Texas United Bancshares (NASDAQ:TXUI)
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Third Quarter 2005 Highlights:
LA GRANGE, Texas, Nov. 8 /PRNewswire-FirstCall/ -- Texas United Bancshares, Inc. (NASDAQ:TXUI), a community banking organization and parent company of State Bank, La Grange, Texas and GNB Financial, n.a., Gainesville, Texas, today reported net income of $2.7 million for the third quarter ended September 30, 2005, an increase of $1.1 million or 72.3% compared with $1.6 million in the same quarter of 2004. Diluted earnings per share for the third quarter of 2005 were $0.34, up $0.05 or 17.2% compared with $0.29 per diluted share for the third quarter of 2004. The higher net income and diluted share earnings for the third quarter of 2005, compared with the same quarter of 2004, were primarily due to the effect of the acquisitions of the two Central Bank branches and GNB Bancshares, Inc. in the third and fourth quarters of 2004, in addition to internal growth and higher market interest rates on earning assets resulting in net interest margin improvement. The return on average tangible equity for the third quarter 2005 was 18.44%.
Diluted earnings per share for the third quarter of 2005 reflect the sale of 2,300,000 shares of common stock through a public offering in August 2004 and the issuance of approximately 1,457,000 shares in connection with the acquisition of GNB Bancshares, Inc. in October 2004. The weighted average diluted shares outstanding for the third quarter of 2005 were approximately 7,979,000 compared with 5,421,000 for the same quarter of 2004.
Net income for the nine months ended September 30, 2005 was $8.1 million, an increase of $3.5 million or 75.4% compared with $4.6 million for the same period in 2004. Diluted earnings per share for the nine months ended September 30, 2005 were $1.02, up $0.02 per diluted share compared with the same period in 2004. The higher net income and diluted share earnings for the nine months ended September 30, 2005, compared with the same period in 2004, were primarily due to the effect of the 2004 acquisitions, higher market interest rates and increased gains on sales of mortgage loans. The diluted per share results for the nine months ended September 30, 2005 were also affected by the above-mentioned issuance of common stock. The weighted average diluted shares outstanding for the nine months ended September 30, 2005 were approximately 7,965,000 compared with 4,605,000 for the same period in 2004.
Don Stricklin, President and CEO of Texas United Bancshares, Inc., commented, "Our third quarter results reflect our continued efforts with our strategic expansion and we were pleased to announce our pending acquisition of The Express Bank of Texas which will enhance our market share in the Austin- metro area. The acquisition of Gateway Holding Company, Inc. is scheduled to close in the fourth quarter of 2005, pending shareholder approval, further enhancing our presence in the north Texas market. Our recent expansions have required us to enhance our back office operations and we have added experienced staff and technology accordingly; positioning our infrastructure for future growth."
Net interest income, before the provision for loan losses, for the third quarter ended September 30, 2005 was $13.7 million, up $5.7 million or 71.7% compared with $8.0 million for the same quarter in 2004. The net interest margin for the third quarter ended September 30, 2005 was 4.85%, up 52 basis points compared with 4.33% for the same quarter in 2004. Net interest income, before the provision for loan losses, for the nine months ended September 30, 2005 was $38.2 million, up $16.9 million or 79.5% compared with $21.3 million for the same period in 2004. The net interest margin for the nine months ended September 30, 2005 was 4.81%, up 46 basis points compared with 4.35% for the same period in 2004. The net interest margin for both periods benefited from the gradual increase in short-term market interest rates over the past twelve to fifteen months. The increases in net interest income and the improved net interest margins for both periods were primarily the result of additional interest income earned on larger earning-asset volumes coupled with higher earning-asset yields that were partially offset by additional interest expense on a higher volume of interest-bearing liabilities coupled with higher interest rates paid for those funding sources.
Noninterest income for the third quarter ended September 30, 2005 was $6.4 million, up $1.2 million or 23.7% compared with $5.2 million for the same quarter of 2004. Noninterest income for the nine months ended September 30, 2005 was $18.9 million, up $4.6 million or 32.4% compared with $14.3 million for the same period in 2004. The increases in both periods were primarily the result of increased fees collected on additional loan and deposit accounts as a result of the 2004 acquisitions and internal growth. The increased gains on sales of mortgage loans for the nine months ended September 30, 2005 was primarily the result of increased mortgage banking activities and higher mortgage loan origination volumes.
