SOURCE: Texas United Bancshares, Inc.

April 20, 2006 08:10 ET

Texas United Bancshares, Inc. Announces First Quarter 2006 Earnings Results; Net Earnings Increased 35.6% and Diluted EPS Increased 14.3%

LA GRANGE, TX -- (MARKET WIRE) -- April 20, 2006 -- Texas United Bancshares, Inc. (NASDAQ: TXUI)

First Quarter 2006 Financial Highlights:

--  Diluted EPS for the first quarter of 2006 was $0.40, an increase of
    $0.09 per diluted share or 29.0% compared with diluted EPS of $0.31 for the
    fourth quarter of 2005 and an increase of $0.05 per diluted share or 14.3%
    compared with diluted EPS of $0.35 for the first quarter of 2005.
--  Net earnings for the first quarter of 2006 were $3.8 million, an
    increase of $1.2 million or 44.4% compared with net earnings of $2.6
    million for the fourth quarter of 2005 and an increase of $1.0 million or
    35.6% compared with net earnings of $2.8 million for the first quarter of
    2005.
--  The net interest margin for the first quarter of 2006 was 4.91%, a
    narrowing of 3 basis points compared with 4.94% for the fourth quarter of
    2005, but an improvement of 4 basis points compared with 4.87% for the
    first quarter of 2005.
--  The efficiency ratio was 69.99% for the first quarter of 2006, an
    improvement compared with 73.21% for the fourth quarter of 2005 and 71.54%
    for the first quarter of 2005.
--  Total loans at March 31, 2006 were $1.097 billion, an increase of
    $65.1 million or 6.3% compared with $1.032 billion at December 31, 2005.
--  Total deposits at March 31, 2006 were $1.205 billion, an increase of
    $83.5 million or 7.4% compared with $1.121 billion at December 31, 2005.
    
First Quarter 2006 Operational Highlights:
--  The Company completed the acquisition of The Express Bank of Texas,
    Round Rock, Texas, on February 14, 2006.
--  Organic loan growth for the first quarter of 2006 was approximately
    $46.1 million (excluding $19.0 million in loans acquired with the
    acquisition of The Express Bank of Texas) or 4.5% compared with total loans
    of $1.032 billion at December 31, 2005.
--  Organic deposit growth for the first quarter of 2006 was approximately
    $45.7 million (excluding $37.8 million in deposits acquired with the
    acquisition of The Express Bank of Texas) or 4.1% compared with total
    deposits of $1.121 billion at December 31, 2005.
--  The Company entered into an agreement with Fidelity National
    Information Services for a new company-wide core processing platform.  The
    conversions and implementations of each subsidiary bank are scheduled to be
    completed by the end of 2006.
    
Texas United Bancshares, Inc. (NASDAQ: TXUI), a community banking organization and parent company of State Bank, La Grange, Texas, GNB Financial, n.a., Gainesville, Texas, Gateway National Bank, Dallas, Texas, and Northwest Bank, Roanoke, Texas, (acquired on April 1, 2006) today reports net earnings of $3.8 million for the first quarter ended March 31, 2006, an increase of $1.2 million or 44.4% compared with $2.6 million for the fourth quarter of 2005, and an increase of $1.0 million or 35.6% compared with $2.8 million for the first quarter of 2005. Diluted earnings per share for the first quarter of 2006 were $0.40, an increase of $0.09 or 29.0% compared with $0.31 per diluted share for the fourth quarter of 2005, and an increase of $0.05 or 14.3% compared with $0.35 per diluted share for the first quarter of 2005. The higher net earnings and diluted earnings per share for the first quarter of 2006, compared with the same quarter of 2005, were primarily due to organic growth, acquired growth as a result of the recent acquisitions, and several increases in the prime lending rate on existing and newly originated or acquired earning assets.

Diluted earnings per share for the first quarter of 2006, compared with the first quarter of 2005, was largely impacted by the issuance of 248,317 shares of common stock in connection with the acquisition of The Express Bank of Texas and approximately 1,357,000 shares of common stock issued in connection with the acquisition of Gateway National Bank. Weighted average diluted shares outstanding for the first quarter of 2006 were approximately 9,583,000 compared with 7,968,000 for the first quarter of 2005. Total outstanding shares at March 31, 2006 were approximately 9,634,000 compared with 7,805,000 at March 31, 2005.

Don Stricklin, President and CEO, commented, "We were extremely pleased with our first quarter 2006 financial results. We worked hard to assimilate our acquisition of Gateway National Bank in Dallas, Texas in the fourth quarter of 2005 and our acquisition of The Express Bank of Texas, Round Rock, Texas, in the first quarter of 2006. We were able to maintain our net interest margin with only a 3 basis point contraction on a linked quarter basis, and an improvement of 4 basis points on a year over year basis. We have also continued to make great strides in reducing our operating costs and this is evidenced by an improved efficiency ratio of 69.99%."

Results of Operations:

Net Interest Income. Net interest income, before the provision for loan losses, for the first quarter of 2006 was $16.5 million, an increase of $1.7 million or 11.8% compared with $14.7 million for the fourth quarter of 2005, and an increase of $4.4 million or 36.5% compared with $12.1 million for the first quarter of 2005. The net interest margin for the first quarter of 2006 was 4.91%, a reduction of 3 basis points compared with 4.94% for the fourth quarter of 2005 and an improvement of 4 basis points compared with 4.87% for the first quarter of 2005. The linked quarter reduction in the net interest margin was primarily the result of increased pricing pressures on interest-bearing liabilities primarily due to increased market interest rates and the associated competition for funding sources thereof. The improvement in net interest income and the net interest margin for the first quarter of 2006, compared with the same quarter of 2005, was primarily due to increased yields on larger earning-asset volumes as a result of internal growth and acquisitions. This was partially offset by increased interest-bearing liability volumes as a result of year over year internal growth and acquisitions, coupled with increased pricing pressures on existing, acquired, and newly established funding sources.

Interest Income. Interest income from average earning-assets for the first quarter ended March 31, 2006 was $25.0 million, an increase of $3.3 million or 15.4% compared with $21.7 million for the fourth quarter of 2005, and an increase of $8.5 million or 51.5% compared with $16.5 million for the first quarter of 2005. Average earning-assets for the first quarter ended March 31, 2006 were $1.358 billion, an increase of $175.1 million or 14.8% compared with average earning-assets of $1.183 billion for the fourth quarter of 2005, and an increase of $353.9 million or 35.2% compared with average earning-assets of $1.005 billion for the first quarter of 2005. The yield on average earning-assets for the first quarter ended March 31, 2006 was 7.48%, an increase of 20 basis points compared with the yield on average earning-assets of 7.28% for the fourth quarter of 2005, and an increase of 81 basis points compared with the yield on average earning-assets of 6.67% for the first quarter of 2005.

