TXUI Texas United Bancshares

Texas United Bancshares, Inc. Announces Second Quarter Earnings LA GRANGE, Texas, July 19 /PRNewswire-FirstCall/ -- Texas United Bancshares, Inc. (NASDAQ:TXUI) today reported second quarter 2004 net income of $1.5 million or $0.36 per diluted share, compared with net income of $1.4 million or $0.34 per diluted share for the second quarter of 2003. For the three months ended June 30, 2004, the annualized return on average assets was 0.83% and annualized return on average equity was 15.75%. For the first six months of 2004, net income was $3.1 million or $0.73 per diluted share, up from $2.5 million or $0.61 per diluted share in the first six months of 2003. The annualized return on average assets was 0.90% and annualized return on average equity was 15.73% for the six months ended June 30, 2004. Other financial results for the second quarter 2004 included net interest income before the provision for loan losses of $7.1 million, up 8.9% compared with the second quarter of 2003. For the first six months of 2004, net interest income before the provision for loan losses was $13.8 million, up 7.6% compared with the first six months of 2003. The net interest margin for the second quarter of 2004 was 4.46% compared with 5.16% for the same period in 2003. Average total loans, including loans held for sale, for the second quarter of 2004 were up $56.9 million, a 15.5% increase from the second quarter last year. Average deposits for the second quarter of 2004 were up $85.3 million, a 17.9% increase from the same period of 2003. Non-interest income was $4.7 million in the second quarter of 2004 compared with $3.4 million for the same period in 2003. For the first six months of 2004, non-interest income was $8.6 million, compared with $7.0 million for the same period in 2003. The increase for the three and six months ended June 30, 2004 is mainly attributed to gains on the sale of mortgage loans generated from Community Home Loan, Inc. Non-interest expense for the second quarter of 2004 was $9.2 million compared with $7.4 million for the same period in 2003. For the first six months of 2004, non-interest expense was $17.3 million compared with $14.9 million for the same period in 2003. The increase for the three and six months ended June 30, 2004 is mainly attributed to employee compensation and benefits and other expenses related to Community Home Loan, Inc. The provision for loan losses was $300,000 in the second quarter 2004 compared with $500,000 for the same quarter in 2003. Non-performing assets totaled $2.6 million or 0.61% of loans and other real estate at June 30, 2004 compared with $2.3 million or 0.59% at December 31, 2003. For the first six months of 2004, net charge-offs were $221,000 or 0.05% of average total loans compared with $2.3 million or 0.61% for the year ended December 31, 2003. The allowance for loan losses totaled $4.1 million at June 30, 2004 compared with $3.9 million at December 31, 2003. As of June 30, 2004, Texas United Bancshares, Inc. had total assets of $751.6 million and total deposits of $567.4 million. Shareholders' equity of $37.6 million represented 5.0% of total assets. Texas United Bancshares, Inc. is a registered financial holding company listed on the Nasdaq National Market under the symbol "TXUI". Its wholly owned subsidiary, State Bank, offers a complete range of banking services through 18 full service banking centers and four loan production offices located in the greater central and south central Texas area. In addition, State Bank has nine mortgage loan production offices located in Houston, San Antonio and Kerrville through its wholly owned subsidiary, Community Home Loan, Inc. In connection with the proposed merger of GNB Bancshares, Inc. ("GNB") into Texas United, Texas United will file with the Securities and Exchange Commission a registration statement on Form S-4 to register the shares of Texas United's common stock to be issued to the shareholders of GNB. The registration statement will include a joint proxy statement/prospectus which will be sent to the shareholders of GNB and the shareholders of Texas United seeking their approval of the proposed transaction. TEXAS UNITED URGES INVESTORS AND SECURITY HOLDERS TO READ THE REGISTRATION STATEMENT ON FORM S-4 AND THE JOINT PROXY STATEMENT/PROSPECTUS INCLUDED WITHIN THE REGISTRATION STATEMENT ON FORM S-4 AND ANY OTHER RELEVANT DOCUMENTS TO BE FILED WITH THE SECURITIES AND EXCHANGE COMMISSION IN CONNECTION WITH THE PROPOSED TRANSACTION, BECAUSE THEY CONTAIN IMPORTANT INFORMATION ABOUT TEXAS UNITED, GNB AND THE PROPOSED TRANSACTION. Investors