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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 June 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
    incorporation or organization) |  | (I.R.S. Employer
    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












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AMEGY BANCORPORATION, INC. AND SUBSIDIARIES


INDEX TO FORM 10-Q


|                                               |  |                                                                                                                                |    |      |    | 
|---------------------------------------------- |  | ------------------------------------------------------------------------------------------------------------------------------ | -- | ---- | -- | 
|                                               |  |                                                                                                                                |    | Page |   
|                                               |  |                                                                                                                                |    |      |   
|PART I. FINANCIAL
    INFORMATION             
|Item 1.                                        |  | Financial Statements                                                                                                           |    |      |    | 
|                                               |  | Report of Independent Registered Public
    Accounting Firm                                                                    |    |      | 2  | 
|                                               |  | Condensed Consolidated Balance Sheet as of
    June 30, 2005 and December 31, 2004 (unaudited)                                 |    |      | 3  | 
|                                               |  | Condensed Consolidated Statement of Income
    for the Three and Six Months Ended June 30, 2005 and 2004
    (unaudited)       |    |      | 4  | 
|                                               |  | Condensed Consolidated Statement of Changes
    in Shareholders Equity for the Six Months Ended
    June 30, 2005 (unaudited) |    |      | 5  | 
|                                               |  | Condensed Consolidated Statement of Cash
    Flows for the Six Months Ended June 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                                      |    |      | 21 | 
|Item 3.                                        |  | Quantitative and Qualitative Disclosures
    About Market Risk                                                                 |    |      | 49 | 
|Item 4.                                        |  | Controls and Procedures                                                                                                        |    |      | 49 | 
|PART II. OTHER INFORMATION                    
|Item 1.                                        |  | Legal Proceedings                                                                                                              |    |      | 51 | 
|Item 2.                                        |  | Changes in Securities and Use of Proceeds
    and Issuer Purchases of Equity Securities                                        |    |      | 51 | 
|Item 3.                                        |  | Defaults upon Senior Securities                                                                                                |    |      | 51 | 
|Item 4.                                        |  | Submission of Matters to a Vote of
    Securities Holders                                                                      |    |      | 51 | 
|Item 5.                                        |  | Other Information                                                                                                              |    |      | 52 | 
|Item 6.                                        |  | Exhibits                                                                                                                       |    |      | 52 | 
|Signatures                                     |  |                                                                                                                                | 53 |     
|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)


|                                                                                         |                                                                                                                                                                                                          |                                            |           |           |              |   |           |           |           | 
|---------------------------------------------------------------------------------------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------ | --------- | --------- | ------------ | - | --------- | --------- | --------- | 
|                                                                                         |                                                                                                                                                                                                          | June 30,                                   |           |           | December 31, |  
|                                                                                         |                                                                                                                                                                                                          | 2005                                       |           |           | 2004         |  
|                                                                                         |                                                                                                                                                                                                          |                                            |           |           |              |  
|                                                                                         |                                                                                                                                                                                                          | (Dollars in thousands,                     |          
|                                                                                         |                                                                                                                                                                                                          | except per share amounts)                  |          
|ASSETS                                                                                  
|Cash and due from banks                                                                  |                                                                                                                                                                                                          | $                                          | 301,428   |           |              | $ | 327,558   |          
|Federal funds sold and other cash equivalents                                            |                                                                                                                                                                                                          |                                            | 28,774    |           |              |   | 14,417    |          
|                                                                                         |                                                                                                                                                                                                          |                                            |           |           |              |  
|                                                                                         | Total cash and cash equivalents                                                                                                                                                                          |                                            |           | 330,202   |              |   |           | 341,975   |          
|Securities available for sale (including $350,279 and $319,599
    pledged to creditors) |                                                                                                                                                                                                          |                                            | 1,921,521 |           |              |   | 1,927,204 |          
|Securities held to maturity (fair value of $51,633 and $58,569)                          |                                                                                                                                                                                                          |                                            | 51,040    |           |              |   | 58,033    |          
|Loans held for sale                                                                      |                                                                                                                                                                                                          |                                            | 116,577   |           |              |   | 107,404   |          
|Loans held for investment, net of allowance for loan losses of
    $49,180 and $49,408   |                                                                                                                                                                                                          |                                            | 4,672,100 |           |              |   | 4,490,170 |          
|Premises and equipment, net                                                              |                                                                                                                                                                                                          |                                            | 170,312   |           |              |   | 164,443   |          
|Accrued interest receivable                                                              |                                                                                                                                                                                                          |                                            | 32,188    |           |              |   | 30,200    |          
|Goodwill                                                                                 |                                                                                                                                                                                                          |                                            | 150,426   |           |              |   | 149,846   |          
|Core deposit intangibles                                                                 |                                                                                                                                                                                                          |                                            | 22,827    |           |              |   | 27,246    |          
|Other assets                                                                             |                                                                                                                                                                                                          |                                            | 271,507   |           |              |   | 209,082   |          
|                                                                                         |                                                                                                                                                                                                          |                                            |           |           |              |  
|                                                                                         |                                                                                                                                                                                                          | Total assets                               |           | $         | 7,738,700    |   |           | $         | 7,505,603 | 
|                                                                                         |                                                                                                                                                                                                          |                                            |           |           |              |  
|                                                                                        
|LIABILITIES AND SHAREHOLDERS EQUITY                                                    
|Deposits:                                                                                |                                                                                                                                                                                                          |                                            |           |           |              |   |           |          
|                                                                                         | Demand  noninterest-bearing                                                                                                                                                                             |                                            | $         | 1,945,595 |              |   | $         | 1,871,228 |          
|                                                                                         | Demand  interest-bearing                                                                                                                                                                                |                                            |           | 104,420   |              |   |           | 135,003   |          
|                                                                                         | Money market accounts                                                                                                                                                                                    |                                            |           | 2,011,714 |              |   |           | 2,091,624 |          
|                                                                                         | Savings                                                                                                                                                                                                  |                                            |           | 216,509   |              |   |           | 205,593   |          
|                                                                                         | Time, $100 and over                                                                                                                                                                                      |                                            |           | 1,251,347 |              |   |           | 944,283   |          
|                                                                                         | Other time                                                                                                                                                                                               |                                            |           | 373,291   |              |   |           | 372,312   |          
|                                                                                         |                                                                                                                                                                                                          |                                            |           |           |              |  
|                                                                                         |                                                                                                                                                                                                          | Total deposits                             |           |           | 5,902,876    |   |           |           | 5,620,043 | 
|Federal funds purchased and securities sold under repurchase
    agreements              |                                                                                                                                                                                                          |                                            | 649,613   |           |              |   | 482,968   |          
|Other borrowings                                                                         |                                                                                                                                                                                                          |                                            | 308,171   |           |              |   | 560,410   |          
|Senior subordinated debenture                                                            |                                                                                                                                                                                                          |                                            | 75,000    |           |              |   | 75,000    |          
|Junior subordinated deferrable interest debentures                                       |                                                                                                                                                                                                          |                                            | 149,486   |           |              |   | 149,486   |          
|Accrued interest payable                                                                 |                                                                                                                                                                                                          |                                            | 4,146     |           |              |   | 2,902     |          
|Other liabilities                                                                        |                                                                                                                                                                                                          |                                            | 36,316    |           |              |   | 34,380    |          
|                                                                                         |                                                                                                                                                                                                          |                                            |           |           |              |  
|                                                                                         |                                                                                                                                                                                                          | Total liabilities                          |           |           | 7,125,608    |   |           |           | 6,925,189 | 
|                                                                                         |                                                                                                                                                                                                          |                                            |           |           |              |  
|Commitments and contingencies                                                            |                                                                                                                                                                                                          |                                            |           |           |              |   |           |          
|Shareholders equity:                                                                    |                                                                                                                                                                                                          |                                            |           |           |              |   |           |          
|                                                                                         | Preferred stock  $0.01 par value,
    1,000,000 shares authorized; 0 issued and outstanding at
    June 30, 2005 and December 31, 2004                                                                  |                                            |           |          |              |   |           |          |          
|                                                                                         | Common stock  $1 par value,
    300,000,000 shares authorized; 70,649,973 issued and
    70,539,090 outstanding at June 30, 2005; 70,198,456 issued
    and 70,095,949 outstanding at December 31, 2004 |                                            |           | 70,650    |              |   |           | 70,198    |          
|                                                                                         | Additional paid-in capital                                                                                                                                                                               |                                            |           | 98,344    |              |   |           | 92,330    |          
|                                                                                         | Retained earnings                                                                                                                                                                                        |                                            |           | 460,198   |              |   |           | 428,311   |          
|                                                                                         | Deferred compensation                                                                                                                                                                                    |                                            |           | (7,682    | )            |   |           | (5,469    | )        
|                                                                                         | Accumulated other comprehensive loss                                                                                                                                                                     |                                            |           | (6,613    | )            |   |           | (3,221    | )        
|                                                                                         | Treasury stock, at cost  110,883 shares and
    102,507 shares, respectively                                                                                                                            |                                            |           | (1,805    | )            |   |           | (1,735    | )        
|                                                                                         |                                                                                                                                                                                                          |                                            |           |           |              |  
|                                                                                         |                                                                                                                                                                                                          | Total shareholders equity                 |           |           | 613,092      |   |           |           | 580,414   | 
|                                                                                         |                                                                                                                                                                                                          |                                            |           |           |              |  
|                                                                                         |                                                                                                                                                                                                          | Total liabilities and shareholders equity |           | $         | 7,738,700    |   |           | $         | 7,505,603 | 
|                                                                                         |                                                                                                                                                                                                          |                                            |           |           |              |  



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AMEGY BANCORPORATION, INC. AND SUBSIDIARIES





CONDENSED CONSOLIDATED STATEMENT OF INCOME


(unaudited)


|                           |                                              |                                                  |            |                                                     |                  |        |        |        |        |        |        |        |         |        |         |        |        |        |         | 
|-------------------------- | -------------------------------------------- | ------------------------------------------------ | ---------- | --------------------------------------------------- | ---------------- | ------ | ------ | ------ | ------ | ------ | ------ | ------ | ------- | ------ | ------- | ------ | ------ | ------ | ------- | 
|                           |                                              | Three Months Ended                               |            |                                                     | Six Months Ended |       
|                           |                                              | June 30,                                         |            |                                                     | June 30,         |       
|                           |                                              |                                                  |            |                                                     |                  |       
|                           |                                              | 2005                                             |            |                                                     | 2004             |        |        | 2005   |        |        | 2004   |       
|                           |                                              |                                                  |            |                                                     |                  |        |        |        |        |        |        |       
|                           |                                              | (Dollars in thousands, except per share amounts) |           
|Interest income:           |                                              |                                                  |            |                                                     |                  |        |        |        |        |        |        |        |         |        |         |       
|                           |                                              | Loans                                            |            | $                                                   | 72,884           |        |        | $      | 50,488 |        |        | $      | 140,084 |        |         | $      | 99,350 |       
|                           |                                              | Securities:                                      |            |                                                     |                  |        |        |        |        |        |        |        |         |        |         |        |        |       
|                           |                                              |                                                  | Taxable    |                                                     |                  | 17,639 |        |        |        | 12,351 |        |        |         | 34,835 |         |        |        | 25,166 |        
|                           |                                              |                                                  | Tax-exempt |                                                     |                  | 2,672  |        |        |        | 2,327  |        |        |         | 5,306  |         |        |        | 4,061  |        
|                           |                                              | Federal funds sold and other                     |            |                                                     | 338              |        |        |        | 119    |        |        |        | 621     |        |         |        | 308    |       
|                           |                                              |                                                  |            |                                                     |                  |        |        |        |        |        |        |       
|                           |                                              |                                                  |            | Total interest income                               |                  |        | 93,533 |        |        |        | 65,285 |        |         |        | 180,846 |        |        |        | 128,885 | 
|                           |                                              |                                                  |            |                                                     |                  |        |        |        |        |        |        |       
|Interest expense:          |                                              |                                                  |            |                                                     |                  |        |        |        |        |        |        |        |         |        |         |       
|                           |                                              | Deposits                                         |            |                                                     | 20,488           |        |        |        | 8,408  |        |        |        | 35,983  |        |         |        | 16,478 |       
|                           |                                              | Interest on subordinated debentures              |            |                                                     | 2,839            |        |        |        | 550    |        |        |        | 5,355   |        |         |        | 1,095  |       
|                           |                                              | Interest on other borrowings                     |            |                                                     | 7,822            |        |        |        | 2,110  |        |        |        | 14,927  |        |         |        | 4,497  |       
|                           |                                              |                                                  |            |                                                     |                  |        |        |        |        |        |        |       
|                           |                                              |                                                  |            | Total interest expense                              |                  |        | 31,149 |        |        |        | 11,068 |        |         |        | 56,265  |        |        |        | 22,070  | 
|                           |                                              |                                                  |            |                                                     |                  |        |        |        |        |        |        |       
|                           |                                              |                                                  |            | Net interest income                                 |                  |        | 62,384 |        |        |        | 54,217 |        |         |        | 124,581 |        |        |        | 106,815 | 
|Provision for loan losses  |                                              |                                                  | 1,500      |                                                     |                  |        | 2,923  |        |        |        | 4,600  |        |         |        | 4,832   |       
|                           |                                              |                                                  |            |                                                     |                  |        |        |        |        |        |        |       
|                           |                                              |                                                  |            | Net interest income after provision for loan losses |                  |        | 60,884 |        |        |        | 51,294 |        |         |        | 119,981 |        |        |        | 101,983 | 
|                           |                                              |                                                  |            |                                                     |                  |        |        |        |        |        |        |       
|Noninterest income:        |                                              |                                                  |            |                                                     |                  |        |        |        |        |        |        |        |         |        |         |       
|                           | Service charges on deposit accounts          |                                                  |            | 10,662                                              |                  |        |        | 11,190 |        |        |        | 22,009 |         |        |         | 22,230 |       
|                           | Investment services                          |                                                  |            | 4,642                                               |                  |        |        | 2,885  |        |        |        | 8,247  |         |        |         | 5,855  |       
|                           | Other fee income                             |                                                  |            | 8,020                                               |                  |        |        | 5,070  |        |        |        | 15,356 |         |        |         | 9,873  |       
|                           | Bank-owned life insurance income             |                                                  |            | 1,946                                               |                  |        |        | 1,906  |        |        |        | 3,582  |         |        |         | 3,397  |       
|                           | Other operating income                       |                                                  |            | 5,878                                               |                  |        |        | 1,273  |        |        |        | 10,030 |         |        |         | 2,595  |       
|                           | Gain on sale of loans, net                   |                                                  |            | 435                                                 |                  |        |        | 215    |        |        |        | 1,129  |         |        |         | 451    |       
|                           | Gain (loss) on sale of securities, net       |                                                  |            | (17                                                 | )                |        |        | (25    | )      |        |        | (15    | )       |        |         | 1      |       
|                           |                                              |                                                  |            |                                                     |                  |        |        |        |        |        |        |       
|                           |                                              |                                                  |            | Total noninterest income                            |                  |        | 31,566 |        |        |        | 22,514 |        |         |        | 60,338  |        |        |        | 44,402  | 
|                           |                                              |                                                  |            |                                                     |                  |        |        |        |        |        |        |       
|Noninterest expenses:      |                                              |                                                  |            |                                                     |                  |        |        |        |        |        |        |        |         |        |         |       
|                           | Salaries and employee benefits               |                                                  |            | 34,739                                              |                  |        |        | 28,458 |        |        |        | 69,468 |         |        |         | 56,439 |       
|                           | Occupancy expense                            |                                                  |            | 10,780                                              |                  |        |        | 8,887  |        |        |        | 21,384 |         |        |         | 17,145 |       
|                           | Marketing and advertising                    |                                                  |            | 2,113                                               |                  |        |        | 1,044  |        |        |        | 4,041  |         |        |         | 2,093  |       
|                           | Professional services                        |                                                  |            | 3,716                                               |                  |        |        | 2,780  |        |        |        | 7,035  |         |        |         | 5,100  |       
|                           | Core deposit intangible amortization expense |                                                  |            | 2,171                                               |                  |        |        | 1,008  |        |        |        | 4,419  |         |        |         | 1,911  |       
|                           | Other operating expenses                     |                                                  |            | 12,768                                              |                  |        |        | 8,052  |        |        |        | 24,112 |         |        |         | 17,642 |       
|                           |                                              |                                                  |            |                                                     |                  |        |        |        |        |        |        |       
|                           |                                              |                                                  |            | Total noninterest expenses                          |                  |        | 66,287 |        |        |        | 50,229 |        |         |        | 130,459 |        |        |        | 100,330 | 
|                           |                                              |                                                  |            |                                                     |                  |        |        |        |        |        |        |       
|                           |                                              |                                                  |            | Income before income taxes                          |                  |        | 26,163 |        |        |        | 23,579 |        |         |        | 49,860  |        |        |        | 46,055  | 
|Provision for income taxes |                                              |                                                  | 7,005      |                                                     |                  |        | 7,358  |        |        |        | 13,758 |        |         |        | 14,547  |       
|                           |                                              |                                                  |            |                                                     |                  |        |        |        |        |        |        |       
|                           | Net income                                   |                                                  | $          | 19,158                                              |                  |        | $      | 16,221 |        |        | $      | 36,102 |         |        | $       | 31,508 |       
|                           |                                              |                                                  |            |                                                     |                  |        |        |        |        |        |        |       
|Earnings per common share: |                                              |                                                  |            |                                                     |                  |        |        |        |        |        |        |        |         |        |         |       
|                           |                                              |                                                  |            | Basic                                               |                  | $      | 0.27   |        |        | $      | 0.24   |        |         | $      | 0.51    |        |        | $      | 0.46    | 
|                           |                                              |                                                  |            |                                                     |                  |        |        |        |        |        |        |       
|                           |                                              |                                                  |            | Diluted                                             |                  | $      | 0.27   |        |        | $      | 0.23   |        |         | $      | 0.50    |        |        | $      | 0.45    | 
|                           |                                              |                                                  |            |                                                     |                  |        |        |        |        |        |        |       
|Dividends per common share |                                              | $                                                | 0.03       |                                                     |                  | $      | 0.03   |        |        | $      | 0.06   |        |         | $      | 0.06    |       
|                           |                                              |                                                  |            |                                                     |                  |        |        |        |        |        |        |       