Interest Expense. Interest expense from average interest-bearing liabilities for the first quarter ended March 31, 2006 was $8.6 million, an increase of $1.6 million or 23.0% compared with $7.0 million for the fourth quarter of 2005, and an increase of $4.1 million or 91.9% compared with $4.5 million for the first quarter of 2005. Average interest-bearing liabilities for the first quarter ended March 31, 2006 were $1.108 billion, an increase of $137.7 million or 14.2% compared with average interest-bearing liabilities of $970.7 million for the fourth quarter of 2005, and an increase of $262.9 million or 31.1% compared with average interest-bearing liabilities of $845.6 million for the first quarter of 2005. The cost of average interest-bearing liabilities for the first quarter ended March 31, 2006 was 3.14%, an increase of 29 basis points compared with the cost of average interest-bearing liabilities of 2.85% for the fourth quarter of 2005, and an increase of 100 basis points compared with the cost of average interest-bearing liabilities of 2.14% for the first quarter of 2005.

Noninterest Income. Noninterest income for the first quarter ended March 31, 2006 was $6.7 million, an increase of $994,000 or 17.3% compared with $5.8 million for the fourth quarter of 2005 and an increase of $450,000 or 7.1% compared with $6.3 million for the first quarter of 2005. The increase over the linked quarters was primarily due to increased fees collected on additional loan and deposit accounts as a result of the recent acquisitions of Gateway National Bank and The Express Bank of Texas in addition to organic growth during the first quarter of 2006. The increase in noninterest income for the first quarter of 2006 compared with the first quarter of 2005 was primarily due to increased fees and revenues received on increased deposit accounts as a result of the full-year effect of the GNB Financial acquisition, year-over-year organic growth, increases in individual rates charged for banking services, and the recent acquisitions of Gateway National Bank and The Express Bank of Texas.

Service charges on deposit accounts for the first quarter of 2006 represented 37.6% of total noninterest income and were $2.5 million, an increase of $47,000 or 1.9% compared with the fourth quarter of 2005, and an increase of $702,000 or 38.3% compared with $1.8 million for the first quarter of 2005. Mortgage servicing revenue for the first quarter of 2006 was $226,000 and remained relatively flat compared with the fourth quarter of 2005 and decreased $70,000 or 23.6% compared with the first quarter of 2005. This decrease was primarily the result of normal mortgage servicing runoff and newly originated mortgage loans being sold into the secondary market as "servicing released" as opposed to "servicing retained." Net gains on sales of mortgage loans for the first quarter of 2006 was $1.7 million, a decrease of $315,000 or 15.4% compared with $2.0 million for the fourth quarter of 2005 and a decrease of $858,000 or 33.1% compared with $2.6 million for the first quarter of 2005. The decreases compared with both prior periods were primarily due to lower volumes of mortgage loans that were sold in addition to timing differences that occur between the volume and number of loans available for sale and the actual amount sold.

Noninterest Expense. Noninterest expense for the first quarter ended March 31, 2006 was $17.1 million, an increase of $1.7 million or 11.2% compared with $15.4 million for the fourth quarter of 2005 and an increase of $3.6 million or 27.1% compared with the first quarter of 2005. The increase in both periods reflects the impact of the Company's expansion and acquisition activities over the past two years, primarily the impact of additional staffing and occupancy costs from each acquisition, staffing to handle expanded back office operations, professional and legal fees related to compliance and acquisition projects, the construction of three full-service banking centers in the third and fourth quarters of 2005.

Salaries and benefits expense for the first quarter of 2006 represented 59.8% of total noninterest expense and was $10.2 million, an increase of $1.1 million or 12.0% compared with $9.1 million for the fourth quarter of 2005 and an increase of $3.2 million or 44.7% compared with $7.1 million for the first quarter of 2005. The increases in salaries and benefits expense reflect the impact of the Company's recent acquisition activities and expanded back office operations, the impact of a full quarter of staff expense from the acquisition of Gateway National Bank, and staff to operate State Bank's three new full-service banking centers opened in the third and fourth quarters of 2005. Average assets per full-time employee for the first quarter ended March 31, 2006 were $2.5 million, an improvement of approximately $300,000 per full-time employee compared with $2.2 million for the fourth quarter of 2005, and an improvement of approximately $400,000 per full-time employee compared with $2.1 million for the first quarter of 2005.

The efficiency ratio for the first quarter of 2006 was 69.99%, an improvement compared with 73.21% for the fourth quarter of 2005 and 71.54% for the first quarter of 2005. Although total noninterest expense has increased comparatively in recent periods, management believes that the Company has achieved increased economies of scale through its expansion activities, and this is positively reflected in its improved efficiency ratio. The Company's efficiency ratios are calculated on a net basis which excludes intangible amortization and securities gains and losses, and includes interest income on a fully tax-equivalent basis.

Financial Condition:

Total Assets. Total assets at March 31, 2006 were $1.630 billion, an increase of $77.9 million or 5.0% compared with $1.552 billion at December 31, 2005 and an increase of $450.2 million or 38.2% compared with $1.180 billion at March 31, 2005. The return on average assets for the first quarter ended March 31, 2006 was 0.98%, an increase of 21 basis points compared with 0.77% for the fourth quarter of 2005, and an increase of 1 basis point compared with 0.97% for the first quarter of 2005.

Investments. Total investments (investment securities and Federal Funds sold and other temporary investments) at March 31, 2006 were $301.6 million, a decrease of $1.2 million or 0.4% compared with total investments of $302.8 million at December 31, 2005 and a decrease of $8.6 million or 2.8% compared with total investments of $310.2 million at March 31, 2005. Investment securities at March 31, 2006 were $268.5 million, relatively flat compared with $269.2 million at December 31, 2005 but a decrease of $36.5 million or 12.0% compared with investment securities of $305.0 million at March 31, 2005. Federal funds sold and other temporary investments at March 31, 2006 were $33.1 million, relatively flat compared with $33.6 million at December 31, 2005 but an increase of $27.9 million or 532.1% compared with Federal Funds sold and other temporary investments of $5.2 million at March 31, 2005.

Loans. Total loans at March 31, 2006 were $1.097 billion, an increase of $65.1 million or 6.3% compared with total loans of $1.032 billion at December 31, 2005 and an increase of $371.3 million or 51.2% compared with total loans of $725.7 million at March 31, 2005. During the first quarter of 2006, approximately $46.1 million or 70.8% of the total loan growth was organically originated, primarily in the categories of commercial real estate and 1-4 single family residential, while approximately $19.0 million or 29.2% was acquired in connection with the acquisition of The Express Bank of Texas. The increase in total loans between March 31, 2006 and March 31, 2005 primarily consisted of $215.2 million or 58.0% that was organically originated and approximately $156.1 million or 42.0% acquired in connection with the acquisitions of Gateway National Bank and The Express Bank of Texas. Additionally, in total, the loan types associated with this trailing twelve-month loan growth is categorized as follows: 44.5% in commercial real estate, 27.1% in commercial/industrial, 24.8% in 1-4 family residential and 3.6% in consumer and other loans.

