One |            |   |          
|                                              |       | One Year               |           |           | Through    |   |           | After      |  |   |        
|                                              |       | or Less                |           |           | Five Years |   |           | Five Years |  |   | Total   |        
|                                              |       |                        |           |           |            |   |           |            |  |   |         |        
|                                              |       | (Dollars in thousands) |          
|Commercial and industrial                     |       | $                      | 732,862   |           |            | $ | 983,987   |            |  | $ | 259,555 |         |  | $ | 1,976,404 |          
|Real estate construction and land development |       |                        | 520,985   |           |            |   | 476,139   |            |  |   | 18,672  |         |  |   | 1,015,796 |          
|                                              |       |                        |           |           |            |   |           |            |  |   |         |        
|                                              | Total |                        | $         | 1,253,847 |            |   | $         | 1,460,126  |  |   | $       | 278,227 |  |   | $         | 2,992,200 | 
|                                              |       |                        |           |           |            |   |           |            |  |   |         |        
|Loans with a fixed interest rate              |       | $                      | 105,333   |           |            | $ | 323,085   |            |  | $ | 93,908  |         |  | $ | 522,326   |          
|Loans with a floating interest rate           |       |                        | 1,148,514 |           |            |   | 1,137,041 |            |  |   | 184,319 |         |  |   | 2,469,874 |          
|                                              |       |                        |           |           |            |   |           |            |  |   |         |        
|                                              | Total |                        | $         | 1,253,847 |            |   | $         | 1,460,126  |  |   | $       | 278,227 |  |   | $         | 2,992,200 | 
|                                              |       |                        |           |           |            |   |           |            |  |   |         |        



| |                    
| | -------------------
| | Loans Held for Sale





| |                                     
| | ------------------------------------
| | Off-Balance Sheet Credit Commitments





|                                                             |  |                        |           |  |              |   |           | 
|------------------------------------------------------------ |  | ---------------------- | --------- |  | ------------ | - | --------- | 
|                                                             |  | September 30,          |           |  | December 31, |  
|                                                             |  | 2005                   |           |  | 2004         |  
|                                                             |  | Contract               |           |  | Contract     |  
|                                                             |  | Amount                 |           |  | Amount       |  
|                                                             |  |                        |           |  |              |  
|                                                             |  | (Dollars in thousands) |          
|Unfunded loan commitments including unfunded lines of credit |  | $                      | 3,091,354 |  |              | $ | 2,720,246 | 
|Standby letters of credit                                    |  |                        | 404,486   |  |              |   | 352,555   | 
|Commercial letters of credit                                 |  |                        | 37,466    |  |              |   | 19,496    | 
|Unfunded commitments to unconsolidated investees             |  |                        | 21,980    |  |              |   | 12,621    | 



33



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| |                  
| | -----------------
| | Credit Management









| |                            
| | ---------------------------
| | Allowance for Credit Losses

Selected Loan Loss
Allowance Methodology and Documentation Issues Accounting by Creditors for
Impairment of a Loan Accounting for Contingencies


34



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##### Table of Contents







Accounting by Creditors for
Impairment of a Loan
















35



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|                                                            |                                          |                           |                                   |        |                   |      |        |        |        |     |        |        |        |        |        |        |        |        |  
|----------------------------------------------------------- | ---------------------------------------- | ------------------------- | --------------------------------- | ------ | ----------------- | ---- | ------ | ------ | ------ | --- | ------ | ------ | ------ | ------ | ------ | ------ | ------ | ------ | -
|                                                            |                                          | Three Months Ended        |                                   |        | Nine Months Ended |     
|                                                            |                                          | September 30,             |                                   |        | September 30,     |     
|                                                            |                                          |                           |                                   |        |                   |     
|                                                            |                                          | 2005                      |                                   |        | 2004              |      |        | 2005   |        |     | 2004   |       
|                                                            |                                          |                           |                                   |        |                   |      |        |        |        |     |        |       
|                                                            |                                          | (Dollars in thousands)    |                                  
|Allowance for loan losses, beginning balance                |                                          | $                         | 49,180                            |        |                   | $    | 45,927 |        |        | $   | 49,408 |        |        | $      | 41,611 |       
|Provision for loan losses                                   |                                          |                           | 1,900                             |        |                   |      | 2,878  |        |        |     | 6,500  |        |        |        | 7,710  |       
|Charge-offs:                                                |                                          |                           |                                   |        |                   |      |        |        |        |     |        |        |        |        |        |       
|                                                            |                                          | Commercial and industrial |                                   |        | (1,233            | )    |        |        | (1,332 | )   |        |        | (6,515 | )      |        |        | (2,778 | )     
|                                                            |                                          | Real estate:              |                                   |        |                   |      |        |        |        |     |        |        |        |        |        |        |        |       
|                                                            |                                          |                           | Construction and land development |        |                   |     |        |        |        |    |        |        |        |       |        |        |        |       |  
|                                                            |                                          |                           | 1-4 family residential            |        |                   | (710 | )      |        |        | (87 | )      |        |        | (1,173 | )      |        |        | (773   | )
|                                                            |                                          |                           | Commercial                        |        |                   |     |        |        |        |    |        |        |        | (342   | )      |        |        | (2,018 | )
|                                                            |                                          |                           | Farmland                          |        |                   |     |        |        |        |    |        |        |        |       |        |        |        |       |  
|                                                            |                                          |                           | Other                             |        |                   |     |        |        |        |    |        |        |        |       |        |        |        |       |  
|                                                            |                                          | Consumer                  |                                   |        | (221              | )    |        |        | (247   | )   |        |        | (749   | )      |        |        | (1,227 | )     
|                                                            |                                          |                           |                                   |        |                   |      |        |        |        |     |        |       
|Total charge-offs                                           |                                          |                           | (2,164                            | )      |                   |      | (1,666 | )      |        |     | (8,779 | )      |        |        | (6,796 | )     
|                                                            |                                          |                           |                                   |        |                   |      |        |        |        |     |        |       
|Recoveries:                                                 |                                          |                           |                                   |        |                   |      |        |        |        |     |        |        |        |        |        |       
|                                                            |                                          | Commercial and industrial |                                   |        | 139               |      |        |        | 51     |     |        |        | 1,361  |        |        |        | 512    |       
|                                                            |                                          | Real estate:              |                                   |        |                   |      |        |        |        |     |        |        |        |        |        |        |        |       
|                                                            |                                          |                           | Construction and land development |        |                   |     |        |        |        |    |        |        |        |       |        |        |        |       |  
|                                                            |                                          |                           | 1-4 family residential            |        |                   | 41   |        |        |        | 105 |        |        |        | 147    |        |        |        | 105    |  
|                                                            |                                          |                           | Commercial                        |        |                   |     |        |        |        |    |        |        |        |       |        |        |        |       |  
|                                                            |                                          |                           | Farmland                          |        |                   |     |        |        |        |    |        |        |        |       |        |        |        |       |  
|                                                            |                                          |                           | Other                             |        |                   |     |        |        |        |    |        |        |        | 119    |        |        |        | 1,700  |  
|                                                            |                                          | Consumer                  |                                   |        | 93                |      |        |        | 221    |     |        |        | 433    |        |        |        | 558    |       
|                                                            |                                          |                           |                                   |        |                   |      |        |        |        |     |        |       
|Total recoveries                                            |                                          |                           | 273                               |        |                   |      | 377    |        |        |     | 2,060  |        |        |        | 2,875  |       
|                                                            |                                          |                           |                                   |        |                   |      |        |        |        |     |        |       
|Net charge-offs                                             |                                          |                           | (1,891                            | )      |                   |      | (1,289 | )      |        |     | (6,719 | )      |        |        | (3,921 | )     
|Allowance acquired through mergers and acquisitions         |                                          |                           |                                  |        |                   |      |       |        |        |     |       |        |        |        | 2,116  |       
|                                                            |                                          |                           |                                   |        |                   |      |        |        |        |     |        |       
|Allowance for loan losses, ending balance                   |                                          |                           | 49,189                            |        |                   |      | 47,516 |        |        |     | 49,189 |        |        |        | 47,516 |       
|                                                            |                                          |                           |                                   |        |                   |      |        |        |        |     |        |       
|Reserve for unfunded lending commitments, beginning balance |                                          |                           | 1,959                             |        |                   |      | 1,565  |        |        |     | 1,851  |        |        |        | 1,397  |       
|Provision for unfunded lending commitments                  |                                          |                           | 54                                |        |                   |      | 122    |        |        |     | 162    |        |        |        | 290    |       
|                                                            |                                          |                           |                                   |        |                   |      |        |        |        |     |        |       
|Reserve for unfunded lending commitments, ending balance    |                                          |                           | 2,013                             |        |                   |      | 1,687  |        |        |     | 2,013  |        |        |        | 1,687  |       
|                                                            |                                          |                           |                                   |        |                   |      |        |        |        |     |        |       
|Allowance for credit losses                                 |                                          | $                         | 51,202                            |        |                   | $    | 49,203 |        |        | $   | 51,202 |        |        | $      | 49,203 |       
|                                                            |                                          |                           |                                   |        |                   |      |        |        |        |     |        |       
|Allowance for loan losses:                                  |                                          |                           |                                   |        |                   |      |        |        |        |     |        |        |        |        |        |       
|                                                            | as a % of period-end loans               |                           |                                   | 0.98   | %                 |      |        | 1.15   | %      |     |        | 0.98   | %      |        |        | 1.15   | %     
|                                                            | as a % of period-end nonperforming loans |                           |                                   | 276.70 | %                 |      |        | 389.00 | %      |     |        | 276.70 | %      |        |        | 389.00 | %     
|Allowance for credit losses:                                |                                          |                           |                                   |        |                   |      |        |        |        |     |        |        |        |        |        |       
|                                                            | as a % of period-end loans               |                           |                                   | 1.02   | %                 |      |        | 1.19   | %      |     |        | 1.02   | %      |        |        | 1.19   | %     
|Net charge-offs as a % of average loans                     |                                          |                           | 0.16                              | %      |                   |      | 0.13   | %      |        |     | 0.19   | %      |        |        | 0.14   | %     

