HAPPY FIRST BIRTHDAY, PATRIOT BANK!
Forget crawling, toddling and walking! By the time Patriot Bank celebrated its first birthday on March 7, the bank was already off and running with confidence.

"Many start-up banks take 3-4 years to break even," says President Don Ellis, "but we hit positive cash flow three months after opening our doors - which is unheard of!"

By December 31, the bank had $181 million in total assets and $155 million in loans. "It's exciting how quickly we were accepted into the Houston market and propelled ahead to finish as the fastest growing bank in the city." Ellis credits the phenomenal success to great employees dedicated to customer service, a supportive shareholder base, strong market and good timing. Management strategies to grow loans through relationships also landed the bank with an impressive January achievement: announcing a net profit of $414,000.

EXPANSION NEWS - PATRIOT BANK OPENS NEW BRANCHES IN FRIENDSWOOD AND DALLAS
Patriot recently opened two new branches in Friendswood and Dallas. The Friendswood branch, which is located at 102 West Parkwood, is managed by Loy Trevino, Theresa Nation, Camille Jury, Tracy Shugart, Juli Rendmon and Brent Goswick (see photo below). The Dallas branch is located at 5430 LBJ Freeway. For more information on our branch locations click here.

ECONOMIC OUTLOOK
A dozen economists typically have a dozen different perspectives. Right now, however, many experts are watching Houston's key economic indicators with an optimistic skip in their step. Flying in the face of back-to-back hurricanes, rising interest rates and high oil prices, 2006 is looking to deliver a fourth consecutive year of economic growth and positive stock returns.

The oddest hiccup on the horizon is the inverted yield curve: a relatively unusual market situation wherein the long-term bond rates are lower than short-term rates. Some believe that, if history repeats itself, an inverted yield curve could be an indicator that a recession is coming-as seemed to be the case in 1979, 1981 and 2000. However, management at Patriot Bank believes the near- term economic environment is quite positive for the Texas market. The best news of the day is that, even if the country heads into a recession in the near future, Houston is insulated via its diversified industry base and strength driven by oil. Historical research indicates Houston would likely lag the national recession curve by 1-2 years- allowing plenty of time to prepare. Patriot Bank recommends consumers and business leaders avoid getting "spoiled" with this buoyant economic climate. Consider the short-term opportunities available now, while keeping an eye to the future.

• While the yield curve is inverted, it's a great time to enjoy flex rates on deposits at Patriot Bank while locking in a low rate by refinancing a home mortgage or business loan. If the Fed reacts/overreacts by adjusting the interest rates higher, consumers with liquidity will benefit.
• Single digit growth is expected in the stock and bond market going forward, causing many investors to prefer money market accounts that are more risk-averse than even blue chip stocks.
• Invest locally. Patriot Bank is bullish on Houston. Houston home appreciation is expected to remain at the 20 year average of 3-4%. Unlike the possible housing bubbles in California and Florida, Houston housing appreciation is in line with real wage appreciation. Additionally, office vacancy rates are under 10% for the first time since the '90s. With an average of 100 people moving to the city a day, The Greater Houston Partnership is projecting another million residents will call Houston home within the next decade.