Asset Quality. Nonperforming assets consist of nonaccrual loans, accruing loans ninety days or more past-due, and other real estate and repossessed assets. At March 31, 2006 total nonperforming assets were $6.3 million or 0.39% of total assets, a decrease of $759,000 or 10.7% compared with nonperforming assets of $7.1 million or 0.46% of total assets at December 31, 2005 and an increase of $2.5 million or 64.1% compared with nonperforming assets of $3.8 million or 0.33% of total assets at March 31, 2005.

Nonperforming loans (nonaccrual loans and accruing loans ninety days or more past-due) at March 31, 2006 totaled $5.1 million or 0.46% of total loans, an increase of $341,000 or 7.2% compared with nonperforming loans of $4.7 million or 0.46% of total loans at December 31, 2005 and an increase of $1.8 million or 57.6% compared with nonperforming loans of $3.2 million or 0.44% of total loans at March 31, 2005.

Other real estate and repossessed assets at March 31, 2006 totaled $1.3 million, a decrease of $1.1 million or 46.6% compared with other real estate and repossessed assets of $2.4 million at December 31, 2005, and an increase of $619,000 or 96.6% compared with other real estate and repossessed assets of $641,000 at March 31, 2005. The decrease in other real estate and repossessed assets during the first quarter of 2006 was primarily the result of the sale and recovery of a parcel of other real estate acquired in connection with the acquisition of Gateway National Bank.

Net charge-offs for the first quarter of 2006 were $723,000 or 0.28% of average loans, a decrease of $358,000 or 33.1% compared with $1.1 million or 0.47% of average loans at December 31, 2005. The allowance for loan losses at March 31, 2006 was $9.9 million or 0.90% of total loans, an increase of $294,000 or 3.1% compared with $9.6 million or 0.93% of total loans at December 31, 2005. The ratio of the allowance for loan losses to nonperforming loans at March 31, 2006 was 195.49% compared with 203.39% at December 31, 2005.

Deposits. Total deposits at March 31, 2006 were $1.205 billion, an increase of $83.5 million or 7.4% compared with total deposits of $1.121 billion at December 31, 2005 and an increase of $324.6 million or 36.9% compared with total deposits of $880.3 million at March 31, 2005. The increase in total deposits during the first quarter of 2006 included $37.8 million acquired in connection with the acquisition of The Express Bank of Texas. The increase in total deposits in the first quarter of 2006 compared with the first quarter of 2005 included $252.6 million acquired in connection with the acquisitions of Gateway National Bank and The Express Bank of Texas.

Noninterest-bearing demand deposits at March 31, 2006 were $330.4 million, an increase of $12.7 million or 4.0% compared with noninterest-bearing demand deposits of $317.7 million at December 31, 2005 and an increase of $137.7 million or 71.4% compared with noninterest-bearing deposits of $192.7 million at March 31, 2005. Interest-bearing deposits at March 31, 2006 were $874.5 million, an increase of $70.8 million or 8.8% compared with interest-bearing deposits of $803.7 at December 31, 2005 and an increase of $186.9 million or 27.2% compared with interest-bearing deposits of $687.6 million at March 31, 2005.

Borrowings. Borrowings at March 31, 2006 were $194.3 million, a decrease of $11.5 million or 5.6% compared with borrowings of $205.8 million at December 31, 2005 and an increase of $86.7 million or 80.6% compared with borrowings of $107.6 million at March 31, 2005. These borrowings include short term advances from the Federal Home Loan Bank and a $7.0 million balance on a $20.0 million line of credit from a correspondent bank. Theses borrowings are utilized as alternative funding sources to compliment deposits in funding earning-assets.

Federal funds purchased at March 31, 2006 were $10.0 million, a decrease of $11.9 million or 54.3% compared with Federal funds purchased of $21.9 million at December 31, 2005, and a decrease of $43.8 million or 81.4% compared with Federal funds purchased of $53.8 million at March 31, 2005. Junior subordinated deferrable interest debentures at March 31, 2006 were approximately $50.0 million, an increase of $12.4 million or 32.9% compared with $37.6 million at December 31, 2005 and an increase of $32.5 million or 185.4% compared with $17.5 million at March 31, 2005. The increases in junior subordinated deferrable interest debentures were related to $12.4 million in debentures issued to a newly formed subsidiary trust on March 31, 2006 and $4.1 million in debentures assumed from Gateway Holding Company on December 1, 2005.

Shareholders' Equity. Shareholders' equity at March 31, 2006 was $146.2 million, an increase of $8.3 million or 6.0% compared with shareholders' equity of $137.9 million at December 31, 2005, and an increase of $42.0 million or 40.4% compared with shareholders' equity of $104.2 million at March 31, 2005. The increase for the first quarter of 2006 was primarily the result of the acquisition of The Express Bank of Texas and net earnings for the first quarter of 2006 that was partially offset by a reduction of $1.0 million in unearned compensation which resulted from the issuance of restricted stock. The increase in the first quarter of 2006 compared with the first quarter of 2005 was primarily the result of the acquisitions of Gateway National Bank and The Express Bank of Texas, net earnings during the period, the issuance of restricted stock, and the purchases of common stock by employees upon the exercise of stock options. At March 31, 2006, there were 9,633,736 shares of Company common stock outstanding.

The ratio of average equity to average assets at March 31, 2006 was 9.12%, an increase of 40 basis points from 8.72% for the fourth quarter of 2005, and an increase of 4 basis points compared with 9.08% for the first quarter of 2005. The return on average equity for the first quarter ended March 31, 2006 was 10.74%, an increase of 187 basis points from 8.87% for the fourth quarter of 2005 and an increase of 8 basis points from 10.66% for the first quarter of 2005. The return on average tangible equity for the first quarter of 2006 was 23.24%, an increase of 549 basis points from 17.75% for the fourth quarter of 2005, and an increase of 290 basis points from 20.34% for the first quarter of 2005.

Looking Ahead in 2006:

--  The Company completed its acquisition of Northwest Banschares, Inc.
    and Northwest Bank on April 1, 2006.
--  The Company plans to close seven underperforming mortgage loan
    production offices in the second quarter of 2006.  These offices were
    acquired as part of the Community Home Loan acquisition.  Management
    anticipates a write-down of approximately $500,000 in goodwill recorded as
    part of the acquisition.  This will be the only charge related to the
    closings.
--  The Company's focus for the remainder of 2006 is on profitability and
    organic growth with no planned branch openings and no active acquisition
    strategies.  However, we may consider selective acquisition opportunities
    that arise in the normal course of business.
--  The Company plans to convert all of its subsidiary banks to one common
    core-processing platform by the end of 2006.
--  The Company's board of directors has approved additional investments
    in bank owned life insurance ("BOLI") of approximately $12.0 million and is
    entering into a 1035 exchange on approximately $5.0 million of existing
    BOLI in order to maximize earning-asset yields.  Combined, these
    transactions should be accretive per year in the range of $0.03 to $0.04
    per diluted share based upon our current outstanding share count.
    