36



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|                                                    |                           |                        |                                   |            |                   |        |  |        |            |        |             |        |       |        |  |       |      |        |  
|--------------------------------------------------- | ------------------------- | ---------------------- | --------------------------------- | ---------- | ----------------- | ------ |  | ------ | ---------- | ------ | ----------- | ------ | ----- | ------ |  | ----- | ---- | ------ | -
|                                                    |                           | September 30, 2005     |                                   |            | December 31, 2004 |       
|                                                    |                           |                        |                                   |            |                   |       
|                                                    |                           |                        |                                   | Percent of |                   |        |  |        | Percent of |       
|                                                    |                           |                        |                                   | Loans to   |                   |        |  |        | Loans to   |       
|                                                    |                           | Amount                 |                                   |            | Total Loans       |        |  | Amount |            |        | Total Loans |       
|                                                    |                           |                        |                                   |            |                   |        |  |        |            |        |             |       
|                                                    |                           | (Dollars in thousands) |                                  
|Balance of allowance for loan losses applicable to: |                           |                        |                                   |            |                   |        |  |        |            |        |             |        |       |        |  |      
|                                                    | Commercial and industrial |                        | $                                 | 27,807     |                   |        |  | 40.29  | %          |        | $           | 26,285 |       |        |  | 45.12 | %   
|                                                    | Real estate:              |                        |                                   |            |                   |        |  |        |            |        |             |        |       |        |  |       |     
|                                                    |                           |                        | Construction and land development |            |                   | 5,730  |  |        |            | 20.70  |             |        |       | 7,547  |  |       |      | 17.55  |  
|                                                    |                           |                        | 1-4 family residential            |            |                   | 7,233  |  |        |            | 15.31  |             |        |       | 6,569  |  |       |      | 16.06  |  
|                                                    |                           |                        | Commercial                        |            |                   | 5,411  |  |        |            | 19.16  |             |        |       | 5,778  |  |       |      | 16.65  |  
|                                                    |                           |                        | Farmland                          |            |                   | 184    |  |        |            | 0.29   |             |        |       | 156    |  |       |      | 0.30   |  
|                                                    |                           |                        | Other                             |            |                   | 575    |  |        |            | 1.68   |             |        |       | 868    |  |       |      | 1.39   |  
|                                                    |                           | Consumer               |                                   |            | 2,249             |        |  |        | 2.57       |        |             |        | 2,205 |        |  |       | 2.93 |       
|                                                    |                           |                        |                                   |            |                   |        |  |        |            |        |             |       
|                                                    |                           |                        | Total allowance for loan losses   |            | $                 | 49,189 |  |        |            | 100.00 | %           |        | $     | 49,408 |  |       |      | 100.00 | %
|                                                    |                           |                        |                                   |            |                   |        |  |        |            |        |             |       



| |                                        
| | ---------------------------------------
| | Nonperforming Assets and Impaired Loans





|                                                          |                            |                        |        |        |              |   |        |        | 
|--------------------------------------------------------- | -------------------------- | ---------------------- | ------ | ------ | ------------ | - | ------ | ------ | 
|                                                          |                            | September 30,          |        |        | December 31, |  
|                                                          |                            | 2005                   |        |        | 2004         |  
|                                                          |                            |                        |        |        |              |  
|                                                          |                            | (Dollars in thousands) |       
|Nonaccrual loans                                          |                            | $                      | 15,122 |        |              | $ | 14,174 |       
|Accruing loans 90 or more days past due                   |                            |                        | 2,655  |        |              |   | 2,052  |       
|Restructured loans                                        |                            |                        |       |        |              |   |       |       
|Other real estate and foreclosed property                 |                            |                        | 7,658  |        |              |   | 8,887  |       
|                                                          |                            |                        |        |        |              |  
|                                                          | Total nonperforming assets |                        | $      | 25,435 |              |   | $      | 25,113 | 
|                                                          |                            |                        |        |        |              |  
|Nonperforming assets to total loans and other real estate |                            |                        | 0.52   | %      |              |   | 0.55   | %     



