SOURCE: Texas United Bancshares, Inc.

July 19, 2006 19:26 ET

Texas United Bancshares, Inc.; Second Quarter Earnings Up 59.2%

LA GRANGE, TX -- (MARKET WIRE) -- July 19, 2006 -- Texas United Bancshares, Inc. (NASDAQ: TXUI)

--  Earnings Per Share Increases 18.2% to $0.39 (Diluted)
    
--  Named to the Russell 3000 Index
    
--  Record High Quarterly Earnings
    
--  Northwest Bancshares, Inc. Acquisition Completed
    
--  Organic Loan Growth Exceeds 18% (Annualized)
    
--  Net Interest Margin climbs to 5.03%
    
Second Quarter 2006 Highlights:
--  The Company completed the acquisition of Northwest Bancshares, Inc.
    (Northwest), Roanoke, Texas, on April 1, 2006.  In connection with the
    acquisition, the Company issued approximately 984,906 shares of its common
    stock and paid approximately $12.4 million in cash to shareholders of
    Northwest in exchange for all of the outstanding shares of Northwest common
    stock.  As of March 31, 2006, Northwest had five branch locations and had
    total assets of $133.0 million, total loans of $107.2 million, total
    deposits of $121.2 million and shareholders' equity of $11.3 million.
    
--  The Company closed seven underperforming mortgage loan production
    offices that had been acquired as part of the Community Home Loan
    acquisition in 2004.  This resulted in a write-down of $500,000 in goodwill
    recorded as part of the acquisition.  This was the only charge related to
    the closings.
    
--  Equity based compensation expense for the second quarter of 2006 was
    $493,000 (stock appreciation rights expense contributed $366,000 of this
    total).
    
--  The Company repositioned approximately $3.6 million in investment
    securities as part of an ongoing yield improvement strategy resulting in
    approximately $134,000 in securities losses for the second quarter 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, today reports record net earnings of $4.2 million for the second quarter ended June 30, 2006, an increase of $1.5 million or 59.2% compared with $2.6 million for the second quarter of 2005. Diluted earnings per share for the second quarter of 2006 were $0.39, an increase of $0.06 per diluted share or 18.2% compared with $0.33 per diluted share for the second quarter of 2005. Net earnings for the six months ended June 30, 2006 were $8.0 million, an increase of $2.5 million or 47.0% compared with $5.4 million for the same six months of 2005. Diluted earnings per share for the six months ended June 30, 2006 were $0.78, an increase of $0.10 per diluted share or 14.7% compared with $0.68 per diluted share for the same six months of 2005.

Results of Operations:

Net Interest Income. Net interest income, before the provision for loan losses, for the second quarter of 2006 was $19.3 million, an increase of $6.4 million or 49.2% compared with $12.9 million for the second quarter of 2005. The net interest margin for the second quarter of 2006 was 5.03%, an improvement of 15 basis points compared with 4.88% for the second quarter of 2005. Net interest income, before the provision for loan losses, for the six months ended June 30, 2006 was $35.8 million, an increase of $10.8 million or 43.1% compared with $25.0 million for the same six months of 2005. The net interest margin for the six months ended June 30, 2006 was 4.98%, an improvement of 10 basis points compared with 4.88% for the same six months of 2005.

The increases in net interest income and the improvements in the net interest margin for the three and six months ended June 30, 2006, compared with the same three and six months ended June 30, 2005, were primarily due to higher yields on earning-assets as a result of increased market interest rates and larger earning-asset volumes as a result of acquisitions and continued internal growth. This was partially offset by increased pricing pressures on interest-bearing liabilities, higher market interest rates and increased interest-bearing liability volumes. As long market interest rates remain at current levels or increase , the Company's net interest margin is anticipated to remain consistent but may experience pressure should market interest rates decline.

Interest Income. Interest income from average earning-assets for the second quarter ended June 30, 2006 was $29.9 million, an increase of $12.1 million or 68.0% compared with $17.8 million for the second quarter of 2005. Average earning-assets for the second quarter ended June 30, 2006 were $1.539 billion, an increase of $476.1 million or 44.8% compared with average earning-assets of $1.063 billion for the second quarter of 2005. The yield on average earning-assets for the second quarter ended June 30, 2006 was 7.78%, an increase of 107 basis points compared with the yield on average earning-assets of 6.71% for the second quarter of 2005.

Interest income from average earning-assets for the six months ended June 30, 2006 was $54.9 million, an increase of $20.6 million or 60.0% compared with $34.3 million for the same six months of 2005. Average earning-assets for the six months ended June 30, 2006 were $1.449 billion, an increase of $415.1 million or 40.1% compared with average earning-assets of $1.034 billion for the same six months of 2005. The yield on average earning-assets for the six months ended June 30, 2006 was 7.64%, an increase of 95 basis points compared with the yield on average earning-assets of 6.69% for the same six months of 2005.