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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                                                      |                                                  |   |              |         |   |            |  |  |          |            | 261,486     |          |       |        | 262           |  |   |              | 2,859 |  |               |         |        |       |   |        |        |   |   |        |        |   |   |        |     |   |   |         | 3,121  |  
|                           | Issuance of restricted common stock, net of shares forfeited
    into Treasury |                                                  |   |              |         |   |            |  |  |          |            | 186,384     |          |       |        | 186           |  |   |              | 3,086 |  |               |         |        |       |   |        | (3,269 | ) |   |        |        |   |   |        | (3  | ) |   |         |       |  
|                           | Issuance of non-employee director stock                                        |                                                  |   |              |         |   |            |  |  |          |            | 3,647       |          |       |        | 4             |  |   |              | 69    |  |               |         |        |       |   |        |        |   |   |        |        |   |   |        |     |   |   |         | 73     |  
|                           | Purchase of treasury stock                                                     |                                                  |   |              |         |   |            |  |  |          |            |             |          |       |        |               |  |   |              |       |  |               |         |        |       |   |        |        |   |   |        |        |   |   |        | (67 | ) |   |         | (67    | )
|                           | Deferred compensation amortization                                             |                                                  |   |              |         |   |            |  |  |          |            |             |          |       |        |               |  |   |              |       |  |               |         |        |       |   |        | 1,056  |   |   |        |        |   |   |        |     |   |   |         | 1,056  |  
|                           | Cash dividends, $0.06 per common share                                         |                                                  |   |              |         |   |            |  |  |          |            |             |          |       |        |               |  |   |              |       |  |               |         | (4,215 | )     |   |        |        |   |   |        |        |   |   |        |     |   |   |         | (4,215 | )
|                           | Comprehensive income (loss):                                                   |                                                  |   |              |         |   |            |  |  |          |            |             |          |       |        |               |  |   |              |       |  |               |         |        |       |   |        |        |   |   |        |        |   |   |        |     |   |   |         |        |  
|                           | Net income for the six months ended June 30, 2005                              |                                                  |   |              |         |   |            |  |  |          |            |             |          |       |        |               |  |   |              |       |  |               |         | 36,102 |       |   |        |        |   |   |        |        |   |   |        |     |   |   |         | 36,102 |  
|                           | Other comprehensive loss                                                       |                                                  |   |              |         |   |            |  |  |          |            |             |          |       |        |               |  |   |              |       |  |               |         |        |       |   |        |        |   |   |        | (3,392 | ) |   |        |     |   |   |         | (3,392 | )
|                           |                                                                                |                                                  |   |              |         |   |            |  |  |          |            |             |          |       |        |               |  |   |              |       |  |               |         |        |       |   |        |        |   |  
|                           | Total comprehensive income                                                     |                                                  |   |              |         |   |            |  |  |          |            |             |          |       |        |               |  |   |              |       |  |               |         |        |       |   |        |        |   |   |        |        |   |   |        |     |   |   |         | 32,710 |  
|                           |                                                                                |                                                  |   |              |         |   |            |  |  |          |            |             |          |       |        |               |  |   |              |       |  |               |         |        |       |   |        |        |   |  
|BALANCE, JUNE 30, 2005     |                                                                                |                                                  |  |              |         | $ |           |  |  |          | 70,649,973 |             |          | $     | 70,650 |               |  | $ | 98,344       |       |  | $             | 460,198 |        |       | $ | (7,682 | )      |   | $ | (6,613 | )      |   | $ | (1,805 | )   |   | $ | 613,092 |       
|                           |                                                                                |                                                  |   |              |         |   |            |  |  |          |            |             |          |       |        |               |  |   |              |       |  |               |         |        |       |   |        |        |   |  



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AMEGY BANCORPORATION, INC. AND SUBSIDIARIES





CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS


(unaudited)


|                                                 |                                                                                       |                                                                           |                                   |                                           |        |        |          |          |       |        |          |  
|------------------------------------------------ | ------------------------------------------------------------------------------------- | ------------------------------------------------------------------------- | --------------------------------- | ----------------------------------------- | ------ | ------ | -------- | -------- | ----- | ------ | -------- | -
|                                                 |                                                                                       | Six Months Ended                                                          |                                  
|                                                 |                                                                                       | June 30,                                                                  |                                  
|                                                 |                                                                                       |                                                                           |                                  
|                                                 |                                                                                       | 2005                                                                      |                                   |                                           | 2004   |       
|                                                 |                                                                                       |                                                                           |                                   |                                           |        |       
|                                                 |                                                                                       | (Dollars in thousands)                                                    |                                  
|Cash flows from operating activities:            |                                                                                       |                                                                           |                                   |                                           |        |        |          |         
|                                                 | Net income                                                                            |                                                                           | $                                 | 36,102                                    |        |        | $        | 31,508   |      
|                                                 | Adjustments to reconcile net income to net cash provided by
    operating activities: |                                                                           |                                   |                                           |        |        |          |          |      
|                                                 |                                                                                       | Provision for loan losses                                                 |                                   |                                           | 4,600  |        |          |          | 4,832 |       
|                                                 |                                                                                       | Deferred tax benefit                                                      |                                   |                                           | (3,344 | )      |          |          | (581  | )     
|                                                 |                                                                                       | Depreciation                                                              |                                   |                                           | 8,728  |        |          |          | 7,027 |       
|                                                 |                                                                                       | Realized (gain) loss on securities available for sale, net                |                                   |                                           | 15     |        |          |          | (1    | )     
|                                                 |                                                                                       | Gain on sale of premises and equipment, net                               |                                   |                                           | (650   | )      |          |          | (2    | )     
|                                                 |                                                                                       | Amortization and accretion of securities premiums and
    discounts, net |                                   |                                           | 1,580  |        |          |          | 3,189 |       
|                                                 |                                                                                       | Amortization of mortgage servicing rights                                 |                                   |                                           | 858    |        |          |          | 1,206 |       
|                                                 |                                                                                       | Amortization of computer software                                         |                                   |                                           | 3,828  |        |          |          | 3,125 |       
|                                                 |                                                                                       | Amortization of core deposit intangibles                                  |                                   |                                           | 4,419  |        |          |          | 1,911 |       
|                                                 |                                                                                       | Other amortization                                                        |                                   |                                           | 1,056  |        |          |          | 728   |       
|                                                 |                                                                                       | Income tax benefit from exercise of stock options                         |                                   |                                           | 614    |        |          |          | 1,880 |       
|                                                 |                                                                                       | Net change in:                                                            |                                   |                                           |        |        |          |          |       |       
|                                                 |                                                                                       |                                                                           | Loans held for sale               |                                           |        | (9,173 | )        |          |       | (1,030 | )       
|                                                 |                                                                                       |                                                                           | Other assets and liabilities, net |                                           |        | (4,865 | )        |          |       | (3,371 | )       
|                                                 |                                                                                       |                                                                           |                                   |                                           |        |       
|                                                 |                                                                                       |                                                                           |                                   | Net cash provided by operating activities |        |        | 43,768   |          |       |        | 50,421   |  
|                                                 |                                                                                       |                                                                           |                                   |                                           |        |       
|Cash flows from investing activities:            |                                                                                       |                                                                           |                                   |                                           |        |        |          |         
|                                                 | Proceeds from maturity and call of securities available for sale                      |                                                                           |                                   | 16,990                                    |        |        |          | 25,810   |      
|                                                 | Proceeds from sale of securities available for sale                                   |                                                                           |                                   | 248,195                                   |        |        |          | 559,839  |      
|                                                 | Principal paydowns of mortgage-backed securities available for
    sale               |                                                                           |                                   | 116,329                                   |        |        |          | 166,551  |      
|                                                 | Principal paydowns of mortgage-backed securities held to maturity                     |                                                                           |                                   | 6,976                                     |        |        |          |         |      
|                                                 | Purchase of securities available for sale                                             |                                                                           |                                   | (384,459                                  | )      |        |          | (834,392 | )    
|                                                 | Purchase of Federal Reserve Bank stock                                                |                                                                           |                                   | (6,713                                    | )      |        |          | (3,400   | )    
|                                                 | Purchase of Federal Home Loan Bank stock                                              |                                                                           |                                   | (13,096                                   | )      |        |          | (11,705  | )    
|                                                 | Proceeds from redemption of Federal Home Loan Bank stock                              |                                                                           |                                   | 21,654                                    |        |        |          | 15,102   |      
|                                                 | Net increase in loans held for investment                                             |                                                                           |                                   | (186,855                                  | )      |        |          | (269,608 | )    
|                                                 | Proceeds from sale of premises and equipment                                          |                                                                           |                                   | 2,604                                     |        |        |          | 733      |      
|                                                 | Purchase of premises and equipment                                                    |                                                                           |                                   | (20,379                                   | )      |        |          | (28,722  | )    
|                                                 | 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                                         |                                                                           |                                   | (1,964                                    | )      |        |          | (2,298   | )    
|                                                 |                                                                                       |                                                                           |                                   |                                           |        |       
|                                                 |                                                                                       |                                                                           |                                   | Net cash used in investing activities     |        |        | (251,005 | )        |       |        | (402,094 | )
|                                                 |                                                                                       |                                                                           |                                   |                                           |        |       
|Cash flows from financing activities:            |                                                                                       |                                                                           |                                   |                                           |        |        |          |         
|                                                 | Net increase in noninterest-bearing demand deposits                                   |                                                                           |                                   | 74,367                                    |        |        |          | 51,023   |      
|                                                 | Net increase in time deposits                                                         |                                                                           |                                   | 308,043                                   |        |        |          | 71,015   |      
|                                                 | Net increase (decrease) in other interest-bearing deposits                            |                                                                           |                                   | (99,577                                   | )      |        |          | 47,827   |      
|                                                 | Net increase (decrease) in short-term borrowings                                      |                                                                           |                                   | (83,355                                   | )      |        |          | 110,955  |      
|                                                 | Proceeds from long-term borrowings                                                    |                                                                           |                                   |                                          |        |        |          | 2,200    |      
|                                                 | Payments on long-term borrowings                                                      |                                                                           |                                   | (2,239                                    | )      |        |          | (100,219 | )    
|                                                 | Payments of cash dividends                                                            |                                                                           |                                   | (4,215                                    | )      |        |          | (4,124   | )    
|                                                 | Net proceeds from exercise of stock options                                           |                                                                           |                                   | 2,507                                     |        |        |          | 4,288    |      
|                                                 | Purchase of treasury stock                                                            |                                                                           |                                   | (67                                       | )      |        |          | (927     | )    
|                                                 |                                                                                       |                                                                           |                                   |                                           |        |       
|                                                 |                                                                                       |                                                                           |                                   | Net cash provided by financing activities |        |        | 195,464  |          |       |        | 182,038  |  
|                                                 |                                                                                       |                                                                           |                                   |                                           |        |       
|Net decrease in cash and cash equivalents        |                                                                                       |                                                                           | (11,773                           | )                                         |        |        | (169,635 | )       
|Cash and cash equivalents at beginning of period |                                                                                       |                                                                           | 341,975                           |                                           |        |        | 485,798  |         
|                                                 |                                                                                       |                                                                           |                                   |                                           |        |       
|Cash and cash equivalents at end of period       |                                                                                       | $                                                                         | 330,202                           |                                           |        | $      | 316,163  |         
|                                                 |                                                                                       |                                                                           |                                   |                                           |        |       



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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                               |   |        | Six Months Ended | 
|                                                   |             | June 30,                                         |   |        | June 30,         | 
|                                                   |             |                                                  |   |        |                  | 
|                                                   |             | 2005                                             |   |        | 2004             |  |   | 2005   |  |  | 2004 |       
|                                                   |             |                                                  |   |        |                  |  |   |        |  |  |      |       
|                                                   |             | (Dollars in thousands, except per share amounts) |  
|Net income                                         |             |                                                  |   |        |                  |  |   |        |  |  |      |        |  |  |   |       
|                                                   | As reported |                                                  | $ | 19,158 |                  |  | $ | 16,221 |  |  | $    | 36,102 |  |  | $ | 31,508 | 
|                                                   | Pro forma   |                                                  | $ | 18,393 |                  |  | $ | 15,668 |  |  | $    | 34,633 |  |  | $ | 30,349 | 
|Stock-based compensation cost, net of income taxes |             |                                                  |   |        |                  |  |   |        |  |  |      |        |  |  |   |       
|                                                   | As reported |                                                  | $ | 374    |                  |  | $ | 252    |  |  | $    | 686    |  |  | $ | 495    | 
|                                                   | Pro forma   |                                                  | $ | 1,139  |                  |  | $ | 805    |  |  | $    | 2,155  |  |  | $ | 1,654  | 
|Basic earnings per common share                    |             |                                                  |   |        |                  |  |   |        |  |  |      |        |  |  |   |       
|                                                   | As reported |                                                  | $ | 0.27   |                  |  | $ | 0.24   |  |  | $    | 0.51   |  |  | $ | 0.46   | 
|                                                   | Pro forma   |                                                  | $ | 0.26   |                  |  | $ | 0.23   |  |  | $    | 0.49   |  |  | $ | 0.44   | 
|Diluted earnings per common share                  |             |                                                  |   |        |                  |  |   |        |  |  |      |        |  |  |   |       
|                                                   | As reported |                                                  | $ | 0.27   |                  |  | $ | 0.23   |  |  | $    | 0.50   |  |  | $ | 0.45   | 
|                                                   | Pro forma   |                                                  | $ | 0.26   |                  |  | $ | 0.22   |  |  | $    | 0.48   |  |  | $ | 0.43   | 