37



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|                                                      |                                             |                        |        |        |              |   |        |        | 
|----------------------------------------------------- | ------------------------------------------- | ---------------------- | ------ | ------ | ------------ | - | ------ | ------ | 
|                                                      |                                             | September 30,          |        |        | December 31, |  
|                                                      |                                             | 2005                   |        |        | 2004         |  
|                                                      |                                             |                        |        |        |              |  
|                                                      |                                             | (Dollars in thousands) |       
|Impaired loans with no SFAS No. 114 valuation reserve |                                             | $                      | 3,824  |        |              | $ | 4,342  |       
|Impaired loans with a SFAS No. 114 valuation reserve  |                                             |                        | 11,995 |        |              |   | 20,944 |       
|                                                      |                                             |                        |        |        |              |  
|                                                      | Total recorded investment in impaired loans |                        | $      | 15,819 |              |   | $      | 25,286 | 
|                                                      |                                             |                        |        |        |              |  
|Valuation allowance related to impaired loans         |                                             | $                      | 2,601  |        |              | $ | 5,848  |       
|                                                      |                                             |                        |        |        |              |  





| |           
| | ----------
| | Securities



38



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|                    |                                       |                                     |   |                  |                   |  |   |       |       |           |                  |         |         |      |   |           |           |  |   |           |           |  |            |       |        |  |   |         |         |   |   |           |           | 
|------------------- | ------------------------------------- | ----------------------------------- | - | ---------------- | ----------------- |  | - | ----- | ----- | --------- | ---------------- | ------- | ------- | ---- | - | --------- | --------- |  | - | --------- | --------- |  | ---------- | ----- | ------ |  | - | ------- | ------- | - | - | --------- | --------- | 
|                    |                                       | September 30, 2005                  |   |                  | December 31, 2004 | 
|                    |                                       |                                     |   |                  |                   | 
|                    |                                       |                                     |   | Gross Unrealized |                   |  |   |       |       |           | Gross Unrealized |         |         |     
|                    |                                       | Amortized                           |   |                  |                   |  |   |       |       | Amortized |                  |         |         |      |   |          
|                    |                                       | Cost                                |   |                  | Gain              |  |   | Loss  |       |           | Fair Value       |         |         | Cost |   |           | Gain      |  |   | Loss      |           |  | Fair Value |      
|                    |                                       |                                     |   |                  |                   |  |   |       |       |           |                  |         |         |      |   |           |           |  |   |           |           |  |            |      
|                    |                                       | (Dollars in thousands)              |  
|Available for sale: |                                       |                                     |   |                  |                   |  |   |       |       |           |                  |         |         |      |   |           |           |  |   |           |           |  |            |       |        |  |   |         |         |   |   |          
|                    | U.S. Government and agency securities |                                     | $ | 447,494          |                   |  | $ |      |       |           | $                | (8,842  | )       |      | $ | 438,652   |           |  | $ | 388,061   |           |  | $          | 246   |        |  | $ | (2,623  | )       |   | $ | 385,684   |          
|                    | Mortgage-backed securities            |                                     |   | 1,108,250        |                   |  |   | 412   |       |           |                  | (25,997 | )       |      |   | 1,082,665 |           |  |   | 1,237,420 |           |  |            | 3,820 |        |  |   | (11,076 | )       |   |   | 1,230,164 |          
|                    | Municipal securities                  |                                     |   | 229,534          |                   |  |   | 4,868 |       |           |                  | (1,056  | )       |      |   | 233,346   |           |  |   | 246,705   |           |  |            | 7,564 |        |  |   | (1,392  | )       |   |   | 252,877   |          
|                    | Federal Reserve Bank stock            |                                     |   | 15,240           |                   |  |   |      |       |           |                  |        |         |      |   | 15,240    |           |  |   | 8,511     |           |  |            |      |        |  |   |        |         |   |   | 8,511     |          
|                    | Federal Home Loan Bank stock          |                                     |   | 32,259           |                   |  |   |      |       |           |                  |        |         |      |   | 32,259    |           |  |   | 32,772    |           |  |            |      |        |  |   |        |         |   |   | 32,772    |          
|                    | Other securities                      |                                     |   | 43,710           |                   |  |   | 12    |       |           |                  |        |         |      |   | 43,722    |           |  |   | 17,196    |           |  |            |      |        |  |   |        |         |   |   | 17,196    |          
|                    |                                       |                                     |   |                  |                   |  |   |       |       |           |                  |         |         |      |   |           |           |  |   |           |           |  |            |      
|                    |                                       | Total securities available for sale |   | $                | 1,876,487         |  |   | $     | 5,292 |           |                  | $       | (35,895 | )    |   | $         | 1,845,884 |  |   | $         | 1,930,665 |  |            | $     | 11,630 |  |   | $       | (15,091 | ) |   | $         | 1,927,204 | 
|                    |                                       |                                     |   |                  |                   |  |   |       |       |           |                  |         |         |      |   |           |           |  |   |           |           |  |            |      
|Held to maturity:   |                                       |                                     |   |                  |                   |  |   |       |       |           |                  |         |         |      |   |           |           |  |   |           |           |  |            |       |        |  |   |         |         |   |   |          
|                    | Mortgage-backed securities            |                                     | $ | 47,005           |                   |  | $ |      |       |           | $                | (170    | )       |      | $ | 46,835    |           |  | $ | 58,033    |           |  | $          | 536   |        |  | $ |        |         |   | $ | 58,569    |          
|                    |                                       |                                     |   |                  |                   |  |   |       |       |           |                  |         |         |      |   |           |           |  |   |           |           |  |            |      
|                    |                                       | Total securities held to maturity   |   | $                | 47,005            |  |   | $     |      |           |                  | $       | (170    | )    |   | $         | 46,835    |  |   | $         | 58,033    |  |            | $     | 536    |  |   | $       |        |   |   | $         | 58,569    | 
|                    |                                       |                                     |   |                  |                   |  |   |       |       |           |                  |         |         |      |   |           |           |  |   |           |           |  |            |      