Noninterest expense for the third quarter ended September 30, 2005 was $15.2 million, an increase of $4.9 million or 47.8% compared with $10.3 million for the same quarter in 2004. Noninterest expense for the nine months ended September 30, 2005 was $42.3 million, up $14.6 million or 53.0% compared with $27.6 million for the same period in 2004. The increase in both periods reflect the impact of Texas United's expansion activities over the past six quarters, including additional staffing to handle expanded back office operations, professional fees related to compliance and acquisition projects, the construction of three full-service banking centers, expanded mortgage banking activities, the acquisition of GNB Bancshares, Inc. and the acquisition of the two Central Bank branches. For the third quarter of 2005, the efficiency ratio was 75.12%, an improvement of 283 basis points compared with 77.95% for the same quarter in 2004. For the nine months ended September 30, 2005 the efficiency ratio was 73.73%, an improvement of 394 basis points compared with 77.67% for the same period in 2004.
Nonperforming assets at September 30, 2005 were $6.1 million or 0.49% of total assets, compared with $2.6 million or 0.31% of total assets at September 30, 2004. Net charge-offs for the third quarter of 2005 were $584,000 or 0.28% of average loans, compared with $287,000 or 0.24% of average loans at September 30, 2004. The allowance for loan losses at September 30, 2005 was $7.8 million or 0.92% of total loans.
Total assets at September 30, 2005 were $1.3 billion, up $114.2 million or 10.0% compared with $1.1 billion at December 31, 2004. Total investment securities at September 30, 2005 were $248.2 million, down $53.4 million or 17.7% compared with $301.6 million at December 31, 2004. Total loans at September 30, 2005 were $847.9 million, up $154.3 million or 22.2% compared with $693.5 million at December 31, 2004. Total deposits at September 30, 2005 were $880.7 million, up $653,000 or 0.07% compared with $880.1 million at December 31, 2004. Total borrowings at September 30, 2005 were $227.9 million, up $121.9 million or 115.1% compared with $105.9 million at December 31, 2004. Loan growth during the nine months ended September 30, 2005 was primarily funded by bank borrowings as deposit growth has softened due to increased competition.
Shareholders' equity at September 30, 2005 was $109.0 million, an increase of $4.2 million or 4.0% compared with $104.8 million at December 31, 2004. Outstanding shares at September 30, 2005 (period-end) were 7,845,472.
Texas United Bancshares, Inc. is a registered financial holding company listed on the NASDAQ National Market under the symbol "TXUI". Texas United operates through two wholly-owned subsidiary banks, State Bank and GNB Financial, n.a., which offer a complete range of banking services through 29 full-service banking centers located in central and south central Texas and in areas north and south of the Dallas-Fort Worth metroplex. In addition, State Bank operates four loan production offices and 13 limited service branches located in Houston, San Antonio and Austin.
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)
Sept. 30, Dec. 31,
2005 2004 2004
(Unaudited)
ASSETS
Cash and due from banks $41,282 $19,196 $36,752
Federal funds sold 6,600 --- 4,015
Total cash and cash
equivalents 47,882 19,196 40,767
Securities available for sale, at
fair value 223,668 255,753 301,631
Securities held to maturity, at
cost 24,563 --- ---
Total loans, including loans held
for sale 847,861 498,632 693,548
Allowance for loan losses (7,835) (4,535) (6,685)
Total loans, net 840,026 494,097 686,863
Premises and equipment, net 43,807 29,196 39,730
Accrued interest receivable 6,207 3,559 5,214
Goodwill 39,835 17,537 40,117
Core deposit intangibles, net 4,783 316 5,341
Mortgage servicing rights, net 4,834 4,769 4,698
Other assets 19,917 14,904 17,005
Total assets $1,255,522 $839,327 $1,141,366
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits:
Noninterest-bearing $217,638 $126,107 $187,454
Interest-bearing 663,090 562,792 692,621
Total deposits 880,728 688,899 880,075
Securities sold under agreement
to repurchase 6,698 8,900 6,291
Federal funds purchased --- 973 15,125
Junior subordinated deferrable
interest debentures 17,520 12,365 17,520
Borrowings 227,882 39,925 105,940
Other liabilities 13,708 9,612 11,603
Total liabilities 1,146,536 760,674 1,036,554
SHAREHOLDERS' EQUITY
Common stock 7,851 6,336 7,802
Additional paid-in capital 76,171 51,007 75,935
Retained earnings 28,149 21,037 21,921
Accumulated other comprehensive
(loss) income (3,068) 390 (729)
Less treasury stock, at cost (117) (117) (117)
Total shareholders' equity 108,986 78,653 104,812
Total liabilities and
shareholders' equity $1,255,522 $839,327 $1,141,366
TEXAS UNITED BANCSHARES, INC.
