State National Bancshares, Inc. Reports Second Quarter 2006 Financial Results

Share Name	Share Symbol	Market	Type
State National Bancshares	NASDAQ:SNBI	NASDAQ	Common Stock

State National Bancshares (NASDAQ:SNBI)
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Net Income Increases 17.9% and Net Interest Margin Increases to 5.64% Compared to Second Quarter 2005 FORT WORTH, Texas, July 26 /PRNewswire-FirstCall/ -- State National Bancshares, Inc. (NASDAQ:SNBI) ("SNBI"), the parent company of State National Bank, today announced net income for the second quarter 2006 of $4.6 million, or $0.37 per diluted common share, compared to $3.9 million, or $0.37 per diluted common share, for the comparable 2005 period. Net income for the six months ended June 30, 2006 was $9.1 million, or $0.75 per diluted common share, compared to $7.3 million, or $0.71 per diluted common share, for the comparable 2005 period. On June 12, 2006, SNBI entered into a definitive agreement with Banco Bilbao Vizcaya Argentaria, S.A., a bank organized under the laws of Spain, (MADRID: BBVA) ("BBVA") pursuant to which BBVA has agreed to acquire SNBI for approximately $38.50 per share or approximately $480 million in cash. The transaction is expected to close during the first quarter of 2007. SNBI expects to continue to pay dividends through the fourth quarter of 2006. SNBI completed the acquisition of Heritage Financial Corporation ("Heritage") on October 6, 2005. The results of operations for Heritage have been included in SNBI's consolidated financial statements since the date of acquisition. "Our Company remains focused on our strengths: net interest margin, noninterest expenses efficiencies and quality loan growth," said Tom C. Nichols, Chairman, President and CEO of SNBI. "The BBVA merger announcement in June was a positive development and all of our bankers and managers remain customer aware and bottom-line driven." Results of Operations For the three months ended June 30, 2006, net income was $4.6 million compared to $3.9 million for the same period in 2005. Net income per diluted common share was $0.37 for the three months ended June 30, 2006 compared with $0.37 for the same period in 2005. Included in the 2006 second quarter results are transaction costs related to the pending acquisition by BBVA totaling $755,000, or $0.06 per share. Return on average assets, average common equity and average tangible equity for the three months ended June 30, 2006 were 1.10%, 8.33% and 15.37%, respectively, compared to 1.14%, 9.70% and 19.51%, respectively for the three months ended June 30, 2005. State National's efficiency ratio was 64.67% and 65.18% for the three months ended June 30, 2006 and June 30, 2005, respectively. The 2006 efficiency ratio was negatively impacted by the previously mentioned transaction costs recorded in the 2nd quarter of 2006. Net income was $9.1 million for the six month period ended June 30, 2006, compared to $7.3 million for the six month period ended June 30, 2005. Net income per diluted common share was $0.75 for the six month period ended June 30, 2006, compared to $0.71 for the comparable period in 2005 which represents an increase of 5.6% on a per share basis. Returns on average assets, average common equity and average tangible equity for the first six months of 2006 were 1.11%, 8.44% and 15.78%, respectively, compared to 1.08%, 9.34% and 19.22%, respectively for the six months ended June 30, 2005. State National's efficiency ratio was 64.13% and 65.60% for the six months ended June 30, 2006 and June 30, 2005, respectively. Our tax-equivalent net interest income was $25.4 million for the three months ended June 30, 2006 as compared to $18.6 million for the comparable period in 2005, an increase of 36.7%. Our net interest margin on a fully taxable-equivalent basis was 5.64% for second quarter of 2006 as compared to 5.35% in the same period in 2005. These increases were primarily attributable to