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

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

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Net Income Increases 30.2% Compared to Third Quarter 2005 and Net Interest Margin Increases to 5.76% FORT WORTH, Texas, Oct. 25 /PRNewswire-FirstCall/ -- State National Bancshares, Inc. (NASDAQ:SNBI) ("SNBI"), the parent company of State National Bank, today announced net income for the third quarter 2006 of $5.7 million, or $0.46 per diluted common share, compared to $4.4 million, or $0.42 per diluted common share, for the third quarter 2005. Net income for the nine months ended September 30, 2006 was $14.8 million, or $1.21 per diluted common share, compared to $11.7 million, or $1.14 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, ("BBVA") (MADRID: BBVA) pursuant to which BBVA has agreed to acquire SNBI for $38.50 per share or approximately $480 million in cash. The transaction is expected to close January 3, 2007. As of the date of this release, all regulatory approvals required for consummation of the transaction have been received. 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. "We are very pleased with our performance in all of our markets, despite a highly competitive environment. Our net interest margin, expenses efficiencies, and quality loan growth have clearly continued our momentum," said Tom C. Nichols, Chairman, President and CEO of SNBI. Results of Operations For the three months ended September 30, 2006, net income was $5.7 million compared to $4.4 million for the same period in 2005. Net income per diluted common share was $0.46 for the three months ended September 30, 2006 compared to $0.42 for the same period in 2005. Included in the 2006 third quarter results are transaction costs related to the pending acquisition by BBVA totaling $126,000, or $0.01 per share. Return on average assets, average common equity and average tangible equity for the three months ended September 30, 2006 were 1.40%, 10.20% and 18.40%, respectively, compared to 1.27%, 10.85% and 21.54%, respectively for the three months ended September 30, 2005. State National's efficiency ratio was 60.67% and 63.93% for the three months ended September 30, 2006 and 2005, respectively. The 2006 efficiency ratio was negatively impacted by the previously mentioned transaction costs recorded in the third quarter of 2006. Net income was $14.8 million for the nine month period ended September 30, 2006, compared to $11.7 million for the nine month period ended September 30, 2005. Net income per diluted common share was $1.21 for the nine month period ended September 30, 2006, compared to $1.14 for the comparable period in 2005, which represents an increase of 6.1% on a per share basis. Returns on average assets, average common equity and average tangible equity for the first nine months of 2006 were 1.20%, 9.04% and 16.69%, respectively, compared to 1.15%, 9.86% and 19.85%, respectively, for the nine months ended September 30, 2005. State National's efficiency ratio was 63.22% and 65.02% for the nine months ended September 30, 2006 and 2005, respectively. Our tax-equivalent net interest income was $19.6 million for the three months ended September 30, 2006 as compared to $15.7 million for the comparable period in 2005, an increase of 25.0%. Our net interest margin on a fully taxable-equivalent basis was 5.76% for the third quarter of 2006 as compared to 5.41% for 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 and securities portfolios. Our tax-equivalent net interest income was $57.5 million for the nine months ended September 30, 2006 as compared to $45.6 million for the comparable period in 2005, an increase of 26.1%. Our net interest margin on a fully taxable-equivalent basis was 5.60% for first nine months of 2006 as compared to 5.33% 