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






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AMEGY BANCORPORATION, INC. AND SUBSIDIARIES


NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|                           |  |                        |          |   |            |   |          |  
|-------------------------- |  | ---------------------- | -------- | - | ---------- | - | -------- | -
|                           |  | 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  |  
|                           |  |                        |          |   |            |  





|                                                                               |  |                                   |        |  |                  |   |         | 
|------------------------------------------------------------------------------ |  | --------------------------------- | ------ |  | ---------------- | - | ------- | 
|                                                                               |  | Pro forma                         |        |  | Pro forma        |  
|                                                                               |  | Three Months Ended                |        |  | Six Months Ended |  
|                                                                               |  | June 30, 2004                     |        |  | June 30, 2004    |  
|                                                                               |  |                                   |        |  |                  |  
|                                                                               |  | (Dollars in thousands, except per |       
|                                                                               |  | share amounts)                    |       
|Net interest income after provision for loan losses and
    noninterest income |  | $                                 | 83,035 |  |                  | $ | 165,616 | 
|Income before income taxes                                                     |  |                                   | 25,573 |  |                  |   | 50,271  | 
|Net income                                                                     |  |                                   | 17,551 |  |                  |   | 34,325  | 
|Earnings per common share, basic                                               |  | $                                 | 0.26   |  |                  | $ | 0.50    | 
|Earnings per common share, diluted                                             |  | $                                 | 0.25   |  |                  | $ | 0.49    | 

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AMEGY BANCORPORATION, INC. AND SUBSIDIARIES


NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




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



|                    |                                       |                                     |                                   |                  |                   |        |   |       |        |           |                  |         |         |      |   |           |           |        |   |           |           |        |            |       |        |     |   |         |         |   |   |           |           |        | 
|------------------- | ------------------------------------- | ----------------------------------- | --------------------------------- | ---------------- | ----------------- | ------ | - | ----- | ------ | --------- | ---------------- | ------- | ------- | ---- | - | --------- | --------- | ------ | - | --------- | --------- | ------ | ---------- | ----- | ------ | --- | - | ------- | ------- | - | - | --------- | --------- | ------ | 
|                    |                                       | June 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 |                                     | $                                 | 427,185          |                   |        | $ | 542   |        |           | $                | (3,539  | )       |      | $ | 424,188   |           |        | $ | 388,061   |           |        | $          | 246   |        |     | $ | (2,623  | )       |   | $ | 385,684   |          
|                    | Mortgage-backed securities            |                                     |                                   | 1,169,943        |                   |        |   | 1,465 |        |           |                  | (14,769 | )       |      |   | 1,156,639 |           |        |   | 1,237,420 |           |        |            | 3,820 |        |     |   | (11,076 | )       |   |   | 1,230,164 |          
|                    | Municipal securities                  |                                     |                                   | 250,982          |                   |        |   | 8,067 |        |           |                  | (447    | )       |      |   | 258,602   |           |        |   | 246,705   |           |        |            | 7,564 |        |     |   | (1,392  | )       |   |   | 252,877   |          
|                    | Federal Reserve Bank stock            |                                     |                                   | 15,223           |                   |        |   |      |        |           |                  |        |         |      |   | 15,223    |           |        |   | 8,511     |           |        |            |      |        |     |   |        |         |   |   | 8,511     |          
|                    | Federal Home Loan Bank stock          |                                     |                                   | 24,216           |                   |        |   |      |        |           |                  |        |         |      |   | 24,216    |           |        |   | 32,772    |           |        |            |      |        |     |   |        |         |   |   | 32,772    |          
|                    | Other securities                      |                                     |                                   | 42,641           |                   |        |   | 12    |        |           |                  |        |         |      |   | 42,653    |           |        |   | 17,196    |           |        |            |      |        |     |   |        |         |   |   | 17,196    |          
|                    |                                       |                                     |                                   |                  |                   |        |   |       |        |           |                  |         |         |      |   |           |           |        |   |           |           |        |            |      
|                    |                                       | Total securities available for sale |                                   | $                | 1,930,190         |        |   | $     | 10,086 |           |                  | $       | (18,755 | )    |   | $         | 1,921,521 |        |   | $         | 1,930,665 |        |            | $     | 11,630 |     |   | $       | (15,091 | ) |   | $         | 1,927,204 |       
|                    |                                       |                                     |                                   |                  |                   |        |   |       |        |           |                  |         |         |      |   |           |           |        |   |           |           |        |            |      
|Held to maturity:   |                                       |                                     |                                   |                  |                   |        |   |       |        |           |                  |         |         |      |   |           |           |        |   |           |           |        |            |       |        |     |   |         |         |   |   |          
|                    | Mortgage-backed securities            |                                     | $                                 | 51,040           |                   |        | $ | 593   |        |           | $                |        |         |      | $ | 51,633    |           |        | $ | 58,033    |           |        | $          | 536   |        |     | $ |        |         |   | $ | 58,569    |          
|                    |                                       |                                     |                                   |                  |                   |        |   |       |        |           |                  |         |         |      |   |           |           |        |   |           |           |        |            |      
|                    |                                       |                                     | Total securities held to maturity |                  | $                 | 51,040 |   |       | $      | 593       |                  |         | $       |     |   |           | $         | 51,633 |   |           | $         | 58,033 |            |       | $      | 536 |   |         | $       |  |   |           | $         | 58,569 | 
|                    |                                       |                                     |                                   |                  |                   |        |   |       |        |           |                  |         |         |      |   |           |           |        |   |           |           |        |            |      



|                    |                                       |                                     |   |            |         |                        |       |            |            |   |      |         |         |            |   |         |         |   |   |           |           |  |   |         |         |  
|------------------- | ------------------------------------- | ----------------------------------- | - | ---------- | ------- | ---------------------- | ----- | ---------- | ---------- | - | ---- | ------- | ------- | ---------- | - | ------- | ------- | - | - | --------- | --------- |  | - | ------- | ------- | -
|                    |                                       |                                     |   |            |         | Greater Than 12 Months |       |            |            |   |     
|                    |                                       |                                     |   |            |         |                        |      
|                    |                                       | Less 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 |                                     | $ | 212,745    |         |                        | $     | (1,512     | )          |   | $    | 94,837  |         |            | $ | (2,027  | )       |   | $ | 307,582   |           |  | $ | (3,539  | )      
|                    | Mortgage-backed securities            |                                     |   | 565,673    |         |                        |       | (4,418     | )          |   |      | 467,760 |         |            |   | (10,351 | )       |   |   | 1,033,433 |           |  |   | (14,769 | )      
|                    | Municipal securities                  |                                     |   | 7,075      |         |                        |       | (20        | )          |   |      | 37,315  |         |            |   | (427    | )       |   |   | 44,390    |           |  |   | (447    | )      
|                    |                                       |                                     |   |            |         |                        |       |            |            |   |      |         |         |            |   |         |         |  
|                    |                                       | Total securities available for sale |   | $          | 785,493 |                        |       | $          | (5,950     | ) |      | $       | 599,912 |            |   | $       | (12,805 | ) |   | $         | 1,385,405 |  |   | $       | (18,755 | )
|                    |                                       |                                     |   |            |         |                        |       |            |            |   |      |         |         |            |   |         |         |  





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



12



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AMEGY BANCORPORATION, INC. AND SUBSIDIARIES


NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)










|                                                    |                           |                                   |   |            |                   |  |  |        |            |   |             |        |        |  |  |       |        |  
|--------------------------------------------------- | ------------------------- | --------------------------------- | - | ---------- | ----------------- |  |  | ------ | ---------- | - | ----------- | ------ | ------ |  |  | ----- | ------ | -
|                                                    |                           | June 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 |                                   | $ | 24,564     |                   |  |  | 42.98  | %          |   | $           | 26,285 |        |  |  | 45.12 | %     
|                                                    | Real estate:              |                                   |   |            |                   |  |  |        |            |   |             |        |        |  |  |       |       
|                                                    |                           | Construction and land development |   |            | 7,465             |  |  |        | 19.56      |   |             |        | 7,547  |  |  |       | 17.55  |  
|                                                    |                           | 1-4 family residential            |   |            | 8,356             |  |  |        | 16.11      |   |             |        | 6,569  |  |  |       | 16.06  |  
|                                                    |                           | Commercial                        |   |            | 5,435             |  |  |        | 16.63      |   |             |        | 5,778  |  |  |       | 16.65  |  
|                                                    |                           | Farmland                          |   |            | 195               |  |  |        | 0.23       |   |             |        | 156    |  |  |       | 0.30   |  
|                                                    |                           | Other                             |   |            | 713               |  |  |        | 1.63       |   |             |        | 868    |  |  |       | 1.39   |  
|                                                    | Consumer                  |                                   |   | 2,452      |                   |  |  | 2.86   |            |   |             | 2,205  |        |  |  | 2.93  |       
|                                                    |                           |                                   |   |            |                   |  |  |        |            |   |             |       
|                                                    |                           | Total allowance for loan losses   |   | $          | 49,180            |  |  |        | 100.00     | % |             | $      | 49,408 |  |  |       | 100.00 | %
|                                                    |                           |                                   |   |            |                   |  |  |        |            |   |             |       

13



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AMEGY BANCORPORATION, INC. AND SUBSIDIARIES


NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




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



|                                   |                                |                                                                   |        |   |                  |  |         |      |         |   |        |   |        |   |         |   |         |  
|---------------------------------- | ------------------------------ | ----------------------------------------------------------------- | ------ | - | ---------------- |  | ------- | ---- | ------- | - | ------ | - | ------ | - | ------- | - | ------- | -
|                                   |                                | Three Months Ended                                                |        |   | Six Months Ended | 
|                                   |                                | June 30,                                                          |        |   | June 30,         | 
|                                   |                                |                                                                   |        |   |                  | 
|                                   |                                | 2005                                                              |        |   | 2004             |  |         | 2005 |         |   | 2004   |  
|                                   |                                |                                                                   |        |   |                  |  |         |      |         |   |        |  
|Other comprehensive income (loss): |                                |                                                                   |        |   |                  |  |         |      |         |   |        |   |        |   |         |  
|                                   | Securities available for sale: |                                                                   |        |   |                  |  |         |      |         |   |        |   |        |   |         |   |        
|                                   |                                | Change in fair value during the period                            |        | $ | 24,160           |  |         | $    | (48,403 | ) |        | $ | (5,397 | ) |         | $ | (35,067 | )
|                                   |                                | Reclassification adjustment for (gains) losses included in income |        |   | 52               |  |         |      | (495    | ) |        |   | 189    |   |         |   | 256     |  
|                                   |                                |                                                                   |        |   |                  |  |         |      |         |   |        |  
|                                   |                                |                                                                   | 24,212 |   |                  |  | (48,898 | )    |         |   | (5,208 | ) |        |   | (34,811 | )
|Deferred tax effect                |                                |                                                                   | (8,474 | ) |                  |  | 17,113  |      |         |   | 1,816  |   |        |   | 12,185  |  
|                                   |                                |                                                                   |        |   |                  |  |         |      |         |   |        |  
|                                   |                                | Net other comprehensive income (loss)                             |        | $ | 15,738           |  |         | $    | (31,785 | ) |        | $ | (3,392 | ) |         | $ | (22,626 | )
|                                   |                                |                                                                   |        |   |                  |  |         |      |         |   |        |  



|                                                     |  |                        |        |   |              |   |        |  
|---------------------------------------------------- |  | ---------------------- | ------ | - | ------------ | - | ------ | -
|                                                     |  | June 30,               |        |   | December 31, |  
|                                                     |  | 2005                   |        |   | 2004         |  
|                                                     |  |                        |        |   |              |  
|                                                     |  | (Dollars in thousands) |       
|Net unrealized loss on securities available for sale |  | $                      | (5,642 | ) |              | $ | (2,250 | )
|Minimum pension liability                            |  |                        | (971   | ) |              |   | (971   | )
|                                                     |  |                        |        |   |              |  
|Total accumulated other comprehensive loss           |  | $                      | (6,613 | ) |              | $ | (3,221 | )
|                                                     |  |                        |        |   |              |  



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





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AMEGY BANCORPORATION, INC. AND SUBSIDIARIES


NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|                             |              |                        |       |      |                  |   |       |      |   |   |       |      |   |   |       |        |  
|---------------------------- | ------------ | ---------------------- | ----- | ---- | ---------------- | - | ----- | ---- | - | - | ----- | ---- | - | - | ----- | ------ | -
|                             |              | Three Months           |       |      | Six Months Ended |  
|                             |              | Ended June 30,         |       |      | June 30,         |  
|                             |              |                        |       |      |                  |  
|                             |              | 2005                   |       |      | 2004             |   |       | 2005 |   |   | 2004  |     
|                             |              |                        |       |      |                  |   |       |      |   |   |       |     
|                             |              | (Dollars in thousands) |      
|Balance, beginning of period |              | $                      | 7,357 |      |                  | $ | 7,926 |      |   | $ | 7,121 |      |   | $ | 8,299 |       
|                             | Originations |                        |       | 292  |                  |   |       | 286  |   |   |       | 703  |   |   |       | 500    |  
|                             | Purchases    |                        |       |     |                  |   |       |     |   |   |       | 287  |   |   |       |       |  
|                             | Amortization |                        |       | (396 | )                |   |       | (619 | ) |   |       | (858 | ) |   |       | (1,206 | )
|                             |              |                        |       |      |                  |   |       |      |   |   |       |     
|Balance, end of period       |              | $                      | 7,253 |      |                  | $ | 7,593 |      |   | $ | 7,253 |      |   | $ | 7,593 |       
|                             |              |                        |       |      |                  |   |       |      |   |   |       |     





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



|                                                               |                                                            |                                          |        |        |                  |   |        |        |  |   |        |        |  |   |        |        | 
|-------------------------------------------------------------- | ---------------------------------------------------------- | ---------------------------------------- | ------ | ------ | ---------------- | - | ------ | ------ |  | - | ------ | ------ |  | - | ------ | ------ | 
|                                                               |                                                            | Three Months Ended                       |        |        | Six Months Ended |  
|                                                               |                                                            | June 30,                                 |        |        | June 30,         |  
|                                                               |                                                            |                                          |        |        |                  |  
|                                                               |                                                            | 2005                                     |        |        | 2004             |   |        | 2005   |  |   | 2004   |       
|                                                               |                                                            |                                          |        |        |                  |   |        |        |  |   |        |       
|                                                               |                                                            | (In thousands, except per share amounts) |       
|Net income                                                     |                                                            | $                                        | 19,158 |        |                  | $ | 16,221 |        |  | $ | 36,102 |        |  | $ | 31,508 |       
|                                                               |                                                            |                                          |        |        |                  |   |        |        |  |   |        |       
|Divided by average common shares and common share equivalents: |                                                            |                                          |        |        |                  |   |        |        |  |   |        |        |  |   |        |       
|                                                               | Average common shares outstanding                          |                                          |        | 70,291 |                  |   |        | 68,746 |  |   |        | 70,206 |  |   |        | 68,646 | 
|                                                               | Average common shares issuable under the stock option plan |                                          |        | 1,240  |                  |   |        | 1,782  |  |   |        | 1,384  |  |   |        | 1,760  | 
|                                                               |                                                            |                                          |        |        |                  |   |        |        |  |   |        |       
|                                                               | Total average common shares and common share equivalents   |                                          |        | 71,531 |                  |   |        | 70,528 |  |   |        | 71,590 |  |   |        | 70,406 | 
|                                                               |                                                            |                                          |        |        |                  |   |        |        |  |   |        |       
|Basic earnings per common share                                |                                                            | $                                        | 0.27   |        |                  | $ | 0.24   |        |  | $ | 0.51   |        |  | $ | 0.46   |       
|                                                               |                                                            |                                          |        |        |                  |   |        |        |  |   |        |       
|Diluted earnings per common share                              |                                                            | $                                        | 0.27   |        |                  | $ | 0.23   |        |  | $ | 0.50   |        |  | $ | 0.45   |       
|                                                               |                                                            |                                          |        |        |                  |   |        |        |  |   |        |       