higher loan volumes due primarily to the acquisition of Heritage as well as to higher interest rates earned on our loan portfolio. Our tax-equivalent net interest income was $49.5 million for the six months ended June 30, 2006 as compared to $36.0 million for the comparable period in 2005, an increase of 37.2%. Our net interest margin on a fully taxable-equivalent basis was 5.52% for first six months of 2006 as compared to 5.29% in the same period in 2005. These increases were primarily attributable to higher loan volumes due primarily to the acquisition of Heritage as well as to higher interest rates earned on our loan portfolio. Provision for loan losses was $320,000 for the three month period ended June 30, 2006 as compared to $300,000 for the three month period ended June 30, 2005. This represents an increase of 6.7%. The provision for loan losses represented 0.12% of average total loans for the second quarter 2006 compared to 0.12% for the same period in 2005. Provision for loan losses was $800,000 for the six month period ended June 30, 2006 as compared to $600,000 for the six month period ended June 30, 2005. This represents an increase of 33.3%. Management calculated a provision for loan losses during 2006 to provide amounts slightly above the long term average net charge offs and to increase the overall loan loss reserve percentage to approximate peer ratios. The provision for loan losses represented 0.15% of average total loans for the first six months of 2006 compared to 0.13% for the same period in 2005. Noninterest income was $5.0 million for the three month period ended June 30, 2006 and $4.5 million for the three month period ended June 30, 2005, a 10.9% increase. This increase is primarily related to increased transactional and savings accounts resulting from our acquisition of Heritage. Noninterest income was $9.7 million for the six month period ended June 30, 2006 and $8.9 million for the six month period ended June 30, 2005, a 9.3% increase. This increase is primarily related to increased transactional and savings accounts resulting from our acquisition of Heritage. Noninterest expense was $16.8 million for the second quarter of 2006 as compared to $13.7 million for the same period in 2005, an increase of 22.6% which is primarily attributable to the acquisition of Heritage. Also included in the second quarter of 2006 are costs related to the pending acquisition by BBVA totaling $755,000. These costs represent legal fees and fairness opinion fees associated with the pending acquisition. Noninterest expense was $32.5 million for the first six months of 2006 as compared to $27.1 million for the same period in 2005, an increase of 20.1% which is primarily attributable to the acquisition of Heritage and previously mentioned transaction costs recorded in the 2nd quarter of 2006. Financial Condition Assets totaled $1.6 billion at June 30, 2006, reflecting an increase of $268.8 million, or 19.7%, as compared to assets at June 30, 2005. The increase was primarily attributable to the acquisition of Heritage. At June 30, 2006, assets related to Heritage represented approximately $232.4 million. Loans at June 30, 2006 totaled $1.1 billion, an increase of $139.7 million, or 14.5% from $965.9 million at June 30, 2005. The increase in loans was primarily related to the acquisition of Heritage, with loans related to Heritage totaling approximately $94.9 million at June 30, 2006. Total deposits at June 30, 2006 were $1.3 billion, an increase of $183.9 million, or 16.3% from $1.1 billion at June 30, 2005. The increase in deposits was primarily attributable to the acquisition of Heritage, with deposits related to Heritage totaling approximately $165.1 million at June 30, 2006. Other Information SNBI paid a quarterly cash dividend of $0.10 per common shares on June 15, 2006 to common shareholders of record on June 5, 2006. Due to the pending acquisition, SNBI has elected not to host an earnings