2016 ANNUAL REPORT. Member FDIC I I DALLAS I FRISCO I LAS COLINAS I PLANO

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1 2016 ANNUAL REPORT Member FDIC I ADDISON I DALLAS I FRISCO I LAS COLINAS I PLANO

2 A Message From Our CEO & Chairman I am pleased to, once again, report that the condition of our bank is strong. Deposits increased $13.5 million while our loan portfolio grew $41 million, setting a new milestone of more than $605 million in loans outstanding. Combined with excellent credit quality and reasonable expense control, net income exceeded $7 million as compared to $6.3 million from W. Michael Shipman Chief Executive Officer & Chairman We continue to find new opportunities in the marketplace, with quality companies preferring to do business with a community bank. With five locations and access to innovative mobile solutions, it is now easier than ever to do business with North Dallas Bank & Trust Co. Our commitment to our customers and to continuously evolving our organization to meet their needs is central to our framework for creating long-term value for our shareholders. Expectations are hopeful for the coming year as we consider an improving and growing economy and a political atmosphere that promises to be business-friendly. Responsible management, consistency in our delivery and first-class service are key elements to sustaining success in a complex and competitive industry. Thank you for your business, your investment and your friendship. We are honored to serve you and extend our best wishes for a prosperous year. Financial Highlights for Earnings exceeded $7 million. Paid cash dividends for the 30th consecutive year. Shareholders Equity surpassed $140 million. Reserve for Possible Loan Losses of $10 million. Total Loans Outstanding reached a historic level of over $605 million. Total Assets exceeded $1.36 billion

3 Financial Highlights Three Months Ended Twelve Months Ended December 31 December 31 Income Statement Net Interest Income 7,564,210 7,161,605 29,298,230 27,780,134 Provision for Loan Losses 0 (150,000) (300,000) (600,000) Non-Interest Income 1,012, ,083 4,119,804 3,477,318 Non-Interest Expenses (5,680,206) (5,362,322) (22,455,915) (21,171,687) Income Before Taxes & Extraordinary 2,896,665 2,491,366 10,662,119 9,485,765 Income Tax (1,068,378) (821,890) (3,658,255) (3,152,131) Income Before Extraordinary 1,828,287 1,669,476 7,003,864 6,333,634 Extraordinary Net Income 1,828,287 1,669,476 7,003,864 6,333,634 Earnings per Share Financial Highlights Twelve-Month Average As of December 31 Ended December 31 Balance Sheet Total Assets 1,367,985,256 1,352,285,512 1,340,169,896 1,330,810,768 Total Loans 605,350, ,869, ,159, ,175,983 Deposits 1,218,839,636 1,205,246,402 1,187,345,774 1,180,579,672 Stockholders Equity 140,580, ,523, ,636, ,613,205 (Prepared internally without review by our independent accountants)

4 Statement of Condition As of December 31, 2016 and 2015 Assets Cash and Due From Banks $179,245,663 $214,317,539 Interest-Bearing Deposits at Other Banks 83,868,675 86,086,929 Securities Held to Maturity 239,281, ,811,352 Securities Available for Sale 242,659, ,220,966 Fed Funds Sold 5,069,008 5,000,000 Loans Commercial 86,767,732 81,524,634 Real Estate 508,046, ,030,698 Consumer 10,535,656 10,314,393 Reserve for Losses on Loans (10,774,724) (10,036,181) Net Loans 594,575, ,833,544 Interest Earned, Not Collected 3,195,837 3,028,430 Bank Premises and Equipment 11,501,072 12,148,217 Other Real Estate (net) 0 0 Other Assets (net) 8,588,843 7,838,535 Total Assets $1,367,985,256 $1,352,285,512 1,500 1,350 1,200 1, Assets (in millions) Liabilities and Stockholders Equity Deposits Demand Deposits $553,041,317 $521,116,985 Savings and Other Time Deposits 665,798, ,129,417 Total Deposits 1,218,839,636 1,205,246,402 Accrued Interest Payable 156, ,155 Federal Income Tax Payable 0 0 Other Liabilities 8,408,539 10,349,115 Total Liabilities 1,227,405,123 1,215,761,672 Stockholders Equity Capital Stock: Common, $5.00 Par Value, 2,569,082 Shares authorized and 2,569,026 outstanding 12,845,130 12,845,130 1,200 1,100 1, Deposits (in millions) Capital Surplus 28,815,012 28,815,012 Accumulated Other Comprehensive Income (299,804) 592,547 Undivided Earnings 99,219,795 94,271,151 Total Stockholders Equity 140,580, ,523,840 Total Liabilities and Stockholders Equity $1,367,985,256 $1,352,285,512 (Prepared internally without review by our independent accountants)