CONSOLIDATED STATEMENTS OF EARNINGS
(Dollars in thousands, except per share data)
For the
For the Three For the Nine Year
Months Ended Months Ended Ended
Sept. 30, Sept. 30, Dec. 31,
2005 2004 2005 2004 2004
(Unaudited)
INTEREST INCOME
Loans $17,079 $8,966 $45,452 $23,956 $36,822
Investment securities -
taxable 2,356 2,227 7,994 5,639 8,161
Investment securities -
tax-exempt 296 97 529 292 436
Federal funds sold and
other temporary
investments 144 7 58 14 30
Total interest income 19,875 11,297 54,033 29,901 45,449
INTEREST EXPENSE
Deposits 3,499 2,320 9,927 6,144 9,223
Federal funds purchased 378 57 851 119 194
Junior subordinated
deferrable interest
debentures 391 266 1,171 798 1,189
Borrowings 1,853 643 3,840 1,535 2,157
Total interest expense 6,121 3,286 15,789 8,596 12,763
Net interest income 13,754 8,011 38,244 21,305 32,686
Provision for loan losses 1,035 700 2,798 1,150 1,850
Net interest income
after provision for
loan losses 12,719 7,311 35,446 20,155 30,836
NONINTEREST INCOME
Service charges on deposit
accounts 2,398 1,869 6,696 5,196 6,931
Mortgage servicing revenue 358 217 917 715 888
Net (loss) gain on sale of
securities (63) 19 (184) 167 114
Net gain on sale of loans 2,521 2,544 7,496 6,204 9,213
Other noninterest income 1,206 539 3,984 1,995 1,937
Total noninterest income 6,420 5,188 18,909 14,277 19,083
NONINTEREST EXPENSE
Salaries and benefits 9,492 5,664 24,733 15,660 23,798
Occupancy 1,986 1,214 5,786 3,419 5,596
Other noninterest expense 3,724 3,411 11,754 8,556 11,667
Total noninterest
expense 15,202 10,289 42,273 27,635 41,061
Earnings before
provision for income
tax expense 3,937 2,210 12,082 6,797 8,858
Provision for income tax
expense 1,247 649 3,978 2,176 2,808
Net earnings $2,690 $1,561 $8,104 $4,621 $6,050
Earnings per common share:
Basic $0.34 $0.30 $1.04 $1.04 $1.15
Diluted $0.34 $0.29 $1.02 $1.00 $1.11
Dividends per common share $0.28
Weighted average shares
outstanding - basic 7,815 5,249 7,806 4,427 5,264
Weighted average shares
outstanding - diluted 7,979 5,421 7,965 4,605 5,442
TEXAS UNITED BANCSHARES, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS
(Dollars in thousands, except per share data)
Quarterly
2005 2005 2005 2004 2004
3rd Qtr 2nd Qtr 1st Qtr 4th Qtr 3rd Qtr
(Unaudited)
EARNINGS
Net interest
income $13,754 $12,942 $12,059 $11,381 $8,011
Provision for
loan losses 1,035 1,041 722 700 700
Noninterest
income 6,420 5,246 6,297 4,806 5,118
Noninterest
expense 15,202 13,197 13,439 13,426 10,289
Net income 2,690 2,612 2,802 1,429 1,561
Basic earnings
per share $0.34 $0.33 $0.36 $0.18 $0.30
Diluted earnings
per share $0.34 $0.33 $0.35 $0.18 $0.29
Weighted average
basic shares
outstanding (in
000s) 7,815 7,805 7,798 7,776 5,249
Weighted average
diluted shares
outstanding (in
000s) 7,979 7,964 7,968 7,953 5,421
PERFORMANCE RATIOS
Return on average
assets 0.84% 0.86% 0.97% 0.50% 0.76%
Return on average
equity 10.01% 9.88% 10.66% 5.40% 10.35%
Net interest
margin 4.85% 4.88% 4.87% 4.64% 4.33%
Efficiency ratio 75.12% 73.02% 73.42% 82.94% 77.95%
Full-time
equivalent
employees 573 595 557 522 409
CAPITAL
Average equity to
average assets 8.41% 8.75% 9.08% 9.34% 7.39%
Tier 1 leverage
capital ratio 6.92% 6.97% 7.10% 7.08% 9.07%
