Gold Banc Reports Fourth Quarter Net Earnings, Loan and Deposit Growth Resumes, and Continued Asset Quality Improvement

Business Wire, Jan 20, 2005

LEAWOOD, Kan. -- Gold Banc Corporation, Inc. (Nasdaq: GLDB) today announced results for the fourth quarter and twelve months ended December 31, 2004.

For the fourth quarter of 2004, Gold's net earnings were $7.3 million, or $0.19 per diluted share, compared to a net loss of $1.8 million or $0.05 per diluted share for the third quarter 2004. Net earnings were $7.2 million, or $0.18 per diluted share for the fourth quarter of 2003. For the year ended December 31, 2004, net earnings were $19.1 million or $0.49 per diluted share, compared to $29.4 million, or $0.77 per diluted share for the year ended December 31, 2003.

Mick Aslin, President and Chief Executive Officer, commented: "The results of the fourth quarter demonstrated the growth and earnings capacity of this company. Growth momentum was regained as loans increased by $185 million and deposits increased $63.5 million during the quarter. Credit and asset quality improved drastically, with non-performing assets declining more than 50% from year earlier levels. Earnings returned to a more normalized level after two quarters of extraordinary events and provide the foundation on which we can deliver earnings in our previously announced range during 2005."

Net Interest Income

For the fourth quarter of 2004, net interest income after provision for loan loss was $31.4 million, compared to $30.6 million for the third quarter of 2004 and $29.0 million for the fourth quarter of 2003. For the year ended December 31, 2004, net interest income after provision for loan loss totaled $117.9 million compared to $109.3 million for 2003. This increase is attributed to rising short-term interest rates and their positive effect on Gold's asset sensitive balance sheet, as well as a decrease associated with the provision for loan losses.

The net interest margin (tax equivalent) for the fourth quarter improved to 3.30% from 3.19% for the previous quarter and 3.26% for the fourth quarter last year.

Non-Interest Income

Non-interest income totaled $5.7 million in the fourth quarter of 2004 compared to a negative $4.5 million for the third quarter of 2004. This increase is largely attributed to the previously reported impairment and write-down of three high yield tax-exempt bonds in the third quarter of 2004.

For the year, non-interest income was $39.3 million for 2004 compared to $41.6 million in 2003. Both periods benefited from the sale of branches, with a gain of $20.6 million during 2004 and $5.7 million in 2003. Additionally, there was a gain of $1.2 million in 2004 from the sale of the credit card portfolio. These gains were partially offset by $11.4 million in realized losses in the securities portfolio largely attributed to the write-down in the third quarter of 2004 described earlier. Additionally, during the fourth quarter the Company implemented the strategy to sell certain FNMA and other securities from its portfolio which resulted in a pre-tax loss of $542,000. For the year, service fees were down $2.0 million, as were investment trading commissions of Gold Capital Management of $2.2 million, Gold's public finance and institutional fixed income sales unit. Revenues at Gold Trust Company increased to $4.6 million in 2004 compared to $4.0 million in 2003 partially offsetting the other declines.

Non-Interest Expense

Non-interest expense for the three months ended December 31, 2004, was $26.8 million, compared to $28.9 million for the third quarter of 2004, which contained additional expenses associated with the settlement of Qui Tam litigation of $2.5 million. Salaries and employee benefits were down $700,000 for the quarter ending December 31, 2004, as the accelerated expensing of restricted stock has been completed. Negatively affecting expenses in the fourth quarter of 2004 were pre-tax costs associated with Sarbanes-Oxley Section 404 compliance of approximately $500,000. Also negatively affecting expenses was a pre-tax charge of $1.3 million to call outstanding trust preferred securities and refinance the amounts at more favorable interest rates. Positively affecting expenses was the reduction of $515,000 in income tax expense during the fourth quarter.

Non-interest expense for the twelve months ended December 31, 2004, was $126.7 million compared to $104.4 million for 2003. This change is largely attributed to expenses associated with the settlement of Qui Tam litigation of $16.5 million in 2004, recoveries from misapplication of bank funds received in 2003 of $1.9 million, and expenses associated with the now terminated acquisition of $1.3 million incurred in 2004.

Balance Sheet

As of December 31, 2004, Gold Banc total assets were $4.3 billion, total investment securities were $0.9 billion, total loans (net) were $3.1 billion and total deposits were $3.1 billion. During the year, Gold Banc, as part of its previously announced repositioning completed the sale of eleven rural banking locations, eight in Kansas and three in Oklahoma. The combined deposits of these branches were $426.3 million and combined loans were $216.5 million. Adjusting for the sale of these branches, net loan growth was $305.5 million or 10.1% while deposits grew $398.8 million or 12.6% compared to December 31, 2003. Loans increased $185.0 million in the fourth quarter and deposits increased $63.5 million as growth momentum was regained. Brokered certificates of deposit totaled $536.6 million at the end of 2004, a reduction of $65.9 million since year-end 2003. Federal Home Loan Bank advances were $576.8 million to $490.7 million at December 31, 2004, compared to 2003. Gold is committed to continuing this move away from wholesale funding and to building core deposits.