|                    |                                       |                                     |   |            |                        |  |   |            |            |   |      |         |         |            |   |         |         |   |   |           |           |  |   |         |         |  
|------------------- | ------------------------------------- | ----------------------------------- | - | ---------- | ---------------------- |  | - | ---------- | ---------- | - | ---- | ------- | ------- | ---------- | - | ------- | ------- | - | - | --------- | --------- |  | - | ------- | ------- | -
|                    |                                       | Less Than 12 Months                 |   |            | Greater Than 12 Months |  |   | Total      |           
|                    |                                       |                                     |   |            |                        |  |   |            |           
|                    |                                       |                                     |   | Unrealized |                        |  |   |            | Unrealized |   |      |         |         | Unrealized |  
|                    |                                       | Fair Value                          |   |            | Loss                   |  |   | Fair Value |            |   | Loss |         |         | Fair Value |   |         | Loss    |  
|                    |                                       |                                     |   |            |                        |  |   |            |            |   |      |         |         |            |   |         |         |  
|                    |                                       | (Dollars in thousands)              |  
|Available for sale: |                                       |                                     |   |            |                        |  |   |            |            |   |      |         |         |            |   |         |         |   |   |           |           |  |   |        
|                    | U.S. Government and agency securities |                                     | $ | 304,684    |                        |  | $ | (4,631     | )          |   | $    | 133,967 |         |            | $ | (4,211  | )       |   | $ | 438,651   |           |  | $ | (8,842  | )      
|                    | Mortgage-backed securities            |                                     |   | 543,763    |                        |  |   | (9,879     | )          |   |      | 518,710 |         |            |   | (16,118 | )       |   |   | 1,062,473 |           |  |   | (25,997 | )      
|                    | Municipal securities                  |                                     |   | 46,698     |                        |  |   | (359       | )          |   |      | 30,848  |         |            |   | (697    | )       |   |   | 77,546    |           |  |   | (1,056  | )      
|                    |                                       |                                     |   |            |                        |  |   |            |            |   |      |         |         |            |   |         |         |  
|                    |                                       | Total securities available for sale |   | $          | 895,145                |  |   | $          | (14,869    | ) |      | $       | 683,525 |            |   | $       | (21,026 | ) |   | $         | 1,578,670 |  |   | $       | (35,895 | )
|                    |                                       |                                     |   |            |                        |  |   |            |            |   |      |         |         |            |   |         |         |  
|Held to maturity:   |                                       |                                     |   |            |                        |  |   |            |            |   |      |         |         |            |   |         |         |   |   |           |           |  |   |        
|                    | Mortgage-backed securities            |                                     | $ | 46,835     |                        |  | $ | (170       | )          |   | $    |        |         |            | $ |        |         |   | $ | 46,835    |           |  | $ | (170    | )      
|                    |                                       |                                     |   |            |                        |  |   |            |            |   |      |         |         |            |   |         |         |  
|                    |                                       | Total securities held to maturity   |   | $          | 46,835                 |  |   | $          | (170       | ) |      | $       |        |            |   | $       |        |   |   | $         | 46,835    |  |   | $       | (170    | )
|                    |                                       |                                     |   |            |                        |  |   |            |            |   |      |         |         |            |   |         |         |  



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|                                      |                                     |                        |        |                    |                   |  |                      |                  |   |   |                 |           |  |      |      |      |           |   |        |         |  |  |          |      |   |       |         |         |          |  |      |      |   |   |           |           |  |  |      |      |  
|------------------------------------- | ----------------------------------- | ---------------------- | ------ | ------------------ | ----------------- |  | -------------------- | ---------------- | - | - | --------------- | --------- |  | ---- | ---- | ---- | --------- | - | ------ | ------- |  |  | -------- | ---- | - | ----- | ------- | ------- | -------- |  | ---- | ---- | - | - | --------- | --------- |  |  | ---- | ---- | -
|                                      |                                     | September 30, 2005     |       
|                                      |                                     |                        |       
|                                      |                                     |                        |        | After One Year but |                   |  | After Five Years but |                  |   |   |                 |          
|                                      |                                     | Within One Year        |        |                    | within Five Years |  |                      | within Ten Years |   |   | After Ten Years |           |  |     
|                                      |                                     |                        |        |                    |                   |  |                      |                  |   |   |                 |           |  |     
|                                      |                                     | Amortized              |        |                    |                   |  | Amortized            |                  |   |   |                 | Amortized |  |      |      |      | Amortized |   |        |         |  | 
|                                      |                                     | Cost                   |        |                    | Yield(1)          |  |                      | Cost             |   |   | Yield(1)        |           |  | Cost |      |      | Yield(1)  |   |        | Cost    |  |  | Yield(1) |      |   | Total |         |         | Yield(1) | 
|                                      |                                     |                        |        |                    |                   |  |                      |                  |   |   |                 |           |  |      |      |      |           |   |        |         |  |  |          |      |   |       |         |         |          | 
|                                      |                                     | (Dollars in thousands) |       
|Available for sale:                   |                                     |                        |        |                    |                   |  |                      |                  |   |   |                 |           |  |      |      |      |           |   |        |         |  |  |          |      |   |       |         |         |          |  |      |      |   |   |           |           |  |  |      |     
|U.S. Government and agency securities |                                     | $                      | 3,991  |                    |                   |  | 2.56                 | %                |   | $ | 417,412         |           |  |      | 3.79 | %    |           | $ | 26,091 |         |  |  | 4.10     | %    |   | $     |        |         |          |  |     | %    |   | $ | 447,494   |           |  |  | 3.80 | %   
|Mortgage-backed securities            |                                     |                        | 879    |                    |                   |  | 8.88                 |                  |   |   | 1,037,922       |           |  |      | 4.17 |      |           |   | 50,193 |         |  |  | 4.95     |      |   |       | 19,256  |         |          |  | 6.24 |      |   |   | 1,108,250 |           |  |  | 4.24 |     
|Municipal securities                  |                                     |                        | 415    |                    |                   |  | 4.87                 |                  |   |   | 673             |           |  |      | 3.71 |      |           |   | 38,955 |         |  |  | 4.11     |      |   |       | 189,491 |         |          |  | 4.32 |      |   |   | 229,534   |           |  |  | 4.28 |     
|Federal Reserve Bank stock            |                                     |                        | 15,240 |                    |                   |  | 6.00                 |                  |   |   |                |           |  |      |     |      |           |   |       |         |  |  |         |      |   |       |        |         |          |  |     |      |   |   | 15,240    |           |  |  | 6.00 |     
|Federal Home Loan Bank stock          |                                     |                        | 32,259 |                    |                   |  | 3.60                 |                  |   |   |                |           |  |      |     |      |           |   |       |         |  |  |         |      |   |       |        |         |          |  |     |      |   |   | 32,259    |           |  |  | 3.60 |     
|Other securities                      |                                     |                        | 43,710 |                    |                   |  | 3.22                 |                  |   |   |                |           |  |      |     |      |           |   |       |         |  |  |         |      |   |       |        |         |          |  |     |      |   |   | 43,710    |           |  |  | 3.22 |     
|Federal funds sold                    |                                     |                        | 40,415 |                    |                   |  | 3.83                 |                  |   |   |                |           |  |      |     |      |           |   |       |         |  |  |         |      |   |       |        |         |          |  |     |      |   |   | 40,415    |           |  |  | 3.83 |     
|Interest-bearing deposits             |                                     |                        | 7,720  |                    |                   |  | 4.16                 |                  |   |   |                |           |  |      |     |      |           |   |       |         |  |  |         |      |   |       |        |         |          |  |     |      |   |   | 7,720     |           |  |  | 4.16 |     
|                                      |                                     |                        |        |                    |                   |  |                      |                  |   |   |                 |           |  |      |      |      |           |   |        |         |  |  |          |      |   |       |         |         |          | 
|                                      | Total securities available for sale |                        | $      | 144,629            |                   |  |                      | 3.84             | % |   | $               | 1,456,007 |  |      |      | 4.06 | %         |   | $      | 115,239 |  |  |          | 4.47 | % |       | $       | 208,747 |          |  |      | 4.49 | % |   | $         | 1,924,622 |  |  |      | 4.12 | %
|                                      |                                     |                        |        |                    |                   |  |                      |                  |   |   |                 |           |  |      |      |      |           |   |        |         |  |  |          |      |   |       |         |         |          | 
|Held to maturity:                     |                                     |                        |        |                    |                   |  |                      |                  |   |   |                 |           |  |      |      |      |           |   |        |         |  |  |          |      |   |       |         |         |          |  |      |      |   |   |           |           |  |  |      |     
|Mortgage-backed securities            |                                     | $                      |       |                    |                   |  |                     | %                |   | $ | 47,005          |           |  |      | 5.11 | %    |           | $ |       |         |  |  |         | %    |   | $     |        |         |          |  |     | %    |   | $ | 47,005    |           |  |  | 5.11 | %   
|                                      |                                     |                        |        |                    |                   |  |                      |                  |   |   |                 |           |  |      |      |      |           |   |        |         |  |  |          |      |   |       |         |         |          | 
|                                      | Total securities held to maturity   |                        | $      |                   |                   |  |                      |                 | % |   | $               | 47,005    |  |      |      | 5.11 | %         |   | $      |        |  |  |          |     | % |       | $       |        |          |  |      |     | % |   | $         | 47,005    |  |  |      | 5.11 | %
|                                      |                                     |                        |        |                    |                   |  |                      |                  |   |   |                 |           |  |      |      |      |           |   |        |         |  |  |          |      |   |       |         |         |          | 