Texas United Bancshares, Inc. is a registered financial holding company listed on the NASDAQ National Market under the symbol "TXUI." The Company operates through four wholly-owned subsidiary banks, State Bank, GNB Financial, n.a., Gateway National Bank and Northwest Bank (acquired on April 1, 2006), each of which offer a complete range of banking services. State Bank is headquartered in La Grange, Texas with 25 full-service banking centers located in central and south central Texas. GNB Financial is headquartered in Gainesville, Texas with seven full-service banking centers located in Cooke, Denton and Ellis counties, north and south of the Dallas-Fort Worth metroplex. Gateway National Bank is headquartered in Dallas, Texas with six Dallas area full-service banking centers. Northwest Bank is located in Roanoke, Texas with five full-service banking centers located in and around the Dallas-Fort Worth metroplex. In addition, State Bank operates ten mortgage loan production offices and five limited service branches located in and around the Houston, San Antonio and Austin, Texas metropolitan areas.

Forward-Looking Statements:

Except for historical information, certain of the matters discussed in this news release may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that involve risks and uncertainties, including, but not limited to, the following: general business and economic conditions in the markets Texas United serves may be less favorable than expected which could decrease the demand for loan, deposit and other financial services and increase loan delinquencies and defaults; changes in the interest rate environment which could reduce Texas United's net interest margin; acquisition integration may be more difficult than anticipated; legislative or regulatory developments including changes in laws concerning taxes, banking, securities, insurance and other aspects of the financial securities industry; competitive factors may increase, including product and pricing pressures among financial services organizations; and changes in accounting principles, policies or guidelines. All written or oral forward-looking statements are expressly qualified in their entirety by these cautionary statements. Please 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. We disclaim any obligation to update or revise any forward-looking statements contained in this release.

                      TEXAS UNITED BANCSHARES, INC.
                        CONSOLIDATED BALANCE SHEETS
                          (Dollars in thousands)

                              March 31,   December 31,
                                 2006         2005       Change   Percent
                             -----------  ------------  --------  --------
                             (Unaudited)
 ASSETS
    Cash and due from banks  $    51,874  $     61,766  $ (9,892)    -16.0%
    Federal funds sold and
     other temporary
     investments                  33,091        33,620      (529)     -1.6%
                             -----------  ------------  --------
       Total cash and cash
        equivalents               84,965        95,386   (10,421)    -10.9%

    Securities available for
     sale, at fair value         242,900       243,011      (111)      0.0%
    Securities held to
     maturity, at cost            25,587        26,163      (576)     -2.2%

    Total loans, including
     loans held for sale       1,096,975     1,031,838    65,137       6.3%
    Allowance for loan
     losses                       (9,886)       (9,592)     (294)     -3.1%
                             -----------  ------------  --------
       Total loans, net        1,087,089     1,022,246    64,843       6.3%

    Premises and equipment,
     net                          57,638        53,610     4,028       7.5%
    Accrued interest
     receivable                    7,751         7,433       318       4.3%
    Goodwill                      68,557        63,396     5,161       8.1%
    Core deposit
     intangibles, net              9,185         8,847       338       3.8%
    Mortgage servicing
     rights, net                   4,936         4,878        58       1.2%
    Other assets                  41,795        27,489    14,306      52.0%

                             -----------  ------------  --------
       Total assets          $ 1,630,403  $  1,552,459  $ 77,944       5.0%
                             -----------  ------------  --------


 LIABILITIES AND
  SHAREHOLDERS' EQUITY
    Deposits:
       Noninterest-bearing   $   330,422  $    317,723  $ 12,699       4.0%
       Interest-bearing          874,526       803,699    70,827       8.8%
                             -----------  ------------  --------
          Total deposits       1,204,948     1,121,422    83,526       7.4%

    Securities sold under
     repurchase agreements         8,196         7,120     1,076      15.1%
    Federal funds purchased       10,000        21,901   (11,901)    -54.3%
    Junior subordinated
     deferrable interest
     debentures                   49,996        37,624    12,372      32.9%
    Borrowings                   194,271       205,755   (11,484)     -5.6%
    Other liabilities             16,771        20,724    (3,953)    -19.1%
                             -----------  ------------  --------
          Total liabilities    1,484,182     1,414,546    69,636       4.9%

 SHAREHOLDERS' EQUITY
    Common stock                   9,640         9,210       430       4.7%
    Additional paid-in
     capital                     109,102       102,682     6,420       6.3%
    Restricted stock,
     unearned compensation        (1,006)            -    (1,006)        -
    Retained earnings             33,074        30,045     3,029      10.1%
    Accumulated other
     comprehensive loss           (4,472)       (3,907)     (565)    -14.5%
    Less treasury stock, at
     cost                           (117)         (117)        -         -
                             -----------  ------------  --------
       Total shareholders'
        equity                   146,221       137,913     8,308       6.0%

                             -----------  ------------  --------
       Total liabilities and
        shareholders' equity $ 1,630,403  $  1,552,459  $ 77,944       5.0%
                             -----------  ------------  --------


                      TEXAS UNITED BANCSHARES, INC.
                        CONSOLIDATED BALANCE SHEETS
                          (Dollars in thousands)

                                    March 31,
                            ------------------------
                                2006         2005       Change    Percent
                            -----------  -----------  ----------- --------
                                  (Unaudited)
 ASSETS
    Cash and due from banks $    51,874  $    34,334  $    17,540     51.1%
    Federal funds sold and
     other temporary
     investments                 33,091        5,235       27,856    532.1%
                            -----------  -----------  -----------
       Total cash and cash
        equivalents              84,965       39,569       45,396    114.7%

    Securities available
     for sale, at fair
     value                      242,900      304,988      (62,088)   -20.4%
    Securities held to
     maturity, at cost           25,587            -       25,587        -

    Total loans, including
     loans held for sale      1,096,975      725,724      371,251     51.2%
    Allowance for loan
     losses                      (9,886)      (6,931)      (2,955)   -42.6%
                            -----------  -----------  -----------
       Total loans, net       1,087,089      718,793      368,296     51.2%

    Premises and equipment,
     net                         57,638       40,983       16,655     40.6%
    Accrued interest
     receivable                   7,751        5,311        2,440     45.9%
    Goodwill                     68,557       40,117       28,440     70.9%
    Core deposit
     intangibles, net             9,185        5,155        4,030     78.2%
    Mortgage servicing
     rights, net                  4,936        4,740          196      4.1%
    Other assets                 41,795       20,510       21,285    103.8%

                            -----------  -----------  -----------
       Total assets         $ 1,630,403  $ 1,180,166  $   450,237     38.2%
                            -----------  -----------  -----------


 LIABILITIES AND
  SHAREHOLDERS' EQUITY
    Deposits:
       Noninterest-bearing  $   330,422  $   192,727  $   137,695     71.4%
       Interest-bearing         874,526      687,579      186,947     27.2%
                            -----------  -----------  -----------
          Total deposits      1,204,948      880,306      324,642     36.9%