The increases in interest income for the three and six months ended June 30, 2006, compared with the same three and six months ended June 30, 2005, were primarily due to higher earning-assets, principally loan increases attributed to organic and acquired loan growth.

Interest Expense. Interest expense from average interest-bearing liabilities for the second quarter ended June 30, 2006 was $10.6 million, an increase of $5.7 million or 118.2% compared with $4.8 million for the second quarter of 2005. Average interest-bearing liabilities for the second quarter ended June 30, 2006 were $1.233 billion, an increase of $344.8 million or 38.8% compared with average interest-bearing liabilities of $888.4 million for the second quarter of 2005. The cost of average interest-bearing liabilities for the second quarter ended June 30, 2006 was 3.43%, an increase of 125 basis points compared with the cost of average interest-bearing liabilities of 2.18% for the second quarter of 2005.

Interest expense from average interest-bearing liabilities for the six months ended June 30, 2006 was $19.1 million, an increase of $9.8 million or 105.6% compared with $9.3 million for the same six months of 2005. Average interest-bearing liabilities for the six months ended June 30, 2006 were $1.173 billion, an increase of $307.8 million or 35.6% compared with average interest-bearing liabilities of $865.3 million for the same six months of 2005. The cost of average interest-bearing liabilities for the six months ended June 30, 2006 was 3.29%, an increase of 112 basis points compared with the cost of average interest-bearing liabilities of 2.17% for the same six months of 2005.

The increases in interest expense for the three and six months ended June 30, 2006, compared with the same three and six months ended June 30, 2005, were primarily due to increased pricing pressures on interest-bearing liabilities as a result of increased market interest rates on larger interest-bearing liability volumes. The larger interest-bearing liability volumes in both periods reflect continued internal growth and growth from the recent acquisitions of Gateway, Express and Northwest as mentioned above.

Noninterest Income. Total noninterest income for the second quarter ended June 30, 2006 was $6.7 million, an increase of $1.5 million or 28.2% compared with $5.2 million for the second quarter of 2005. Service charges on deposit accounts for the second quarter of 2006 were $3.1 million, an increase of $1.1 million or 55.8% compared with $2.0 million for the second quarter of 2005. Mortgage servicing revenue for the second quarter of 2006 was $451,000, an increase of $188,000 or 71.5% compared with $263,000 for the second quarter of 2005. Net gains on sales of loans for the second quarter of 2006 were $1.9 million, a decrease of $533,000 or 22.3% compared with $2.4 million for the second quarter of 2005. Other noninterest income for the second quarter of 2006 was $1.5 million, an increase of $770,000 or 109.4% compared with the second quarter of 2005.

Total noninterest income for the six months ended June 30, 2006 was $13.5 million, an increase of $1.9 million or 16.7% compared with $11.5 million for the same six months of 2005. Service charges on deposit accounts for the six months ended June 30, 2006 were $5.6 million, an increase of $1.8 million or 47.4% compared with $3.8 million for the same six months of 2005. Mortgage servicing revenue for the six months ended June 30, 2006 was $677,000, an increase of $118,000 or 21.1% compared with $559,000 for the same six months of 2005. Net gains on sales of loans for the six months ended June 30, 2006 were $3.6 million, a decrease of $1.4 million or 28.0% compared with $5.0 million for the same six months of 2005. The decrease in net gains on sales of loans, was primarily due to lower mortgage origination volumes as a result of increasing market interest rates.

The increases in total noninterest income for the three and six months ended June 30, 2006, compared with the same three and six months ended June 30, 2005, were primarily the result of increased service charge and fee-based revenues received on an expanded customer base as a result of internal growth and the recent acquisitions. This is evidenced by the higher volumes and the increased number of loan and deposit accounts in 2006 compared with 2005.

Noninterest Expense. Total noninterest expense for the second quarter ended June 30, 2006 was $19.3 million, an increase of $6.1 million or 46.2% compared with $13.2 million for the second quarter of 2005. Salaries and benefits expense for the second quarter of 2006 was $10.8 million, an increase of $2.6 million or 32.2% compared with $8.2 million for the second quarter of 2005. Occupancy expense for the second quarter of 2006 was $2.8 million, an increase of $854,000 or 43.4% compared with $2.0 million for the second quarter of 2005. Other noninterest expense for the second quarter of 2006 was $5.7 million, an increase of $2.6 million or 85.5% compared with $3.0 million for the second quarter of 2005.

Included in other noninterest expense for the second quarter of 2006 is $500,000 associated with a goodwill write-down resulting from the closing of seven underperforming mortgage loan production offices. Additionally, included in salaries and benefits expense for the second quarter of 2006 is $366,000 of stock appreciation rights expense, $39,600 of stock option expense, $88,225 of restricted stock expense and $470,000 of incentive compensation expense related to projected 2006 performance incentives.