|    |                                                
|--- | -----------------------------------------------
|(1) | Taxable-equivalent rates used where applicable.

40



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| |             
| | ------------
| | Other Assets



|                                          |  |                        |         |  |              |   |         | 
|----------------------------------------- |  | ---------------------- | ------- |  | ------------ | - | ------- | 
|                                          |  | September 30,          |         |  | December 31, |  
|                                          |  | 2005                   |         |  | 2004         |  
|                                          |  |                        |         |  |              |  
|                                          |  | (Dollars in thousands) |        
|Other real estate and foreclosed property |  | $                      | 7,658   |  |              | $ | 8,887   | 
|Deferred income taxes                     |  |                        | 8,626   |  |              |   |        | 
|Bankers acceptances                      |  |                        | 1,033   |  |              |   | 429     | 
|Investment in unconsolidated investees    |  |                        | 12,129  |  |              |   | 9,671   | 
|Cash value of Bank-owned life insurance   |  |                        | 181,137 |  |              |   | 127,189 | 
|Factored receivables                      |  |                        | 29,029  |  |              |   | 35,126  | 
|Mortgage servicing rights, net            |  |                        | 7,145   |  |              |   | 7,121   | 
|Other                                     |  |                        | 25,130  |  |              |   | 20,659  | 
|                                          |  |                        |         |  |              |  
|                                          |  | $                      | 271,887 |  |              | $ | 209,082 | 
|                                          |  |                        |         |  |              |  





| |         
| | --------
| | Deposits









41



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|                                 |                |                        |           |           |                   |  |      |        |  |   |           |           |  |  |      |   | 
|-------------------------------- | -------------- | ---------------------- | --------- | --------- | ----------------- |  | ---- | ------ |  | - | --------- | --------- |  |  | ---- | - | 
|                                 |                | September 30, 2005     |           |           | December 31, 2004 | 
|                                 |                |                        |           |           |                   | 
|                                 |                | Amount                 |           |           | Rate              |  |      | Amount |  |   | Rate      |          
|                                 |                |                        |           |           |                   |  |      |        |  |   |           |          
|                                 |                | (Dollars in thousands) |          
|Interest-bearing demand          |                | $                      | 106,905   |           |                   |  | 0.91 | %      |  | $ | 81,286    |           |  |  | 0.38 | %
|Regular savings                  |                |                        | 210,580   |           |                   |  | 0.49 |        |  |   | 158,030   |           |  |  | 0.30 |  
|Premium yield                    |                |                        | 1,117,488 |           |                   |  | 1.89 |        |  |   | 1,011,355 |           |  |  | 0.92 |  
|Money market savings             |                |                        | 940,302   |           |                   |  | 1.48 |        |  |   | 876,408   |           |  |  | 0.80 |  
|Time deposits less than $100,000 |                |                        | 292,511   |           |                   |  | 2.82 |        |  |   | 279,653   |           |  |  | 2.44 |  
|Time deposits $100,000 and over  |                |                        | 1,141,329 |           |                   |  | 3.02 |        |  |   | 730,845   |           |  |  | 1.86 |  
|IRAs, QRPs and other           |                |                        | 93,852    |           |                   |  | 2.96 |        |  |   | 95,358    |           |  |  | 2.51 |  
|                                 |                |                        |           |           |                   |  |      |        |  |   |           |          
|Total interest-bearing deposits  |                |                        | 3,902,967 |           |                   |  | 2.11 | %      |  |   | 3,232,935 |           |  |  | 1.23 | %
|                                 |                |                        |           |           |                   |  |      |        |  |   |           |          
|Noninterest-bearing deposits     |                |                        | 1,786,069 |           |                   |  |      |        |  |   | 1,611,636 |           |  |  |      |  
|                                 |                |                        |           |           |                   |  |      |        |  |   |           |          
|                                 | Total deposits |                        | $         | 5,689,036 |                   |  |      |        |  |   | $         | 4,844,571 |  |  |      |   | 
|                                 |                |                        |           |           |                   |  |      |        |  |   |           |          



|                                       |                                       |                        |           |           |              |   |         |         | 
|-------------------------------------- | ------------------------------------- | ---------------------- | --------- | --------- | ------------ | - | ------- | ------- | 
|                                       |                                       | September 30,          |           |           | December 31, |  
|                                       |                                       | 2005                   |           |           | 2004         |  
|                                       |                                       |                        |           |           |              |  
|                                       |                                       | (Dollars in thousands) |          
|Three months or less                   |                                       | $                      | 1,126,751 |           |              | $ | 655,571 |        
|Over three months through nine months  |                                       |                        | 67,781    |           |              |   | 95,186  |        
|Over nine months through twelve months |                                       |                        | 201,809   |           |              |   | 76,703  |        
|Thereafter                             |                                       |                        | 97,116    |           |              |   | 116,823 |        
|                                       |                                       |                        |           |           |              |  
|                                       | Total time deposits $100,000 and over |                        | $         | 1,493,457 |              |   | $       | 944,283 | 
|                                       |                                       |                        |           |           |              |  