conference call related to the 2nd quarter 2006 earnings results. FORWARD-LOOKING STATEMENTS This press release contains certain forward-looking information about State National that is intended to be covered by the safe harbor for "forward- looking statements" provided by the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical fact are forward- looking statements. Such statements involve inherent risks and uncertainties, many of which are difficult to predict and are generally beyond the control of State National. State National cautions readers that a number of important factors could cause actual results to differ materially from those expressed in, implied or projected by, such forward-looking statements. Risks and uncertainties include, but are not limited to: the possibility that personnel changes will not proceed as planned; planned acquisitions and related cost savings cannot be realized or realized within the expected time frame; costs and uncertainties related to the outcome of pending litigation; revenues are lower than expected; competitive pressure among depository institutions increases significantly; the integration of acquired businesses costs more, takes longer or is less successful than expected; the cost of additional capital is more than expected; a change in the interest rate environment reduces interest margins; general economic conditions, either nationally or in the market areas in which State National operates, are less favorable than expected; legislative or regulatory requirements or changes that adversely affect State National's business or regulatory capital requirements, or that alter the regulatory capital treatment of the State National's trust preferred securities; changes in the securities markets and other risks that are described in State National's public filings with the U.S. Securities and Exchange Commission (the "SEC"). If any of these risks or uncertainties materializes or if any of the assumptions underlying such forward-looking statements proves to be incorrect, State National's results could differ materially from those expressed in, implied or projected by such forward- looking statements. All information in this release and its attachments is as of July 26, 2006. State National assumes no obligation to update such forward-looking statements. State National Bancshares, Inc. Financial Highlights (Dollars in thousands, except per share data) As of or For The Three Month Periods Ended June 30, March 31, Dec. 31, Sept. 30, June 30, 2006 2006 2005 2005 2005 Income Statement (Unaudited) Data: Total interest income $25,263 $23,886 $23,474 $19,589 $18,572 Total interest expense 6,031 5,512 5,230 3,882 3,385 Net interest income 19,232 18,374 18,244 15,707 15,187 Provision for loan losses 320 480 150 150 300 Net interest income after provision 18,912 17,894 18,094 15,557 14,887 Noninterest income 4,999 4,697 4,886 4,931 4,508 Noninterest expense 16,761 15,784 15,912 14,025 13,669 Income before income taxes and minority interest in consolidated subsidiary's net (income) loss 7,150 6,807 7,068 6,463 5,726 Income tax expense 2,586 2,280 2,061 2,085 1,866 Minority interest in consolidated subsidiary's net (income) loss (12) 60 --- --- --- Net income $4,552 $4,587 $5,007 $4,378 $3,860 Balance Sheet Data: Total assets $1,634,602 $1,692,678 $1,662,877 $1,397,009 $1,365,816 Securities 239,279 218,491 214,881 124,899 133,916 Total loans 1,105,508 1,094,896 1,086,195 973,322 965,853 Intangibles, net 115,686 116,676 118,422 83,833 84,657 Total deposits 1,311,449 1,382,539 1,357,078 1,150,776 1,127,582 Junior subordinated debentures 47,000 47,000 47,000 47,000 47,000 Other borrowings 44,420 33,919 34,438 28,280 22,113 Stockholders' equity 218,575 216,072 212,257 161,335 158,213 Per Share Data: Earnings-basic $0.38 $0.38 $0.42 $0.43 $0.38 Earnings-diluted 0.37 0.38 0.41 0.42 0.37 Cash dividend 0.10 0.10 --- --- --- Book value 18.19 18.03 17.73 16.03 15.73 Period end