    Securities sold under
     repurchase agreements        8,196        5,243        2,953     56.3%
    Federal funds purchased      10,000       53,825      (43,825)   -81.4%
    Junior subordinated
     deferrable interest
     debentures                  49,996       17,520       32,476    185.4%
    Borrowings                  194,271      107,593       86,678     80.6%
    Other liabilities            16,771       11,502        5,269     45.8%
                            -----------  -----------  -----------
          Total liabilities   1,484,182    1,075,989      408,193     37.9%

 SHAREHOLDERS' EQUITY
    Common stock                  9,640        7,811        1,829     23.4%
    Additional paid-in
     capital                    109,102       75,976       33,126     43.6%
    Restricted stock,
     unearned compensation       (1,006)           -       (1,006)       -
    Retained earnings            33,074       24,099        8,975     37.2%
    Accumulated other
     comprehensive loss          (4,472)      (3,592)        (880)   -24.5%
    Less treasury stock, at
     cost                          (117)        (117)           -        -
                            -----------  -----------  -----------
       Total shareholders'
        equity                  146,221      104,177       42,044     40.4%

                            -----------  -----------  -----------
       Total liabilities
        and shareholders'
        equity              $ 1,630,403  $ 1,180,166  $   450,237     38.2%
                            -----------  -----------  -----------

                      TEXAS UNITED BANCSHARES, INC.
                    CONSOLIDATED STATEMENTS OF EARNINGS
                  (In thousands, except per share data)

                                      For The Three
                                       Months Ended
                                        March 31,
                                    -------------------
                                      2006      2005     Change   Percent
                                    --------- --------  --------  --------
                                        (Unaudited)
INTEREST INCOME
   Loans                            $  21,935 $ 13,659  $  8,276      60.6%
   Investment securities - taxable      2,432    2,767      (335)    -12.1%
   Investment securities -
    tax-exempt                            372       97       275     283.5%
   Federal funds sold and other
    temporary investments                 301        8       293    3662.5%
                                    --------- --------  --------
      Total interest income            25,040   16,531     8,509      51.5%

INTEREST EXPENSE
   Deposits                             5,437    3,077     2,360      76.7%
   Federal funds purchased                102      176       (74)    -42.0%
   Borrowings                           2,245      809     1,436     177.5%
   Securities sold under repurchase
    agreements                             39       20        19      95.0%
   Junior subordinated deferrable
    interest debentures                   759      390       369      94.6%
                                    --------- --------  --------
      Total interest expense            8,582    4,472     4,110      91.9%

                                    --------- --------  --------
      Net interest income, before
       provision for loan losses       16,458   12,059     4,399      36.5%
   Provision for loan losses              560      722      (162)    -22.4%
                                    --------- --------  --------
      Net interest income, after
       provision for loan losses       15,898   11,337     4,561      40.2%

NONINTEREST INCOME
   Service charges on deposit
    accounts                            2,536    1,834       702      38.3%
   Mortgage servicing revenue             226      296       (70)    -23.6%
   Net loss on sale of securities           -      (38)       38         -
   Net gain on sale of loans            1,732    2,590      (858)    -33.1%
   Other noninterest income             2,253    1,615       638      39.5%
                                    --------- --------  --------
      Total noninterest income          6,747    6,297       450       7.1%

NONINTEREST EXPENSE
   Salaries and benefits               10,217    7,061     3,156      44.7%
   Occupancy                            2,410    1,805       605      33.5%
   Other noninterest expense            4,456    4,573      (117)     -2.6%
                                    --------- --------  --------
      Total noninterest expense        17,083   13,439     3,644      27.1%

                                    --------- --------  --------
      Earnings before provision for
       income tax expense               5,562    4,195     1,367      32.6%
   Provision for income tax expense     1,762    1,393       369      26.5%
                                    --------- --------  --------

      Net earnings                  $   3,800 $  2,802  $    998      35.6%
                                    --------- --------  --------

Earnings per common share:
    Basic                           $    0.40 $   0.36  $   0.04      11.1%
    Diluted                         $    0.40 $   0.35  $   0.05      14.3%

Dividends per common share          $    0.08 $   0.08  $      -         -

Weighted average shares outstanding
 - basic                                9,447    7,798     1,649      21.1%
Weighted average shares outstanding
 - diluted                              9,583    7,968     1,615      20.3%



                      TEXAS UNITED BANCSHARES, INC.
                    CONSOLIDATED STATEMENTS OF EARNINGS
                  (In thousands, except per share data)

                                   For The Three Months
                                           Ended
                                   ----------------------
                                   March 31, December 31,
                                     2006        2005     Change   Percent
                                   --------- ------------ -------  -------
                                        (Unaudited)
INTEREST INCOME
   Loans                           $  21,935 $     19,141 $ 2,794     14.6%
   Investment securities - taxable     2,432        2,093     339     16.2%
   Investment securities -
    tax-exempt                           372          292      80     27.4%
   Federal funds sold and other
    temporary investments                301          177     124     70.1%
                                   --------- ------------ -------
      Total interest income           25,040       21,703   3,337     15.4%

INTEREST EXPENSE
   Deposits                            5,437        4,097   1,340     32.7%
   Federal funds purchased               102           74      28     37.8%
   Borrowings                          2,245        2,227      18      0.8%
   Securities sold under
    repurchase agreements                 39           32       7     21.9%
   Junior subordinated deferrable
    interest debentures                  759          550     209     38.0%
                                   --------- ------------ -------
      Total interest expense           8,582        6,980   1,602     23.0%

                                   --------- ------------ -------
      Net interest income, before
       provision for loan losses      16,458       14,723   1,735     11.8%
   Provision for loan losses             560        1,040    (480)   -46.2%
                                   --------- ------------ -------
      Net interest income, after
       provision for loan losses      15,898       13,683   2,215     16.2%

NONINTEREST INCOME
   Service charges on deposit
    accounts                           2,536        2,489      47      1.9%
   Mortgage servicing revenue            226          220       6      2.7%
   Net gain on sale of  securities         -           15     (15)       -
   Net gain on sale of loans           1,732        2,047    (315)   -15.4%
   Other noninterest income            2,253          982   1,271    129.4%
                                   --------- ------------ -------
      Total noninterest income         6,747        5,753     994     17.3%

NONINTEREST EXPENSE
   Salaries and benefits              10,217        9,123   1,094     12.0%
   Occupancy                           2,410        2,023     387     19.1%
   Other noninterest expense           4,456        4,222     234      5.5%
                                   --------- ------------ -------
      Total noninterest expense       17,083       15,368   1,715     11.2%

                                   --------- ------------ -------
      Earnings before provision
       for income tax expense          5,562        4,068   1,494     36.7%
   Provision for income tax
    expense                            1,762        1,436     326     22.7%
                                   --------- ------------ -------

      Net earnings                 $   3,800 $      2,632 $ 1,168     44.4%
                                   --------- ------------ -------