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| |                      
| | ---------------------
| | Short-term Borrowings



|                                                                             |                                         |                        |   |         |              |  |   |         |  
|---------------------------------------------------------------------------- | --------------------------------------- | ---------------------- | - | ------- | ------------ |  | - | ------- | -
|                                                                             |                                         | September 30,          |   |         | December 31, | 
|                                                                             |                                         | 2005                   |   |         | 2004         | 
|                                                                             |                                         |                        |   |         |              | 
|                                                                             |                                         | (Dollars in thousands) |  
|Federal funds purchased and securities sold under repurchase
    agreements: |                                         |                        |   |         |              |  |   |        
|                                                                             | Average                                 |                        | $ | 583,999 |              |  | $ | 630,108 |  
|                                                                             | Period-end                              |                        |   | 441,181 |              |  |   | 482,968 |  
|                                                                             | Maximum month-end balance during period |                        |   | 649,613 |              |  |   | 751,109 |  
|Interest rate:                                                               |                                         |                        |   |         |              |  |   |        
|                                                                             | Weighted average for the period         |                        |   | 2.45    | %            |  |   | 1.14    | %
|                                                                             | Weighted average at period-end          |                        |   | 2.66    | %            |  |   | 1.68    | %
|Short-term borrowings:                                                       |                                         |                        |   |         |              |  |   |        
|                                                                             | Average                                 |                        | $ | 543,627 |              |  | $ | 270,743 |  
|                                                                             | Period-end                              |                        |   | 200,000 |              |  |   | 550,000 |  
|                                                                             | Maximum month-end balance during period |                        |   | 700,000 |              |  |   | 675,000 |  
|Interest rate:                                                               |                                         |                        |   |         |              |  |   |        
|                                                                             | Weighted average for the period         |                        |   | 2.92    | %            |  |   | 1.60    | %
|                                                                             | Weighted average at period-end          |                        |   | 3.64    | %            |  |   | 2.20    | %



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





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|                                            |                  |                          |  |  |        |    |  |   |       |    |      |  |      |      |  |  |       |    |  |  |       |   
|------------------------------------------- | ---------------- | ------------------------ |  |  | ------ | -- |  | - | ----- | -- | ---- |  | ---- | ---- |  |  | ----- | -- |  |  | ----- | --
|                                            |                  | Change in Interest Rates | 
|                                            |                  |                          | 
|                                            |                  | -200                     |  |  | -100   |    |  | 0 |       |    | +100 |  |      | +200 | 
|                                            |                  |                          |  |  |        |    |  |   |       |    |      |  |      |      | 
|Impact on net interest income:              |                  |                          |  |  |        |    |  |   |       |    |      |  |      |      |  |  |       |    |  | 
|                                            | Next 12 months:  |                          |  |  |        |    |  |   |       |    |      |  |      |      |  |  |       |    |  |  |      
|                                            |                  | September 30, 2005       |  |  | (0.73  | )% |  |   | 0.93  | %  |      |  | 0.00 | %    |  |  | 0.96  | %  |  |  | 1.76  | % 
|                                            |                  | December 31, 2004        |  |  | (5.69  | )% |  |   | (0.93 | )% |      |  | 0.00 | %    |  |  | 2.03  | %  |  |  | 3.88  | % 
|                                            | Months 13 to 24: |                          |  |  |        |    |  |   |       |    |      |  |      |      |  |  |       |    |  |  |      
|                                            |                  | September 30, 2005       |  |  | (2.18  | )% |  |   | 0.28  | %  |      |  | 0.00 | %    |  |  | 1.71  | %  |  |  | 3.29  | % 
|                                            |                  | December 31, 2004        |  |  | (11.39 | )% |  |   | (3.36 | )% |      |  | 0.00 | %    |  |  | 3.60  | %  |  |  | 6.82  | % 
|Impact on market value of portfolio equity: |                  |                          |  |  |        |    |  |   |       |    |      |  |      |      |  |  |       |    |  | 
|                                            |                  | September 30, 2005       |  |  | (0.84  | )% |  |   | 0.87  | %  |      |  | 0.00 | %    |  |  | (0.67 | )% |  |  | (1.51 | )%
|                                            |                  | December 31, 2004        |  |  | (8.21  | )% |  |   | (1.78 | )% |      |  | 0.00 | %    |  |  | (0.16 | )% |  |  | (0.67 | )%





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| |                                
| | -------------------------------
| | Liquidity and Capital Resources













45



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|                    |  |                        |            |          |      |           |            |             |              |            |          |  |  |               |               |  |      |            |                         |      |  |  |      |   |  |  |            | 
|------------------- |  | ---------------------- | ---------- | -------- | ---- | --------- | ---------- | ----------- | ------------ | ---------- | -------- |  |  | ------------- | ------------- |  | ---- | ---------- | ----------------------- | ---- |  |  | ---- | - |  |  | ---------- | 
|                    |  |                        |            |          |      | Trust     |            |             | Junior       |            |          |  |  | Interest      |               |  |     
|                    |  |                        |            |          |      | Preferred |            |             | Subordinated |            |          |  |  | Rate at       |               |  |     
|                    |  |                        |            | Maturity |      |           | Securities |             |              | Debt Owned |          |  |  |               | September 30, |  |      | Redemption |                        
|Description         |  | Issuance Date          |            |          | Date |           |            | Outstanding |              |            | by Trust |  |  | Interest Rate |               |  | 2005 |            |                         | Date | 
|                    |  |                        |            |          |      |           |            |             |              |            |          |  |  |               |               |  |      |            |                         |      | 
|                    |  | (Dollars in thousands) |           
|Statutory Trust I   |  |                        | 10/7/2003  |          |      |           | 12/17/2033 |             |              | $          | 50,000   |  |  | $             | 51,547        |  |      |            | 3-month LIBOR plus 2.85 | %    |  |  | 6.74 | % |  |  | 12/17/2008 | 
|Statutory Trust II  |  |                        | 9/24/2004  |          |      |           | 10/7/2034  |             |              |            | 35,000   |  |  |               | 36,083        |  |      |            | 3-month LIBOR plus 1.90 | %    |  |  | 5.50 | % |  |  | 10/7/2009  | 
|Statutory Trust III |  |                        | 12/13/2004 |          |      |           | 12/15/2034 |             |              |            | 60,000   |  |  |               | 61,856        |  |      |            | 3-month LIBOR plus 1.78 | %    |  |  | 5.65 | % |  |  | 12/15/2009 | 
|                    |  |                        |            |          |      |           |            |             |              |            |          |  |  |               |               |  |      |            |                         |      | 
|                    |  |                        |            |          |      |           |            |             |              | $          | 145,000  |  |  | $             | 149,486       |  |      |            |                         |      |  |  |      |   |  |  |            | 
|                    |  |                        |            |          |      |           |            |             |              |            |          |  |  |               |               |  |      |            |                         |      | 