Total noninterest expense for the six months ended June 30, 2006 was $36.4 million, an increase of $9.7 million or 36.6% compared with $26.6 million for the same six months of 2005. Salaries and benefits expense for the six months ended June 30, 2006 was $21.0 million, an increase of $5.8 million or 38.0% compared with $15.2 million for the same six months of 2005. Occupancy expense for the six months ended June 30, 2006 was $5.2 million, an increase of $1.5 million or 38.6% compared with $3.8 million for the same six months of 2005. Other noninterest expense for the six months ended June 30, 2006 was $10.1 million, an increase of $2.5 million or 32.7% compared with $7.6 million for the same six months of 2005.

The increase in total noninterest expense for the three and six months ended June 30, 2006, compared with the same three and six months ended June 30, 2005, reflects the impact of the Company's acquisition activities which includes the acquisitions of Gateway, Express and Northwest.

Financial Condition:

Total Assets. Total assets at June 30, 2006 were $1.818 billion, an increase of $265.8 million or 17.1% compared with $1.552 billion at December 31, 2005 and an increase of $576.3 million or 46.4% compared with $1.242 billion at June 30, 2005. The return on average assets for the second quarter ended June 30, 2006 was 0.93%, an increase of 7 basis points compared with 0.86% for the second quarter of 2005.

Loans. Total loans (including loans held for sale) at June 30, 2006 were $1.255 billion, an increase of $223.4 million or 21.6% compared with total loans of $1.032 billion at December 31, 2005 and an increase of $468.5 million or 59.6% compared with total loans of $786.7 million at June 30, 2005. On April 1, 2006, the Company acquired approximately $107.2 million of loans in connection with the acquisition of Northwest Bank.

Asset Quality. Nonperforming assets consist of nonaccrual loans, accruing loans ninety days or more past-due, and other real estate and repossessed assets. At June 30, 2006 total nonperforming assets were $6.5 million or 0.36% of total assets, a decrease of $530,000 or 7.5% compared with nonperforming assets of $7.1 million or 0.46% of total assets at December 31, 2005 and an increase of $885,000 or 15.6% compared with nonperforming assets of $5.7 million or 0.46% of total assets at June 30, 2005.

Nonperforming loans (nonaccrual loans and accruing loans ninety days or more past-due) at June 30, 2006 totaled $5.0 million or 0.40% of total loans, an increase of $305,000 or 6.5% compared with nonperforming loans of $4.7 million or 0.46% of total loans at December 31, 2005 and an increase of $256,000 or 5.4% compared with nonperforming loans of $4.8 million or 0.61% of total loans at June 30, 2005.

Other real estate and repossessed assets at June 30, 2006 totaled $1.5 million, a decrease of $835,000 or 35.4% compared with other real estate and repossessed assets of $2.4 million at December 31, 2005, and an increase of $629,000 or 70.2% compared with other real estate and repossessed assets of $896,000 at June 30, 2005.

Net charge-offs for the second quarter of 2006 were $471,000 or 0.15% of average loans, a decrease of $118,000 or 20.0% compared with net charge-offs for the second quarter of 2005 of $589,000 or 0.30% of average loans. Net charge-offs for the six months ended June 30, 2006 were $1.2 million or 0.21% of average loans, an increase of $129,000 or 12.1% compared with net charge-offs for the six months ended June 30, 2005 of $1.1 million or 0.15% of average loans. The allowance for loan losses at June 30, 2006 was $11.0 million or 0.88% of total loans, an increase of $1.4 million or 14.6% compared with $9.6 million or 0.93% of total loans at December 31, 2005, and an increase of $3.6 million or 48.9% compared with $7.4 million or 0.94% of total loans at June 30, 2005. The ratio of the allowance for loan losses to nonperforming loans at June 30, 2006 was 218.98% compared with 203.39% at December 31, 2005 and compared with 154.94% at June 30, 2005.

Deposits. Total deposits at June 30, 2006 were $1.323 billion, an increase of $201.1 million or 17.9% compared with total deposits of $1.121 billion at December 31, 2005 and an increase of $420.2 million or 46.6% compared with total deposits of $902.4 million at June 30, 2005. On April 1, 2006, the Company acquired approximately $121.2 million of deposits in connection with the acquisition of Northwest Bank.

Shareholders' Equity. Shareholders' equity at June 30, 2006 was $169.3 million, an increase of $31.4 million or 22.8% compared with shareholders' equity of $137.9 million at December 31, 2005, and an increase of $61.9 million or 57.6% compared with shareholders' equity of $107.4 million at June 30, 2005. The return on average tangible equity for the second quarter of 2006 was 26.32%, an increase of 779 basis points from 18.53% for the second quarter of 2005. At June 30, 2006, there were 10,689,560 shares of Company common stock outstanding.