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 and securities portfolios. Provision for loan losses was $160,000 for the three month period ended September 30, 2006 as compared to $150,000 for the three month period ended September 30, 2005. This represents an increase of 6.7%. The provision for loan losses represented 0.06% of average total loans for both the third quarter 2006 and 2005. Provision for loan losses was $960,000 for the nine month period ended September 30, 2006 as compared to $750,000 for the nine month period ended September 30, 2005. This represents an increase of 28.0%. The provision for loan losses represented 0.12% of average total loans for the first nine months of 2006 compared to 0.10% for the same period in 2005. Noninterest income was $5.0 million for the three month period ended September 30, 2006 and $4.9 million for the three month period ended September 30, 2005, a 2.1% increase. This increase is primarily related to increased transactional and savings accounts resulting from our acquisition of Heritage. Noninterest income was $14.7 million for the nine month period ended September 30, 2006 and $13.8 million for the nine month period ended September 30, 2005, a 6.7% increase. This increase is primarily related to increased transactional and savings accounts resulting from our acquisition of Heritage. Noninterest expense was $15.9 million for the third quarter of 2006 as compared to $14.0 million for the same period in 2005, an increase of 13.3% which is primarily attributable to the acquisition of Heritage. Also included in the third quarter of 2006 are costs related to the pending acquisition by BBVA totaling $126,000. These costs include legal fees and fairness opinion expenses associated with the pending acquisition. Noninterest expense was $48.4 million for the first nine months of 2006 as compared to $41.1 million for the same period in 2005, an increase of 17.8% which is primarily attributable to the acquisition of Heritage and previously mentioned transaction costs recorded in the second and third quarters of 2006 totaling $884,000. Financial Condition Assets totaled $1.6 billion at September 30, 2006, reflecting an increase of $248.2 million, or 17.8%, as compared to assets at September 30, 2005. The increase was primarily attributable to the acquisition of Heritage. At September 30, 2006, assets related to Heritage represented approximately $229.2 million. Loans at September 30, 2006 totaled $1.1 billion, an increase of $161.7 million, or 16.6%, from $973.3 million at September 30, 2005. The increase in loans was related to organic growth and the acquisition of Heritage, with loans related to Heritage totaling approximately $93.6 million at September 30, 2006. Total deposits at September 30, 2006 were $1.3 billion, an increase of $166.4 million, or 14.5%, from $1.2 billion at September 30, 2005. The increase in deposits was primarily attributable to the acquisition of Heritage, with deposits related to Heritage totaling approximately $162.0 million at September 30, 2006. Other Information SNBI paid a quarterly cash dividend of $0.10 per common shares on September 8, 2006 to common shareholders of record on August 28, 2006. Due to the pending acquisition, SNBI has elected not to host an earnings conference call related to the third 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: conditions to the consummation of the pending acquisition by BBVA; 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 October 25, 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 Sept. 30, June 30, March 31, Dec. 31, Sept. 30, 2006 2006 2006 2005 2005 Income Statement Data: (Unaudited) Total interest income $26,107 $25,263 $23,886 $23,474 $19,589 Total interest expense 6,608 6,031 5,512 5,230 3,882 Net interest income 19,499 19,232 18,374 18,244 15,707 Provision for loan losses 160 320 480 150 