shares outstanding 12,014,083 11,984,083 11,971,107 10,063,415 10,059,915 Weighted average shares outstanding- basic 12,003,918 11,976,230 11,971,107 10,080,154 10,059,860 Weighted average shares outstanding- diluted 12,270,849 12,176,031 12,297,044 10,352,201 10,322,065 Performance Ratios: Return on average equity 8.33% 8.54% 9.44% 10.85% 9.70% Return on average assets 1.10 1.11 1.22 1.27 1.14 Return on average tangible common equity 15.37 16.13 17.95 21.54 19.51 Net interest margin 5.64 5.40 5.36 5.41 5.35 Efficiency ratio 64.67 63.56 63.99 63.93 65.18 Asset Quality Ratios: Nonperforming assets to loans and other real estate 0.99% 0.92% 0.89% 0.73% 0.74% Allowance for loan losses to nonperforming loans 127.44 139.17 144.03 220.08 231.36 Allowance for loan losses to total loans 1.19 1.19 1.16 1.19 1.19 Net charge-offs (recoveries) to average loans (annualized) 0.10 (0.00) 0.32 0.03 0.09 Liquidity and Capital Ratios: Average loans to average deposits 82.16% 80.89% 80.79% 84.95% 86.45% Total equity to total assets 13.37 12.77 12.76 11.55 11.58 Average equity to average assets 13.25 13.02 12.91 11.70 11.77 Tangible equity to tangible assets(A) 6.84 6.58 6.19 6.23 5.91 Leverage ratio 9.91 9.64 9.36 9.71 9.61 Tier 1 risk-based capital ratio 12.44 12.37 11.98 11.74 11.84 Total risk-based capital ratio 13.51 13.46 13.04 12.82 12.96 (A) This ratio is calculated based on regulatory tangible common equity. State National Bancshares, Inc. Financial Highlights (Dollars in thousands, except per share data) As of or For The Six Months Ended June 30, June 30, 2006 2005 Income Statement Data: (Unaudited) Total interest income $49,149 $36,008 Total interest expense 11,543 6,117 Net interest income 37,606 29,891 Provision for loan losses 800 600 Net interest income after provision 36,806 29,291 Noninterest income 9,696 8,872 Noninterest expense 32,545 27,094 Income before income taxes and minority interest in consolidated subsidiary's net loss 13,957 11,069 Income tax expense 4,866 3,772 Minority interest in consolidated subsidiary's net loss 48 --- Net income $9,139 $7,297 Per Share Data: Earnings-basic $0.76 $0.73 Earnings-diluted 0.75 0.71 Cash dividend 0.10 --- Book value 18.19 15.73 Period end shares outstanding 12,014,083 10,059,915 Weighted average shares outstanding-basic 11,992,388 10,057,357 Weighted average shares outstanding-diluted 12,222,764 10,320,427 Performance Ratios: Return on average equity 8.44% 9.34% Return on average assets 1.11 1.08 Return on average tangible common equity 15.78 19.22 Net interest margin 5.52 5.29 Efficiency ratio 64.13 65.60 Asset Quality Ratios: Nonperforming assets to loans and other real estate 0.99% 0.75% Allowance for loan losses to nonperforming loans 127.44 231.36 Allowance for loan losses to total loans 1.19 1.21 Net charge-offs to average loans (annualized) 0.05 0.09 Liquidity and Capital Ratios: Average loans to average deposits 81.52% 85.78% Total equity to total assets 13.37 11.58 Average equity to average assets 13.13 11.61 Tangible equity to tangible assets(A) 6.84 5.91 Leverage ratio 9.91 9.61 Tier 1 risk-based capital ratio 12.44 11.84 Total risk-based capital ratio 13.51 12.96 (A) This ratio is calculated based on regulatory tangible common equity. State National Bancshares, Inc. Consolidated Balance Sheets (Dollars in thousands) June 30, March 31, Dec 31, Sept 30, June 30, 2006 2006 2005 2005 2005 ASSETS (Unaudited) Cash and due from banks $77,228 $71,236 $72,922 $64,658 $64,175 Federal funds sold --- 65,700 36,950 60,900 34,500 Interest-bearing deposits in other banks 3,301 35,318 44,763 16,525 11,384 Cash and cash equivalents 80,529 172,254 154,635 142,083 110,059 Securities available- for-sale 231,660 210,399 206,787 116,958 126,001 Federal Reserve Bank stock and other investments 7,619 8,092 8,094 7,941 7,915 Loans held-for-sale 6,949 7,477 11,584 6,761 8,765 Loans held-for- investment 1,098,559 1,087,419 1,074,611 966,561 957,088 Total Loans 