Tier 1 risk-based
capital ratio 9.14% 9.61% 9.96% 10.40% 13.53%
Total risk-based
capital ratio 9.99% 10.48% 10.83% 11.31% 14.39%
Book value per
share $13.89 $13.75 $13.35 $13.44 $12.43
Cash dividend per
share $0.08 $0.08 $0.08 $0.07 $0.07
ASSET QUALITY
Gross charge-offs $833 $857 $684 $621 $449
Net charge-offs $584 $589 $476 $456 $287
Net charge-offs
to average loans 0.28% 0.30% 0.27% 0.27% 0.24%
Allowance for
loan losses $7,835 $7,383 $6,931 $6,685 $4,535
Allowance for
loan losses to
total loans 0.92% 0.94% 0.96% 0.96% 0.91%
Nonperforming
loans $4,953 $4,765 $3,208 $2,970 $1,978
Other real estate
and repossessed
assets $1,167 $896 $641 $843 $586
Nonperforming
assets to total
assets 0.49% 0.46% 0.33% 0.33% 0.31%
END OF PERIOD
BALANCES
Loans $847,861 $786,675 $725,724 $693,548 $498,632
Total earning
assets (before
allowance for
loan losses) 1,102,692 1,084,723 1,035,947 999,194 754,385
Total assets 1,255,522 1,242,003 1,180,166 1,141,366 839,327
Deposits 880,728 902,356 880,306 880,075 688,899
Shareholders'
equity 108,986 107,445 104,177 104,812 78,653
AVERAGE BALANCES
Loans $822,938 $754,879 $699,763 $679,149 $476,826
Total earning
assets (before
allowance for
loan losses) 1,124,095 1,063,221 1,004,551 980,258 736,516
Total assets 1,267,287 1,212,045 1,157,872 1,128,209 811,834
Deposits 885,055 895,889 884,117 890,913 664,560
Shareholders'
equity 106,598 106,065 105,190 105,320 59,999
TEXAS UNITED BANCSHARES, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS (Continued)
(Dollars in thousands, except per share data)
Year ended December 31,
2004 2003
EARNINGS
Net interest income $32,686 $24,172
Provision for loan losses 1,850 2,900
Noninterest income 18,195 13,804
Noninterest expense 41,061 29,992
Net income 6,050 5,241
Basic earnings per share $1.15 $1.31
Diluted earnings per share $1.11 $1.26
Weighted average basic shares
outstanding (in 000s) 5,264 3,984
Weighted average diluted shares
outstanding (in 000s) 5,442 4,149
PERFORMANCE RATIOS
Return on average assets 0.74% 0.86%
Return on average equity 9.97% 14.12%
Net interest margin 4.44% 4.44%
Efficiency ratio 79.49% 77.33%
Full-time equivalent employees 522 313
CAPITAL
Average equity to average assets 7.43% 6.07%
Tier 1 leverage capital ratio 7.08% 6.46%
Tier 1 risk-based capital ratio 10.40% 9.54%
Total risk-based capital ratio 11.31% 10.47%
Book value per share $13.44 $9.49
Cash dividend per share $0.28 $0.28
ASSET QUALITY
Gross charge-offs $1,706 $3,238
Net charge-offs $964 $2,303
Net charge-offs to average loans 0.19% 0.61%
Allowance for loan losses $6,685 $3,893
Allowance for loan losses to total
loans 0.96% 1.01%
Nonperforming loans $2,970 $1,988
Other real estate and repossessed
assets $843 $273
Nonperforming assets to total
assets 0.33% 0.35%
END OF PERIOD BALANCES
Loans $693,548 $384,331
Total earning assets (before
allowance for loan losses) 999,194 568,878
Total assets 1,141,366 637,684
Deposits 880,075 501,136
Shareholders' equity 104,812 37,987
AVERAGE BALANCES
Loans $493,490 $376,988
Total earning assets (before
allowance for loan losses) 735,847 544,778
Total assets 816,705 611,645
Deposits 639,850 486,441
Shareholders' equity 60,663 37,112
TEXAS UNITED BANCSHARES, INC.