150 Net interest income after provision 19,339 18,912 17,894 18,094 15,557 Noninterest income 5,036 4,999 4,697 4,886 4,931 Noninterest expense 15,884 16,761 15,784 15,912 14,025 Income before income taxes and minority interest in consolidated subsidiary's net (income) loss 8,491 7,150 6,807 7,068 6,463 Income tax expense 2,811 2,586 2,280 2,061 2,085 Minority interest in consolidated subsidiary's net (income) loss 19 (12) 60 --- --- Net income $5,699 $4,552 $4,587 $5,007 $4,378 Balance Sheet Data: Total assets $1,645,203 $1,634,602 $1,692,678 $1,662,877 $1,397,009 Securities 235,149 239,279 218,491 214,881 124,899 Total loans 1,134,973 1,105,508 1,094,896 1,086,195 973,322 Intangibles, net 114,688 115,686 116,676 118,422 83,833 Total deposits 1,317,203 1,311,449 1,382,539 1,357,078 1,150,776 Junior subordinated debentures 47,000 47,000 47,000 47,000 47,000 Other borrowings 44,377 44,420 33,919 34,438 28,280 Stockholders' equity 225,347 218,575 216,072 212,257 161,335 Per Share Data: Earnings-basic $0.47 $0.38 $0.38 $0.42 $0.43 Earnings-diluted 0.46 0.37 0.38 0.41 0.42 Cash dividend 0.10 0.10 0.10 --- --- Book value 18.70 18.19 18.03 17.73 16.03 Period end shares outstanding 12,047,513 12,014,083 11,984,083 11,971,107 10,063,415 Weighted average shares outstanding- basic 12,030,385 12,003,918 11,976,230 11,971,107 10,083,499 Weighted average shares outstanding- diluted 12,311,913 12,270,849 12,176,031 12,297,044 10,352,201 Performance Ratios: Return on average equity 10.20% 8.33% 8.54% 9.44% 10.85% Return on average assets 1.40 1.10 1.11 1.22 1.27 Return on average tangible common equity 18.40 15.37 16.13 17.95 21.54 Net interest margin 5.76 5.64 5.40 5.36 5.41 Efficiency ratio 60.67 64.67 63.56 63.99 63.93 Asset Quality Ratios: Nonperforming assets to loans and other real estate 0.87% 0.99% 0.92% 0.89% 0.73% Allowance for loan losses to nonperforming loans 146.32 150.05 139.17 144.03 220.08 Allowance for loan losses to total loans 1.14 1.19 1.19 1.16 1.19 Net charge-offs (recoveries) to average loans (annualized) 0.10 0.10 (0.00) 0.32 0.03 Liquidity and Capital Ratios: Average loans to average deposits 85.06% 82.16% 80.89% 80.79% 84.95% Total equity to total assets 13.70 13.37 12.77 12.76 11.55 Average equity to average assets 13.67 13.25 13.02 12.91 11.70 Tangible equity to tangible assets(A) 7.33 6.84 6.58 6.27 6.08 Leverage ratio 10.42 9.91 9.64 9.36 9.71 Tier 1 risk-based capital ratio 12.68 12.44 12.37 11.98 11.74 Total risk-based capital ratio 13.72 13.51 13.46 13.04 12.82 (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 Nine Months Ended Sept. 30, Sept. 30, 2006 2005 Income Statement Data: (Unaudited) Total interest income $75,256 $55,596 Total interest expense 18,151 9,998 Net interest income 57,105 45,598 Provision for loan losses 960 750 Net interest income after provision 56,145 44,848 Noninterest income 14,732 13,803 Noninterest expense 48,429 41,119 Income before income taxes and minority interest in consolidated subsidiary's net loss 22,448 17,532 Income tax expense 7,677 5,857 Minority interest in consolidated subsidiary's net loss 67 --- Net income $14,838 $11,675 Per Share Data: Earnings-basic $1.24 $1.16 Earnings-diluted 1.21 1.14 Cash dividend 0.10 --- Book value 18.70 16.03 Period end shares outstanding 12,047,513 10,063,415 Weighted average shares outstanding- basic 12,003,709 10,066,186 Weighted average shares outstanding- diluted 12,263,263 10,286,334 Performance Ratios: Return on average equity 9.04% 9.86% Return on average assets 1.20 1.15 Return on average tangible common equity 16.69 19.85 Net interest margin 5.60 5.33 Efficiency ratio 63.22 65.02 Asset Quality Ratios: Nonperforming assets to loans and other real estate 0.87% 0.73% Allowance for loan losses to nonperforming loans 146.32 220.08 Allowance for loan losses to total loans 1.14 1.19 Net charge-offs to average loans (annualized) 0.07 0.07 Liquidity and Capital Ratios: Average loans to average deposits 82.69% 85.50% Total equity to total assets 13.70 11.55 Average equity to average assets 13.31 11.64 Tangible equity to tangible assets(A) 7.33 6.08 Leverage ratio 10.42 9.71 Tier 1 risk-based capital ratio 12.68 11.74 Total risk-based capital ratio 13.72 12.82 (A) This ratio is calculated based on regulatory tangible common equity. State National Bancshares, Inc. Consolidated Balance Sheets (Dollars in thousands) Sept 30, June 30, March 31, Dec 31, Sept 30, 2006 2006 2006 2005 2005 ASSETS (Unaudited) Cash and due from banks $58,887 $77,228 $71,236 $72,922 $64,658 Federal funds sold --- --- 65,700 36,950 60,900 Interest-bearing deposits in other banks 3,155 3,301 35,318 44,763 16,525 Cash and cash equivalents 62,042 80,529 172,254 154,635 142,083 Securities available-for- sale 226,023 231,660 210,399 206,787 116,958 Federal Reserve Bank stock and other investments 9,126 7,619 8,092 8,094 7,941 Loans held-for- sale 4,318 6,949 7,477 11,584 6,761 Loans held-for- investment 1,130,655 1,098,559 1,087,419 1,074,611 966,561 Total Loans 1,134,973 1,105,508 1,094,896 1,086,195 973,322 Less allowance for loan losses 12,992 13,122 13,072 12,591 11,620 Net loans 1,121,981 1,092,386 1,081,824 1,073,604 961,702 Premises and equipment, net 54,529 51,897 50,643 48,769 35,583 Goodwill 99,354 99,354 99,351 100,486 70,818 Other intangible assets, net 15,334 16,332 17,325 17,936 13,015 Accrued interest receivable 10,038 9,018 7,921 8,919 6,766 Other real estate and other repossessed assets 1,019 601 696 935 1,851 Other Assets 45,757 45,206 44,173 42,712 40,292 TOTAL ASSETS $1,645,203 $1,634,602 $1,692,678 $1,662,877 $1,397,009 LIABILITIES AND SHAREHOLDERS' EQUITY LIABILITIES: Noninterest bearing demand deposits $478,192 $479,610 $509,329 $487,369 $428,795 Interest bearing demand deposits 494,829 492,570 535,221 523,857 441,275 Interest bearing time deposits 344,182 339,269 337,989 345,852 280,706 Total deposits 1,317,203 1,311,449 1,382,539 1,357,078 1,150,776 Federal funds purchased and repurchase agreements 43,151 43,150 32,718 28,597 27,470 Accrued interest payable 1,957 1,781 1,691 1,645 1,202 Other liabilities 8,152 10,191 10,591 10,459 8,416 Junior subordinated debentures 47,000 47,000 47,000 47,000 47,000 Notes payable 1,226 1,270 1,201 5,841 810 Total liabilities 1,418,689 1,414,841 1,475,740 1,450,620 1,235,674 Minority interest in consolidated subsidiary 1,167 1,186 866 --- --- SHAREHOLDERS' EQUITY Common Stock 12,047 12,014 11,984 11,971 11,971 Additional paid- in-capital 179,399 178,560 177,823 177,428 177,012 Retained earnings 35,400 30,904 27,553 24,164 19,157 Accumulated other comprehensive loss (1,499) (2,903) (1,288) (1,306) (677) Subscription Receivable --- --- --- --- (46,128) Total shareholders' equity 255,347 218,575 216,072 212,257 161,335 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $1,645,203 $1,634,602 $1,692,678 $1,662,877 $1,397,009 State National Bancshares, Inc. Consolidated Statements of Operations (Dollars in thousands) Three Month Periods Ended Sept. 30, June 30, March 31, Dec. 31, Sept. 30, 2006 2006 2006 2005 2005 (Unaudited) Interest on loans $23,272 $22,170 $20,785 $20,471 $17,728 Interest on securities 2,700 2,632 2,320 2,480 1,277 Interest on federal funds sold and other earning assets 135 461 781 523 584 Total interest income 26,107 25,263 23,886 23,474 19,589 Interest expense - deposits 5,064 4,632 4,215 4,031 2,862 Interest expense - federal funds purchased and securities sold under agreement to repurchase 449 366 304 248 178 Interest expense - subordinated notes payable 1,073 1,010 942 898 832 Interest expense - notes payable 22 23 51 53 10 Total interest expense 6,608 6,031 5,512 5,230 3,882 Net interest income 19,499 19,232 18,374 18,244 15,707 Provision for loan losses 160 320 480 150 150 Net