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, 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 three 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)

                                       June 30,    December 31,   June 30,
                                         2006         2005         2005
                                     -----------  -----------  -----------
                                     (Unaudited)               (Unaudited)
 ASSETS
    Cash and due from banks          $    66,548  $    61,766  $    36,927
    Federal funds sold and other
     temporary investments                 9,660       33,620        4,085
                                     -----------  -----------  -----------
       Total cash and cash
        equivalents                       76,208       95,386       41,012

    Securities available for sale,
     at fair value                       255,051      243,011      291,631
    Securities held to maturity, at
     cost                                 25,582       26,163       12,825

    Total loans, including loans
     held for sale                     1,255,217    1,031,838      786,675
    Allowance for loan losses            (10,995)      (9,592)      (7,383)
                                     -----------  -----------  -----------
       Total loans, net                1,244,222    1,022,246      779,292

    Premises and equipment, net           64,124       53,610       42,288
    Accrued interest receivable           10,100        7,433        6,114
    Goodwill                              86,468       63,396       40,117
    Core deposit intangibles, net         12,442        8,847        4,969
    Mortgage servicing rights, net         5,188        4,878        4,738
    Other assets                          38,910       27,489       19,017

                                     -----------  -----------  -----------
       Total assets                  $ 1,818,295  $ 1,552,459  $ 1,242,003
                                     ===========  ===========  ===========


 LIABILITIES AND SHAREHOLDERS'
  EQUITY
    Deposits:
       Noninterest-bearing           $   377,022  $   317,723  $   212,516
       Interest-bearing                  945,522      803,699      689,840
                                     -----------  -----------  -----------
          Total deposits               1,322,544    1,121,422      902,356

    Securities sold under repurchase
     agreements                           10,112        7,120        6,367
    Federal funds purchased               30,807       21,901       31,921
    Junior subordinated deferrable
     interest debentures                  49,996       37,624       17,520
    Borrowings                           220,278      205,755      164,529
    Other liabilities                     15,260       20,724       11,865
                                     -----------  -----------  -----------
          Total liabilities            1,648,997    1,414,546    1,134,558

 SHAREHOLDERS' EQUITY
    Common stock                          10,647        9,210        7,811
    Additional paid-in capital           128,546      102,682       75,978
    Retained earnings                     36,379       30,045       26,087
    Accumulated other comprehensive
     loss                                 (6,157)      (3,907)      (2,314)
    Less treasury stock, at cost            (117)        (117)        (117)
                                     -----------  -----------  -----------
       Total shareholders' equity        169,298      137,913      107,445

                                     -----------  -----------  -----------
       Total liabilities and
        shareholders' equity         $ 1,818,295  $ 1,552,459  $ 1,242,003
                                     ===========  ===========  ===========




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

                                                      (Unaudited)
                                               For The Three Months Ended
                                              ----------------------------
                                              June 30,  March 31, June 30,
                                                2006      2006      2005
                                              --------  --------- --------

INTEREST INCOME
   Loans                                      $ 26,613  $  21,935 $ 14,840
   Investment securities - taxable               2,539      2,432    2,810
   Investment securities - tax-exempt              441        372       97
   Federal funds sold and other temporary
    investments                                    267        301       31
                                              --------  --------- --------
      Total interest income                     29,860     25,040   17,778

INTEREST EXPENSE
   Deposits                                      6,709      5,437    3,350
   Federal funds purchased                         231        102      331
   Borrowings                                    2,588      2,245      738
   Securities sold under repurchase
    agreements                                      59         39       26
   Junior subordinated deferrable interest
    debentures                                     965        759      391
                                              --------  --------- --------
      Total interest expense                    10,552      8,582    4,836

                                              --------  --------- --------
      Net interest income, before provision
       for loan losses                          19,308     16,458   12,942
   Provision for loan losses                       635        560    1,041
                                              --------  --------- --------
      Net interest income, after provision
       for loan losses                          18,673     15,898   11,901

NONINTEREST INCOME
   Service charges on deposit accounts           3,082      2,536    1,978
   Mortgage servicing revenue                      451        226      263
   Net (loss) gain on sale of  securities         (134)         2      (84)
   Net gain on sale of loans                     1,852      1,732    2,385
   Other noninterest income                      1,474      2,253      704
                                              --------  --------- --------
      Total noninterest income                   6,725      6,749    5,246

NONINTEREST EXPENSE
   Salaries and benefits                        10,818     10,217    8,180
   Occupancy                                     2,824      2,410    1,970
   Other noninterest expense                     5,652      4,458    3,047
                                              --------  --------- --------
      Total noninterest expense                 19,294     17,085   13,197

                                              --------  --------- --------
      Earnings before provision for income
       tax expense                               6,104      5,562    3,950
   Provision for income tax expense              1,946      1,762    1,338
                                              --------  --------- --------

      Net earnings                            $  4,158  $   3,800 $  2,612
                                              ========  ========= ========

Earnings per common share:
    Basic                                     $   0.39  $    0.40 $   0.33
    Diluted                                   $   0.39  $    0.40 $   0.33