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



15



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AMEGY BANCORPORATION, INC. AND SUBSIDIARIES


NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)






|                           |  |                             |        |  |          |   |       |              |  |   |              |   |  |      |        |  |          |   |        |              |  |   |              |  |  |   |        |   |  |   |        | 
|-------------------------- |  | --------------------------- | ------ |  | -------- | - | ----- | ------------ |  | - | ------------ | - |  | ---- | ------ |  | -------- | - | ------ | ------------ |  | - | ------------ |  |  | - | ------ | - |  | - | ------ | 
|                           |  | Three Months Ended June 30, |       
|                           |  |                             |       
|                           |  | 2005                        |        |  | 2004     |  
|                           |  |                             |        |  |          |  
|                           |  | Bank                        |        |  | Mortgage |   |       | Eliminations |  |   | Consolidated |   |  | Bank |        |  | Mortgage |   |        | Eliminations |  |   | Consolidated | 
|                           |  |                             |        |  |          |   |       |              |  |   |              |   |  |      |        |  |          |   |        |              |  |   |              | 
|                           |  | (Dollars in thousands)      |       
|Interest income            |  | $                           | 89,756 |  |          | $ | 6,895 |              |  | $ | (3,118       | ) |  | $    | 93,533 |  |          | $ | 63,164 |              |  | $ | 3,504        |  |  | $ | (1,383 | ) |  | $ | 65,285 | 
|Interest expense           |  |                             | 31,149 |  |          |   | 3,118 |              |  |   | (3,118       | ) |  |      | 31,149 |  |          |   | 11,068 |              |  |   | 1,383        |  |  |   | (1,383 | ) |  |   | 11,068 | 
|                           |  |                             |        |  |          |   |       |              |  |   |              |   |  |      |        |  |          |   |        |              |  |   |              | 
|Net interest income        |  |                             | 58,607 |  |          |   | 3,777 |              |  |   |             |   |  |      | 62,384 |  |          |   | 52,096 |              |  |   | 2,121        |  |  |   |       |   |  |   | 54,217 | 
|Provision for loan losses  |  |                             | 1,400  |  |          |   | 100   |              |  |   |             |   |  |      | 1,500  |  |          |   | 1,899  |              |  |   | 1,024        |  |  |   |       |   |  |   | 2,923  | 
|Noninterest income         |  |                             | 30,421 |  |          |   | 1,145 |              |  |   |             |   |  |      | 31,566 |  |          |   | 21,417 |              |  |   | 1,097        |  |  |   |       |   |  |   | 22,514 | 
|Noninterest expense        |  |                             | 63,108 |  |          |   | 3,179 |              |  |   |             |   |  |      | 66,287 |  |          |   | 48,482 |              |  |   | 1,747        |  |  |   |       |   |  |   | 50,229 | 
|                           |  |                             |        |  |          |   |       |              |  |   |              |   |  |      |        |  |          |   |        |              |  |   |              | 
|Income before income taxes |  | $                           | 24,520 |  |          | $ | 1,643 |              |  | $ |             |   |  | $    | 26,163 |  |          | $ | 23,132 |              |  | $ | 447          |  |  | $ |       |   |  | $ | 23,579 | 
|                           |  |                             |        |  |          |   |       |              |  |   |              |   |  |      |        |  |          |   |        |              |  |   |              | 

|                              |  |                           |           |  |          |   |         |              |  |   |              |   |  |      |           |  |          |   |           |              |  |   |              |  |  |   |          |   |  |   |           | 
|----------------------------- |  | ------------------------- | --------- |  | -------- | - | ------- | ------------ |  | - | ------------ | - |  | ---- | --------- |  | -------- | - | --------- | ------------ |  | - | ------------ |  |  | - | -------- | - |  | - | --------- | 
|                              |  | Six Months Ended June 30, |          
|                              |  |                           |          
|                              |  | 2005                      |           |  | 2004     |  
|                              |  |                           |           |  |          |  
|                              |  | Bank                      |           |  | Mortgage |   |         | Eliminations |  |   | Consolidated |   |  | Bank |           |  | Mortgage |   |           | Eliminations |  |   | Consolidated | 
|                              |  |                           |           |  |          |   |         |              |  |   |              |   |  |      |           |  |          |   |           |              |  |   |              | 
|                              |  | (Dollars in thousands)    |          
|Interest income               |  | $                         | 173,485   |  |          | $ | 13,137  |              |  | $ | (5,776       | ) |  | $    | 180,846   |  |          | $ | 124,484   |              |  | $ | 7,050        |  |  | $ | (2,649   | ) |  | $ | 128,885   | 
|Interest expense              |  |                           | 56,265    |  |          |   | 5,776   |              |  |   | (5,776       | ) |  |      | 56,265    |  |          |   | 22,070    |              |  |   | 2,649        |  |  |   | (2,649   | ) |  |   | 22,070    | 
|                              |  |                           |           |  |          |   |         |              |  |   |              |   |  |      |           |  |          |   |           |              |  |   |              | 
|Net interest income           |  |                           | 117,220   |  |          |   | 7,361   |              |  |   |             |   |  |      | 124,581   |  |          |   | 102,414   |              |  |   | 4,401        |  |  |   |         |   |  |   | 106,815   | 
|Provision for loan
    losses |  |                           | 4,305     |  |          |   | 295     |              |  |   |             |   |  |      | 4,600     |  |          |   | 3,743     |              |  |   | 1,089        |  |  |   |         |   |  |   | 4,832     | 
|Noninterest income            |  |                           | 57,952    |  |          |   | 2,386   |              |  |   |             |   |  |      | 60,338    |  |          |   | 42,341    |              |  |   | 2,061        |  |  |   |         |   |  |   | 44,402    | 
|Noninterest expense           |  |                           | 124,787   |  |          |   | 5,672   |              |  |   |             |   |  |      | 130,459   |  |          |   | 96,739    |              |  |   | 3,591        |  |  |   |         |   |  |   | 100,330   | 
|                              |  |                           |           |  |          |   |         |              |  |   |              |   |  |      |           |  |          |   |           |              |  |   |              | 
|Income before income taxes    |  | $                         | 46,080    |  |          | $ | 3,780   |              |  | $ |             |   |  | $    | 49,860    |  |          | $ | 44,273    |              |  | $ | 1,782        |  |  | $ |         |   |  | $ | 46,055    | 
|                              |  |                           |           |  |          |   |         |              |  |   |              |   |  |      |           |  |          |   |           |              |  |   |              | 
|Total assets                  |  | $                         | 7,700,359 |  |          | $ | 467,787 |              |  | $ | (429,446     | ) |  | $    | 7,738,700 |  |          | $ | 6,311,259 |              |  | $ | 318,087      |  |  | $ | (287,904 | ) |  | $ | 6,341,442 | 
|                              |  |                           |           |  |          |   |         |              |  |   |              |   |  |      |           |  |          |   |           |              |  |   |              | 





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



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AMEGY BANCORPORATION, INC. AND SUBSIDIARIES


NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)






|                                                             |  |                        |           |  |              |   |           | 
|------------------------------------------------------------ |  | ---------------------- | --------- |  | ------------ | - | --------- | 
|                                                             |  | June 30,               |           |  | December 31, |  
|                                                             |  | 2005                   |           |  | 2004         |  
|                                                             |  | Contract               |           |  | Contract     |  
|                                                             |  | Amount                 |           |  | Amount       |  
|                                                             |  |                        |           |  |              |  
|                                                             |  | (Dollars in thousands) |          
|Unfunded loan commitments including unfunded lines of credit |  | $                      | 2,867,897 |  |              | $ | 2,720,246 | 
|Standby letters of credit                                    |  |                        | 418,004   |  |              |   | 352,555   | 
|Commercial letters of credit                                 |  |                        | 18,287    |  |              |   | 19,496    | 
|Unfunded commitments to unconsolidated investees             |  |                        | 22,515    |  |              |   | 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                       |                        |         |             |             |   |        | (4,419 | )
|                           |                                    |                        |         |              |             |  
|Balance, June 30, 2005     |                                    | $                      | 150,426 |              |             | $ | 22,827 |       
|                           |                                    |                        |         |              |             |  

17



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AMEGY BANCORPORATION, INC. AND SUBSIDIARIES


NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|               |  |                        |       | 
|-------------- |  | ---------------------- | ----- | 
|               |  | Core Deposit           |      
|               |  | Intangibles            |      
|               |  |                        |      
|               |  | (Dollars in thousands) |      
|Remaining 2005 |  | $                      | 3,559 | 
|2006           |  |                        | 5,432 | 
|2007           |  |                        | 4,141 | 
|2008           |  |                        | 3,137 | 
|2009           |  |                        | 2,212 | 
|Thereafter     |  |                        | 4,346 | 



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



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



|                       |  |          |            |  |          |           |            |             |              |   |            |  |  |               |         |          |      |  |                          |      |  |  |       |  |  |  |            | 
|---------------------- |  | -------- | ---------- |  | -------- | --------- | ---------- | ----------- | ------------ | - | ---------- |  |  | ------------- | ------- | -------- | ---- |  | ------------------------ | ---- |  |  | ----- |  |  |  | ---------- | 
|                       |  |          |            |  |          | Trust     |            |             | Junior       |   |            |  |  | Interest      |         |          |     
|                       |  |          |            |  |          | Preferred |            |             | Subordinated |   |            |  |  | Rate at       |         |          |     
|                       |  | Issuance |            |  | Maturity |           |            | Securities  |              |   | Debt Owned |  |  |               |         | June 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% |      |  |  | 6.27% |  |  |  | 12/17/2008 | 
|Statutory Trust II     |  |          | 9/24/2004  |  |          |           | 10/7/2034  |             |              |   | 35,000     |  |  |               | 36,083  |          |      |  | 3-month LIBOR plus 1.90% |      |  |  | 5.04% |  |  |  | 10/7/2009  | 
|Statutory Trust III    |  |          | 12/13/2004 |  |          |           | 12/15/2034 |             |              |   | 60,000     |  |  |               | 61,856  |          |      |  | 3-month LIBOR plus 1.78% |      |  |  | 5.19% |  |  |  | 12/15/2009 | 
|                       |  |          |            |  |          |           |            |             |              |   |            |  |  |               |         |          |      |  |                          |      | 
|                       |  |          |            |  |          |           |            |             |              | $ | 145,000    |  |  | $             | 149,486 |          |      |  |                          |      |  |  |       |  |  |  |            | 
|                       |  |          |            |  |          |           |            |             |              |   |            |  |  |               |         |          |      |  |                          |      | 







18



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AMEGY BANCORPORATION, INC. AND SUBSIDIARIES


NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




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





|    |                           
|--- | --------------------------
|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 | 
|                                |                     |             |        

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AMEGY BANCORPORATION, INC. AND SUBSIDIARIES


NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




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



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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




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Results of Operations




|                                              |  |                    |        |   |                  |   |        |          |  |   |          |   |  |   |         |  
|--------------------------------------------- |  | ------------------ | ------ | - | ---------------- | - | ------ | -------- |  | - | -------- | - |  | - | ------- | -
|                                              |  | Three Months Ended |        |   | Six Months Ended |  
|                                              |  |                    |        |   |                  |  
|                                              |  | June 30,           |        |   | June 30,         |   |        | June 30, |  |   | June 30, |  
|                                              |  | 2005               |        |   | 2004             |   |        | 2005     |  |   | 2004     |  
|                                              |  |                    |        |   |                  |   |        |          |  |   |          |  
|Taxable  equivalent net interest income      |  | $                  | 63,944 |   |                  | $ | 55,618 |          |  | $ | 127,687  |   |  | $ | 109,257 |  
|Taxable  equivalent adjustment               |  |                    | (1,560 | ) |                  |   | (1,401 | )        |  |   | (3,106   | ) |  |   | (2,442  | )
|                                              |  |                    |        |   |                  |   |        |          |  |   |          |  
|Net interest income, as reported              |  |                    | 62,384 |   |                  |   | 54,217 |          |  |   | 124,581  |   |  |   | 106,815 |  
|Provision for loan losses                     |  |                    | 1,500  |   |                  |   | 2,923  |          |  |   | 4,600    |   |  |   | 4,832   |  
|Noninterest income                            |  |                    | 31,566 |   |                  |   | 22,514 |          |  |   | 60,338   |   |  |   | 44,402  |  
|Noninterest expenses                          |  |                    | 66,287 |   |                  |   | 50,229 |          |  |   | 130,459  |   |  |   | 100,330 |  
|                                              |  |                    |        |   |                  |   |        |          |  |   |          |  
|Income before income taxes                    |  |                    | 26,163 |   |                  |   | 23,579 |          |  |   | 49,860   |   |  |   | 46,055  |  
|Provision for income taxes                    |  |                    | 7,005  |   |                  |   | 7,358  |          |  |   | 13,758   |   |  |   | 14,547  |  
|                                              |  |                    |        |   |                  |   |        |          |  |   |          |  
|Net income                                    |  | $                  | 19,158 |   |                  | $ | 16,221 |          |  | $ | 36,102   |   |  | $ | 31,508  |  
|                                              |  |                    |        |   |                  |   |        |          |  |   |          |  
|Basic earnings per common share               |  | $                  | 0.27   |   |                  | $ | 0.24   |          |  | $ | 0.51     |   |  | $ | 0.46    |  
|Diluted earnings per common share             |  | $                  | 0.27   |   |                  | $ | 0.23   |          |  | $ | 0.50     |   |  | $ | 0.45    |  
|Return on average assets                      |  |                    | 1.00   | % |                  |   | 1.06   | %        |  |   | 0.96     | % |  |   | 1.04    | %
|Return on average common shareholders equity |  |                    | 12.88  | % |                  |   | 12.66  | %        |  |   | 12.28    | % |  |   | 12.35   | %







