EXTRACO ANNOUNCES ACQUISITION OF HEIGHTS STATE BANK

August 26, 2002 - KILLEEN, TEXAS: S. Boyce Brown, President and CEO of Extraco Corporation, and Keith Maxwell, President of Extraco's West Bell and Copperas Cove region, announced today the acquisition of Heights State Bank. The nearly $60 million asset bank transaction is pending regulatory approval and should occur during the fourth quarter.

The Harker Heights addition will increase Extraco's assets to $800 million, and expand their Central Texas bank centers to 13. Michael Helm, President and CEO of Heights State Bank, has agreed to become Vice-Chairman of Extraco's regional board to assist in the transition. Extraco remains perhaps the soundest financial institution in Central Texas with $72 million in unencumbered capital, nearly $10 million in loan loss reserves and is considered one of the top banking companies in the country by its regulators.

"Extraco has been committed to the Killeen area for more than a decade and this significant investment is further evidence of that commitment," said Brown. "With the addition of Heights State Bank, Extraco extends its full array of financial offerings to all communities of the Greater Ft. Hood area. We are particularly excited about Mr. Helm and his impressive team joining our company."

Extraco offers a unique approach to banking that is centered around its mission "to touch lives" and deliver a superior experience to customers. This is achieved not only through more personal attention in how it meets customer needs, but also in the broadness of its product offerings.

"We're really excited about the Harker Heights community," said Maxwell. "We have lots of friends there who have been banking with us for years and this will be a natural fit."

"Extraco is a real plus for our customers," said Helm. "This merger will significantly increase our abilities to meet the growing needs of our customers, particularly as it relates to insurance and computer support services."

Extraco Corporation celebrated 100 years and three generations of family management on July 12, 2002. Founded as a cotton warehousing company, Extraco has evolved to become the largest and most complex independent financial institution in Central Texas with a $10 million loan limit, over 75,000 customers, 275 volunteer community leadership roles and 525 employees. Extraco offers trust, insurance, brokerage, mortgage and technology solutions to complement its traditional bank product line.