Dividends per common share                    $   0.08  $    0.08 $   0.08

Weighted average shares outstanding - basic     10,576      9,447    7,805
Weighted average shares outstanding - diluted   10,753      9,583    7,964




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

                                                            (Unaudited)
                                                        For The Six Months
                                                          Ended June 30,
                                                        ------------------
                                                          2006      2005
                                                        --------  --------

INTEREST INCOME
   Loans                                                $ 48,548  $ 28,499
   Investment securities - taxable                         4,969     5,577
   Investment securities - tax-exempt                        815       194
   Federal funds sold and other temporary investments        568        39
                                                        --------  --------
      Total interest income                               54,900    34,309

INTEREST EXPENSE
   Deposits                                               12,146     6,427
   Federal funds purchased                                   333       507
   Borrowings                                              4,833     1,547
   Securities sold under repurchase agreements                98        46
   Junior subordinated deferrable interest debentures      1,724       781
                                                        --------  --------
      Total interest expense                              19,134     9,308

                                                        --------  --------
      Net interest income, before provision for loan
       losses                                             35,766    25,001
   Provision for loan losses                               1,195     1,763
                                                        --------  --------
      Net interest income, after provision for loan
       losses                                             34,571    23,238

NONINTEREST INCOME
   Service charges on deposit accounts                     5,618     3,812
   Mortgage servicing revenue                                677       559
   Net loss on sale of  securities                          (132)     (122)
   Net gain on sale of loans                               3,584     4,975
   Other noninterest income                                3,727     2,319
                                                        --------  --------
      Total noninterest income                            13,474    11,543

NONINTEREST EXPENSE
   Salaries and benefits                                  21,035    15,241
   Occupancy                                               5,234     3,775
   Other noninterest expense                              10,110     7,620
                                                        --------  --------
      Total noninterest expense                           36,379    26,636

                                                        --------  --------
      Earnings before provision for income tax expense    11,666     8,145
   Provision for income tax expense                        3,708     2,731
                                                        --------  --------

      Net earnings                                      $  7,958  $  5,414
                                                        ========  ========

Earnings per common share:
    Basic                                               $   0.79  $   0.69
    Diluted                                             $   0.78  $   0.68

Dividends per common share                              $   0.16  $   0.16

Weighted average shares outstanding - basic               10,012     7,802
Weighted average shares outstanding - diluted             10,146     7,966




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


                                              Quarterly (Unaudited)
                                     -------------------------------------
                                                     2006
                                     -------------------------------------
                                       6 Months     2nd Qtr      1st Qtr
                                     -----------  -----------  -----------

EARNINGS
   Interest income                   $    54,900  $    29,860  $    25,040
   Interest expense                       19,134       10,552        8,582
                                     -----------  -----------  -----------
   Net interest income, before
    provision for loan losses             35,766       19,308       16,458
   Provision for loan losses               1,195          635          560
                                     -----------  -----------  -----------
   Net interest income, after
    provision for loans losses            34,571       18,673       15,898
   Noninterest income                     13,474        6,725        6,749
   Noninterest expense                    36,379       19,294       17,085
                                     -----------  -----------  -----------
   Net earnings, before provision
    for income taxes                      11,666        6,104        5,562
   Provision for income taxes              3,708        1,946        1,762
                                     -----------  -----------  -----------
   Net earnings                      $     7,958  $     4,158  $     3,800
                                     ===========  ===========  ===========

   Basic earnings per share          $      0.79  $      0.39  $      0.40
   Diluted earnings per share        $      0.78  $      0.39  $      0.40

   Weighted average basic shares
    outstanding (in 000's)                10,012       10,576        9,447
   Weighted average diluted shares
    outstanding (in 000's)                10,146       10,753        9,583
   Shares outstanding at end of
    period (in 000's)                     10,690       10,690        9,634

PERFORMANCE RATIOS
   Return on average assets                 0.95%        0.93%        0.98%
   Return on average equity                10.28%        9.89%       10.74%
   Return on average tangible equity       24.77%       26.32%       23.25%
   Net interest margin                      4.98%        5.03%        4.91%
   Efficiency ratio, gross                 73.68%       73.73%       73.62%
   Efficiency ratio, net                   71.40%       71.29%       69.99%
   Full-time equivalent employees            664          664          629

CAPITAL
   Average equity to average assets         9.26%        9.38%        9.12%
   Book value per share              $     15.84  $     15.84  $     15.18
   Tangible book value per share     $      6.58  $      6.58  $      7.11
   Cash dividends per share          $      0.16  $      0.08  $      0.08
   Dividend payout ratio                    20.4%        20.6%        20.2%