5 Statement of Earnings For the Twelve Months Ended December 31 Interest Income Earnings Per Share Return On Assets Loans (including fees) $23,368,839 $22,598,058 Investment Securities 6,117,041 6,483,458 Federal Funds Sold 28,537 15,653 Deposit Interest 1,869,435 1,301,469 31,383,852 30,398,638 Interest Expense Deposit, Time and Savings 2,077,113 2,607,184 Other Borrowings 8,509 11,320 2,085,622 2,618,504 Net Interest Income 29,298,230 27,780,134 Provision for Losses on Loans (300,000) (600,000) Net Interest Income After Provision For Losses on Loans $28,998,230 $27,180,134 Non-Interest Income Service Charges 931, ,115 Net Gain on Sale of Assets 46,166 (5,135) Net Gain on Sale of Loans 301, ,457 Gain on Sale of Securities 0 0 Other Operating Income 2,840,741 2,321,881 4,119,804 3,477,318 Non-Interest Expenses Employee Compensation and Benefits 15,218,890 14,376,225 FDIC Insurance and Examination Fees 709, ,061 Net Occupancy Expense 1,329,580 1,275,326 Other Operating Expenses 5,198,119 4,721,075 22,455,915 21,171,687 Income Before Income Tax & Extraordinary 10,662,119 9,485,765 Income Tax Expense 3,658,255 3,152,131 Net Income Before Extraordinary 7,003,864 6,333,634 Extraordinary Income 0 0 Net Income $7,003,864 $6,333,634 Earnings Per Share (Prepared internally without review by our independent accountants)

6 Reserve for Losses on Loans Three Months Ended Twelve Months Ended December 31 December Balance, beginning of period 10,776,853 9,792,093 10,036,181 9,235,143 Provision charged to income 0 150, , ,000 Loans charged off, net of recoveries: Charge-offs 40,707 49,210 43, ,258 Recoveries 38, , , ,296 (Net charge-offs)/recoveries (2,129) 94, , ,038 Balance, end of period 10,774,724 10,036,181 10,774,724 10,036,181 Changes in Stockholders Equity Three Months Ended Twelve Months Ended December 31 December Balance, beginning of period 141,915, ,711, ,523, ,610,786 Net Income 1,828,287 1,669,476 7,003,864 6,333,634 Unrealized Gains/(Losses) (2,418,495) (1,163,898) (892,350) (416,740) Cash Dividends Declared (745,018) (693,637) (2,055,221) (2,003,840) Balance, end of period 140,580, ,523, ,580, ,523,840 (Prepared internally without review by our independent accountants)

7 Financial Ratios and Other Data (Annualized where applicable) Three Months Ended Twelve Months Ended December 31 December 31 Profitability Ratios Return on Average Assets 0.52% 0.48% 0.52% 0.48% Return on Average Equity Capital 5.10% 4.81% 4.98% 4.67% Net Interest Spread 2.22% 2.11% 2.26% 2.15% Net Income per Share As of December 31 Asset Quality Ratios Nonperforming Loans to Total Assets 0.06% 0.06% Nonperforming Loans to Total Loans 0.14% 0.14% Nonperforming Loans to Total Capital 0.55% 0.54% Reserve for Loan Losses to Total Loans 1.78% 1.78% Total Loans to Total Deposits 49.67% 46.78% Average Loans to Average Deposits 48.95% 46.09% Liquidity 54.83% 57.34% As of December 31 Capital Ratios Equity Capital to Total Assets 10.28% 10.10% Total Capital to Total Assets 11.06% 10.84% Total Capital to Total Loans 25.00% 25.99% Average Equity Capital to Average Assets 10.49% 10.19% Average Total Capital to Average Assets 11.28% 10.91% Average Total Capital to Average Loans 26.01% 26.68% Key: Equity Capital = Common Stock + Capital Surplus + Undivided Profits + Accumulated Other Comprehensive Income Total Capital = Equity Capital + Reserve for Loan Losses Liquidity Ratio = (Securities + Fed Funds + Cash & Due From Banks + Interest Bearing Deposits) / Total Assets Assets are net of Unearned Discount and Loan Loss Provision Total Loans are net of Unearned Discount Notes to Financial Statements: 1. Net Loans include Nonperforming Loans on December 31, 2016 of $835,138 and on December 31, 2015 of $788,364. (Nonperforming = Nonaccrual + Loans 90 days and over past due.) 2. Not included in the financials of North Dallas Bank & Trust Co., are NDB. Company and North Dallas Bank Tower Corporation, affiliated companies of North Dallas Bank & Trust. Scrub Oak Corp. is a wholly owned subsidiary of NDB Company, Inc. The Affiliates were formed primarily for the purpose of buying, selling, leasing, and renting office space, business machines and equipment. At December 31, 2016, the Affiliates and Subsidiary had earnings for the year of $8,342,522 and equity of $11,882, N.D.B. COMPANY INC. and its wholly owned subsidiary Scrub Oak Corporation are in the process of liquidating their assets and dissolving the companies. The assets from the dissolution will be distributed to the shareholders of record of North Dallas Bank & Trust Co. at distibution date. We estimate the return to be between $3 and $5 per share. (Prepared internally without review by our independent accountants)