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|                         |                                           |                        |  |                 |             |  |                   |                   |       |                    |       |   |         |        |  |  |       |     |  |   |         |  |  |  |       |  
|------------------------ | ----------------------------------------- | ---------------------- |  | --------------- | ----------- |  | ----------------- | ----------------- | ----- | ------------------ | ----- | - | ------- | ------ |  |  | ----- | --- |  | - | ------- |  |  |  | ----- | -
|                         |                                           |                        |  |                 |             |  |                   |                   |       | Minimum to Be Well |      
|                         |                                           |                        |  |                 |             |  |                   | Capitalized Under |      
|                         |                                           |                        |  | Minimum Capital |             |  | Prompt Corrective |                  
|                         |                                           | Actual                 |  |                 | Requirement |  |                   | Action Provisions |      
|                         |                                           |                        |  |                 |             |  |                   |                   |      
|                         |                                           | Amount                 |  |                 | Ratio       |  |                   | Amount            |       |                    | Ratio |   |         | Amount |  |  | Ratio |    
|                         |                                           |                        |  |                 |             |  |                   |                   |       |                    |       |   |         |        |  |  |       |    
|                         |                                           | (Dollars in thousands) | 
|As of September 30, 2005 |                                           |                        |  |                 |             |  |                   |                   |       |                    |       |   |         |        |  |  |       |     |  |   |         |  |  | 
|                         | Total Capital (to Risk Weighted Assets):  |                        |  |                 |             |  |                   |                   |       |                    |       |   |         |        |  |  |       |     |  |   |         |  |  |  |      
|                         |                                           | The Company            |  | $               | 741,483     |  |                   |                   | 10.87 | %                  |       | $ | 545,820 |        |  |  | 8.00  | %   |  | $ | 682,275 |  |  |  | 10.00 | %
|                         |                                           | The Bank               |  |                 | 727,554     |  |                   |                   | 10.67 |                    |       |   | 545,387 |        |  |  | 8.00  |     |  |   | 681,734 |  |  |  | 10.00 |  
|                         | Tier 1 Capital (to Risk Weighted Assets): |                        |  |                 |             |  |                   |                   |       |                    |       |   |         |        |  |  |       |     |  |   |         |  |  |  |      
|                         |                                           | The Company            |  |                 | 617,294     |  |                   |                   | 9.05  |                    |       |   | 272,910 |        |  |  | 4.00  |     |  |   | 409,365 |  |  |  | 6.00  |  
|                         |                                           | The Bank               |  |                 | 677,734     |  |                   |                   | 9.94  |                    |       |   | 272,694 |        |  |  | 4.00  |     |  |   | 409,041 |  |  |  | 6.00  |  
|                         | Tier 1 Capital (to Average Assets):       |                        |  |                 |             |  |                   |                   |       |                    |       |   |         |        |  |  |       |     |  |   |         |  |  |  |      
|                         |                                           | The Company            |  |                 | 617,294     |  |                   |                   | 8.03  |                    |       |   | 307,636 |        |  |  | 4.00  | (1) |  |   | 384,545 |  |  |  | 5.00  |  
|                         |                                           | The Bank               |  |                 | 677,734     |  |                   |                   | 8.83  |                    |       |   | 307,047 |        |  |  | 4.00  | (1) |  |   | 383,809 |  |  |  | 5.00  |  
|As of December 31, 2004  |                                           |                        |  |                 |             |  |                   |                   |       |                    |       |   |         |        |  |  |       |     |  |   |         |  |  | 
|                         | Total Capital (to Risk Weighted Assets):  |                        |  |                 |             |  |                   |                   |       |                    |       |   |         |        |  |  |       |     |  |   |         |  |  |  |      
|                         |                                           | The Company            |  |                 | 683,804     |  |                   |                   | 11.02 |                    |       |   | 496,231 |        |  |  | 8.00  |     |  |   | 620,289 |  |  |  | 10.00 |  
|                         |                                           | The Bank               |  |                 | 676,090     |  |                   |                   | 10.91 |                    |       |   | 495,559 |        |  |  | 8.00  |     |  |   | 619,449 |  |  |  | 10.00 |  
|                         | Tier 1 Capital (to Risk Weighted Assets): |                        |  |                 |             |  |                   |                   |       |                    |       |   |         |        |  |  |       |     |  |   |         |  |  |  |      
|                         |                                           | The Company            |  |                 | 559,396     |  |                   |                   | 9.02  |                    |       |   | 248,115 |        |  |  | 4.00  |     |  |   | 372,173 |  |  |  | 6.00  |  
|                         |                                           | The Bank               |  |                 | 626,074     |  |                   |                   | 10.11 |                    |       |   | 247,780 |        |  |  | 4.00  |     |  |   | 371,670 |  |  |  | 6.00  |  
|                         | Tier 1 Capital (to Average Assets):       |                        |  |                 |             |  |                   |                   |       |                    |       |   |         |        |  |  |       |     |  |   |         |  |  |  |      
|                         |                                           | The Company            |  |                 | 559,396     |  |                   |                   | 7.81  |                    |       |   | 286,337 |        |  |  | 4.00  | (1) |  |   | 357,921 |  |  |  | 5.00  |  
|                         |                                           | The Bank               |  |                 | 626,074     |  |                   |                   | 8.77  |                    |       |   | 285,522 |        |  |  | 4.00  | (1) |  |   | 356,903 |  |  |  | 5.00  |  






|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | The Tier 1 leverage ratio consists of Tier 1 capital
    divided by quarterly average total assets, excluding goodwill
    and certain other items. The minimum leverage ratio guideline is
    3% for banking organizations that do not anticipate significant
    growth and that have well-diversified risk, excellent asset
    quality, high liquidity, good earnings, effective management and
    monitoring of market risk and, in general, are considered
    top-rated, strong banking organizations.



| |                             
| | ----------------------------
| | Critical Accounting Policies





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| |                                                  
| | -------------------------------------------------
| | Recent Accounting Pronouncements and Developments








|        |                                                               
|------- | --------------------------------------------------------------
|ITEM 3. | Quantitative and Qualitative Disclosures About Market
    Risk








|        |                        
|------- | -----------------------
|ITEM 4. | Controls and Procedures