Earnings per common share:
    Basic                          $    0.40 $       0.32 $  0.08     25.0%
    Diluted                        $    0.40 $       0.31 $  0.09     29.0%

Dividends per common share         $    0.08 $       0.08 $     -        -

Weighted average shares
 outstanding - basic                   9,447        8,298   1,149     13.8%
Weighted average shares
 outstanding - diluted                 9,583        8,555   1,028     12.0%



                      TEXAS UNITED BANCSHARES, INC.
                   CONSOLIDATED SELECTED FINANCIAL DATA
              (Dollars in thousands, except per share data)

                                  Quarterly
                                 -----------
                                     2006
                                 -----------
                                   1st Qtr
                                 -----------
                                 (Unaudited)
EARNINGS
   Interest income               $    25,040
   Interest expense                    8,582
                                 -----------
   Net interest income,
    before provision
    for loan losses                   16,458
   Provision for loan
    losses                               560
                                 -----------
   Net interest income,
    after provision for
    loans losses                      15,898
   Noninterest income                  6,747
   Noninterest expense                17,083
                                 -----------
   Net earnings, before
    provision for
    income taxes                       5,562
   Provision for income
    taxes                              1,762
                                 -----------
   Net earnings                  $     3,800
                                 ===========

   Basic earnings per
    share                        $      0.40
   Diluted earnings per
    share                        $      0.40

   Weighted average
    basic shares
    outstanding (in
    000's)                             9,447
   Weighted average
    diluted shares
    outstanding (in
    000's)                             9,583
   Shares outstanding
    at end of period
    (in 000's)                         9,634

PERFORMANCE RATIOS
   Return on average
    assets                              0.98%
   Return on average
    equity                             10.74%
   Return on average
    tangible equity                    23.24%
   Net interest margin                  4.91%
   Efficiency ratio,
    gross                              73.62%
   Efficiency ratio,
    net                                69.99%
   Full-time equivalent
    employees                            629

CAPITAL
   Average equity to
    average assets                      9.12%
   Book value per share          $     15.18
   Tangible book value
    per share                    $      7.11
   Cash dividends per
    share                        $      0.08
   Dividend payout
    ratio                               19.4%

ASSET QUALITY
   Gross charge-offs             $       936
   Recoveries from
    charge-offs                  $      (213)
   Net charge-offs               $       723
   Net charge-offs to
    average loans                       0.28%
   Allowance for loan
    losses                       $     9,886
   Allowance for loan
    losses to total
    loans                               0.90%
   Allowance for loan
    losses to
    nonperforming loans               195.49%
   Loan to deposit
    ratio                              91.04%

   Nonaccural loans              $     3,303
   Loans accruing 90
    days or more past
    due                          $     1,754
   Total nonperforming
    loans                        $     5,057
   Other real estate
    and repossessed
    assets                       $     1,260
   Total nonperforming
    assets                       $     6,317
   Nonperforming loans
    to total loans                      0.46%
   Nonperforming assets
    to total assets                     0.39%

END OF PERIOD BALANCES
   Loans, including
    loans held for sale          $ 1,096,975
   Total earning assets
    (before allowance
    for loan losses)               1,398,553
   Total assets                    1,630,403
   Deposits                        1,204,948
   Shareholders' equity              146,221
   Tangible equity                    68,479

AVERAGE BALANCES
   Loans, including
    loans held for sale          $ 1,054,888
   Total earning assets
    (before allowance
    for loan losses)               1,358,493
   Total assets                    1,574,542
   Deposits                        1,158,407
   Shareholders' equity              143,556
   Tangible equity                    71,396



                                            Quarterly
                        --------------------------------------------------
                                               2005
                        --------------------------------------------------
                          4th Qtr      3rd Qtr      2nd Qtr      1st Qtr
                        -----------  -----------  -----------  -----------
                                            (Unaudited)
EARNINGS
   Interest income      $    21,703  $    19,875  $    17,626  $    16,531
   Interest expense           6,980        6,121        5,196        4,472
                        -----------  -----------  -----------  -----------
   Net interest income,
    before provision
    for loan losses          14,723       13,754       12,430       12,059
   Provision for loan
    losses                    1,040        1,035        1,041          722
                        -----------  -----------  -----------  -----------
   Net interest income,
    after provision for
    loans losses             13,683       12,719       11,389       11,337
   Noninterest income         5,753        6,420        6,192        6,297
   Noninterest expense       15,368       15,202       13,631       13,439
                        -----------  -----------  -----------  -----------
   Net earnings, before
    provision for
    income taxes              4,068        3,937        3,950        4,195
   Provision for income
    taxes                     1,436        1,247        1,338        1,393
                        -----------  -----------  -----------  -----------
   Net earnings         $     2,632  $     2,690  $     2,612  $     2,802
                        ===========  ===========  ===========  ===========

   Basic earnings per
    share               $      0.32  $      0.34  $      0.33  $      0.36
   Diluted earnings per
    share               $      0.31  $      0.34  $      0.33  $      0.35

   Weighted average
    basic shares
    outstanding (in
    000's)                    8,298        7,815        7,805        7,798
   Weighted average
    diluted shares
    outstanding (in
    000's)                    8,555        7,979        7,964        7,968
   Shares outstanding
    at end of period
    (in 000's)                9,204        7,845        7,805        7,805

PERFORMANCE RATIOS
   Return on average
    assets                     0.77%        0.84%        0.86%        0.97%
   Return on average
    equity                     8.87%       10.01%        9.88%       10.66%
   Return on average
    tangible equity           17.75%       18.44%       18.53%       20.34%
   Net interest margin         4.94%        4.85%        4.88%        4.87%
   Efficiency ratio,
    gross                     75.11%       75.79%       72.23%       73.06%
   Efficiency ratio,
    net                       73.21%       74.03%       70.61%       71.54%
   Full-time equivalent
    employees                   628          573          595          557

CAPITAL
   Average equity to
    average assets             8.72%        8.41%        8.75%        9.08%
   Book value per share $     14.95  $     13.89  $     13.75  $     13.35
   Tangible book value
    per share           $      7.13  $      8.17  $      7.99  $      7.55
   Cash dividends per
    share               $      0.08  $      0.08  $      0.08  $      0.08
   Dividend payout
    ratio                      28.0%        23.3%        23.9%        22.3%

ASSET QUALITY
   Gross charge-offs    $     1,282  $       833  $       857  $       684
   Recoveries from
    charge-offs         $      (201) $      (249) $      (268) $      (208)
   Net charge-offs      $     1,081  $       584  $       589  $       476
   Net charge-offs to
    average loans              0.47%        0.28%        0.30%        0.27%
   Allowance for loan
    losses              $     9,592  $     7,835  $     7,383  $     6,931
   Allowance for loan
    losses to total
    loans                      0.93%        0.92%        0.94%        0.96%
   Allowance for loan
    losses to
    nonperforming loans      203.39%      158.19%      154.94%      216.05%
   Loan to deposit
    ratio                     92.01%       96.27%       87.18%       82.44%