and security holders may obtain free copies of these documents through the website maintained by the Securities and Exchange Commission at http://www.sec.gov/ . Free copies of the joint proxy statement/prospectus may also be obtained by directing a request by telephone or mail to Texas United Bancshares, Inc., 202 West Colorado St., La Grange, Texas 78945, Attn: Investor Relations. Texas United's telephone number is (979) 968-8451. The directors, executive officers, and certain other members of management of Texas United and GNB may be soliciting proxies in favor of the merger from the companies' respective shareholders. For information about Texas United's directors, executive officers, and members of management, shareholders are asked to refer to the most recent proxy statement issued by Texas United, which is available on its web site and at the address provided in the preceding paragraph. FORWARD-LOOKING STATEMENTS AND ASSOCIATED RISK FACTORS This release, other written materials, and statements management may make, may contain certain forward-looking statements regarding Texas United's prospective performance and strategies within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Texas United intends such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995, and is including this statement for purposes of said safe harbor provisions. Forward-looking statements, which are based on certain assumptions and describe future plans, strategies, and expectations of Texas United, are generally identified by use of the words "plan," "believe," "expect," "intend," "anticipate," "estimate," "project," or other similar expressions. Texas United's ability to predict results or the actual effects of its plans and strategies is inherently uncertain. Accordingly, actual results may differ materially from anticipated results. The following factors, among others, could cause actual results to differ materially from the expectations stated in any forward-looking statement: the ability of Texas United and GNB to obtain the required shareholder or regulatory approvals for the merger of GNB into Texas United or to consummate the merger; the ability of Texas United to obtain the required regulatory approvals for the purchase of the branches from Central Bank; the ability to successfully integrate GNB and the Caldwell and Lexington branches with Texas United following the merger and the branch purchase; a materially adverse change in the financial condition of either Texas United or GNB; a change in general business and economic conditions; changes in the interest rate environment, deposit flows, loan demand, real estate values, and competition; changes in accounting principles, policies or guidelines; changes in legislation and regulation; and other economic, competitive, governmental, regulatory, geopolitical, and technological factors affecting Texas United's operations, pricing, products and services. The forward-looking statements are made as of the date of this release and, except as may be required by applicable law or regulation, Texas United undertakes no obligation to update these forward-looking statements to reflect events or circumstances that occur after the date on which such statements were made. All written or oral forward-looking statements are expressly qualified in their entirety by these cautionary statements. You should also read the additional risks and factors described from time to time in Texas United's reports and registration statements filed with the Securities and Exchange Commission. Copies of our Texas United's filings are also available on our website http://www.statebanktx.com/ under the caption of investor relations. Texas United Bancshares, Inc. CONSOLIDATED FINANCIAL SUMMARY (UNAUDITED) (In thousands, except per share amounts) 2004 2003 2nd Qtr 1st Qtr 4th Qtr 3rd Qtr 2nd Qtr CONDENSED INCOME STATEMENTS Net interest income $7,148 $6,664 $6,621 $6,770 $6,561 Provision for loan losses 300 150 800 800 500 Non-interest income Service charges on deposits accounts 2,228 1,597 1,737 1,718 1,689 Mortgage servicing revenue 290 208 76 400 132 Net gain on securities transactions 71 77 3 376 684 Other 2,078 2,022 1,871 654 884 Total non-interest income $4,667 $3,904 $3,687 $3,148 $3,389 Non-interest expense Employee compensation and benefits 5,722 4,274 4,375 4,509 4,349 Occupancy 1,117 1,088 1,142 1,214 1,144 Other 2,357 2,788 2,636 1,199 1,934 Total non-interest expense $9,196 $8,150 $8,153 $6,922 $7,427 Income before provision for taxes 2,319 2,268 1,355 2,196 2,023 Income taxes 824 703 166 667 631 Net income $1,495 $1,565 $1,189 $1,529 $1,392 PER SHARE DATA Earnings per share - basic $0.37 $0.39 $0.30 $0.38 $0.35 Earnings per share - diluted 0.36 0.37 0.29 0.37 0.34 Cash dividends 0.07 0.07 0.07 0.07 0.07 Book value per share 9.34 10.17 9.49 9.11 9.68 Period-end common shares outstanding 4,025 4,017 4,002 3,995 3,995 Weighted average shares - basic 4,020 4,010 4,000 3,995 3,978 Weighted average shares - diluted 4,200 4,193 4,154 4,163 4,139 SELECTED ANNUALIZED RATIOS Return on average assets 0.83% 0.96% 0.75% 0.97% 0.93% Return on average equity 15.75 15.33 12.86 16.70 14.38 Net interest margin 4.46 4.63 4.75 4.91 5.16 Texas United Bancshares, Inc. CONSOLIDATED FINANCIAL SUMMARY (UNAUDITED) (Dollars in thousands) 2004 2003 2nd Qtr 1st Qtr 4th Qtr 3rd Qtr 2nd Qtr BALANCE SHEET SUMMARY Average Balance: Loans (including loans held for sale) $424,805 $391,820 $376,623 $384,748 $367,909 Earning assets 645,214 578,730 568,074 568,068 527,609 Total assets 716,168 650,610 632,285 631,398 601,609 Total deposits 561,454 517,797 505,431 501,208 476,178 Shareholders' equity 37,960 40,845 36,970 36,621 38,728 Period-End Balance: Loans (including loans held for sale) $435,128 $406,840 $384,331 $373,438 $369,514 Earning assets 676,414 589,071 568,878 560,158 543,863 Goodwill and intangible assets 14,704 14,365 13,941 14,259 12,896 Total assets 751,631 658,720 637,684 630,142 614,374 Total deposits 567,440 536,749 501,136 503,706 495,614 Shareholders' equity 37,570 40,845 37,987 36,396 38,647 ASSET QUALITY Allowance for loan losses: $4,122 $4,093 $3,893 $3,896 $3,584 As a percentage of period-end loans 0.95% 1.01% 1.01% 1.04% 0.97% Net charge-offs (recoveries): $271 $(50) $803 $488 $509 As a percentage average loans (annualized) 0.26% (0.01)% 0.85% 0.51% 0.55% Non-performing assets: Past due and non-accrual $976 $2,073 $1,988 $1,373 $1,445 Other real estate 1,672 333 273 449 369 Total $2,648 $2,406 $2,261 $1,822 $1,814 As a percentage of: Total assets 0.35% 0.37% 0.35% 0.29% 0.30% Total loans plus other real estate 0.61 0.59 0.59 0.49 0.49 CONSOLIDATED CAPITAL RATIOS Tier 1 risk-based capital ratio 8.88% 9.61% 9.54% 8.09% 8.35% Total risk-based capital ratio 9.74 10.56 10.47 9.01 9.26 Leverage ratio 6.04 6.46 6.46 5.47 5.56 Texas United Bancshares, Inc. CONSOLIDATED FINANCIAL SUMMARY (UNAUDITED) (In thousands, except per share amounts) Six Months Ended June 30 2004 2003 CONDENSED INCOME STATEMENTS Net interest income $13,812 $12,832 Provision for loan losses 450 1,300 Non-interest income Service charges on deposit accounts 3,825 3,298 Mortgage servicing revenue 498 1,151 Net gain on securities transactions 148 915 Other 4,100 1,605 Total non-interest income 8,571 6,969 Non-interest expense Employee compensation and benefits 9,996 7,805 Occupancy 2,205 2,265 Other 5,145 4,847 Total non-interest expense 17,346 14,917 Income before provision for income taxes 4,587 3,584 Income taxes 1,527 1,061 Net income $3,060 $2,523 PER SHARE DATA Earnings per share - basic $0.76 $0.64 Earnings per share - diluted 0.73 0.61 Cash dividends 0.14 0.14 Book value per share 9.34 9.68 OUTSTANDING SHARES (shares in thousands) Period-end common shares outstanding 4,025 3,995 Weighted average shares outstanding - basic 4,015 3,971 Weighted average shares outstanding - diluted 4,197 4,130 SELECTED ANNUALIZED RATIOS Return on average assets 0.90% 0.85% Return on average equity 15.73 13.48 Net interest margin 4.57 5.17 Texas United Bancshares, Inc. CONSOLIDATED FINANCIAL SUMMARY (UNAUDITED) (Dollars in thousands) Six Months Ended June 30 2004 2003 BALANCE SHEET SUMMARY Average Balance: Total loans (including loans held for sale) $408,329 $373,139 Earning assets 607,582 518,290 Total assets 682,258 591,448 Total deposits 540,407 463,798 Shareholders' equity 38,897 37,428 Period-End Balance: Total loans (including loans held for sale) $435,128 $369,514 Earning assets 676,414 543,863 Goodwill and intangible assets 14,704 12,896 Total assets 751,631 614,374 Total deposits 567,440 495,614 Shareholders' equity 37,570 38,647 ASSET QUALITY Allowance for loan losses $4,122 $3,584 As a percentage of period-end loans 0.95% 0.97% Net charge-offs: $221 $1,012 As a percentage of average loans 0.05% 0.27% Non-performing assets: Past due and non-accrual loans $976 $1,445 Other real estate 1,672 369 Total $2,648 $1,814 As a percentage of: Total assets 0.35% 0.30% Total loans plus other real estate 0.61 0.49 DATASOURCE: Texas United Bancshares, Inc. CONTACT: Tom Adams of Texas United Bancshares, Inc., +1-979-968-7261 Web site: http://www.sec.gov/ Web site: http://www.statebanktx.com/

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