22



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23



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









24



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|                                       |                                                |                                            |           |           |           |   |        |         |        |  |             |      |      |          |           |           |           |   |        |        |        |  |      |      |      |  
|-------------------------------------- | ---------------------------------------------- | ------------------------------------------ | --------- | --------- | --------- | - | ------ | ------- | ------ |  | ----------- | ---- | ---- | -------- | --------- | --------- | --------- | - | ------ | ------ | ------ |  | ---- | ---- | ---- | -
|                                       |                                                | Three Months Ended June 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                                          |                                            | $         | 4,761,471 |           |   | $      | 73,114  |        |  |             | 6.16 | %    |          | $         | 3,873,174 |           |   | $      | 50,677 |        |  |      | 5.26 | %   
|                                       | Securities                                     |                                            |           | 1,996,238 |           |   |        | 21,641  |        |  |             | 4.35 |      |          |           | 1,628,789 |           |   |        | 15,890 |        |  |      | 3.92 |     
|                                       | Federal funds sold and other                   |                                            |           | 43,514    |           |   |        | 338     |        |  |             | 3.12 |      |          |           | 42,375    |           |   |        | 119    |        |  |      | 113  |     
|                                       |                                                |                                            |           |           |           |   |        |         |        |  |             |      |      |          |           |           |           |  
|                                       |                                                | Total interest-earning assets              |           |           | 6,801,223 |   |        |         | 95,093 |  |             |      | 5.61 | %        |           |           | 5,544,338 |   |        |        | 66,686 |  |      |      | 4.84 | %
|                                       |                                                |                                            |           |           |           |   |        |         |        |  |             |      |      |          |           |           |           |  
|Less allowance for loan losses         |                                                |                                            | (50,833   | )         |           |   |        |         |        |  |             |      |      |          | (49,658   | )         |           |   |        |        |        |  |      |     
|                                       |                                                |                                            |           |           |           |   |        |         |        |  |             |      |      |          |           |           |           |  
|                                       |                                                |                                            | 6,750,390 |           |           |   |        |         |        |  |             |      |      |          | 5,494,680 |           |           |   |        |        |        |  |      |     
|Noninterest-earning assets             |                                                |                                            | 906,569   |           |           |   |        |         |        |  |             |      |      |          | 686,900   |           |           |   |        |        |        |  |      |     
|                                       |                                                |                                            |           |           |           |   |        |         |        |  |             |      |      |          |           |           |           |  
|                                       |                                                | Total assets                               |           | $         | 7,656,959 |   |        |         |        |  |             |      |      |          |           | $         | 6,181,580 |   |        |        |        |  |      |      |      |  
|                                       |                                                |                                            |           |           |           |   |        |         |        |  |             |      |      |          |           |           |           |  
|Interest-bearing liabilities:          |                                                |                                            |           |           |           |   |        |         |        |  |             |      |      |          |           |           |           |   |        |        |        |  |      |     
|                                       | Money market and savings deposits              |                                            | $         | 2,317,533 |           |   |        | 9,040   |        |  |             | 1.56 | %    |          | $         | 2,052,257 |           |   |        | 3,353  |        |  |      | 0.66 | %   
|                                       | Time deposits                                  |                                            |           | 1,564,356 |           |   |        | 11,448  |        |  |             | 2.94 |      |          |           | 1,065,937 |           |   |        | 5,055  |        |  |      | 1.91 |     
|                                       | Repurchase agreements and other borrowed funds |                                            |           | 1,372,552 |           |   |        | 10,661  |        |  |             | 3.12 |      |          |           | 940,165   |           |   |        | 2,660  |        |  |      | 1.14 |     
|                                       |                                                |                                            |           |           |           |   |        |         |        |  |             |      |      |          |           |           |           |  
|                                       |                                                | Total interest-bearing liabilities         |           |           | 5,254,441 |   |        |         | 31,149 |  |             |      | 2.38 | %        |           |           | 4,058,359 |   |        |        | 11,068 |  |      |      | 1.10 | %
|                                       |                                                |                                            |           |           |           |   |        |         |        |  |             |      |      |          |           |           |           |  
|Noninterest-bearing liabilities:       |                                                |                                            |           |           |           |   |        |         |        |  |             |      |      |          |           |           |           |   |        |        |        |  |      |     
|                                       | Noninterest-bearing demand deposits            |                                            |           | 1,765,836 |           |   |        |         |        |  |             |      |      |          |           | 1,574,075 |           |   |        |        |        |  |      |      |     
|                                       | Other liabilities                              |                                            |           | 40,155    |           |   |        |         |        |  |             |      |      |          |           | 33,824    |           |   |        |        |        |  |      |      |     
|                                       |                                                |                                            |           |           |           |   |        |         |        |  |             |      |      |          |           |           |           |  
|                                       |                                                | Total liabilities                          |           |           | 7,060,432 |   |        |         |        |  |             |      |      |          |           |           | 5,666,258 |   |        |        |        |  |      |      |      |  
|Shareholders equity                   |                                                |                                            | 596,527   |           |           |   |        |         |        |  |             |      |      |          | 515,322   |           |           |   |        |        |        |  |      |     
|                                       |                                                |                                            |           |           |           |   |        |         |        |  |             |      |      |          |           |           |           |  
|                                       |                                                | Total liabilities and shareholders equity |           | $         | 7,656,959 |   |        |         |        |  |             |      |      |          |           | $         | 6,181,580 |   |        |        |        |  |      |      |      |  
|                                       |                                                |                                            |           |           |           |   |        |         |        |  |             |      |      |          |           |           |           |  
|Taxable-equivalent net interest income |                                                |                                            |           |           |           | $ | 63,944 |         |        |  |             |      |      |          |           |           |           | $ | 55,618 |        |        |  |      |     
|                                       |                                                |                                            |           |           |           |   |        |         |        |  |             |      |      |          |           |           |           |  
|Taxable-equivalent net interest spread |                                                |                                            |           |           |           |   |        |         |        |  | 3.23        | %    |      |          |           |           |           |   |        |        |        |  | 3.74 | %   
|                                       |                                                |                                            |           |           |           |   |        |         |        |  |             |      |      |          |           |           |           |  
|Taxable-equivalent net interest margin |                                                |                                            |           |           |           |   |        |         |        |  | 3.77        | %    |      |          |           |           |           |   |        |        |        |  | 4.03 | %   
|                                       |                                                |                                            |           |           |           |   |        |         |        |  |             |      |      |          |           |           |           |  

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|    |                                                                                                                                                                                                                                                                                                                                                                                                             
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(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. The following is a reconciliation of
    taxable-equivalent net interest income to net interest income,
    as reported:

|                                       |                                  |                        |        |        |      |   |        |        | 
|-------------------------------------- | -------------------------------- | ---------------------- | ------ | ------ | ---- | - | ------ | ------ | 
|                                       |                                  | Three Months Ended     |       
|                                       |                                  | June 30,               |       
|                                       |                                  |                        |       
|                                       |                                  | 2005                   |        |        | 2004 |  
|                                       |                                  |                        |        |        |      |  
|                                       |                                  | (Dollars in thousands) |       
|Taxable-equivalent net interest income |                                  | $                      | 63,944 |        |      | $ | 55,618 |       
|Taxable-equivalent adjustment          |                                  |                        | (1,560 | )      |      |   | (1,401 | )     
|                                       |                                  |                        |        |        |      |  
|                                       | Net interest income, as reported |                        | $      | 62,384 |      |   | $      | 54,217 | 
|                                       |                                  |                        |        |        |      |  

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|                                       |                                                |                                            |           |           |           |   |         |         |         |  |             |      |      |          |           |           |           |   |         |        |         |  |      |      |      |  
|-------------------------------------- | ---------------------------------------------- | ------------------------------------------ | --------- | --------- | --------- | - | ------- | ------- | ------- |  | ----------- | ---- | ---- | -------- | --------- | --------- | --------- | - | ------- | ------ | ------- |  | ---- | ---- | ---- | -
|                                       |                                                | Six Months Ended June 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                                          |                                            | $         | 4,722,238 |           |   | $       | 140,527 |         |  |             | 6.00 | %    |          | $         | 3,785,214 |           |   | $       | 99,678 |         |  |      | 5.30 | %   
|                                       | Securities                                     |                                            |           | 1,976,870 |           |   |         | 42,804  |         |  |             | 4.37 |      |          |           | 1,592,290 |           |   |         | 31,341 |         |  |      | 3.96 |     
|                                       | Federal funds sold and other                   |                                            |           | 43,827    |           |   |         | 621     |         |  |             | 2.86 |      |          |           | 58,481    |           |   |         | 308    |         |  |      | 1.06 |     
|                                       |                                                |                                            |           |           |           |   |         |         |         |  |             |      |      |          |           |           |           |  
|                                       |                                                | Total interest-earning assets              |           |           | 6,742,935 |   |         |         | 183,952 |  |             |      | 5.50 | %        |           |           | 5,435,985 |   |         |        | 131,327 |  |      |      | 4.86 | %
|                                       |                                                |                                            |           |           |           |   |         |         |         |  |             |      |      |          |           |           |           |  
|Less allowance for loan losses         |                                                |                                            | (50,748   | )         |           |   |         |         |         |  |             |      |      |          | (47,714   | )         |           |   |         |        |         |  |      |     
|                                       |                                                |                                            |           |           |           |   |         |         |         |  |             |      |      |          |           |           |           |  
|                                       |                                                |                                            | 6,692,187 |           |           |   |         |         |         |  |             |      |      |          | 5,388,271 |           |           |   |         |        |         |  |      |     
|Noninterest-earning assets             |                                                |                                            | 914,526   |           |           |   |         |         |         |  |             |      |      |          | 716,284   |           |           |   |         |        |         |  |      |     
|                                       |                                                |                                            |           |           |           |   |         |         |         |  |             |      |      |          |           |           |           |  
|                                       |                                                | Total assets                               |           | $         | 7,606,713 |   |         |         |         |  |             |      |      |          |           | $         | 6,104,555 |   |         |        |         |  |      |      |      |  
|                                       |                                                |                                            |           |           |           |   |         |         |         |  |             |      |      |          |           |           |           |  
|Interest-bearing liabilities:          |                                                |                                            |           |           |           |   |         |         |         |  |             |      |      |          |           |           |           |   |         |        |         |  |      |     
|                                       | Money market and savings deposits              |                                            | $         | 2,341,021 |           |   |         | 16,053  |         |  |             | 1.38 | %    |          | $         | 2,012,728 |           |   |         | 6,561  |         |  |      | 0.66 | %   
|                                       | Time deposits                                  |                                            |           | 1,447,413 |           |   |         | 19,930  |         |  |             | 2.78 |      |          |           | 1,035,563 |           |   |         | 9,917  |         |  |      | 1.93 |     
|                                       | Repurchase agreements and other borrowed funds |                                            |           | 1,425,922 |           |   |         | 20,282  |         |  |             | 2.87 |      |          |           | 974,197   |           |   |         | 5,592  |         |  |      | 1.15 |     
|                                       |                                                |                                            |           |           |           |   |         |         |         |  |             |      |      |          |           |           |           |  
|                                       |                                                | Total interest-bearing liabilities         |           |           | 5,214,356 |   |         |         | 56,265  |  |             |      | 2.18 | %        |           |           | 4,022,488 |   |         |        | 22,070  |  |      |      | 1.10 | %
|                                       |                                                |                                            |           |           |           |   |         |         |         |  |             |      |      |          |           |           |           |  
|Noninterest-bearing liabilities:       |                                                |                                            |           |           |           |   |         |         |         |  |             |      |      |          |           |           |           |   |         |        |         |  |      |     
|                                       | Noninterest-bearing demand deposits            |                                            |           | 1,762,810 |           |   |         |         |         |  |             |      |      |          |           | 1,532,569 |           |   |         |        |         |  |      |      |     
|                                       | Other liabilities                              |                                            |           | 36,635    |           |   |         |         |         |  |             |      |      |          |           | 36,491    |           |   |         |        |         |  |      |      |     
|                                       |                                                |                                            |           |           |           |   |         |         |         |  |             |      |      |          |           |           |           |  
|                                       |                                                | Total liabilities                          |           |           | 7,013,801 |   |         |         |         |  |             |      |      |          |           |           | 5,591,548 |   |         |        |         |  |      |      |      |  
|Shareholders equity                   |                                                |                                            | 592,912   |           |           |   |         |         |         |  |             |      |      |          | 513,007   |           |           |   |         |        |         |  |      |     
|                                       |                                                |                                            |           |           |           |   |         |         |         |  |             |      |      |          |           |           |           |  
|                                       |                                                | Total liabilities and shareholders equity |           | $         | 7,606,713 |   |         |         |         |  |             |      |      |          |           | $         | 6,104,555 |   |         |        |         |  |      |      |      |  
|                                       |                                                |                                            |           |           |           |   |         |         |         |  |             |      |      |          |           |           |           |  
|Taxable-equivalent net interest income |                                                |                                            |           |           |           | $ | 127,687 |         |         |  |             |      |      |          |           |           |           | $ | 109,257 |        |         |  |      |     
|                                       |                                                |                                            |           |           |           |   |         |         |         |  |             |      |      |          |           |           |           |  
|Taxable-equivalent net interest spread |                                                |                                            |           |           |           |   |         |         |         |  | 3.32        | %    |      |          |           |           |           |   |         |        |         |  | 3.76 | %   
|                                       |                                                |                                            |           |           |           |   |         |         |         |  |             |      |      |          |           |           |           |  
|Taxable-equivalent net interest margin |                                                |                                            |           |           |           |   |         |         |         |  | 3.82        | %    |      |          |           |           |           |   |         |        |         |  | 4.04 | %   
|                                       |                                                |                                            |           |           |           |   |         |         |         |  |             |      |      |          |           |           |           |  






|    |                                                                                                                                                                                                                                                                                                                                                                                                             
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(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. The following is a reconciliation of
    taxable-equivalent net interest income to net interest income,
    as reported:

|                                       |                                  |                        |         |         |      |   |         |         | 
|-------------------------------------- | -------------------------------- | ---------------------- | ------- | ------- | ---- | - | ------- | ------- | 
|                                       |                                  | Three Months Ended     |        
|                                       |                                  | June 30,               |        
|                                       |                                  |                        |        
|                                       |                                  | 2005                   |         |         | 2004 |  
|                                       |                                  |                        |         |         |      |  
|                                       |                                  | (Dollars in thousands) |        
|Taxable-equivalent net interest income |                                  | $                      | 127,687 |         |      | $ | 109,257 |        
|Taxable-equivalent adjustment          |                                  |                        | (3,106  | )       |      |   | (2,442  | )      
|                                       |                                  |                        |         |         |      |  
|                                       | Net interest income, as reported |                        | $       | 124,581 |      |   | $       | 106,815 | 
|                                       |                                  |                        |         |         |      |  

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|                                                              |                                                                 |                            |        |        |                            |   |        |        |  |   |        |        |  |      |        |        |      |   |        |        |  |   |      |      |   |   |        |        | 
|------------------------------------------------------------- | --------------------------------------------------------------- | -------------------------- | ------ | ------ | -------------------------- | - | ------ | ------ |  | - | ------ | ------ |  | ---- | ------ | ------ | ---- | - | ------ | ------ |  | - | ---- | ---- | - | - | ------ | ------ | 
|                                                              |                                                                 | Three Months Ended         |        |        | Six Months Ended           |  
|                                                              |                                                                 | June 30, 2005 vs. 2004     |        |        | June 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                                                         |                                                                 | $                          | 11,727 |        |                            | $ | 10,710 |        |  | $ | 22,437 |        |  | $    | 24,770 |        |      | $ | 16,627 |        |  | $ | (548 | )    |   | $ | 40,849 |       
|Securities                                                    |                                                                 |                            | 3,622  |        |                            |   | 2,129  |        |  |   | 5,751  |        |  |      | 7,604  |        |      |   | 4,031  |        |  |   | (172 | )    |   |   | 11,463 |       
|Federal funds sold and other                                  |                                                                 |                            | 3      |        |                            |   | 216    |        |  |   | 219    |        |  |      | (77    | )      |      |   | 392    |        |  |   | (2   | )    |   |   | 313    |       
|                                                              |                                                                 |                            |        |        |                            |   |        |        |  |   |        |        |  |      |        |        |      |   |        |        | 
|                                                              | Total increase (decrease) in taxable-equivalent interest income |                            |        | 15,352 |                            |   |        | 13,055 |  |   |        | 28,407 |  |      |        | 32,297 |      |   |        | 21,050 |  |   |      | (722 | ) |   |        | 52,625 | 
|                                                              |                                                                 |                            |        |        |                            |   |        |        |  |   |        |        |  |      |        |        |      |   |        |        | 
|Interest-bearing liabilities:                                 |                                                                 |                            |        |        |                            |   |        |        |  |   |        |        |  |      |        |        |      |   |        |        |  |   |      |      |   |   |        |       
|Money market and savings deposits                             |                                                                 |                            | 436    |        |                            |   | 5,252  |        |  |   | 5,688  |        |  |      | 1,069  |        |      |   | 8,459  |        |  |   | (36  | )    |   |   | 9,492  |       
|Time deposits                                                 |                                                                 |                            | 2,375  |        |                            |   | 4,018  |        |  |   | 6,393  |        |  |      | 3,944  |        |      |   | 6,123  |        |  |   | (54  | )    |   |   | 10,013 |       
|Repurchase agreements and borrowed funds                      |                                                                 |                            | 1,228  |        |                            |   | 6,773  |        |  |   | 8,001  |        |  |      | 2,589  |        |      |   | 12,132 |        |  |   | (31  | )    |   |   | 14,690 |       
|                                                              |                                                                 |                            |        |        |                            |   |        |        |  |   |        |        |  |      |        |        |      |   |        |        | 
|                                                              | Total increase (decrease) in interest expense                   |                            |        | 4,039  |                            |   |        | 16,043 |  |   |        | 20,082 |  |      |        | 7,602  |      |   |        | 26,714 |  |   |      | (121 | ) |   |        | 34,195 | 
|                                                              |                                                                 |                            |        |        |                            |   |        |        |  |   |        |        |  |      |        |        |      |   |        |        | 
|Increase (decrease) in taxable-equivalent net interest income |                                                                 | $                          | 11,313 |        |                            | $ | (2,988 | )      |  | $ | 8,325  |        |  | $    | 24,695 |        |      | $ | (5,664 | )      |  | $ | (601 | )    |   | $ | 18,430 |       
|                                                              |                                                                 |                            |        |        |                            |   |        |        |  |   |        |        |  |      |        |        |      |   |        |        | 