   Nonaccural loans     $     2,544  $     2,804  $     2,272  $     1,696
   Loans accruing 90
    days or more past
    due                 $     2,172  $     2,149  $     2,493  $     1,512
   Total nonperforming
    loans               $     4,716  $     4,953  $     4,765  $     3,208
   Other real estate
    and repossessed
    assets              $     2,360  $     1,167  $       896  $       641
   Total nonperforming
    assets              $     7,076  $     6,120  $     5,661  $     3,849
   Nonperforming loans
    to total loans             0.46%        0.58%        0.61%        0.44%
   Nonperforming assets
    to total assets            0.46%        0.49%        0.46%        0.33%

END OF PERIOD BALANCES
   Loans, including
    loans held for sale $ 1,031,838  $   847,861  $   786,675  $   725,724
   Total earning assets
    (before allowance
    for loan losses)      1,334,632    1,102,692    1,084,723    1,035,947
   Total assets           1,552,459    1,255,522    1,242,003    1,180,166
   Deposits               1,121,422      880,728      902,356      880,306
   Shareholders' equity     137,913      108,986      107,445      104,177
   Tangible equity           65,670       64,086       62,359       58,905

AVERAGE BALANCES
   Loans, including
    loans held for sale $   914,300  $   822,938  $   754,879  $   699,763
   Total earning assets
    (before allowance
    for loan losses)      1,183,377    1,124,095    1,063,221    1,004,551
   Total assets           1,350,593    1,267,287    1,212,045    1,157,872
   Deposits                 954,579      885,055      895,889      884,117
   Shareholders' equity     117,756      106,598      106,065      105,190
   Tangible equity           63,802       61,880       60,804       59,831



                                   For the Years Ended
                                       December 31,
                                 ------------------------
                                     2005         2004
                                 -----------  -----------
EARNINGS
   Interest income               $    75,735  $    45,449
   Interest expense                   22,769       12,763
                                 -----------  -----------
   Net interest income,
    before provision
    for loan losses                   52,966       32,686
   Provision for loan
    losses                             3,838        1,850
                                 -----------  -----------
   Net interest income,
    after provision for
    loans losses                      49,128       30,836
   Noninterest income                 24,662       19,083
   Noninterest expense                57,640       41,061
                                 -----------  -----------
   Net earnings, before
    provision for
    income taxes                      16,150        8,858
   Provision for income
    taxes                              5,414        2,808
                                 -----------  -----------
   Net earnings                  $    10,736  $     6,050
                                 ===========  ===========

   Basic earnings per
    share                        $      1.35  $      1.15
   Diluted earnings per
    share                        $      1.31  $      1.11

   Weighted average
    basic shares
    outstanding (in
    000's)                             7,930        5,264
   Weighted average
    diluted shares
    outstanding (in
    000's)                             8,184        5,442
   Shares outstanding
    at end of period
    (in 000's)                         9,204        7,796

PERFORMANCE RATIOS
   Return on average
    assets                              0.87%        0.74%
   Return on average
    equity                              9.80%        9.97%
   Return on average
    tangible equity                    18.53%       16.07%
   Net interest margin                  4.92%        4.44%
   Efficiency ratio,
    gross                              74.09%       79.49%
   Efficiency ratio,
    net                                72.40%       78.37%
   Full-time equivalent
    employees                            628          522

CAPITAL
   Average equity to
    average assets                      8.93%        7.43%
   Book value per share          $     14.95  $     13.44
   Tangible book value
    per share                    $      7.12  $      7.61
   Cash dividends per
    share                        $      0.32  $      0.28
   Dividend payout
    ratio                               24.3%        25.6%

ASSET QUALITY
   Gross charge-offs             $     3,656  $     1,706
   Recoveries from
    charge-offs                  $      (926) $      (742)
   Net charge-offs               $     2,730  $       964
   Net charge-offs to
    average loans                       0.35%        0.19%
   Allowance for loan
    losses                       $     9,592  $     6,685
   Allowance for loan
    losses to total
    loans                               0.93%        0.96%
   Allowance for loan
    losses to
    nonperforming loans               203.39%      222.02%
   Loan to deposit
    ratio                              92.01%       78.81%

   Nonaccural loans              $     2,544  $     1,725
   Loans accruing 90
    days or more past
    due                          $     2,172  $     1,286
   Total nonperforming
    loans                        $     4,716  $     3,011
   Other real estate
    and repossessed
    assets                       $     2,360  $       906
   Total nonperforming
    assets                       $     7,076  $     3,917
   Nonperforming loans
    to total loans                      0.46%        0.43%
   Nonperforming assets
    to total assets                     0.46%        0.34%

END OF PERIOD BALANCES
   Loans, including
    loans held for sale          $ 1,031,838  $   693,548
   Total earning assets
    (before allowance
    for loan losses)               1,334,632      999,194
   Total assets                    1,552,459    1,141,366
   Deposits                        1,121,422      880,075
   Shareholders' equity              137,913      104,812
   Tangible equity                    65,670       59,354

AVERAGE BALANCES
   Loans, including
    loans held for sale          $   783,512  $   493,490
   Total earning assets
    (before allowance
    for loan losses)               1,076,767      735,847
   Total assets                    1,227,298      823,514
   Deposits                          887,786      657,580
   Shareholders' equity              109,591       60,249
   Tangible equity                    62,268       39,469



                      TEXAS UNITED BANCSHARES, INC.
                     CONSOLIDATED YIELD/RATE ANALYSIS
                                (Unaudited)

                                     For the Three Months Ended March 31,
                                     -------------------------------------
                                                     2006
                                     -------------------------------------
                                       Average      Interest     Average
                                     Outstanding    Earned /     Yield /
                                       Balance        Paid         Rate
                                     -----------  ------------ -----------
                                             (Dollars in Thousands)
ASSETS
Interest-earning assets:
  Total loans                        $ 1,054,888  $     21,935        8.43%
  Taxable securities                     239,856         2,432        4.11%
  Tax-exempt securities                   36,870           372        4.09%
  Federal funds sold                      26,880           301        4.54%
                                     -----------  ------------
       Total interest-earning assets   1,358,494        25,040        7.48%
  Less: allowance for loan losses
   (ALL)                                  (9,902)
                                     -----------
  Total interest-earning assets,
   net of ALL                          1,348,592
Noninterest-earning assets               225,950
                                     -----------
       Total assets                  $ 1,574,542
                                     ===========