1,105,508 1,094,896 1,086,195 973,322 965,853 Less allowance for loan losses 13,122 13,072 12,591 11,620 11,538 Net loans 1,092,386 1,081,824 1,073,604 961,702 954,315 Premises and equipment, net 51,897 50,643 48,769 35,583 35,136 Goodwill 99,354 99,351 100,486 70,818 70,818 Other intangible assets, net 16,332 17,325 17,936 13,015 13,839 Accrued interest receivable 9,018 7,921 8,919 6,766 6,142 Other real estate and other repossessed assets 601 696 935 1,851 2,212 Other Assets 45,206 44,173 42,712 40,292 39,379 TOTAL ASSETS $1,634,602 $1,692,678 $1,662,877 $1,397,009 $1,365,816 LIABILITIES AND SHAREHOLDERS' EQUITY LIABILITIES: Noninterest bearing demand deposits $479,610 $509,329 $487,369 $428,795 $401,797 Interest bearing demand deposits 492,570 535,221 523,857 441,275 448,760 Interest bearing time deposits 339,269 337,989 345,852 280,706 277,025 Total deposits 1,311,449 1,382,539 1,357,078 1,150,776 1,127,582 Federal funds purchased and repurchase agreements 43,150 32,718 28,597 27,470 21,273 Accrued interest payable 1,781 1,691 1,645 1,202 1,091 Other liabilities 10,191 10,591 10,459 8,416 9,817 Junior subordinated debentures 47,000 47,000 47,000 47,000 47,000 Notes payable 1,270 1,201 5,841 810 840 Total liabilities 1,414,841 1,475,740 1,450,620 1,235,674 1,207,603 Minority interest in consolidated subsidiary 1,186 866 --- --- --- SHAREHOLDERS' EQUITY Common Stock 12,014 11,984 11,971 11,971 10,060 Additional paid-in-capital 178,560 177,823 177,428 177,012 133,850 Retained earnings 30,904 27,553 24,164 19,157 14,779 Accumulated other comprehensive loss (2,903) (1,288) (1,306) (677) (476) Subscription Receivable --- --- --- (46,128) --- Total shareholders' equity 218,575 216,072 212,257 161,335 158,213 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $1,634,602 $1,692,678 $1,662,877 $1,397,009 $1,365,816 State National Bancshares, Inc. Consolidated Statements of Operations (Dollars in thousands) Three Month Periods Ended June 30, March 31, Dec. 31, Sept. 30, June 30, 2006 2006 2005 2005 2005 (Unaudited) Interest on loans $22,170 $20,785 $20,471 $17,728 $16,989 Interest on securities 2,632 2,320 2,480 1,277 1,342 Interest on federal funds sold and other earning assets 461 781 523 584 241 Total interest income 25,263 23,886 23,474 19,589 18,572 Interest expense - deposits 4,632 4,215 4,031 2,862 2,471 Interest expense - federal funds purchased and securities sold under agreement to repurchase 366 304 248 178 124 Interest expense - subordinated notes payable 1,010 942 898 832 780 Interest expense - notes payable 23 51 53 10 10 Total interest expense 6,031 5,512 5,230 3,882 3,385 Net interest income 19,232 18,374 18,244 15,707 15,187 Provision for loan losses 320 480 150 150 300 Net interest income after provision for loan losses 18,912 17,894 18,094 15,557 14,887 Service charges on deposit accounts 2,799 2,695 2,750 2,600 2,435 Gain on sale of loans 651 633 797 804 776 Bank owned life insurance 326 327 416 316 319 Other income 1,223 1,042 923 1,211 978 Total noninterest income 4,999 4,697 4,886 4,931 4,508 Salaries and employee benefits 8,054 8,251 8,176 7,297 7,248 Net occupancy and equipment 2,461 2,544 2,547 2,322 2,139 Amortization of intangibles 997 1,022 1,031 824 823 Professional fees 587 504 281 326 336 Communication 325 320 371 300 276 Merger 755 --- 230 19 40 Other 3,582 3,143 3,276 2,937 2,807 Total noninterest expense 16,761 15,784 15,912 14,025 13,669 Income before income taxes and minority interest in consolidated subsidiary's net (income) loss 7,150 6,807 7,068 6,463 5,726 Income tax expense 2,586 2,280 2,061 2,085 1,866 Minority interest in consolidated subsidiary's net (income) loss (12) 60 --- --- --- Net income $4,552 $4,587 $5,007 $4,378 $3,860 State National Bancshares, Inc. Consolidated Statements of Operations (Dollars in thousands) Six Months Ended June 30, June 30, 2006 2005 (Unaudited) Interest on loans $42,955 $32,791 Interest on securities 4,952 2,823 Interest on