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



28



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##### Table of Contents





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



|                                             |  |                             |        |   |                           |   |       |          |  |   |        |   |  |          |        |   |          |   |       |      |  |   |          |   |  |          |        |   |      |   |       |          |  |   |          |   |  |   |        |  |  |   |       |  |  |   |        | 
|-------------------------------------------- |  | --------------------------- | ------ | - | ------------------------- | - | ----- | -------- |  | - | ------ | - |  | -------- | ------ | - | -------- | - | ----- | ---- |  | - | -------- | - |  | -------- | ------ | - | ---- | - | ----- | -------- |  | - | -------- | - |  | - | ------ |  |  | - | ----- |  |  | - | ------ | 
|                                             |  | Three Months Ended June 30, |        |   | Six Months Ended June 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          |  | $                           | 10,662 |   |                           | $ |      |          |  | $ | 10,662 |   |  | $        | 11,190 |   |          | $ |      |      |  | $ | 11,190   |   |  | $        | 22,009 |   |      | $ |      |          |  | $ | 22,009   |   |  | $ | 22,230 |  |  | $ |      |  |  | $ | 22,230 | 
|Investment services                          |  |                             | 4,642  |   |                           |   |      |          |  |   | 4,642  |   |  |          | 2,885  |   |          |   |      |      |  |   | 2,885    |   |  |          | 8,247  |   |      |   |      |          |  |   | 8,247    |   |  |   | 5,855  |  |  |   |      |  |  |   | 5,855  | 
|Factoring fee income                         |  |                             | 1,252  |   |                           |   |      |          |  |   | 1,252  |   |  |          | 891    |   |          |   |      |      |  |   | 891      |   |  |          | 2,326  |   |      |   |      |          |  |   | 2,326    |   |  |   | 1,845  |  |  |   |      |  |  |   | 1,845  | 
|Loan fee income                              |  |                             | 1,719  |   |                           |   | 530   |          |  |   | 2,249  |   |  |          | 768    |   |          |   | 381   |      |  |   | 1,149    |   |  |          | 3,137  |   |      |   | 1,279 |          |  |   | 4,416    |   |  |   | 1,421  |  |  |   | 852   |  |  |   | 2,273  | 
|Bank-owned life insurance income             |  |                             | 1,946  |   |                           |   |      |          |  |   | 1,946  |   |  |          | 1,906  |   |          |   |      |      |  |   | 1,906    |   |  |          | 3,582  |   |      |   |      |          |  |   | 3,582    |   |  |   | 3,397  |  |  |   |      |  |  |   | 3,397  | 
|Letters of credit fee income                 |  |                             | 1,555  |   |                           |   |      |          |  |   | 1,555  |   |  |          | 1,006  |   |          |   |      |      |  |   | 1,006    |   |  |          | 2,794  |   |      |   |      |          |  |   | 2,794    |   |  |   | 1,868  |  |  |   |      |  |  |   | 1,868  | 
|Mortgage servicing fees, net of amortization |  |                             | 12     |   |                           |   | 414   |          |  |   | 426    |   |  |          |       |   |          |   | 168   |      |  |   | 168      |   |  |          | 12     |   |      |   | 774   |          |  |   | 786      |   |  |   |       |  |  |   | 358   |  |  |   | 358    | 
|Gain on sale of loans, net                   |  |                             | 356    |   |                           |   | 79    |          |  |   | 435    |   |  |          |       |   |          |   | 215   |      |  |   | 215      |   |  |          | 1,027  |   |      |   | 102   |          |  |   | 1,129    |   |  |   | 65     |  |  |   | 385   |  |  |   | 450    | 
|Gain (loss) on sale of securities, net       |  |                             | (17    | ) |                           |   |      |          |  |   | (17    | ) |  |          | (25    | ) |          |   |      |      |  |   | (25      | ) |  |          | (15    | ) |      |   |      |          |  |   | (15      | ) |  |   | 1      |  |  |   |      |  |  |   | 1      | 
|Other income                                 |  |                             | 8,294  |   |                           |   | 122   |          |  |   | 8,416  |   |  |          | 2,796  |   |          |   | 333   |      |  |   | 3,129    |   |  |          | 14,833 |   |      |   | 231   |          |  |   | 15,064   |   |  |   | 5,659  |  |  |   | 466   |  |  |   | 6,125  | 
|                                             |  |                             |        |   |                           |   |       |          |  |   |        |   |  |          |        |   |          |   |       |      |  |   |          |   |  |          |        |   |      |   |       |          |  |   |          |  
|Total noninterest income                     |  | $                           | 30,421 |   |                           | $ | 1,145 |          |  | $ | 31,566 |   |  | $        | 21,417 |   |          | $ | 1,097 |      |  | $ | 22,514   |   |  | $        | 57,952 |   |      | $ | 2,386 |          |  | $ | 60,338   |   |  | $ | 42,341 |  |  | $ | 2,061 |  |  | $ | 44,402 | 
|                                             |  |                             |        |   |                           |   |       |          |  |   |        |   |  |          |        |   |          |   |       |      |  |   |          |   |  |          |        |   |      |   |       |          |  |   |          |  

Banking Segment.






29



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##### Table of Contents







Mortgage Segment.






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



|                                             |                            |                    |        |        |                  |   |        |          |  |   |          |         |  |   |        |         | 
|-------------------------------------------- | -------------------------- | ------------------ | ------ | ------ | ---------------- | - | ------ | -------- |  | - | -------- | ------- |  | - | ------ | ------- | 
|                                             |                            | Three Months Ended |        |        | Six Months Ended |  
|                                             |                            |                    |        |        |                  |  
|                                             |                            | June 30,           |        |        | June 30,         |   |        | June 30, |  |   | June 30, |        
|                                             |                            | 2005               |        |        | 2004             |   |        | 2005     |  |   | 2004     |        
|                                             |                            |                    |        |        |                  |   |        |          |  |   |          |        
|Salaries and employee benefits               |                            | $                  | 34,739 |        |                  | $ | 28,458 |          |  | $ | 69,468   |         |  | $ | 56,439 |        
|Occupancy                                    |                            |                    | 10,780 |        |                  |   | 8,887  |          |  |   | 21,384   |         |  |   | 17,145 |        
|Marketing and advertising                    |                            |                    | 2,113  |        |                  |   | 1,044  |          |  |   | 4,041    |         |  |   | 2,093  |        
|Professional services                        |                            |                    | 3,716  |        |                  |   | 2,780  |          |  |   | 7,035    |         |  |   | 5,100  |        
|Core deposit intangible amortization expense |                            |                    | 2,171  |        |                  |   | 1,008  |          |  |   | 4,419    |         |  |   | 1,911  |        
|Other operating expenses                     |                            |                    | 12,768 |        |                  |   | 8,052  |          |  |   | 24,112   |         |  |   | 17,642 |        
|                                             |                            |                    |        |        |                  |   |        |          |  |   |          |        
|                                             | Total noninterest expenses |                    | $      | 66,287 |                  |   | $      | 50,229   |  |   | $        | 130,459 |  |   | $      | 100,330 | 
|                                             |                            |                    |        |        |                  |   |        |          |  |   |          |        



30



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31



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##### Table of Contents







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



Financial Condition




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





|                          |                                   |                                 |           |         |                   |  |       |        |        |   |           |         |           |  |       |       |        |  
|------------------------- | --------------------------------- | ------------------------------- | --------- | ------- | ----------------- |  | ----- | ------ | ------ | - | --------- | ------- | --------- |  | ----- | ----- | ------ | -
|                          |                                   | June 30, 2005                   |           |         | December 31, 2004 | 
|                          |                                   |                                 |           |         |                   | 
|                          |                                   | Amount                          |           |         | Percent           |  |       | Amount |        |   | Percent   |        
|                          |                                   |                                 |           |         |                   |  |       |        |        |   |           |        
|                          |                                   | (Dollars in thousands)          |          
|Commercial and industrial |                                   |                                 |           |         |                   |  |       |        |        |   |           |         |           |  |       |      
|Real estate:              |                                   | $                               | 2,029,166 |         |                   |  | 42.98 | %      |        | $ | 2,048,460 |         |           |  | 45.12 | %    
|                          | Construction and land development |                                 |           | 923,627 |                   |  |       | 19.56  |        |   |           | 796,541 |           |  |       | 17.55 |       
|                          | 1-4 family residential            |                                 |           | 760,587 |                   |  |       | 16.11  |        |   |           | 729,173 |           |  |       | 16.06 |       
|                          | Commercial                        |                                 |           | 785,310 |                   |  |       | 16.63  |        |   |           | 755,929 |           |  |       | 16.65 |       
|                          | Farmland                          |                                 |           | 10,953  |                   |  |       | 0.23   |        |   |           | 13,414  |           |  |       | 0.30  |       
|                          | Other                             |                                 |           | 76,773  |                   |  |       | 1.63   |        |   |           | 62,889  |           |  |       | 1.39  |       
|Consumer                  |                                   |                                 | 134,864   |         |                   |  | 2.86  |        |        |   | 133,172   |         |           |  | 2.93  |      
|                          |                                   |                                 |           |         |                   |  |       |        |        |   |           |        
|                          |                                   | Total loans held for investment |           | $       | 4,721,280         |  |       |        | 100.00 | % |           | $       | 4,539,578 |  |       |       | 100.00 | %
|                          |                                   |                                 |           |         |                   |  |       |        |        |   |           |        



32



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33



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|                                              |       |                        |           |           |            |   |           |            |  |   |         |         |  |   |           |           | 
|--------------------------------------------- | ----- | ---------------------- | --------- | --------- | ---------- | - | --------- | ---------- |  | - | ------- | ------- |  | - | --------- | --------- | 
|                                              |       | June 30, 2005          |          
|                                              |       |                        |          
|                                              |       |                        |           | After One |            |   |          
|                                              |       | One Year               |           |           | Through    |   |           | After      |  |   |        
|                                              |       | or Less                |           |           | Five Years |   |           | Five Years |  |   | Total   |        
|                                              |       |                        |           |           |            |   |           |            |  |   |         |        
|                                              |       | (Dollars in thousands) |          
|Commercial and industrial                     |       | $                      | 813,097   |           |            | $ | 952,401   |            |  | $ | 263,668 |         |  | $ | 2,029,166 |          
|Real estate construction and land development |       |                        | 471,592   |           |            |   | 430,253   |            |  |   | 21,782  |         |  |   | 923,627   |          
|                                              |       |                        |           |           |            |   |           |            |  |   |         |        
|                                              | Total |                        | $         | 1,284,689 |            |   | $         | 1,382,654  |  |   | $       | 285,450 |  |   | $         | 2,952,793 | 
|                                              |       |                        |           |           |            |   |           |            |  |   |         |        
|Loans with a fixed interest rate              |       | $                      | 121,606   |           |            | $ | 334,418   |            |  | $ | 93,317  |         |  | $ | 549,341   |          
|Loans with a floating interest rate           |       |                        | 1,163,083 |           |            |   | 1,048,236 |            |  |   | 192,133 |         |  |   | 2,403,452 |          
|                                              |       |                        |           |           |            |   |           |            |  |   |         |        
|                                              | Total |                        | $         | 1,284,689 |            |   | $         | 1,382,654  |  |   | $       | 285,450 |  |   | $         | 2,952,793 | 
|                                              |       |                        |           |           |            |   |           |            |  |   |         |        



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





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





|                                                             |  |                        |           |  |              |   |           | 
|------------------------------------------------------------ |  | ---------------------- | --------- |  | ------------ | - | --------- | 
|                                                             |  | June 30,               |           |  | December 31, |  
|                                                             |  | 2005                   |           |  | 2004         |  
|                                                             |  | Contract               |           |  | Contract     |  
|                                                             |  | Amount                 |           |  | Amount       |  
|                                                             |  |                        |           |  |              |  
|                                                             |  | (Dollars in thousands) |          
|Unfunded loan commitments including unfunded lines of credit |  | $                      | 2,867,897 |  |              | $ | 2,720,246 | 
|Standby letters of credit                                    |  |                        | 418,004   |  |              |   | 352,555   | 
|Commercial letters of credit                                 |  |                        | 18,287    |  |              |   | 19,496    | 
|Unfunded commitments to unconsolidated investees             |  |                        | 22,515    |  |              |   | 12,621    | 



34



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##### Table of Contents







| |                  
| | -----------------
| | 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.