8 Fostering Our Mission in 2016 The principles contained in our Mission Statement and Core Values of Integrity, Responsiveness and Service provide the foundation that has kept us on course through different economic cycles. We believe that a dependable, consistent performance and honorable principles are maintained through our commitment to values that are beneficial for all concerned. We will continue our focus on doing the right things, the right way and at the right time. On behalf of the Officers, Employees and Board of Directors, thank you for your support. 1ST QUARTER 2ND QUARTER 3RD QUARTER Notable Accomplishments in 2016 Awarded two James W Tyra memorial college scholarships to top achieving area students Received our Five-Star rating for the 27th consecutive year from Bauer Financial Co-Sponsored the Erwin Waldman Memorial Golf Tournament benefiting the Jewish Community Center of Dallas Hosted Cyber Crime Awareness forum with focus on fraud trends Doubled our collection efforts of school supply-filled backpacks for homeless DFW students Election of Thomas A Koons of Tommy Koons Company to the Board of Directors Released EMV Chip embedded Debit Cards for enhanced security and convenience Volunteered more than 900 employee hours toward financial literacy and community support Each of our Banking Centers, as well as our Trust Wealth Management division, supported Addison Metrocrest Services Dallas Family Gateway Frisco Frisco FAST Pacs 4TH QUARTER Registered a new milestone in loans outstanding exceeding $600 million Launched Mobile Wallet a nonprofit association in their local communities: Las Colinas Irving Cares Plano Living for Zachary Reinforced our support for the DPD Assist The Officer Golf Tournament Trust Wealth Management Family Compass

9 Officers Mike Shipman CEO / Chairman of the Board Judy Alvarado Senior Kim Cheshier Andrew Davenport Assistant Sam Renshaw CFO / Vice Chairman of the Board Larry Miller President - North Dallas Bank & Trust Co. Jay Henry President - Addison Michael Howell President - Las Colinas Allen Hudson President - Dallas Ralph Thompson President - Plano Pam Burdine Executive Gary Carley Executive Toni McReynolds Executive Maureen Stackhouse Executive Ron Williams Executive Sam MacGregor SVP / Cashier Glenn Henry SVP / Controller Kirk Dixon SVP / Corporate Security Jerri Anderson Senior Donald Ashley Senior Steve Carpenter Senior Jeff Crow Senior Billy Martin Senior Donna Melotakis Senior Shawna O Dell Senior Landa Shaw Senior Michelle Smith Senior James Tipton Senior Allie Wadley Senior Will Alexander Gina Brown Daniel Cahill Sharon Cannon Kelly Green Tim Griffin Janis Moczygemba Teri Nahoolewa Jose Ortiz Corina Padron Gwen Pearson Ginger Pilgrim Felicia Porter Julie Russ Ann Simmons Cathy Thornton Donna Baker Assistant Donna Brule Assistant Darci Crain Assistant Jamie Fullerton Assistant Ross Gillispie Assistant Haydee Olivares Assistant Robyn Price Assistant Judy Rambo Assistant Michelle Skelton Assistant Maurice Uttley Assistant Jason Boyd Bank Officer Sean Hansen Bank Officer Lee Martinez Bank Officer Adriana Pena Bank Officer Baharak Sotoudeh Bank Officer Kathleen Martin Trust Officer Directors Larry R. Byrd Investments Michael P. Haggerty Executor, Estate of Bert Fields, Jr. Thomas A. Koons President, Tommy Koons Company John S. Mahar, Jr. President, Storage Services Inc. Brannon D. Marlowe, M.D. Anesthesiologist, Excel Anesthesia Larry A. Miller President, North Dallas Bank & Trust Co. Larry M. Nobles Investments Thomas A. Oddo President, Oddo Investment Company Paul A. Pulliam Investments Sam W. Renshaw CFO & Vice Chairman, North Dallas Bank & Trust Co. W. Michael Shipman CEO & Chairman, North Dallas Bank & Trust Co. Jay S. Turner SVP, Residential Counsel, Republic Title of Texas Inc. We are 149 employees and 5 full-service banking centers.

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