interest income after provision for loan losses 19,339 18,912 17,894 18,094 15,557 Service charges on deposit accounts 2,891 2,799 2,695 2,750 2,600 Gain on sale of loans 641 651 633 797 804 Bank owned life insurance 326 326 327 416 316 Other income 1,178 1,223 1,042 923 1,211 Total noninterest income 5,036 4,999 4,697 4,886 4,931 Salaries and employee benefits 8,108 8,054 8,251 8,176 7,297 Net occupancy and equipment 2,490 2,461 2,544 2,547 2,322 Amortization of intangibles 998 997 1,022 1,031 824 Professional fees 588 587 504 281 326 Communication 330 325 320 371 300 Merger 126 755 --- 230 19 Other 3,244 3,582 3,143 3,276 2,937 Total noninterest expense 15,884 16,761 15,784 15,912 14,025 Income before income taxes and minority interest in consolidated subsidiary's net (income) loss 8,491 7,150 6,807 7,068 6,463 Income tax expense 2,811 2,586 2,280 2,061 2,085 Minority interest in consolidated subsidiary's net (income) loss 19 (12) 60 --- --- Net income $5,699 $4,552 $4,587 $5,007 $4,378 State National Bancshares, Inc. Consolidated Statements of Operations (Dollars in thousands) Nine Months Ended Sept. 30, Sept. 30, 2006 2005 (Unaudited) Interest on loans $66,227 $50,519 Interest on securities 7,652 4,100 Interest on federal funds sold and other earning assets 1,377 977 Total interest income 75,256 55,596 Interest expense - deposits 13,910 7,267 Interest expense - federal funds purchased and securities sold under agreement to repurchase 1,120 387 Interest expense - subordinated notes payable 3,025 2,314 Interest expense - notes payable 96 30 Total interest expense 18,151 9,998 Net interest income 57,105 45,598 Provision for loan losses 960 750 Net interest income after provision for loan losses 56,145 44,848 Service charges on deposit accounts 8,385 7,416 Gain on sale of loans 1,925 2,153 Bank owned life insurance 979 948 Other income 3,443 3,286 Total noninterest income 14,732 13,803 Salaries and employee benefits 24,413 21,614 Net occupancy and equipment 7,495 6,628 Amortization of intangibles 3,017 2,471 Professional fees 1,679 1,017 Communication 975 856 Merger 884 59 Other 9,966 8,474 Total noninterest expense 48,429 41,119 Income before income taxes and minority interest in consolidated subsidiary's net loss 22,448 17,532 Income tax expense 7,677 5,857 Minority interest in consolidated subsidiary's net loss 67 --- Net income $14,838 $11,675 State National Bancshares, Inc. Selected Financial Information (Dollars in thousands) Three Month Period Ended Sept. 30, June 30, March 31, Dec. 31, Sept. 30, 2006 2006 2006 2005 2005 Condensed Average Balance Sheet (Unaudited) Total loans $1,116,668 $1,097,418 $1,083,370 $1,082,133 $963,379 Securities and other investments 237,018 238,968 216,846 235,434 130,028 Federal funds sold and other earning assets 9,291 38,746 72,482 52,253 68,377 Total earning assets 1,362,977 1,375,132 1,372,698 1,369,820 1,161,784 Allowance for loan losses (13,151) (13,303) (12,813) (13,127) (11,627) Cash and due from banks 61,018 67,390 70,120 69,898 62,622 Goodwill 99,350 99,350 100,012 100,494 70,818 Other intangible assets, net 15,753 16,757 17,669 16,281 13,357 Other real estate 715 680 804 1,266 2,036 Premises and equipment, net 53,288 51,497 49,451 47,505 35,835 Other Assets 54,064 52,420 51,556 52,239 44,677 Total assets $1,634,014 $1,649,923 $1,649,497 $1,644,376 $1,379,502 Noninterest bearing demand $476,793 $476,571 $476,067 $466,397 $412,567 Interest bearing demand, savings and money market 494,787 522,112 519,680 521,784 443,542 Time less than $100,000 184,764 186,564 192,444 198,860 153,975 Time greater than $100,000 156,444 150,501 151,113 152,400 123,981 Total deposits 1,312,788 1,335,748 1,339,304 1,339,441 1,134,065 Federal funds purchased and other interest bearing liabilities 37,301 33,905 31,649 29,939 23,869 Subordinated notes payable 47,000 47,000 47,000 47,000 47,000 