35



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##### Table of Contents







Accounting by Creditors for
Impairment of a Loan
















36



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##### Table of Contents





|                                                            |                                          |                           |                                   |        |                  |      |        |        |      |        |        |        |        |      |        |        |        |        |  
|----------------------------------------------------------- | ---------------------------------------- | ------------------------- | --------------------------------- | ------ | ---------------- | ---- | ------ | ------ | ---- | ------ | ------ | ------ | ------ | ---- | ------ | ------ | ------ | ------ | -
|                                                            |                                          | Three Months Ended        |                                   |        | Six Months Ended |     
|                                                            |                                          | June 30,                  |                                   |        | June 30,         |     
|                                                            |                                          |                           |                                   |        |                  |     
|                                                            |                                          | 2005                      |                                   |        | 2004             |      |        | 2005   |      |        | 2004   |       
|                                                            |                                          |                           |                                   |        |                  |      |        |        |      |        |        |       
|                                                            |                                          | (Dollars in thousands)    |                                  
|Allowance for loan losses, beginning balance                |                                          | $                         | 49,291                            |        |                  | $    | 46,583 |        |      | $      | 49,408 |        |        | $    | 41,611 |       
|Provision for loan losses                                   |                                          |                           | 1,500                             |        |                  |      | 2,923  |        |      |        | 4,600  |        |        |      | 4,832  |       
|Charge-offs:                                                |                                          |                           |                                   |        |                  |      |        |        |      |        |        |        |        |      |        |       
|                                                            |                                          | Commercial and industrial |                                   |        | (1,412           | )    |        |        | (735 | )      |        |        | (5,282 | )    |        |        | (1,446 | )     
|                                                            |                                          | Real estate:              |                                   |        |                  |      |        |        |      |        |        |        |        |      |        |        |        |       
|                                                            |                                          |                           | Construction and land development |        |                  |     |        |        |      |       |        |        |        |     |        |        |        |       |  
|                                                            |                                          |                           | 1-4 family residential            |        |                  | (144 | )      |        |      | (593   | )      |        |        | (463 | )      |        |        | (686   | )
|                                                            |                                          |                           | Commercial                        |        |                  | (342 | )      |        |      | (2,018 | )      |        |        | (342 | )      |        |        | (2,018 | )
|                                                            |                                          |                           | Farmland                          |        |                  |     |        |        |      |       |        |        |        |     |        |        |        |       |  
|                                                            |                                          |                           | Other                             |        |                  |     |        |        |      |       |        |        |        |     |        |        |        |       |  
|                                                            |                                          | Consumer                  |                                   |        | (190             | )    |        |        | (402 | )      |        |        | (528   | )    |        |        | (980   | )     
|                                                            |                                          |                           |                                   |        |                  |      |        |        |      |        |        |       
|Total charge-offs                                           |                                          |                           | (2,088                            | )      |                  |      | (3,748 | )      |      |        | (6,615 | )      |        |      | (5,130 | )     
|                                                            |                                          |                           |                                   |        |                  |      |        |        |      |        |        |       
|Recoveries:                                                 |                                          |                           |                                   |        |                  |      |        |        |      |        |        |        |        |      |        |       
|                                                            |                                          | Commercial and industrial |                                   |        | 145              |      |        |        | 18   |        |        |        | 1,222  |      |        |        | 461    |       
|                                                            |                                          | Real estate:              |                                   |        |                  |      |        |        |      |        |        |        |        |      |        |        |        |       
|                                                            |                                          |                           | Construction and land development |        |                  |     |        |        |      |       |        |        |        |     |        |        |        |       |  
|                                                            |                                          |                           | 1-4 family residential            |        |                  | 43   |        |        |      |       |        |        |        | 106  |        |        |        |       |  
|                                                            |                                          |                           | Commercial                        |        |                  |     |        |        |      |       |        |        |        |     |        |        |        |       |  
|                                                            |                                          |                           | Farmland                          |        |                  |     |        |        |      |       |        |        |        |     |        |        |        |       |  
|                                                            |                                          |                           | Other                             |        |                  | 114  |        |        |      |       |        |        |        | 119  |        |        |        | 1,700  |  
|                                                            |                                          | Consumer                  |                                   |        | 175              |      |        |        | 151  |        |        |        | 340    |      |        |        | 337    |       
|                                                            |                                          |                           |                                   |        |                  |      |        |        |      |        |        |       
|Total recoveries                                            |                                          |                           | 477                               |        |                  |      | 169    |        |      |        | 1,787  |        |        |      | 2,498  |       
|                                                            |                                          |                           |                                   |        |                  |      |        |        |      |        |        |       
|Net charge-offs                                             |                                          |                           | (1,611                            | )      |                  |      | (3,579 | )      |      |        | (4,828 | )      |        |      | (2,632 | )     
|Allowance acquired through mergers and acquisitions         |                                          |                           |                                  |        |                  |      |       |        |      |        |       |        |        |      | 2,116  |       
|                                                            |                                          |                           |                                   |        |                  |      |        |        |      |        |        |       
|Allowance for loan losses, ending balance                   |                                          |                           | 49,180                            |        |                  |      | 45,927 |        |      |        | 49,180 |        |        |      | 45,927 |       
|                                                            |                                          |                           |                                   |        |                  |      |        |        |      |        |        |       
|Reserve for unfunded lending commitments, beginning balance |                                          |                           | 1,905                             |        |                  |      | 1,488  |        |      |        | 1,851  |        |        |      | 1,397  |       
|Provision for unfunded lending commitments                  |                                          |                           | 54                                |        |                  |      | 77     |        |      |        | 108    |        |        |      | 168    |       
|                                                            |                                          |                           |                                   |        |                  |      |        |        |      |        |        |       
|Reserve for unfunded lending commitments, ending balance    |                                          |                           | 1,959                             |        |                  |      | 1,565  |        |      |        | 1,959  |        |        |      | 1,565  |       
|                                                            |                                          |                           |                                   |        |                  |      |        |        |      |        |        |       
|Allowance for credit losses                                 |                                          | $                         | 51,139                            |        |                  | $    | 47,492 |        |      | $      | 51,139 |        |        | $    | 47,492 |       
|                                                            |                                          |                           |                                   |        |                  |      |        |        |      |        |        |       
|Allowance for loan losses:                                  |                                          |                           |                                   |        |                  |      |        |        |      |        |        |        |        |      |        |       
|                                                            | as a % of period-end loans               |                           |                                   | 1.02   | %                |      |        | 1.17   | %    |        |        | 1.02   | %      |      |        | 1.17   | %     
|                                                            | as a % of period-end nonperforming loans |                           |                                   | 347.61 | %                |      |        | 368.21 | %    |        |        | 347.61 | %      |      |        | 368.21 | %     
|Allowance for credit losses:                                |                                          |                           |                                   |        |                  |      |        |        |      |        |        |        |        |      |        |       
|                                                            | as a % of period-end loans               |                           |                                   | 1.06   | %                |      |        | 1.21   | %    |        |        | 1.06   | %      |      |        | 1.21   | %     
|Net charge-offs as a % of average loans                     |                                          |                           | 0.14                              | %      |                  |      | 0.38   | %      |      |        | 0.21   | %      |        |      | 0.14   | %     

37



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|                                                    |                           |                        |                                   |            |                   |        |  |        |            |        |             |        |       |        |  |       |      |        |  
|--------------------------------------------------- | ------------------------- | ---------------------- | --------------------------------- | ---------- | ----------------- | ------ |  | ------ | ---------- | ------ | ----------- | ------ | ----- | ------ |  | ----- | ---- | ------ | -
|                                                    |                           | June 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 |                        | $                                 | 24,564     |                   |        |  | 42.98  | %          |        | $           | 26,285 |       |        |  | 45.12 | %   
|                                                    | Real estate:              |                        |                                   |            |                   |        |  |        |            |        |             |        |       |        |  |       |     
|                                                    |                           |                        | Construction and land development |            |                   | 7,465  |  |        |            | 19.56  |             |        |       | 7,547  |  |       |      | 17.55  |  
|                                                    |                           |                        | 1-4 family residential            |            |                   | 8,356  |  |        |            | 16.11  |             |        |       | 6,569  |  |       |      | 16.06  |  
|                                                    |                           |                        | Commercial                        |            |                   | 5,435  |  |        |            | 16.63  |             |        |       | 5,778  |  |       |      | 16.65  |  
|                                                    |                           |                        | Farmland                          |            |                   | 195    |  |        |            | 0.23   |             |        |       | 156    |  |       |      | 0.30   |  
|                                                    |                           |                        | Other                             |            |                   | 713    |  |        |            | 1.63   |             |        |       | 868    |  |       |      | 1.39   |  
|                                                    |                           | Consumer               |                                   |            | 2,452             |        |  |        | 2.86       |        |             |        | 2,205 |        |  |       | 2.93 |       
|                                                    |                           |                        |                                   |            |                   |        |  |        |            |        |             |       
|                                                    |                           |                        | Total allowance for loan losses   |            | $                 | 49,180 |  |        |            | 100.00 | %           |        | $     | 49,408 |  |       |      | 100.00 | %
|                                                    |                           |                        |                                   |            |                   |        |  |        |            |        |             |       



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





|                                                          |                            |                        |        |        |              |   |        |        | 
|--------------------------------------------------------- | -------------------------- | ---------------------- | ------ | ------ | ------------ | - | ------ | ------ | 
|                                                          |                            | June 30,               |        |        | December 31, |  
|                                                          |                            | 2005                   |        |        | 2004         |  
|                                                          |                            |                        |        |        |              |  
|                                                          |                            | (Dollars in thousands) |       
|Nonaccrual loans                                          |                            | $                      | 12,180 |        |              | $ | 14,174 |       
|Accruing loans 90 or more days past due                   |                            |                        | 1,968  |        |              |   | 2,052  |       
|Restructured loans                                        |                            |                        |       |        |              |   |       |       
|Other real estate and foreclosed property                 |                            |                        | 6,807  |        |              |   | 8,887  |       
|                                                          |                            |                        |        |        |              |  
|                                                          | Total nonperforming assets |                        | $      | 20,955 |              |   | $      | 25,113 | 
|                                                          |                            |                        |        |        |              |  
|Nonperforming assets to total loans and other real estate |                            |                        | 0.44   | %      |              |   | 0.55   | %     



38



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|                                                      |                                             |                        |        |        |              |   |        |        | 
|----------------------------------------------------- | ------------------------------------------- | ---------------------- | ------ | ------ | ------------ | - | ------ | ------ | 
|                                                      |                                             | June 30,               |        |        | December 31, |  
|                                                      |                                             | 2005                   |        |        | 2004         |  
|                                                      |                                             |                        |        |        |              |  
|                                                      |                                             | (Dollars in thousands) |       
|Impaired loans with no SFAS No. 114 valuation reserve |                                             | $                      | 3,590  |        |              | $ | 4,342  |       
|Impaired loans with a SFAS No. 114 valuation reserve  |                                             |                        | 14,214 |        |              |   | 20,944 |       
|                                                      |                                             |                        |        |        |              |  
|                                                      | Total recorded investment in impaired loans |                        | $      | 17,804 |              |   | $      | 25,286 | 
|                                                      |                                             |                        |        |        |              |  
|Valuation allowance related to impaired loans         |                                             | $                      | 3,959  |        |              | $ | 5,848  |       
|                                                      |                                             |                        |        |        |              |  





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



39



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|                    |                                       |                                     |   |                  |                   |  |   |       |        |           |                  |         |         |      |   |           |           |  |   |           |           |  |            |       |        |  |   |         |         |   |   |           |           | 
|------------------- | ------------------------------------- | ----------------------------------- | - | ---------------- | ----------------- |  | - | ----- | ------ | --------- | ---------------- | ------- | ------- | ---- | - | --------- | --------- |  | - | --------- | --------- |  | ---------- | ----- | ------ |  | - | ------- | ------- | - | - | --------- | --------- | 
|                    |                                       | June 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 |                                     | $ | 427,185          |                   |  | $ | 542   |        |           | $                | (3,539  | )       |      | $ | 424,188   |           |  | $ | 388,061   |           |  | $          | 246   |        |  | $ | (2,623  | )       |   | $ | 385,684   |          
|                    | Mortgage-backed securities            |                                     |   | 1,169,943        |                   |  |   | 1,465 |        |           |                  | (14,769 | )       |      |   | 1,156,639 |           |  |   | 1,237,420 |           |  |            | 3,820 |        |  |   | (11,076 | )       |   |   | 1,230,164 |          
|                    | Municipal securities                  |                                     |   | 250,982          |                   |  |   | 8,067 |        |           |                  | (447    | )       |      |   | 258,602   |           |  |   | 246,705   |           |  |            | 7,564 |        |  |   | (1,392  | )       |   |   | 252,877   |          
|                    | Federal Reserve Bank stock            |                                     |   | 15,223           |                   |  |   |      |        |           |                  |        |         |      |   | 15,223    |           |  |   | 8,511     |           |  |            |      |        |  |   |        |         |   |   | 8,511     |          
|                    | Federal Home Loan Bank stock          |                                     |   | 24,216           |                   |  |   |      |        |           |                  |        |         |      |   | 24,216    |           |  |   | 32,772    |           |  |            |      |        |  |   |        |         |   |   | 32,772    |          
|                    | Other securities                      |                                     |   | 42,641           |                   |  |   | 12    |        |           |                  |        |         |      |   | 42,653    |           |  |   | 17,196    |           |  |            |      |        |  |   |        |         |   |   | 17,196    |          
|                    |                                       |                                     |   |                  |                   |  |   |       |        |           |                  |         |         |      |   |           |           |  |   |           |           |  |            |      
|                    |                                       | Total securities available for sale |   | $                | 1,930,190         |  |   | $     | 10,086 |           |                  | $       | (18,755 | )    |   | $         | 1,921,521 |  |   | $         | 1,930,665 |  |            | $     | 11,630 |  |   | $       | (15,091 | ) |   | $         | 1,927,204 | 
|                    |                                       |                                     |   |                  |                   |  |   |       |        |           |                  |         |         |      |   |           |           |  |   |           |           |  |            |      
|Held to maturity:   |                                       |                                     |   |                  |                   |  |   |       |        |           |                  |         |         |      |   |           |           |  |   |           |           |  |            |       |        |  |   |         |         |   |   |          
|                    | Mortgage-backed securities            |                                     | $ | 51,040           |                   |  | $ | 593   |        |           | $                |        |         |      | $ | 51,633    |           |  | $ | 58,033    |           |  | $          | 536   |        |  | $ |        |         |   | $ | 58,569    |          
|                    |                                       |                                     |   |                  |                   |  |   |       |        |           |                  |         |         |      |   |           |           |  |   |           |           |  |            |      
|                    |                                       | Total securities held to maturity   |   | $                | 51,040            |  |   | $     | 593    |           |                  | $       |        |      |   | $         | 51,633    |  |   | $         | 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 |                                     | $ | 212,745    |                        |  | $ | (1,512     | )          |   | $    | 94,837  |         |            | $ | (2,027  | )       |   | $ | 307,582   |           |  | $ | (3,539  | )      
|                    | Mortgage-backed securities            |                                     |   | 565,673    |                        |  |   | (4,418     | )          |   |      | 467,760 |         |            |   | (10,351 | )       |   |   | 1,033,433 |           |  |   | (14,769 | )      
|                    | Municipal securities                  |                                     |   | 7,075      |                        |  |   | (20        | )          |   |      | 37,315  |         |            |   | (427    | )       |   |   | 44,390    |           |  |   | (447    | )      
|                    |                                       |                                     |   |            |                        |  |   |            |            |   |      |         |         |            |   |         |         |  
|                    |                                       | Total securities available for sale |   | $          | 785,493                |  |   | $          | (5,950     | ) |      | $       | 599,912 |            |   | $       | (12,805 | ) |   | $         | 1,385,405 |  |   | $       | (18,755 | )
|                    |                                       |                                     |   |            |                        |  |   |            |            |   |      |         |         |            |   |         |         |  