federal funds sold and other earning assets 1,242 394 Total interest income 49,149 36,008 Interest expense - deposits 8,846 4,405 Interest expense - federal funds purchased and securities sold under agreement to repurchase 671 209 Interest expense - subordinated notes payable 1,952 1,482 Interest expense - notes payable 74 21 Total interest expense 11,543 6,117 Net interest income 37,606 29,891 Provision for loan losses 800 600 Net interest income after provision for loan losses 36,806 29,291 Service charges on deposit accounts 5,494 4,815 Gain on sale of loans 1,284 1,349 Bank owned life insurance 653 634 Other income 2,265 2,074 Total noninterest income 9,696 8,872 Salaries and employee benefits 16,305 14,317 Net occupancy and equipment 5,005 4,307 Amortization of intangibles 2,019 1,647 Professional fees 1,091 691 Communication 645 556 Merger 755 --- Other 6,725 5,576 Total noninterest expense 32,545 27,094 Income before income taxes and minority interest in consolidated subsidiary's net loss 13,957 11,069 Income tax expense 4,866 3,772 Minority interest in consolidated subsidiary's net loss 48 --- Net income $9,139 $7,297 State National Bancshares, Inc. Selected Financial Information (Dollars in thousands) Three Month Period Ended June 30, March 31, Dec 31, Sept 30, June 30, 2006 2006 2005 2005 2005 Condensed Average (Unaudited) Balance Sheet Total loans $1,097,418 $1,083,370 $1,082,133 $963,379 $964,792 Securities and other investments 238,968 216,846 235,434 130,028 137,497 Federal funds sold and other earning assets 38,746 72,482 52,253 68,377 34,611 Total earning assets 1,375,132 1,372,698 1,369,820 1,161,784 1,136,900 Allowance for loan losses (13,303) (12,813) (13,127) (11,627) (11,438) Cash and due from banks 67,390 70,120 69,898 62,622 61,063 Goodwill 99,350 100,012 100,494 70,818 70,818 Other intangible assets, net 16,757 17,669 16,281 13,357 14,191 Other real estate 680 804 1,266 2,036 1,744 Premises and equipment, net 51,497 49,451 47,505 35,835 34,994 Other Assets 52,420 51,556 52,239 44,677 44,726 Total assets $1,649,923 $1,649,497 $1,644,376 $1,379,502 $1,352,998 Noninterest bearing demand $476,571 $476,067 $466,397 $412,567 $397,852 Interest bearing demand, savings and money market 522,112 519,680 521,784 443,542 443,461 Time less than $100,000 186,564 192,444 198,860 153,975 156,724 Time greater than $100,000 150,501 151,113 152,400 123,981 117,918 Total deposits 1,335,748 1,339,304 1,339,441 1,134,065 1,115,955 Federal funds purchased and other interest bearing liabilities 33,905 31,649 29,939 23,869 20,871 Subordinated notes payable 47,000 47,000 47,000 47,000 47,000 Notes payable 1,245 4,203 4,199 823 850 Other liabilities 12,409 12,319 11,540 12,412 9,141 Total liabilities 1,430,307 1,434,475 1,432,119 1,218,169 1,193,817 Minority interest in consolidated subsidiary 975 289 --- --- --- Total shareholders' equity 218,641 214,733 212,257 161,333 159,181 Total liabilities and shareholders' equity $1,649,923 $1,649,497 $1,644,376 $1,379,502 $1,352,998 State National Bancshares, Inc. Selected Financial Information (Dollars in thousands) Six Months Ended June 30, June 30, 2006 2005 Condensed Average Balance Sheet (Unaudited) Total loans $1,090,394 $956,056 Securities and other investments 227,907 144,107 Federal funds sold and other earning assets 55,614 30,475 Total earning assets 1,373,915 1,1,30,638 Allowance for loan losses (13,058) (11,453) Cash and due from banks 68,755 61,080 Goodwill 99,681 70,818 Other intangible assets, net 17,213 14,605 Other real estate 742 1,925 Premises and equipment, net 50,474 34,464 Other Assets 51,988 44,068 Total assets $1,649,710 $1,346,145 Noninterest bearing demand $476,319 $392,854 Interest bearing demand, savings and money market 520,896 445,009 Time less than $100,000 189,504 158,874 Time greater than $100,000 150,807 117,756 Total deposits 1,337,526 1,114,493 Federal funds purchased and other interest bearing liabilities 32,777 19,444 