Notes payable 1,227 1,245 4,203 4,199 823 Other liabilities 11,119 12,409 12,319 11,540 12,412 Total liabilities 1,409,435 1,430,307 1,434,475 1,432,119 1,218,169 Minority interest in consolidated subsidiary 1,172 975 289 --- --- Total shareholders' equity 223,407 218,641 214,733 212,257 161,333 Total liabilities and shareholders' equity $1,634,014 $1,649,923 $1,649,497 $1,644,376 $1,379,502 State National Bancshares, Inc. Selected Financial Information (Dollars in thousands) Nine Months Ended Sept. 30, Sept. 30, 2006 2005 Condensed Average Balance Sheet (Unaudited) Total loans $1,099,152 $958,497 Securities and other investments 230,944 139,414 Federal funds sold and other earning assets 40,173 43,109 Total earning assets 1,370,269 1,141,020 Allowance for loan losses (13,089) (11,511) Cash and due from banks 66,176 61,594 Goodwill 99,571 70,818 Other intangible assets, net 16,726 14,189 Other real estate 733 1,962 Premises and equipment, net 51,412 34,921 Other Assets 52,680 44,271 Total assets $1,644,478 $1,357,264 Noninterest bearing demand $476,477 $399,425 Interest bearing demand, savings and money market 512,193 444,520 Time less than $100,000 187,924 157,241 Time greater than $100,000 152,686 119,831 Total deposits 1,329,280 1,121,017 Federal funds purchased and other interest bearing liabilities 34,285 20,919 Subordinated notes payable 47,000 47,000 Notes payable 2,225 851 Other liabilities 11,949 9,544 Total liabilities 1,424,739 1,199,331 Minority interest in consolidated subsidiary 812 --- Total shareholders' equity 218,927 157,933 Total liabilities and shareholders' equity $1,644,478 $1,357,264 State National Bancshares, Inc. Selected Financial Information (Dollars in thousands) As of or For The Three Month Periods Ended Sept. 30, June 30, March 31, Dec. 31, Sept. 30, 2006 2006 2006 2005 2005 Allowance for loan losses (Unaudited) Balance, beginning of period $13,122 $13,072 $12,591 $11,620 $11,538 Provision for loan losses 160 320 480 150 150 Loan loss reserves of acquired banks --- --- --- 1,670 --- Charge-offs: Real estate - construction 88 18 --- --- 15 Real estate - 1-4 family 11 54 48 36 --- Real estate - other 53 --- --- --- --- Commercial loans 267 285 --- 272 106 Consumer loans 197 116 125 257 212 Agriculture and other loans --- --- --- 500 --- Total charge-offs 616 473 173 1,065 333 Recoveries: Real estate - construction --- --- --- --- --- Real estate - 1-4 family 2 2 1 1 3 Real estate - other 3 3 3 3 3 Commercial loans 262 143 58 87 210 Consumer loans 42 29 98 122 46 Agriculture and other loans 17 26 14 3 3 Total recoveries 326 203 174 216 265 Net charge-offs (recoveries) 290 270 (1) 849 68 Balance, end of period $12,992 $13,122 $13,072 $12,591 $11,620 Nonperforming Assets Nonaccrual loans $8,806 $8,658 $9,087 $8,654 $5,188 Accruing loans 90 or more days past due --- 13 220 --- --- Restructured loans 73 74 86 88 92 Total non- performing loans 8,879 8,745 9,393 8,742 5,280 Other real estate 1,003 593 684 927 1,836 Repossessed assets 16 8 13 8 15 Total non- performing assets $9,898 $9,346 $10,090 $9,677 $7,131 Ratios Allowance for loan losses to total loans 1.14% 1.19% 1.19% 1.16% 1.19% Allowance for loan losses to nonperforming loans 146.32 150.05 139.17 144.03 220.08 Nonperforming assets to loans and other real estate 0.87 0.84 0.92 0.89 0.73 Nonperforming loans to total loans 0.78 0.79 0.86 0.80 0.54 Nonperforming assets to total loans 0.87 0.85 0.92 0.89 0.73 Net charge-offs (recoveries) to average loans (annualized) 0.10 0.10 (0.00) 0.32 0.03 State National Bancshares, Inc. Yield Analysis (Dollars in thousands) Three Month Period Ended September 30, 2006 September 30, 2005 Interest Interest Average Income/ Yield/ Average Income/ Yield/ Balance Expense Rate(A) Balance Expense Rate(A) Assets: (Unaudited) Interest earnings assets: Total loans $1,116,668 $23,300 8.35% $963,379 $17,728 