ASSET QUALITY
   Gross charge-offs                 $     1,630  $       694  $       936
    Recoveries from charge-offs      $      (436) $      (223) $      (213)
                                     -----------  -----------  -----------
   Net charge-offs                   $     1,194  $       471  $       723
   Net charge-offs to average loans         0.21%        0.15%        0.28%
   Allowance for loan losses         $    10,995  $    10,995  $     9,886
   Allowance for loan losses to
    total loans                             0.88%        0.88%        0.90%
   Allowance for loan losses to
    nonperforming loans                   218.98%      218.98%      195.49%
   Loan to deposit ratio                   94.91%       94.91%       91.04%

   Nonaccural loans                  $     3,479  $     3,479  $     3,303
    Loans accruing 90 days or more
     past due                        $     1,542  $     1,542  $     1,754
                                     -----------  -----------  -----------
   Total nonperforming loans         $     5,021  $     5,021  $     5,057
   Other real estate and repossessed
    assets                           $     1,525  $     1,525  $     1,260
   Total nonperforming assets        $     6,546  $     6,546  $     6,317
   Nonperforming loans to total
    loans                                   0.40%        0.40%        0.46%
   Nonperforming assets to total
    assets                                  0.36%        0.36%        0.39%

END OF PERIOD BALANCES
   Loans, including loans held for
    sale                             $ 1,255,217  $ 1,255,217  $ 1,096,975
   Total earning assets (before
    allowance for loan losses)         1,545,511    1,545,511    1,398,553
   Total assets                        1,818,295    1,818,295    1,630,403
   Deposits                            1,322,544    1,322,544    1,204,948
   Shareholders' equity                  169,298      169,298      146,221
   Tangible equity                        70,388       70,388       68,479

AVERAGE BALANCES
   Loans, including loans held for
    sale                             $ 1,141,471  $ 1,227,693  $ 1,054,888
   Total earning assets (before
    allowance for loan losses)         1,449,161    1,539,293    1,358,493
   Total assets                        1,686,365    1,797,737    1,574,542
   Deposits                            1,239,482    1,320,435    1,158,407
   Shareholders' equity                  156,123      168,690      143,556
   Tangible equity                        70,510       69,629       71,396




                                  Quarterly (Unaudited)
                       ----------------------------------------- Year Ended
                                                                 December
                                           2005                     31,
                       ----------------------------------------- ---------
                         4th Qtr    3rd Qtr   2nd Qtr   1st Qtr    2005
                       ----------- --------- --------- --------- ---------

EARNINGS
   Interest income     $    21,703 $  19,875 $  17,778 $  16,531 $  75,735
   Interest expense          6,980     6,121     4,836     4,472    22,769
                       ----------- --------- --------- --------- ---------
   Net interest income,
    before provision
    for loan losses         14,723    13,754    12,942    12,059    52,966
   Provision for loan
    losses                   1,040     1,035     1,041       722     3,838
                       ----------- --------- --------- --------- ---------
   Net interest income,
    after provision for
    loans losses            13,683    12,719    11,901    11,337    49,128
   Noninterest income        5,753     6,420     5,246     6,297    24,662
   Noninterest expense      15,368    15,202    13,197    13,439    57,640
                       ----------- --------- --------- --------- ---------
   Net earnings, before
    provision for
    income taxes             4,068     3,937     3,950     4,195    16,150
   Provision for income
    taxes                    1,436     1,247     1,338     1,393     5,414
                       ----------- --------- --------- --------- ---------
   Net earnings        $     2,632 $   2,690 $   2,612 $   2,802 $  10,736
                       =========== ========= ========= ========= =========

   Basic earnings per
    share              $      0.32 $    0.34 $    0.33 $    0.36 $    1.35
   Diluted earnings
    per share          $      0.31 $    0.34 $    0.33 $    0.35 $    1.31

   Weighted average
    basic shares
    outstanding (in
    000's)                   8,298     7,815     7,805     7,798     7,930
   Weighted average
    diluted shares
    outstanding (in
    000's)                   8,555     7,979     7,964     7,968     8,184
   Shares outstanding
    at end of period
    (in 000's)               9,204     7,845     7,805     7,805     9,204

PERFORMANCE RATIOS
   Return on average
    assets                    0.77%     0.84%     0.86%     0.97%     0.87%
   Return on average
    equity                    8.87%    10.01%     9.88%    10.66%     9.80%
   Return on average
    tangible equity          17.75%    18.44%    18.53%    20.34%    18.53%
   Net interest margin        4.94%     4.85%     4.88%     4.87%     4.92%
   Efficiency ratio,
    gross                    75.11%    75.79%    72.56%    73.06%    74.09%
   Efficiency ratio,
    net                      73.21%    74.03%    70.61%    71.54%    72.40%
   Full-time equivalent
    employees                  628       573       595       557       628