Subordinated notes payable 47,000 47,000 Notes payable 2,724 865 Other liabilities 12,364 8,110 Total liabilities 1,432,391 1,189,912 Minority interest in consolidated subsidiary 632 --- Total shareholders' equity 216,687 156,233 Total liabilities and shareholders' equity $1,649,710 $1,346,145 State National Bancshares, Inc. Selected Financial Information (Dollars in thousands) As of or For The Three Month Periods Ended June 30, March 31, Dec 31, Sept 30, June 30, 2006 2006 2005 2005 2005 Allowance for (Unaudited) loan losses Balance, beginning of period $13,072 $12,591 $11,620 $11,538 $11,386 Provision for loan losses 320 480 150 150 300 Loan loss reserves of acquired banks --- --- 1,670 --- --- Charge-offs: Real estate - construction 18 --- --- 15 --- Real estate - 1-4 family 54 48 36 --- 38 Real estate - other --- --- --- --- --- Commercial loans 267 --- 272 106 384 Consumer loans 114 126 257 212 180 Agriculture and other loans 19 --- 500 --- --- Total charge-offs 472 174 1,065 333 602 Recoveries: Real estate - construction --- --- --- --- --- Real estate - 1-4 family 2 1 1 3 12 Real estate - other 3 3 3 3 3 Commercial loans 142 54 87 210 219 Consumer loans 29 79 122 46 218 Agriculture and other loans 26 38 3 3 2 Total recoveries 202 175 216 265 454 Net charge-offs (recoveries) 270 (1) 849 68 148 Balance, end of period $13,122 $13,072 $12,591 $11,620 $11,538 Nonperforming Assets Nonaccrual loans $8,659 $9,087 $8,654 $5,188 $4,892 Accruing loans 90 or more days past due 13 220 --- --- --- Restructured loans 1,625 86 88 92 95 Total non-performing loans 10,297 9,393 8,742 5,280 4,987 Other real estate 593 684 927 1,836 2,212 Repossessed assets 8 13 8 15 6 Total non-performing assets $10,898 $10,090 $9,677 $7,131 $7,205 Ratios Allowance for loan losses to total loans 1.19% 1.19% 1.16% 1.19% 1.19% Allowance for loan losses to nonperforming loans 127.44 139.17 144.03 220.08 231.36 Nonperforming assets to loans and other real estate 0.99 0.92 0.89 0.73 0.74 Nonperforming loans to total loans 0.93 0.86 0.80 0.54 0.52 Nonperforming assets to total loans 0.99 0.92 0.89 0.73 0.75 Net charge-offs (recoveries) to average loans (annualized) 0.10 (0.00) 0.32 0.03 0.09 State National Bancshares, Inc. Yield Analysis (Dollars in thousands) Three Month Period Ended June 30, 2006 June 30, 2005 Interest Interest Average Income/ Yield/ Average Income/ Yield/ Balance Expenses Rate(A) Balance Expense Rate(A) (Unaudited) Assets: Interest earnings assets: Total loans $1,097,418 $22,199 8.09% $964,792 $16,989 7.04% Securities 238,968 2,749 4.60% 137,497 1,355 3.94% Time deposits in other banks 17,069 111 2.60% 8,985 57 2.54% Federal funds sold 21,677 350 6.46% 25,626 184 2.87% Total interest- earnings assets 1,375,132 25,409 7.39% 1,136,900 18,585 6.54% Noninterest- earning assets: Cash and due from banks 67,390 61,063 Intangible assets 116,107 85,009 Premises and equipment, net 51,497 34,994 Accrued interest receivable and other assets 53,100 46,470 Allowance for loan losses (13,303) (11,438) Total noninterest- earning assets 274,791 216,098 Total assets $1,649,923 $1,352,998 Liabilities and shareholders' equity: Interest-bearing liabilities: Demand, savings and money market deposits $522,112 1,796 1.38% $443,461 982 0.89% Time deposits 337,065 2,836 3.37% 274,642 1,489 2.17% Fed funds purchased and securities sold under agreement to repurchase 33,905 366 4.32% 20,871 124 2.38% Subordinated notes payable 47,000 1,010 8.60% 47,000 780 6.64% Note payable 1,245 23 7.39% 850 10 4.71% Total interest- bearing liabilities 941,327 6,031 2.56% 786,824 3,385 1.72% Noninterest- bearing liabilities: Demand deposits 476,571 397,852 Accrued interest payable and other liabilities 12,409 9,141 Total noninterest- bearing liabilities 488,980 406,993 Total liabilities 1,430,307 1,193,817 Minority interest in consolidated subsidiary 975 --- Shareholders' equity 218,641 159,181 Total liabilities and shareholders' equity $1,649,923 $1,352,998 