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49



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##### Table of Contents






PART II  OTHER INFORMATION







|        |                  
|------- | -----------------
|Item 1. | Legal Proceedings








|        |                                                                
|------- | ---------------------------------------------------------------
|Item 2. | Unregistered Sales of Equity Securities and Use of
    Proceeds








|        |                                
|------- | -------------------------------
|Item 3. | Defaults upon Senior Securities








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








|        |                  
|------- | -----------------
|Item 5. | Other Information








|        |         
|------- | --------
|Item 6. | Exhibits

|        |     |             |  |                                                                                                                                                                                                                                                                                                                                                                                                                                  
|------- | --- | ----------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |     |            
|Number  |     | Description
|        |     |            
|        | 3   | .1          |  | Articles of Incorporation of the Company, restated as of
    May 1, 2001 (incorporated by reference to Exhibit 4.1
    to the Companys Form S-8 Registration Statement
    No. 333-60190), as Amended by Certificate of Amendment to
    the Articles of Incorporation (incorporated by reference to
    Appendix A of the Companys definitive proxy statement
    on Form DEF-14A, filed with Commission on April 1,
    2005)
|        | 3   | .2          |  | Bylaws of the Company (Restated as of December 31,
    1996)(incorporated by reference to Exhibit 3.2 to the
    Companys Form S-1 Registration Statement
    No. 333-16509)                                                                                                                                                                                                                                                    
|        | 4   | .1          |  | Specimen Common Stock certificate (incorporated by reference to
    Exhibit 4.1 to the Companys Form S-1
    Registration Statement No. 333-16509)                                                                                                                                                                                                                                                                              
|        | 4   | .2          |  | Indenture, dated as of September 24, 2004, between the
    Company, as Issuer, and Wells Fargo Bank National Association,
    as Trustee (incorporated by reference to Exhibit 4.2 to the
    Companys Current Report on Form 8-K filed 28,
    2004)                                                                                                                                                                           
|        | *15 | .1          |  | Awareness Letter of PricewaterhouseCoopers LLP                                                                                                                                                                                                                                                                                                                                                                                   
|        | *31 | .1          |  | Certification of the Chief Executive Officer Pursuant to
    Section 302 of the Sarbanes-Oxley Act of 2002                                                                                                                                                                                                                                                                                                                       
|        | *31 | .2          |  | Certification of the Chief Financial Officer Pursuant to
    Section 302 of the Sarbanes-Oxley Act of 2002                                                                                                                                                                                                                                                                                                                       
|        | *32 | .1          |  | Certification of the Chief Executive Officer Pursuant to
    18 U.S.C. Section 1350, Adopted Pursuant to
    Section 906 of the Sarbanes-Oxley Act of 2002                                                                                                                                                                                                                                                                       
|        | *32 | .2          |  | Certification of the Chief Financial Officer Pursuant to
    18 U.S.C. Section 1350, Adopted Pursuant to
    Section 906 of the Sarbanes-Oxley Act of 2002                                                                                                                                                                                                                                                                       






|  |               
|- | --------------
|* | Filed herewith

50



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SIGNATURES


Pursuant to the requirements of the Securities Exchange Act
of 1934, as amended, this report has been signed below by the
following persons on behalf of the Registrant and in the
capacities and on the dates indicated.


|                                                     |  |                                                                                             |  |                  |  | 
|---------------------------------------------------- |  | ------------------------------------------------------------------------------------------- |  | ---------------- |  | 
|Signature                                            |  | Title                                                                                       |  | Date            
|                                                     |  |                                                                                             |  |                 
|                                                    
|/s/ PAUL B. MURPHY, JR.Paul B. Murphy, Jr.           |  | Director and Chief Executive Officer
     (Principal Executive Officer)                     |  | November 8, 2005
|                                                    
|/s/ RANDALL E. MEYERRandall E. Meyer                 |  | Executive Vice President and Chief
     Financial Officer
    (Principal Financial Officer) |  | November 8, 2005
|                                                    
|/s/ SCOTT J. MCLEANScott J. McLean                   |  | Director and President                                                                      |  | November 8, 2005
|                                                    
|/s/ LAURENCE L.
    LEHMAN IIILaurence L. Lehman III |  | Senior Vice President and Controller
    (Principal Accounting Officer)                     |  | November 8, 2005

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EXHIBIT INDEX


|        |     |             |  |                                                                                                                                                                                                                                                                                                                                                                                                                                  
|------- | --- | ----------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |     |            
|Number  |     | Description
|        |     |            
|        | 3   | .1          |  | Articles of Incorporation of the Company, restated as of
    May 1, 2001 (incorporated by reference to Exhibit 4.1
    to the Companys Form S-8 Registration Statement
    No. 333-60190), as Amended by Certificate of Amendment to
    the Articles of Incorporation (incorporated by reference to
    Appendix A of the Companys definitive proxy statement
    on Form DEF-14A, filed with Commission on April 1,
    2005)
|        | 3   | .2          |  | Bylaws of the Company (Restated as of December 31,
    1996)(incorporated by reference to Exhibit 3.2 to the
    Companys Form S-1 Registration Statement
    No. 333-16509)                                                                                                                                                                                                                                                    
|        | 4   | .1          |  | Specimen Common Stock certificate (incorporated by reference to
    Exhibit 4.1 to the Companys Form S-1
    Registration Statement No. 333-16509)                                                                                                                                                                                                                                                                              
|        | 4   | .2          |  | Indenture, dated as of September 24, 2004, between the
    Company, as Issuer, and Wells Fargo Bank National Association,
    as Trustee (incorporated by reference to Exhibit 4.2 to the
    Companys Current Report on Form 8-K filed 28,
    2004)                                                                                                                                                                           
|        | *15 | .1          |  | Awareness Letter of PricewaterhouseCoopers LLP                                                                                                                                                                                                                                                                                                                                                                                   
|        | *31 | .1          |  | Certification of the Chief Executive Officer Pursuant to
    Section 302 of the Sarbanes-Oxley Act of 2002                                                                                                                                                                                                                                                                                                                       
|        | *31 | .2          |  | Certification of the Chief Financial Officer Pursuant to
    Section 302 of the Sarbanes-Oxley Act of 2002                                                                                                                                                                                                                                                                                                                       
|        | *32 | .1          |  | Certification of the Chief Executive Officer Pursuant to
    18 U.S.C. Section 1350, Adopted Pursuant to
    Section 906 of the Sarbanes-Oxley Act of 2002                                                                                                                                                                                                                                                                       
|        | *32 | .2          |  | Certification of the Chief Financial Officer Pursuant to
    18 U.S.C. Section 1350, Adopted Pursuant to
    Section 906 of the Sarbanes-Oxley Act of 2002                                                                                                                                                                                                                                                                       






|  |               
|- | --------------
|* | Filed herewith