CAPITAL
   Average equity to
    average assets            8.72%     8.41%     8.75%     9.08%     8.93%
   Book value per
    share              $     14.95 $   13.89 $   13.75 $   13.35 $   14.95
   Tangible book value
    per share          $      7.13 $    8.17 $    7.99 $    7.55 $    7.12
   Cash dividends per
    share              $      0.08 $    0.08 $    0.08 $    0.08 $    0.32
   Dividend payout
    ratio                     28.0%     23.3%     23.9%     22.3%     24.3%

ASSET QUALITY
   Gross charge-offs   $     1,282 $     833 $     857 $     684 $   3,656
    Recoveries from
     charge-offs       $      (201)$    (249)$    (268)$    (208)$    (926)
                       ----------- --------- --------- --------- ---------
   Net charge-offs     $     1,081 $     584 $     589 $     476 $   2,730
   Net charge-offs to
    average loans             0.47%     0.28%     0.30%     0.27%     0.35%
   Allowance for loan
    losses             $     9,592 $   7,835 $   7,383 $   6,931 $   9,592
   Allowance for loan
    losses to total
    loans                     0.93%     0.92%     0.94%     0.96%     0.93%
   Allowance for loan
    losses to
    nonperforming loans     203.39%   158.19%   154.94%   216.05%   203.39%
   Loan to deposit
    ratio                    92.01%    96.27%    87.18%    82.44%    92.01%

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

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

AVERAGE BALANCES
   Loans, including
    loans held for
    sale               $   914,300 $ 822,938 $ 754,879 $ 699,763 $ 783,512
   Total earning assets
    (before allowance
    for loan losses)     1,183,377 1,124,095 1,063,221 1,004,551 1,076,767
   Total assets          1,350,593 1,267,287 1,212,045 1,157,872 1,227,298
   Deposits                954,579   885,055   895,889   884,117   887,786
   Shareholders' equity    117,756   106,598   106,065   105,190   109,591
   Tangible equity          63,802    61,880    60,804    59,831    62,268




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


                                                For the Three Months Ended
                                                     June 30, 2006
                                            ------------------------------
                                              Average    Interest  Average
                                            Outstanding  Earned /  Yield /
                                              Balance      Paid      Rate
                                            -----------  --------- -------
                                                (Dollars in Thousands)
ASSETS
Interest-earning assets:
  Total loans                               $ 1,227,693  $  26,613    8.69%
  Taxable securities                            246,240      2,539    4.14%
  Tax-exempt securities                          43,779        441    4.04%
  Federal funds sold                             21,580        267    4.96%
                                            -----------  ---------
       Total interest-earning assets          1,539,292     29,860    7.78%
  Less: allowance for loan losses (ALL)         (11,123)
                                            -----------
  Total interest-earning assets, net of ALL   1,528,169
Noninterest-earning assets                      269,568
                                            -----------
       Total assets                         $ 1,797,737
                                            ===========

LIABILITIES AND SHAREHOLDERS' EQUITY
Interest-bearing liabilities:
  Interest-bearing demand deposits          $   235,404  $     984    1.68%
  Saving and money market accounts              289,484      1,565    2.17%
  Time deposits                                 421,295      4,160    3.96%
  Federal funds purchased                        18,291        231    5.07%
  Junior subordinated deferrable interest
   debentures                                    49,996        965    7.74%
  Securities sold under repurchase
   agreements                                    13,252         59    1.79%
  Other borrowings                              205,520      2,588    5.05%
                                            -----------  ---------
       Total interest-bearing liabilities     1,233,242     10,552    3.43%
Noninterest-bearing liabilities:
  Noninterest-bearing demand deposits           374,252
  Other liabilities                              21,553
                                            -----------
       Total liabilities                      1,629,047
       Shareholders' equity                     168,690
                                            -----------
      Total liabilities and shareholders'
       equity                               $ 1,797,737
                                            ===========

Net interest income                                      $  19,308
                                                         =========

Net interest spread                                                   4.35%
Net interest margin                                                   5.03%



                                               For the Three Months Ended
                                                    June 30, 2005
                                            ------------------------------
                                              Average    Interest  Average
                                            Outstanding  Earned /  Yield /
                                              Balance      Paid      Rate
                                            -----------  --------- -------
                                                (Dollars in Thousands)
ASSETS
Interest-earning assets:
  Total loans                               $   754,879  $  14,840    7.89%
  Taxable securities                            291,541      2,810    3.87%
  Tax-exempt securities                          12,488         97    3.12%
  Federal funds sold                              4,313         31    2.88%
                                            -----------  ---------
       Total interest-earning assets          1,063,221     17,778    6.71%
  Less: allowance for loan losses (ALL)          (7,014)
                                            -----------
  Total interest-earning assets, net of ALL   1,056,207
Noninterest-earning assets                      155,838
                                            -----------
       Total assets                         $ 1,212,045
                                            ===========