Net interest income $19,378 $15,200 Net interest spread(B) 4.83% 4.82% Net interest margin(C) 5.64% 5.35% (A) Yields on tax-exempt securities are calculated on a fully taxable equivalent basis assuming a 35% tax rate. (B) Represents the average rate earned on interest-earning assets less the average rate paid on interest-bearing liabilities. (C) Represents net interest income on a fully taxable equivalent basis as a percentage of average interest-earning assets. State National Bancshares, Inc. Yield Analysis (Dollars in thousands) Six Month Period Ended June 30, 2006 June 30, 2005 Interest Interest Average Income/ Yield/ Average Income/ Yield/ Balance Expenses Rate(A) Balance Expense Rate(A) (Unaudited) Assets: Interest earnings assets: Total loans $1,090,394 $43,015 7.89% $956,056 $32,791 6.86% Securities 227,907 5,192 4.56% 144,107 2,851 3.96% Time deposits in other banks 24,712 537 4.35% 9,415 110 2.34% Federal funds sold 30,902 705 4.56% 21,060 284 2.70% Total interest- earnings assets 1,373,915 49,449 7.20% 1,130,638 36,036 6.37% Noninterest- earning assets: Cash and due from banks 68,755 61,080 Intangible assets 116,894 85,423 Premises and equipment, net 50,474 34,464 Accrued interest receivable and other assets 52,730 45,993 Allowance for loan losses (13,058) (11,453) Total noninterest- earning assets 275,795 215,507 Total assets $1,649,710 $1,346,145 Liabilities and shareholders' equity: Interest-bearing liabilities: Demand, savings and money market deposits $520,896 3,365 1.29% $445,009 1,664 0.75% Time deposits 340,311 5,481 3.22% 276,630 2,741 1.98% Fed funds purchased and securities sold under agreement to repurchase 32,777 671 4.09% 19,444 209 2.15% Subordinated notes payable 47,000 1,952 8.31% 47,000 1,482 6.31% Note payable 2,724 74 5.43% 865 21 4.86% Total interest-bearing liabilities 943,708 11,543 2.45% 788,948 6,117 1.55% Noninterest-bearing liabilities: Demand deposits 476,319 392,854 Accrued interest payable and other liabilities 12,364 8,110 Total noninterest- bearing liabilities 488,683 400,964 Total liabilities 1,432,391 1,189,912 Minority interest in consolidated subsidiary 632 --- Shareholders' equity 216,687 156,233 Total liabilities and shareholders' equity $1,649,710 $1,346,145 Net interest income $37,906 $29,919 Net interest spread(B) 4.75% 4.82% Net interest margin(C) 5.52% 5.29% (A) Yields on tax-exempt securities are calculated on a fully taxable equivalent basis assuming a 35% tax rate. (B) Represents the average rate earned on interest-earning assets less the average rate paid on interest-bearing liabilities. (C) Represents net interest income on a fully taxable equivalent basis as a percentage of average interest-earning assets. Cash Earnings Per Share Our balance sheet has a significant amount of intangible assets and a corresponding amount of intangible amortization, creating a wide margin between GAAP and Cash (GAAP EPS plus tax effected intangible amortization expense per share) EPS. Cash EPS is a good indicator of the increase in tangible book value per share net of any dividends paid. Therefore, we believe Cash EPS is a very important performance measurement for our company. Below is a table reconciling GAAP EPS to Cash EPS for the quarters and the six months ended June 30, 2006 and June 30, 2005. Three Months Ended Six Months Ended June 30, June 30, 2006 2005 2006 2005 (Unaudited) (Unaudited) GAAP EPS fully diluted $0.37 $0.37 $0.75 $0.71 Intangible amortization expense per share tax effected 0.05 0.05 0.11 0.10 Cash EPS fully diluted $0.42 $0.42 $0.86 $0.81 DATASOURCE: State National Bancshares, Inc. CONTACT: Tom C. Nichols, Chairman, President and Chief Executive Officer, or Don E. Cosby, Executive Vice President and Chief Financial Officer, both of State National Bancshares, Inc., +1-817-547-1150, or fax, +1-817-547-1159 Web site: http://www.statenationalbank.com/

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SNBI State National Bancshares