CONSOLIDATED YIELD/RATE ANALYSIS
(Unaudited)
For the Three Months Ended September 30,
2005 2004
Average Interest Average Average Interest Average
Outstanding Earned / Yield / Outstanding Earned / Yield /
Balance Paid Rate Balance Paid Rate
(Dollars in Thousands)
ASSETS
Interest-
earning
assets:
Total loans $822,938 $17,079 8.23% $476,826 $8,966 7.48%
Taxable
securities 271,008 2,483 3.63% 248,203 2,227 3.57%
Tax-exempt
securities 28,419 296 4.13% 8,687 97 4.44%
Federal funds
sold 1,730 17 3.90% 2,800 7 0.99%
Total
interest-
earning
assets 1,124,095 19,875 7.01% 736,516 11,297 6.10%
Less: allowance
for loan
losses (ALL) (7,391) (4,253)
Total
interest-
earning
assets, net
of ALL 1,116,704 732,263
Noninterest-
earning
assets 150,583 79,571
Total
assets $1,267,287 $811,834
LIABILITIES
AND SHAREHOLDERS'
EQUITY
Interest-bearing
liabilities:
Interest-
bearing
demand
deposits $204,378 $646 1.25% $196,222 $665 1.35%
Saving and
money market
accounts 153,559 507 1.31% 115,974 351 1.20%
Time deposits 316,919 2,346 2.94% 219,076 1,304 2.37%
Federal funds
purchased 36,502 378 4.11% 7,568 57 3.00%
Junior
subordinated
deferrable
interest
debentures 17,520 391 8.85% 12,365 266 8.56%
Other
borrowings 209,111 1,853 3.52% 60,126 643 4.25%
Total interest-
bearing
liabilities 937,989 6,121 2.59% 611,331 3,286 2.14%
Noninterest-
bearing
liabilities:
Noninterest-
bearing
demand
deposits 209,065 133,288
Other
liabilities 13,635 7,216
Total
liabilities 1,160,689 751,835
Shareholders'
equity 106,598 59,999
Total
liabilities
and
shareholders'
equity $1,267,287 $811,834
Net interest
income $13,754 $8,011
Net interest spread 4.43% 3.96%
Net interest margin 4.85% 4.33%
TEXAS UNITED BANCSHARES, INC.
CONSOLIDATED YIELD/RATE ANALYSIS
(Unaudited)
For the Nine Months Ended September 30,
2005 2004
Average Interest Average Average Interest Average
Outstanding Earned / Yield / Outstanding Earned / Yield /
Balance Paid Rate Balance Paid Rate
(Dollars in Thousands)
ASSETS
Interest-
earning
assets:
Total loans $759,217 $45,452 8.00% $431,255 $23,956 7.42%
Taxable
securities 285,426 7,994 3.74% 212,208 5,639 3.55%
Tax-exempt
securities 16,604 529 4.26% 8,729 292 4.47%
Federal funds
sold 2,468 58 3.14% 1,887 14 0.99%
Total
interest-
earning
assets 1,063,715 54,033 6.79% 654,079 29,901 6.11%
Less: allowance
for loan
losses (ALL) (7,079) (4,061)
Total interest-
earning
assets, net
of ALL 1,056,636 650,018
Noninterest-
earning
assets 155,765 75,432
Total
assets $1,212,401 $725,450
LIABILITIES AND
SHAREHOLDERS'
EQUITY
Interest-bearing
liabilities:
Interest-
bearing
demand
deposits $220,908 $2,134 1.29% $173,328 $1,617 1.25%
Saving and
money
market
accounts 156,829 1,468 1.25% 100,410 838 1.11%
Time deposits 310,286 6,325 2.73% 200,184 3,689 2.46%
Federal funds
purchased 30,410 851 3.74% 9,887 119 1.61%
Junior
subordinated
deferrable
interest
debentures 17,520 1,171 8.94% 12,365 798 8.62%
Other
borrowings 152,067 3,840 3.38% 69,222 1,535 2.96%
Total
interest-
bearing
liabilities 888,020 15,789 2.38% 565,396 8,596 2.03%
Noninterest-
bearing
liabilities:
Noninterest-
bearing demand
deposits 200,351 112,010
Other
liabilities 18,079 2,113
Total
liabilities 1,106,450 679,519
Shareholders'
equity 105,951 45,931
Total
liabilities
and
shareholders'
equity $1,212,401 $725,450
Net interest
income $38,244 $21,305
Net interest
spread 4.41% 4.08%
Net interest margin 4.81% 4.35%
DATASOURCE: Texas United Bancshares, Inc.
CONTACT: Jeffrey A. Wilkinson, Executive Vice President and Chief
Financial Officer of Texas United Bancshares, Inc., +1-979-968-8451, or