LIABILITIES AND SHAREHOLDERS' EQUITY
Interest-bearing liabilities:
  Interest-bearing demand deposits          $   218,768  $     715    1.31%
  Saving and money market accounts              157,162        504    1.29%
  Time deposits                                 317,519      2,131    2.69%
  Federal funds purchased                        37,038        331    3.58%
  Junior subordinated deferrable interest
   debentures                                    17,520        391    8.95%
  Securities sold under repurchase
   agreements                                     6,256         26    1.67%
  Other borrowings                              134,168        738    2.21%
                                            -----------  ---------
       Total interest-bearing liabilities       888,431      4,836    2.18%
Noninterest-bearing liabilities:
  Noninterest-bearing demand deposits           202,440
  Other liabilities                              15,109
                                            -----------
       Total liabilities                      1,105,980
       Shareholders' equity                     106,065
                                            -----------
      Total liabilities and shareholders'
       equity                               $ 1,212,045
                                            ===========

Net interest income                                      $  12,942
                                                         =========

Net interest spread                                                   4.53%
Net interest margin                                                   4.88%


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


                                              For the Six Months Ended
                                                   June 30, 2006
                                            ------------------------------
                                              Average    Interest  Average
                                            Outstanding  Earned /  Yield /
                                              Balance      Paid      Rate
                                            -----------  --------- -------
                                                (Dollars in Thousands)
ASSETS
Interest-earning assets:
  Total loans                               $ 1,141,471  $  48,548    8.58%
  Taxable securities                            243,166      4,969    4.12%
  Tax-exempt securities                          40,343        815    4.07%
  Federal funds sold                             24,181        568    4.74%
                                            -----------  ---------
       Total interest-earning assets          1,449,161     54,900    7.64%
  Less: allowance for loan losses (ALL)         (10,512)
                                            -----------
  Total interest-earning assets, net of ALL   1,438,649
Noninterest-earning assets                      247,716
                                            -----------
       Total assets                         $ 1,686,365
                                            ===========

LIABILITIES AND SHAREHOLDERS' EQUITY
Interest-bearing liabilities:
  Interest-bearing demand deposits          $   232,149  $   1,872    1.63%
  Saving and money market accounts              278,626      2,987    2.16%
  Time deposits                                 389,913      7,287    3.77%
  Federal funds purchased                        13,109        333    5.12%
  Junior subordinated deferrable interest
   debentures                                    45,872      1,724    7.58%
  Securities sold under repurchase
   agreements                                     9,916         98    1.99%
  Other borrowings                              203,473      4,833    4.79%
                                            -----------  ---------
       Total interest-bearing liabilities     1,173,058     19,134    3.29%
Noninterest-bearing liabilities:
  Noninterest-bearing demand deposits           338,794
  Other liabilities                              18,390
                                            -----------
       Total liabilities                      1,530,242
       Shareholders' equity                     156,123
                                            -----------
      Total liabilities and shareholders'
       equity                               $ 1,686,365
                                            ===========

Net interest income                                      $  35,766
                                                         =========

Net interest spread                                                   4.35%
Net interest margin                                                   4.98%



                                                For the Six Months Ended
                                                     June 30, 2005
                                            ------------------------------
                                              Average    Interest  Average
                                            Outstanding  Earned /  Yield /
                                              Balance      Paid      Rate
                                            -----------  --------- -------
ASSETS
Interest-earning assets:
  Total loans                               $   727,491  $  28,499    7.90%
  Taxable securities                            293,104      5,577    3.84%
  Tax-exempt securities                          10,599        194    3.69%
  Federal funds sold                              2,848         39    2.76%
                                            -----------  ---------
       Total interest-earning assets          1,034,042     34,309    6.69%
  Less: allowance for loan losses (ALL)          (6,921)
                                            -----------
  Total interest-earning assets, net of ALL   1,027,121
Noninterest-earning assets                      157,838
                                            -----------
       Total assets                         $ 1,184,959
                                            ===========

LIABILITIES AND SHAREHOLDERS' EQUITY
Interest-bearing liabilities:
  Interest-bearing demand deposits          $   229,304  $   1,488    1.31%
  Saving and money market accounts              158,494        977    1.24%
  Time deposits                                 306,858      3,962    2.60%
  Federal funds purchased                        27,521        507    3.71%
  Junior subordinated deferrable interest
   debentures                                    17,520        781    8.99%
  Securities sold under repurchase
   agreements                                     5,874         46    1.58%
  Other borrowings                              119,722      1,547    2.61%
                                            -----------  ---------
       Total interest-bearing liabilities       865,293      9,308    2.17%
Noninterest-bearing liabilities:
  Noninterest-bearing demand deposits           195,364
  Other liabilities                              18,467
                                            -----------
       Total liabilities                      1,079,124
       Shareholders' equity                     105,835
                                            -----------
      Total liabilities and shareholders'
       equity                               $ 1,184,959
                                            ===========

Net interest income                                      $  25,001
                                                         =========

Net interest spread                                                   4.52%
Net interest margin                                                   4.88%

Contact Information

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