Gold Bank Settles IRS Claims Over Housing Revenue Bond Investments For $3.5 Million, Recovers $4.6 Million in Settlement of Claims Against Other Participants

The bonds were marketed and sold as tax-exempt investments, andthe company had previously reported the bonds as high-yield, tax-freeinvestments. The IRS made a proposed determination that the interestpaid on the bonds could not be excluded from the gross income of thebank for tax purposes.

"While we do not agree with the IRS' assertion that the bank owedfederal income tax on the interest it received on the bonds, webelieve it is in the best interest of the bank to avoid the cost,uncertainty, and distraction that would come from a prolonged legalproceeding," said Mick Aslin, Chief Executive Officer. "It makes moresense for us to move on and continue growing our bank for the benefitof our shareholders, customers and associates, while seeking torecover funds from other parties to the transactions in addition tothose we are announcing today," said Aslin.

The bank will make a single cash payment to cover the threesettlements, which were signed on October 17, 2005. The payment willbe recorded as a onetime charge for the quarter ended September 30,2005.

The bonds were purchased by Gold Bank in 2001 and 2002 and wereissued by the City of Lee's Summit, Missouri, the CommunityDevelopment Authority of the City of Manitowoc, Wisconsin, and theOklahoma Housing Development Authority. The bonds were part of threelarger bond issues totaling $450 million. Gold Bank was first notifiedabout IRS concerns in August, after an examination of the Lee'sSummit, Missouri bonds. The bank received similar notices from the IRSin September regarding the Wisconsin and Oklahoma bonds.

The bank received payments on the bonds in the amount of $1.940million, $4.225 million, $4.375 million, and $0.828 million in 2002,2003, 2004, and 2005, respectively. The bank recorded an aggregateimpairment loss of $10.846 million on the bonds in 2004, as disclosedin the company's quarterly report on Form 10-Q for the quarter endedSeptember 30, 2004 and its annual report on Form 10-K/A for the yearended December 31, 2004. Gold Banc's Gold Capital Managementsubsidiary received an aggregate of $450,000 in fees paid out of theproceeds of the three bond issues.

By entering into the settlement agreements, Gold Bank has resolvedany and all claims the IRS may have had against the bank related tothe bonds. Certain current and former employees who were involved inthe bond transactions were also released from liability by the IRS.Under the settlement agreements, the interest received on the bondscannot be excluded from the income of the bank for federal income taxpurposes. The IRS, however, has agreed that it will not impose anytax, penalties, additions to tax, adjustments, or assessments againstthe bank. Finally, the bank will not be required to file amended taxreturns for the years in which the bank received interest on thebonds.

For additional information about the bonds and the IRS settlement,please refer to our current report on Form 8-K dated October 17, 2005filed with the Securities and Exchange Commission.

Related Settlements

In separate but related matters, Gold Bank has recovered anaggregate of $4.643 million in settlement of claims it had madeagainst other participants in the bond transactions.

Gold Bank has entered into a settlement agreement with the trusteeof the Oklahoma bonds. As part of the agreement, the trustee made acash payment of approximately $1.4 million to Gold Bank on September29, 2005. The agreement was the result of a claim by Gold Bank thatthe trustee had improperly paid fees and expenses to third parties outof bond proceeds in which the bank had a security interest. Thesettlement amount, net of a remaining write-off of $0.753 million,will be recorded as other non-interest income in the third quarter of2005.

Gold Banc Corporation's corporate counsel also acted as bondcounsel in the transactions. The firm issued opinions that, based oncertain assumptions and conditions, interest on the bonds was excludedfor tax purposes from the gross income of the bondholders. The firm'sopinions were a factor relied upon by Gold Bank in purchasing thebonds. Gold Bank made claims against the firm in connection with thebonds, and the firm denied liability arising out of the bondtransactions. Gold Bank has agreed to settle its claims against thefirm for a total of $3.25 million, consisting of $2.05 million in cashpayments by the firm and $1.20 million in structured payments thatinclude discounts on legal fees over a period of up to four yearsafter the date of the settlement. Gold Bank will receive a total of$2.05 million in cash, and has realized $0.150 million in structuredpayments from the firm as of the date of this release. Of this amount,$1.75 million will be received after the end of the third quarter andis expected to be recorded as income in the fourth quarter of 2005.

Conference Call

Gold Banc has scheduled a conference call for October 21, 2005 at8:00 a.m. (CDT) to discuss earnings and results of operations for thethird quarter and strategic directions and goals. Information aboutthe call will be provided in the third quarter earnings release. GoldBanc may provide information and respond to questions during the callabout the events described in this release.

About Gold Banc

Gold Banc is a $4.1 billion financial holding companyheadquartered in Leawood, Kansas, a part of the Kansas Citymetropolitan area. Gold Banc provides banking and asset managementservices in Florida, Kansas, Missouri and Oklahoma through 32 bankinglocations. Gold Banc is traded on the Nasdaq under the symbol GLDB.