7.36% Securities 237,018 2,813 4.75% 130,028 1,288 3.96% Time deposits in other banks 3,938 51 5.18% 13,591 127 3.74% Federal funds sold 6,449 84 5.20% 54,786 457 3.34% Total interest- earnings assets 1,364,073 26,248 7.70% 1,161,784 19,600 6.75% Noninterest-earning assets: Cash and due from banks 61,018 62,622 Intangible assets 115,103 84,175 Premises and equipment, net 53,288 35,835 Accrued interest receivable and other assets 53,683 46,713 Allowance for loan losses (13,151) (11,627) Total noninterest- earning assets 269,941 217,718 Total assets $1,634,014 $1,379,502 Liabilities and shareholders' equity: Interest-bearing liabilities: Demand, savings and money market deposits $494,787 1,884 1.52% $443,542 1,104 1.00% Time deposits 341,208 3,180 3.73% 277,956 1,758 2.53% Fed funds purchased and securities sold under agreement to repurchase 37,301 449 4.81% 23,869 178 2.98% Subordinated notes payable 47,000 1,073 9.13% 47,000 832 7.08% Note payable 1,227 22 7.17% 823 10 4.86% Total interest-bearing liabilities 921,523 6,608 2.87% 793,190 3,882 1.96% Noninterest-bearing liabilities: Demand deposits 476,793 412,567 Accrued interest payable and other liabilities 11,119 12,412 Total noninterest- bearing liabilities 487,912 424,979 Total liabilities 1,409,435 1,218,169 Minority interest in consolidated subsidiary 1,172 --- Shareholders' equity 223,407 161,333 Total liabilities and shareholders' equity $1,634,014 $1,379,502 Net interest income $19,640 $15,718 Net interest spread (B) 4.83% 4.79% Net interest margin (C) 5.76% 5.41% (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) Nine Month Period Ended September 30, 2006 September 30, 2005 Interest Interest Average Income/ Yield/ Average Income/ Yield/ Balance Expense Rate(A) Balance Expense Rate(A) Assets: (Unaudited) Interest earnings assets: Total loans $1,099,152 $66,315 8.04% $958,497 $50,519 7.03% Securities 230,944 8,005 4.62% 139,414 4,140 3.96% Time deposits in other banks 17,642 588 4.44% 10,807 237 2.92% Federal funds sold 22,531 789 4.67% 32,302 740 3.05% Total interest- earnings assets 1,370,269 75,697 7.37% 1,141,020 55,636 6.50% Noninterest-earning assets: Cash and due from banks 66,176 61,594 Intangible assets 116,297 85,007 Premises and equipment, net 51,412 34,921 Accrued interest receivable and other assets 53,413 46,233 Allowance for loan losses (13,089) (11,511) Total noninterest- earning assets 274,209 216,244 Total assets $1,644,478 $1,357,264 Liabilities and shareholders' equity: Interest-bearing liabilities: Demand, savings and money market deposits $512,193 5,249 1.37% $444,520 2,768 0.83% Time deposits 340,610 8,661 3.39% 277,072 4,499 2.17% Fed funds purchased and securities sold under agreement to repurchase 34,285 1,120 4.36% 20,919 387 2.47% Subordinated notes payable 47,000 3,025 8.58% 47,000 2,314 6.56% Note payable 2,225 96 5.75% 851 30 4.70% Total interest- bearing liabilities 936,313 18,151 2.58% 790,362 9,998 1.69% Noninterest-bearing liabilities: Demand deposits 476,477 399,425 Accrued interest payable and other liabilities 11,949 9,544 Total noninterest- bearing liabilities 488,426 408,969 Total liabilities 1,424,739 1,199,331 Minority interest in consolidated subsidiary 812 --- Shareholders' equity 218,927 157,933 Total liabilities and shareholders' equity $1,644,478 $1,357,264 Net interest income $57,546 $45,638 Net interest spread (B) 4.78% 4.81% Net interest margin (C) 5.60% 5.33% (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 nine months ended September 30, 2006 and September 30, 2005. Three Months Ended Nine Months Ended September 30, September 30, 2006 2005 2006 2005 (Unaudited) (Unaudited) GAAP EPS fully diluted $0.46 $0.42 $1.21 $1.14 Intangible amortization expense per share tax effected 0.06 0.05 0.16 0.15 Cash EPS fully diluted $0.52 $0.47 $1.37 $1.29 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