Surety Capital Corporation Announces Sale of San Antonio Branches

Business Wire, Nov 12, 2003

Business Editors

FORT WORTH, Texas--(BUSINESS WIRE)--Nov. 12, 2003

Dick Abrams, Chairman of the Board of Surety Capital Corporation (OTCBB:SRYP), announced that Surety Bank, N.A. signed a definitive agreement to sell four of its branches located in the San Antonio, Texas area. Mr. Abrams commented: "We are sorry to leave a thriving area such as San Antonio, but managing these locations from Fort Worth was not economical." Mr. Abrams further said: "This branch sale should position Surety Bank to fully comply with its obligations under its formal agreement with the Office of the Controller of the Currency."

Mr. Abrams also announced that Surety Bank sold several parcels of foreclosed property for an amount equal to approximately $1,100,000 in excess of the allocated value of the properties. No income was recognized in connection with the sales in accordance with guidance provided by the OCC. Surety Bank also indicated that it hoped to generate a similar aggregate amount of proceeds above allocated value upon the sale of three other foreclosed properties and that as of September 30, 2003, it had recovered more than $200,000 in charged-off loans during 2003.

Mr. Abrams stated, "Two years ago the bank had many problems resulting from actions of its two former managements. For the past year, our current management team has worked to improve the operations and performance of the Bank and to bring the Bank into compliance with the formal agreement with the OCC. Surety Bank was cash flow positive for the third quarter ending September, 2003 and presently anticipates becoming profitable during 2004. I want to thank our employees and stockholders for their patience and their assistance in meeting many difficult challenges."

Finally, Mr. Abrams also stated Surety Capital is presently working to develop a plan that will allow it to retire its convertible debentures at a discounted amount that would be negotiated with holders of the debentures. Any progress in implementing such a plan would, however, require the OCC to approve a distribution from Surety Bank to Surety Capital. Such an approval could not be requested and approved until Surety Bank is in full compliance with the formal agreement with the OCC.

This document contains, and future oral and written statements of Surety Capital Corporation and its management may contain, forward-looking statements, within the meaning of such term in the Private Securities Litigation Reform Act of 1995, with respect to the financial condition, results of operations, plans, objectives, future performance and business of the company. Forward-looking statements, which may be based upon beliefs, expectations and assumptions of the company's management and on information currently available to management, are generally identifiable by the use of words such as "believe," "expect," "anticipate," "hope," "plan," "intend," "estimate," "may," "will," "would," "could," "should" or other similar expressions. Additionally, all statements in this document, including forward-looking statements, speak only as of the date they are made, and the company undertakes no obligation to update any statement in light of new information or future events.

The company's ability to predict results or the actual effect of future plans or strategies is inherently uncertain. Factors that could have material adverse effects on the operations and future prospects of the company and its subsidiaries include, but are not limited to, the following: (i) the ability of the company to consummate the branch sale transaction announced above and to continue to progress toward the completion of the initiatives discussed above; (ii) the strength of the United States economy in general and the strength of the local economies in which the company conducts its operations which may be less favorable than expected and may result in, among other things, a deterioration in the credit quality and value of the company's assets; (iii) the economic impact of past and any future terrorist attacks, acts of war or threats thereof and the response of the United States (which may include military action) to any such threats and attacks; (iv) the costs, effects and outcomes of existing or future litigation; (v) the effects of, and changes in, federal, state and local laws, regulations and policies affecting banking, securities, insurance and monetary and financial matters; (vi) the effects of changes in interest rates (including the effects of changes in the rate of prepayments of the company's assets) and the policies of the Board of Governors of the Federal Reserve System; (vii) the ability of the company to compete with other financial institutions as effectively as the company currently intends due to increases in competitive pressures in the financial services sector; (viii) the inability of the company to obtain new customers and to retain existing customers; (ix) the timely development and acceptance of products and services, including products and services offered through alternative delivery channels such as the Internet; (x) technological changes implemented by the company and by other parties, including third party vendors, which may be more difficult or more expensive than anticipated or which may have unforeseen consequences to the company and its customers; (xi) the ability of the company to develop and maintain secure and reliable electronic systems; (xii) the ability of the company to retain key executives and employees and the difficulty that the company may experience in replacing key executives and employees in an effective manner; (xiii) consumer spending and saving habits which may change in a manner that affects the company's business adversely; (xiv) business combinations and the integration of acquired businesses that may be more difficult or expensive than expected; (xv) changes in accounting policies and practices, as may be adopted by state and federal regulatory agencies and the Financial Accounting Standards Board; (xvi) the ability of the company to manage the risks associated with the foregoing as well as its inability to meet its obligations under the subordinated convertible notes including interest payments that became due March 31, 2002 and subsequent periods which the company has not made; and (xvii) the ability of the company to comply with the terms of the Formal Agreement with the OCC entered into on February 18, 2003.