Dear Shareholders and Clients:

We are pleased to report The Bank of San Antonio continues to grow in a consistent, safe and sound manner. As of September 30, 2008, the bank reported total assets of $109 million, a $28 million increase from the previous quarter. This growth is a result of increases in core deposits from local businesses and their owners. Moreover, the bank continues to maintain a conservative loan portfolio with no past dues, non-accruals or other problem loans, and investments in only U.S. government securities.

The Bank of San Antonio continues its strong capital position with a 22% capital to asset ratio as of September 30, 2008, almost three times the amount of a “well capitalized” bank’s ratio of 8%. This strong capital base together with the increased FDIC deposit insurance available for each of your accounts, including unlimited FDIC insurance on non-interest bearing accounts (checking accounts), and up to $250,000 of FDIC insurance on all other accounts, makes The Bank of San Antonio a safe place for your money in these uncertain times.

Our Board of Directors, executive management and entire bank staff are excited about the future of The Bank of San Antonio. Our team of dedicated, professional bankers remains ready to serve you as we continue our goal of being “the Bank for Business” in San Antonio. Thank you for your ongoing business relationships and, as always, we appreciate your referrals of both depository and loan prospects.

 Thank you for your support and confidence.

J. Bruce Bugg, Jr.
Chairman and Chief Executive Officer
Southwest Bancshares, Inc.

James W. Gorman
Chairman of the Board
The Bank of San Antonio

Brent R. Given
President and Chief Executive Officer
The Bank of San Antonio