Gold Banc Reports $8.1 Million Net Earnings for the First Quarter, Increased Cash Dividend and $20 Million Additional Stock Repurchase Authorization

Business Wire, April 18, 2005

LEAWOOD, Kan. -- Gold Banc Corporation, Inc. (Nasdaq: GLDB), a $4.4 billion financial services company offering banking and asset management services, today announced an 11.0% increase in net income over the prior quarter. Net income increased to $8.1 million for the first quarter of 2005, from $7.3 million in the fourth quarter of 2004. Earnings per share for the same period grew $0.02 per share from $0.19 to $0.21. "Continued loan growth in strategic, high-growth markets in metropolitan Kansas City and Tampa, Sarasota and Bradenton, Florida, fueled the expansion," said Mick Aslin, Gold Banc President and CEO. "We believe the key initiatives and repositioning undertaken during the past two years have set the stage for further growth throughout 2005, and we are pleased with our pipeline for new loans over the next 90 days. Additionally, we are pleased with our core deposit growth; however, we have taken note of the incremental cost in this growth and its impact on net interest margin," continued Aslin. "We have worked hard to bring clarity and transparency to our financial results, and we are hopeful that this will be the first of many quarters of easily understood results."

First quarter earnings for 2005 declined from $13.3 million in the first quarter of 2004 due primarily to a $17.0 million gain on branch sales recognized in the prior year, offset in part by other one-time expenses including costs to refinance debt and provide restricted stock grants.

Net Interest Income

For the first quarter of 2005, net interest income after provision for loan loss was $29.0 million, compared to $25.7 million for the first quarter of 2004 and $29.3 million for the fourth quarter of 2004. The increase over the prior year is attributed to loan growth outpacing deposit growth. Additional interest income from loan growth exceeded additional interest on deposits, despite the impact of increased rates on both. In addition, there was a decrease associated with the provision for loan losses due to an allocation of $1.8 million of the allowance in the first quarter of 2004 due to branch sales. These improvements were offset with lesser earnings from the investment portfolio due to declines in the principal balances from pay-downs and maturities of securities. Net interest income is nearly unchanged from the fourth quarter of 2004 with increases in interest income on loans being offset by increases in interest expense on deposits and borrowings. The tax equivalent net interest margin for the first quarter of 2005 increased to 2.99% from 2.89% for the first quarter of 2004. The costs of growing core deposits have slightly eroded the gain in net interest margin.

Non-Interest Income

Non-interest income totaled $6.4 million in the first quarter of 2005 compared to $7.8 million for the first quarter of 2004, excluding the 2004 gain on branch sales of $17.0 million. Without the gain on branch sales, the remaining decrease is primarily due to declines of $0.7 million in service fees and a change in the losses on sales of securities of $0.3 million. Non-interest income is down slightly from the fourth quarter of 2004 with declines in service fees being somewhat offset by fewer losses on securities and increased trading and commission income.

Non-Interest Expense

Non-interest expense for the three months ended March 31, 2005, was $24.3 million, compared to $28.8 million for the first quarter of 2004, which contained additional expenses associated with the refinancing of subordinated debt of $2.0 million as well as expense on interest rate swaps of $0.4 million and acquisition costs of $0.6 million. Salaries and employee benefits were down $1.0 million as the accelerated expensing of restricted stock has been completed, and savings from branch disposals are being realized. The current quarter showed improvement over the prior quarter ended December 31, 2004, with non-interest expense of $24.7 million. Impacting expenses in the fourth quarter of 2004 were consulting and contract labor costs associated primarily with Sarbanes-Oxley compliance of approximately $0.5 million and the cost of refinancing subordinated debt of $1.3 million to call outstanding debt and refinance the amounts at more favorable interest rates. "We are pleased that our efforts to reduce overhead and other operating costs from consolidation of charters, sale of non-core locations and economies of scale are beginning to be realized," said Aslin.

Balance Sheet

As of March 31, 2005, Gold Banc total assets were $4.4 billion including total loans net of allowance of $3.2 billion (including loans held for sale), investment securities of $894.3 million and total deposits of $3.2 billion (including deposits held for sale). Loans and deposits held for sale are part of a pending transaction to sell five rural Oklahoma branches. As of December 31, 2004, Gold Banc's total assets were $4.3 billion, total investment securities were $916.0 million, total loans (net of allowance, including loans held for sale) were $3.1 billion and total deposits (including deposits held for sale) were $3.1 billion. Excluding loans held for sale, net loan growth was $101.9 million or 3.3% for the quarter. Excluding deposits held for sale, deposits grew $81.3 million or 2.9% from December 31, 2004, to March 31, 2005, despite a reduction in brokered certificates of deposit. Brokered certificates of deposit totaled $461.4 million as of March 31, 2004, a reduction of $75.2 million from $536.6 million at the end of 2004. Federal Home Loan Bank advances were $512.2 million at March 31, 2005, compared to $571.9 million at December 31, 2004, a reduction of $59.6 million. This reduction of $134.8 million in brokered deposits and FHLB borrowings reflects Gold Banc's commitment to move away from wholesale funding and to build core deposits.