40



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|                                      |                                     |                        |        |                    |                   |  |                      |                  |   |   |                 |           |  |      |      |      |           |   |         |         |  |  |          |      |   |       |         |         |          |  |      |      |   |   |           |           |  |  |      |      |  
|------------------------------------- | ----------------------------------- | ---------------------- | ------ | ------------------ | ----------------- |  | -------------------- | ---------------- | - | - | --------------- | --------- |  | ---- | ---- | ---- | --------- | - | ------- | ------- |  |  | -------- | ---- | - | ----- | ------- | ------- | -------- |  | ---- | ---- | - | - | --------- | --------- |  |  | ---- | ---- | -
|                                      |                                     | June 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 |                                     | $                      | 1,990  |                    |                   |  | 2.56                 | %                |   | $ | 399,100         |           |  |      | 3.78 | %    |           | $ | 26,095  |         |  |  | 4.10     | %    |   | $     |        |         |          |  |     | %    |   | $ | 427,185   |           |  |  | 3.80 | %   
|Mortgage-backed securities            |                                     |                        | 29,007 |                    |                   |  | 4.92                 |                  |   |   | 984,161         |           |  |      | 4.16 |      |           |   | 132,187 |         |  |  | 4.36     |      |   |       | 24,588  |         |          |  | 4.01 |      |   |   | 1,169,943 |           |  |  | 4.20 |     
|Municipal securities                  |                                     |                        | 350    |                    |                   |  | 4.73                 |                  |   |   | 615             |           |  |      | 4.80 |      |           |   | 34,813  |         |  |  | 4.09     |      |   |       | 215,204 |         |          |  | 4.34 |      |   |   | 250,982   |           |  |  | 4.30 |     
|Federal Reserve Bank stock            |                                     |                        | 15,223 |                    |                   |  | 6.00                 |                  |   |   |                |           |  |      |     |      |           |   |        |         |  |  |         |      |   |       |        |         |          |  |     |      |   |   | 15,223    |           |  |  | 6.00 |     
|Federal Home Loan Bank stock          |                                     |                        | 24,216 |                    |                   |  | 2.95                 |                  |   |   |                |           |  |      |     |      |           |   |        |         |  |  |         |      |   |       |        |         |          |  |     |      |   |   | 24,216    |           |  |  | 2.95 |     
|Other securities                      |                                     |                        | 42,641 |                    |                   |  | 2.74                 |                  |   |   |                |           |  |      |     |      |           |   |        |         |  |  |         |      |   |       |        |         |          |  |     |      |   |   | 42,641    |           |  |  | 2.74 |     
|Federal funds sold                    |                                     |                        | 21,188 |                    |                   |  | 3.48                 |                  |   |   |                |           |  |      |     |      |           |   |        |         |  |  |         |      |   |       |        |         |          |  |     |      |   |   | 21,188    |           |  |  | 3.48 |     
|Interest-bearing deposits             |                                     |                        | 7,586  |                    |                   |  | 3.30                 |                  |   |   |                |           |  |      |     |      |           |   |        |         |  |  |         |      |   |       |        |         |          |  |     |      |   |   | 7,586     |           |  |  | 3.30 |     
|                                      |                                     |                        |        |                    |                   |  |                      |                  |   |   |                 |           |  |      |      |      |           |   |         |         |  |  |          |      |   |       |         |         |          | 
|                                      | Total securities available for sale |                        | $      | 142,201            |                   |  |                      | 3.71             | % |   | $               | 1,383,876 |  |      |      | 4.05 | %         |   | $       | 193,095 |  |  |          | 4.27 | % |       | $       | 239,792 |          |  |      | 4.30 | % |   | $         | 1,958,964 |  |  |      | 4.08 | %
|                                      |                                     |                        |        |                    |                   |  |                      |                  |   |   |                 |           |  |      |      |      |           |   |         |         |  |  |          |      |   |       |         |         |          | 
|Held to maturity:                     |                                     |                        |        |                    |                   |  |                      |                  |   |   |                 |           |  |      |      |      |           |   |         |         |  |  |          |      |   |       |         |         |          |  |      |      |   |   |           |           |  |  |      |     
|Mortgage-backed securities            |                                     | $                      |       |                    |                   |  |                     | %                |   | $ | 51,040          |           |  |      | 5.13 | %    |           | $ |        |         |  |  |         | %    |   | $     |        |         |          |  |     | %    |   | $ | 51,040    |           |  |  | 5.13 | %   
|                                      |                                     |                        |        |                    |                   |  |                      |                  |   |   |                 |           |  |      |      |      |           |   |         |         |  |  |          |      |   |       |         |         |          | 
|                                      | Total securities held to maturity   |                        | $      |                   |                   |  |                      |                 | % |   | $               | 51,040    |  |      |      | 5.13 | %         |   | $       |        |  |  |          |     | % |       | $       |        |          |  |      |     | % |   | $         | 51,040    |  |  |      | 5.13 | %
|                                      |                                     |                        |        |                    |                   |  |                      |                  |   |   |                 |           |  |      |      |      |           |   |         |         |  |  |          |      |   |       |         |         |          | 






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

41



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



|                                          |  |                        |         |  |              |   |         | 
|----------------------------------------- |  | ---------------------- | ------- |  | ------------ | - | ------- | 
|                                          |  | June 30,               |         |  | December 31, |  
|                                          |  | 2005                   |         |  | 2004         |  
|                                          |  |                        |         |  |              |  
|                                          |  | (Dollars in thousands) |        
|Other real estate and foreclosed property |  | $                      | 6,807   |  |              | $ | 8,887   | 
|Deferred income taxes                     |  |                        | 494     |  |              |   |        | 
|Bankers acceptances                      |  |                        | 1,596   |  |              |   | 429     | 
|Investment in unconsolidated investees    |  |                        | 10,511  |  |              |   | 9,671   | 
|Cash value of Bank-owned life insurance   |  |                        | 179,798 |  |              |   | 127,189 | 
|Factored receivables                      |  |                        | 41,281  |  |              |   | 35,126  | 
|Mortgage servicing rights, net            |  |                        | 7,252   |  |              |   | 7,121   | 
|Other                                     |  |                        | 23,768  |  |              |   | 20,659  | 
|                                          |  |                        |         |  |              |  
|                                          |  | $                      | 271,507 |  |              | $ | 209,082 | 
|                                          |  |                        |         |  |              |  





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









42



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##### Table of Contents





|                                 |                |                        |           |           |                   |  |      |        |  |   |           |           |  |  |      |   | 
|-------------------------------- | -------------- | ---------------------- | --------- | --------- | ----------------- |  | ---- | ------ |  | - | --------- | --------- |  |  | ---- | - | 
|                                 |                | June 30, 2005          |           |           | December 31, 2004 | 
|                                 |                |                        |           |           |                   | 
|                                 |                | Amount                 |           |           | Rate              |  |      | Amount |  |   | Rate      |          
|                                 |                |                        |           |           |                   |  |      |        |  |   |           |          
|                                 |                | (Dollars in thousands) |          
|Interest-bearing demand          |                | $                      | 101,921   |           |                   |  | 0.66 | %      |  | $ | 81,286    |           |  |  | 0.38 | %
|Regular savings                  |                |                        | 211,895   |           |                   |  | 0.45 |        |  |   | 158,030   |           |  |  | 0.30 |  
|Premium yield                    |                |                        | 1,095,174 |           |                   |  | 1.70 |        |  |   | 1,011,355 |           |  |  | 0.92 |  
|Money market savings             |                |                        | 932,031   |           |                   |  | 1.30 |        |  |   | 876,408   |           |  |  | 0.80 |  
|Time deposits less than $100,000 |                |                        | 283,729   |           |                   |  | 2.68 |        |  |   | 279,653   |           |  |  | 2.44 |  
|Time deposits $100,000 and over  |                |                        | 1,069,591 |           |                   |  | 2.80 |        |  |   | 730,845   |           |  |  | 1.86 |  
|IRAs, QRPs and other           |                |                        | 94,093    |           |                   |  | 2.83 |        |  |   | 95,358    |           |  |  | 2.51 |  
|                                 |                |                        |           |           |                   |  |      |        |  |   |           |          
|Total interest-bearing deposits  |                |                        | 3,788,434 |           |                   |  | 1.92 | %      |  |   | 3,232,935 |           |  |  | 1.23 | %
|                                 |                |                        |           |           |                   |  |      |        |  |   |           |          
|Noninterest-bearing deposits     |                |                        | 1,762,810 |           |                   |  |      |        |  |   | 1,611,636 |           |  |  |      |  
|                                 |                |                        |           |           |                   |  |      |        |  |   |           |          
|                                 | Total deposits |                        | $         | 5,551,244 |                   |  |      |        |  |   | $         | 4,844,571 |  |  |      |   | 
|                                 |                |                        |           |           |                   |  |      |        |  |   |           |          



|                                      |                                       |                        |         |           |              |   |         |         | 
|------------------------------------- | ------------------------------------- | ---------------------- | ------- | --------- | ------------ | - | ------- | ------- | 
|                                      |                                       | June 30,               |         |           | December 31, |  
|                                      |                                       | 2005                   |         |           | 2004         |  
|                                      |                                       |                        |         |           |              |  
|                                      |                                       | (Dollars in thousands) |        
|Three months or less                  |                                       | $                      | 929,515 |           |              | $ | 655,571 |        
|Over three months through six months  |                                       |                        | 90,172  |           |              |   | 95,186  |        
|Over six months through twelve months |                                       |                        | 138,457 |           |              |   | 76,703  |        
|Thereafter                            |                                       |                        | 93,203  |           |              |   | 116,823 |        
|                                      |                                       |                        |         |           |              |  
|                                      | Total time deposits $100,000 and over |                        | $       | 1,251,347 |              |   | $       | 944,283 | 
|                                      |                                       |                        |         |           |              |  

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



|                                                                             |                                         |                        |   |         |              |  |   |         |  
|---------------------------------------------------------------------------- | --------------------------------------- | ---------------------- | - | ------- | ------------ |  | - | ------- | -
|                                                                             |                                         | June 30,               |   |         | December 31, | 
|                                                                             |                                         | 2005                   |   |         | 2004         | 
|                                                                             |                                         |                        |   |         |              | 
|                                                                             |                                         | (Dollars in thousands) |  
|Federal funds purchased and securities sold under repurchase
    agreements: |                                         |                        |   |         |              |  |   |        
|                                                                             | Average                                 |                        | $ | 597,610 |              |  | $ | 630,108 |  
|                                                                             | Period-end                              |                        |   | 649,613 |              |  |   | 482,968 |  
|                                                                             | Maximum month-end balance during period |                        |   | 649,613 |              |  |   | 751,109 |  
|Interest rate:                                                               |                                         |                        |   |         |              |  |   |        
|                                                                             | Weighted average for the period         |                        |   | 2.23    | %            |  |   | 1.14    | %
|                                                                             | Weighted average at period-end          |                        |   | 2.82    | %            |  |   | 1.68    | %
|Short-term borrowings:                                                       |                                         |                        |   |         |              |  |   |        
|                                                                             | Average                                 |                        | $ | 593,591 |              |  | $ | 270,743 |  
|                                                                             | Period-end                              |                        |   | 300,000 |              |  |   | 550,000 |  
|                                                                             | Maximum month-end balance during period |                        |   | 700,000 |              |  |   | 675,000 |  
|Interest rate:                                                               |                                         |                        |   |         |              |  |   |        
|                                                                             | Weighted average for the period         |                        |   | 2.72    | %            |  |   | 1.60    | %
|                                                                             | Weighted average at period-end          |                        |   | 3.04    | %            |  |   | 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:  |                          |  |  |        |    |  |   |       |    |      |  |      |      |  |  |       |    |  |  |      
|                                            |                  | June 30, 2005            |  |  | (1.96  | )% |  |   | 0.48  | %  |      |  | 0.00 | %    |  |  | 1.12  | %  |  |  | 2.00  | % 
|                                            |                  | December 31, 2004        |  |  | (5.69  | )% |  |   | (0.93 | )% |      |  | 0.00 | %    |  |  | 2.03  | %  |  |  | 3.88  | % 
|                                            | Months 13 to 24: |                          |  |  |        |    |  |   |       |    |      |  |      |      |  |  |       |    |  |  |      
|                                            |                  | June 30, 2005            |  |  | (6.46  | )% |  |   | (1.55 | )% |      |  | 0.00 | %    |  |  | 2.54  | %  |  |  | 4.72  | % 
|                                            |                  | December 31, 2004        |  |  | (11.39 | )% |  |   | (3.36 | )% |      |  | 0.00 | %    |  |  | 3.60  | %  |  |  | 6.82  | % 
|Impact on market value of portfolio equity: |                  |                          |  |  |        |    |  |   |       |    |      |  |      |      |  |  |       |    |  | 
|                                            |                  | June 30, 2005            |  |  | (3.96  | )% |  |   | (1.12 | )% |      |  | 0.00 | %    |  |  | (0.27 | )% |  |  | (1.13 | )%
|                                            |                  | December 31, 2004        |  |  | (8.21  | )% |  |   | (1.78 | )% |      |  | 0.00 | %    |  |  | (0.16 | )% |  |  | (0.67 | )%





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













46



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|                    |  |                        |            |          |      |           |            |             |              |            |          |  |  |               |          |  |      |            |                         |      |  |  |      |   |  |  |            | 
|------------------- |  | ---------------------- | ---------- | -------- | ---- | --------- | ---------- | ----------- | ------------ | ---------- | -------- |  |  | ------------- | -------- |  | ---- | ---------- | ----------------------- | ---- |  |  | ---- | - |  |  | ---------- | 
|                    |  |                        |            |          |      | Trust     |            |             | Junior       |            |          |  |  | Interest      |          |  |     
|                    |  |                        |            |          |      | Preferred |            |             | Subordinated |            |          |  |  | Rate at       |          |  |     
|                    |  |                        |            | Maturity |      |           | Securities |             |              | Debt Owned |          |  |  |               | June 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 | %    |  |  | 6.27 | % |  |  | 12/17/2008 | 
|Statutory Trust II  |  |                        | 9/24/2004  |          |      |           | 10/7/2034  |             |              |            | 35,000   |  |  |               | 36,083   |  |      |            | 3-month LIBOR plus 1.90 | %    |  |  | 5.04 | % |  |  | 10/7/2009  | 
|Statutory Trust III |  |                        | 12/13/2004 |          |      |           | 12/15/2034 |             |              |            | 60,000   |  |  |               | 61,856   |  |      |            | 3-month LIBOR plus 1.78 | %    |  |  | 5.19 | % |  |  | 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 June 30, 2005     |                                           |                        |  |                 |             |  |                   |                   |       |                    |       |   |         |        |  |  |       |     |  |   |         |  |  | 
|                        | Total Capital (to Risk Weighted Assets):  |                        |  |                 |             |  |                   |                   |       |                    |       |   |         |        |  |  |       |     |  |   |         |  |  |  |      
|                        |                                           | The Company            |  | $               | 721,925     |  |                   |                   | 11.04 | %                  |       | $ | 523,080 |        |  |  | 8.00  | %   |  | $ | 653,850 |  |  |  | 10.00 | %
|                        |                                           | The Bank               |  |                 | 712,370     |  |                   |                   | 10.90 |                    |       |   | 522,617 |        |  |  | 8.00  |     |  |   | 653,271 |  |  |  | 10.00 |  
|                        | Tier 1 Capital (to Risk Weighted Assets): |                        |  |                 |             |  |                   |                   |       |                    |       |   |         |        |  |  |       |     |  |   |         |  |  |  |      
|                        |                                           | The Company            |  |                 | 597,745     |  |                   |                   | 9.14  |                    |       |   | 261,540 |        |  |  | 4.00  |     |  |   | 392,310 |  |  |  | 6.00  |  
|                        |                                           | The Bank               |  |                 | 662,560     |  |                   |                   | 10.14 |                    |       |   | 261,308 |        |  |  | 4.00  |     |  |   | 391,962 |  |  |  | 6.00  |  
|                        | Tier 1 Capital (to Average Assets):       |                        |  |                 |             |  |                   |                   |       |                    |       |   |         |        |  |  |       |     |  |   |         |  |  |  |      
|                        |                                           | The Company            |  |                 | 597,745     |  |                   |                   | 7.98  |                    |       |   | 299,639 |        |  |  | 4.00  | (1) |  |   | 374,549 |  |  |  | 5.00  |  
|                        |                                           | The Bank               |  |                 | 662,560     |  |                   |                   | 8.85  |                    |       |   | 299,386 |        |  |  | 4.00  | (1) |  |   | 374,232 |  |  |  | 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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50



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PART II  OTHER INFORMATION







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








|        |                                                                                        
|------- | ---------------------------------------------------------------------------------------
|Item 2. | Changes in Securities and Use of Proceeds and Issuer
    Purchases of Equity Securities








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








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





|                        |  |     |            |  |          |  |         | 
|----------------------- |  | --- | ---------- |  | -------- |  | ------- | 
|Director                |  | For |            |  | Withheld | 
|                        |  |     |            |  |          | 
|Carin M. Barth          |  |     | 62,913,451 |  |          |  | 456,410 | 
|Paul W. Hobby           |  |     | 62,848,174 |  |          |  | 521,687 | 
|John W. Johnson         |  |     | 63,014,284 |  |          |  | 355,577 | 
|Walter E. Johnson       |  |     | 62,791,084 |  |          |  | 578,777 | 
|Scott J. McLean         |  |     | 62,861,388 |  |          |  | 508,473 | 
|Wilhelmina E. Robertson |  |     | 63,090,625 |  |          |  | 279,236 | 







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|        |                  
|------- | -----------------
|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
    September 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

52



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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)                    |  | August 8, 2005
|                                                    
|/s/ RANDALL E. MEYERRandall E. Meyer                 |  | Executive Vice President and Chief
    Financial Officer
    (Principal Financial Officer) |  | August 8, 2005
|                                                    
|/s/ SCOTT J. MCLEANScott J. McLean                   |  | Director and President                                                                     |  | August 8, 2005
|                                                    
|/s/ LAURENCE L.
    LEHMAN IIILaurence L. Lehman III |  | Senior Vice President and Controller
    (Principal Accounting Officer)                    |  | August 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
    September 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