LIABILITIES AND SHAREHOLDERS' EQUITY
Interest-bearing liabilities:
  Interest-bearing demand deposits   $   228,973  $        888        1.57%
  Saving and money market accounts       269,070         1,422        2.14%
  Time deposits                          357,098         3,127        3.55%
  Federal funds purchased                  7,866           102        5.26%
  Junior subordinated deferrable
   interest debentures                    37,624           759        8.18%
  Securities sold under repurchase
   agreements                              6,444            39        2.45%
  Other borrowings                       201,374         2,245        4.52%
                                     -----------  ------------
       Total interest-bearing
        liabilities                    1,108,449         8,582        3.14%
Noninterest-bearing liabilities:
  Noninterest-bearing demand
   deposits                              303,266  Other liabilities                       19,271
                                     -----------
       Total liabilities               1,430,986
       Shareholders' equity              143,556
                                     -----------
      Total liabilities and
       shareholders' equity          $ 1,574,542
                                     ===========

Net interest income                               $     16,458
                                                  ============

Net interest spread                                                   4.34%
Net interest margin                                                   4.91%


                                     For the Three Months Ended March 31,
                                     -------------------------------------
                                                     2005
                                     -------------------------------------
                                       Average      Interest     Average
                                     Outstanding    Earned /     Yield /
                                       Balance        Paid         Rate
                                     -----------  ------------ -----------
                                             (Dollars in Thousands)
ASSETS
Interest-earning assets:
  Total loans                        $   699,763  $     13,659        7.92%
  Taxable securities                     294,674         2,767        3.81%
  Tax-exempt securities                    8,709            97        4.52%
  Federal funds sold                       1,405             8        2.31%
                                     -----------  ------------
       Total interest-earning assets   1,004,551        16,531        6.67%
  Less: allowance for loan losses
   (ALL)                                  (6,845)
                                     -----------
  Total interest-earning assets,
   net of ALL                            997,706
Noninterest-earning assets               160,166
                                     -----------
       Total assets                  $ 1,157,872
                                     ===========

LIABILITIES AND SHAREHOLDERS' EQUITY
Interest-bearing liabilities:
  Interest-bearing demand deposits   $   239,929  $        772        1.30%
  Saving and money market accounts       159,844           474        1.20%
  Time deposits                          296,132         1,831        2.51%
  Federal funds purchased                 21,600           176        3.30%
  Junior subordinated deferrable
   interest debentures                    17,520           390        9.03%
  Securities sold under repurchase
   agreements                              5,486            20        1.48%
  Other borrowings                       105,086           809        3.12%
                                     -----------  ------------
       Total interest-bearing
        liabilities                      845,597         4,472        2.14%
Noninterest-bearing liabilities:
  Noninterest-bearing demand
   deposits                              188,212
  Other liabilities                       18,873
                                     -----------
       Total liabilities               1,052,682
       Shareholders' equity              105,190
                                     -----------
      Total liabilities and
       shareholders' equity          $ 1,157,872
                                     ===========

Net interest income                               $     12,059
                                                  ============

Net interest spread                                                   4.53%
Net interest margin                                                   4.87%



                      TEXAS UNITED BANCSHARES, INC.
                     CONSOLIDATED YIELD/RATE ANALYSIS
                                (Unaudited)

                                           For the Three Months Ended
                                     -------------------------------------
                                                 March 31, 2006
                                     -------------------------------------
                                       Average      Interest     Average
                                     Outstanding    Earned /     Yield /
                                       Balance        Paid         Rate
                                     -----------  ------------ -----------
                                             (Dollars in Thousands)
ASSETS
Interest-earning assets:
  Total loans                        $ 1,054,888  $     21,935        8.43%
  Taxable securities                     239,856         2,432        4.11%
  Tax-exempt securities                   36,870           372        4.09%
  Federal funds sold                      26,880           301        4.54%
                                     -----------  ------------
       Total interest-earning assets   1,358,494        25,040        7.48%
  Less: allowance for loan losses
   (ALL)                                  (9,902)
                                     -----------
  Total interest-earning assets,
   net of ALL                          1,348,592
Noninterest-earning assets               225,950
                                     -----------
       Total assets                  $ 1,574,542
                                     ===========

LIABILITIES AND SHAREHOLDERS' EQUITY
Interest-bearing liabilities:
  Interest-bearing demand deposits   $   228,973  $        888        1.57%
  Saving and money market accounts       269,070         1,422        2.14%
  Time deposits                          357,098         3,127        3.55%
  Federal funds purchased                  7,866           102        5.26%
  Junior subordinated deferrable
   interest debentures                    37,624           759        8.18%
  Securities sold under repurchase
   agreements                              6,444            39        2.45%
  Other borrowings                       201,374         2,245        4.52%
                                     -----------  ------------
       Total interest-bearing
        liabilities                    1,108,449         8,582        3.14%
Noninterest-bearing liabilities:
  Noninterest-bearing demand
   deposits                              303,266
  Other liabilities                       19,271
                                     -----------
       Total liabilities               1,430,986
       Shareholders' equity              143,556
                                     -----------
      Total liabilities and
       shareholders' equity          $ 1,574,542
                                     ===========

Net interest income                               $     16,458
                                                  ============

Net interest spread                                                   4.34%
Net interest margin                                                   4.91%



                                           For the Three Months Ended
                                     -------------------------------------
                                               December 31, 2005
                                     -------------------------------------
                                       Average      Interest     Average
                                     Outstanding    Earned /     Yield /
                                       Balance        Paid         Rate
                                     -----------  ------------ -----------
                                             (Dollars in Thousands)
ASSETS
Interest-earning assets:
  Total loans                        $   914,300  $     19,141        8.31%
  Taxable securities                     223,373         2,093        3.72%
  Tax-exempt securities                   28,729           292        4.03%
  Federal funds sold                      16,975           177        4.14%
                                     -----------  ------------
       Total interest-earning assets   1,183,377        21,703        7.28%
  Less: allowance for loan losses
   (ALL)                                  (8,910)
                                     -----------
  Total interest-earning assets,
   net of ALL                          1,174,467
Noninterest-earning assets               176,126
                                     -----------
       Total assets                  $ 1,350,593
                                     ===========

LIABILITIES AND SHAREHOLDERS' EQUITY
Interest-bearing liabilities:
  Interest-bearing demand deposits   $   200,017  $        612        1.21%
  Saving and money market accounts       196,576           894        1.80%
  Time deposits                          312,928         2,592        3.29%
  Federal funds purchased                  7,709            73        3.76%
  Junior subordinated deferrable
   interest debentures                    29,548           550        7.38%
  Securities sold under repurchase
   agreements                              5,600            32        2.27%
  Other borrowings                       218,339         2,227        4.05%
                                     -----------  ------------
       Total interest-bearing
        liabilities                      970,717         6,980        2.85%
Noninterest-bearing liabilities:
  Noninterest-bearing demand
   deposits                              245,058
  Other liabilities                       17,062
                                     -----------
       Total liabilities               1,232,837
       Shareholders' equity              117,756
                                     -----------
      Total liabilities and
       shareholders' equity          $ 1,350,593
                                     ===========

Net interest income                               $     14,723
                                                  ============

Net interest spread                                                   4.42%
Net interest margin                                                   4.94%

Contact Information

  • Contact:
    Jeffrey A. Wilkinson
    Executive Vice President and Chief Financial Officer
    979-968-8451
    Email Contact