Gold Banc Reports Net Earnings of $5.0 Million Compared With Year-Ago $1.8 Million Loss, Announces $20.0 Million Additional Stock Repurchase Authorization

Business Wire, Oct 21, 2005

LEAWOOD, Kan. -- Gold Banc Corporation, Inc. (Nasdaq:GLDB), today announced earnings for the quarter ended September 30, 2005 of $5.0 million or $0.13 per share. This is an increase of $6.8 million over the third quarter 2004 net loss of $1.8 million or $0.05 per share. Year to date earnings were $38.4 million or $1.00 per share compared to $11.8 million or $0.29 per share in the prior year. Additionally, the board of directors authorized an expenditure of up to $20.0 million for the repurchase of common stock, which is supplemental to the $32.0 million of stock previously repurchased this year.

"The third-quarter's underlying performance was achieved despite the recently announced settlement with the IRS which was mitigated by associated recoveries from other parties," explained Chief Executive Officer Mick Aslin. "For instance, net loans and deposits, excluding branch sales, were up 2.8% and 3.7%, respectively, for the quarter, and were up 11.4% and 8.4% year to date, respectively. The net interest margin improved slightly, and our efficiency ratio has improved dramatically. Even so, our core earnings per share fell $0.03 short of our target, primarily because of higher provision for loan losses, lower-than-expected contribution from Gold Capital Management and lower-than-projected net interest income due to nearly half of the new loan volume coming the last ten days of the quarter."

Turning to the fourth-quarter outlook, Aslin anticipated core earnings per share should approximate $0.24 - $0.25 ($0.27 - $0.28 GAAP earnings including the settlement payment received in fourth quarter discussed below), with continued loan and deposit growth anticipated, as well as slight margin expansion if the Federal Reserve increases rates on November 1.

"Most important," Aslin emphasized, "we remain confident about the validity of our strategy of focusing on our large metro markets, which rank among the highest-growth Metropolitan Statistical Areas in the country. To capitalize on this enviable market positioning, over the next three years we anticipate opening up to 12 new offices in our Florida and Midwest markets."

Aslin also reported that Gold Banc is implementing several initiatives aimed at contributing to consistent earnings growth. "The steps we are taking include a personal banking emphasis on new checking accounts and attractive CD rates with other features that are being well-received by customers; new leadership in Business Banking and Residential Real Estate Lending, which is focused on more targeted marketing campaigns, and a renewed emphasis on Asset Management, Trust Services and Private Banking, all areas with significant growth potential."

Although significantly improved over last year's third quarter, the results for this year's third quarter include a $3.5 million settlement agreement with the IRS, announced earlier this week. The Gold Bank Kansas (the "Bank") subsidiary entered into three settlement agreements with the IRS arising from the Bank's purchase of $14.2 million in multifamily housing revenue bonds (the "Series C Bonds") in 2001 and 2002. The Bank made a one-time $3.5 million cash payment in full settlement of all claims made by the IRS. The payment is reflected as income tax expense in the quarterly financial statements. The Bank didn't admit any liability or wrongdoing in connection with the settlement. Further detail on the settlement can be obtained in the related news release and Form 8-K, both dated October 17, 2005.

The Bank made a claim against the trustee of the Oklahoma Series C Bonds. The trustee denied any wrongdoing in connection with the Oklahoma Series C bonds. On September 29, 2005, the Bank entered into a Settlement Agreement and Release with the trustee, pursuant to which the trustee made a cash payment of $1.4 million to the Bank and the Bank released the trustee from liability in connection with the claims described above. This payment was received prior to the close of the quarter ended September 30, 2005 and was recorded as a reduction of the remaining principal of the Series C Bonds in the amount of $0.8 million and a settlement gain in the amount of $0.6 million.

"The resulting net impact of these settlements per outstanding share totaled approximately $0.08 in third quarter 2005. As indicated in the October 17, 2005 press release, a $1.75 million additional recovery has been received and will be recorded as income in fourth quarter 2005 in the amount of approximately $0.03 per share net of tax. When all was said and done, these investments generated a net positive return of approximately 5% based on currently known facts," commented Aslin.

The following chart provides a reconciliation of GAAP net earnings to core earnings excluding unusual, non-recurring items in the results for the three months ended September 30, 2005 and 2004:

3 Months    3 Months    3 Months    3 Months
                          Ended       Ended       Ended       Ended
                         9/30/05     9/30/05     9/30/04     9/30/04
                       (amounts in (earnings   (amounts in (earnings
                        millions)   per share)  millions)   per share)
                       ----------- ----------- ----------- -----------
GAAP net earnings:     $      5.0  $     0.13  $     (1.8) $    (0.05)
Gain on branch sales:           -           -           -           -
Bond impairment:                -           -        10.8        0.28
Qui tam settlement:             -           -         2.5        0.06
Bond trustee
 settlement:                 (0.6)      (0.02)
IRS settlement:               3.5        0.09           -           -
Tax impact of
 adjustments:                 0.2        0.01        (3.8)      (0.09)
                        ----------  ----------  ----------  ----------
Core earnings:         $      8.1  $     0.21  $      7.7  $     0.20
                        ==========  ==========  ==========  ==========

GAAP earnings ratios
Return on average
 assets (annualized):        0.49%                 -0.17%
Return on average
 equity (annualized):        7.10%                 -2.70%

Core earnings ratios
Return on average
 assets (annualized):        0.79%                  0.73%
Return on average
 equity (annualized):       11.46%                 11.28%