Texas United Bancshares, Inc. Announces 38% Increase in First Quarter Earnings

Texas United Bancshares, Inc. Announces 38% Increase in First
Quarter Earnings 


LA GRANGE, Texas, May 5  /PRNewswire-FirstCall/ -- Texas United Bancshares,
Inc.  today reported first quarter 2004 net income of $1.6 million or $0.37 per
diluted share, an increase of $434,000 or $0.10 per diluted share, compared to
the first quarter of 2003.  The annualized return on average assets was 0.96%
and the annualized return on average equity was 15.3% for the first quarter of
2004.

Other financial results for the quarter included net interest income of $6.7
million before provision for loan losses, up 3.1% from the first quarter 2003. 
The net interest margin for the first quarter of 2004 and 2003 was 4.63% and
5.18%, respectively.  Average total loans, including loans held for sale, for
the first quarter 2004 were up $13.1 million, a 3.5% increase from the first
quarter of 2003.  Average deposits for the first quarter of 2004 were up $61.8
million, a 13.5% increase from the first quarter of 2003.

Non-interest income was $3.7 million in the first quarter of 2004, compared to
$2.6 million for the same period in 2003.  The increase is attributed to the
$1.2 million in mortgage fees generated from Community Home Loan, Inc. which
was acquired in February of 2004.

Non-interest expenses for the quarter were $7.9 million, compared to $6.7
million for the same period in 2003.  The increase is primarily attributed to
the $1.2 million in employee compensation and benefits and other operating
expenses from Community Home Loan, Inc.  The provision for loan losses was
$150,000 in the first quarter 2004, compared to $800,000 in the same quarter in
2003.  The Company increased its provisions during 2003 primarily due to the
growth in the loan portfolio, changes in the Central Texas economy, and the
increase in net charge-offs.

Non-performing assets totaled $2.4 million or 0.59% of loans and other real
estate at March 31, 2004 compared to $2.3 million or 0.59% of loans and other
real estate at December 31, 2003.  For the three months ended March 31, 2004,
the Company had net recoveries of $50,000.  Charge-offs for the first three
months ended March 31, 2004 are down from 2003 levels primarily due to the sale
of State Bank's credit card portfolio in the fourth quarter of 2003. Net
charge-offs were $2.3 million or 0.61% of average loans for the year ended
December 31, 2003.  The allowance for loan losses totaled $4.1 million at March
31, 2004 compared to $3.9 million at December 31, 2003.

As of March 31, 2004 Texas United Bancshares, Inc. had total assets of $658.7
million and total deposits of $536.7 million.  Shareholders' equity of $40.8
million represented 6.2% of total assets.

Texas United Bancshares, Inc. is a registered financial holding company listed
on the Nasdaq National Market under the symbol "TXUI".  Its wholly owned
subsidiary, State Bank, offers a complete range of banking services through 18
full service banking centers located in the greater central and south central
Texas area.  In addition, State Bank has seven mortgage loan production offices
located in Houston and San Antonio through its wholly owned subsidiary
Community Home Loan, Inc.

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 the company's reports and registration
statements filed with the Securities and Exchange Commission.

Copies of our Company filings are available on our website
http://www.statebanktx.com/ under the caption of investor relations.

                      Texas United Bancshares, Inc.
                CONSOLIDATED FINANCIAL SUMMARY (UNAUDITED)

                                  2004                 2003
                                1st Qtr  4th Qtr  3rd Qtr  2nd Qtr  1st Qtr

  CONDENSED INCOME STATEMENTS

   ($ in thousands)
  Net interest income            $6,664   $6,815   $7,035   $6,793   $6,498
  Provision for loan losses         150      800      800      500      800
  Non-interest income
     Service charges on
      deposit accounts            1,597    1,737    1,718    1,689    1,609
     Net servicing fees              (3)      76    1,401      132       18
     Net gain on securities
      transactions                   77        3      376      684      231
     Other                        2,020    1,251      654      884      721

  Total non-interest income       3,691    3,067    4,149    3,389    2,579

  Non-interest expense
     Employee compensation
      and benefits                4,274    4,375    4,509    4,349    3,456
     Occupancy                    1,088    1,142    1,214    1,144    1,121
     Other                        2,575    2,210    2,465    2,166    2,139

  Total non-interest expense      7,937    7,727    8,188    7,659    6,716

  Income before provision
   for taxes                      2,268    1,355    2,196    2,023    1,561
  Income taxes                      703      166      667      631      430

  Net income                     $1,565   $1,189   $1,529   $1,392   $1,131

  PER SHARE DATA

  Net income - basic              $0.39    $0.30    $0.38    $0.35    $0.29
  Net income - diluted             0.37     0.29     0.37     0.34     0.27
  Cash dividends                   0.07     0.07     0.07     0.07     0.07
  Book value                      10.17     9.49     9.11     9.67     9.28
  Period-end common shares
   outstanding                    4,017    4,002    3,995    3,995    3,968
  Weighted average
   shares - basic                 4,010    4,000    3,995    3,978    3,965
  Weighted average
   shares - diluted               4,193    4,154    4,163    4,139    4,120

  SELECTED ANNUALIZED RATIOS

  Return on average assets         0.96%    0.75%    0.97%    0.93%    0.79%
  Return on average equity        15.33    12.86    16.70    14.38    12.70
  Net interest margin to average
   earning assets                  4.63     4.75     4.91     5.16     5.18


                        Texas United Bancshares, Inc.
                  CONSOLIDATED FINANCIAL SUMMARY (UNAUDITED)

                             2004                     2003
                           1st Qtr   4th Qtr   3rd Qtr   2nd Qtr   1st Qtr

  BALANCE SHEET SUMMARY

  ($ in thousands)
  Average Balance:
     Loans (including
      loans held for sale) $391,820  $376,623  $384,748  $367,909  $378,671
     Earning assets         578,730   568,074   568,068   527,609   509,197
     Total assets           650,610   632,285   631,398   601,609   581,287
     Total deposits         517,797   505,431   501,208   476,178   456,016
     Shareholders' equity    40,845    36,970    36,621    38,728    36,128

  Period-End Balance:
     Net Loans (including
      loans held for sale) $402,747  $380,438  $369,542  $365,930  $354,269
     Earning assets         589,071   568,878   560,158   543,863   521,431
     Goodwill and intangible
      assets                 14,365    13,940    14,259    12,896    12,798
     Total assets           658,720   637,319   630,142   614,374   591,661
     Total deposits         536,749   501,631   503,706   495,614   474,599
     Shareholders' equity    40,845    37,987    36,396    38,647    36,821

  ASSET QUALITY

  ($ in thousands)
  Allowance for loan losses: $4,093    $3,893    $3,896    $3,584    $3,593
  As a percentage of
   period-end loans            1.01%     1.01%     1.04%     0.97%     1.00%

  Net (recoveries)
   charge-offs:                $(50)     $803      $488      $509      $503
    As a percentage of average
     loans (annualized)         ---%     0.85%     0.51%     0.55%     0.54%

  Non-performing assets:
    Past due and
     non-accrual             $2,073    $1,988    $1,373    $1,445    $1,633
    Other real estate           333       273       449       369       375

    Total                    $2,406    $2,261    $1,822    $1,814    $2,008

  As a percentage of:
    Total assets               0.37%     0.35%     0.29%     0.30%     0.34%
    Total loans plus other
     real estate               0.59      0.59      0.49      0.49      0.56

  CONSOLIDATED CAPITAL RATIOS

  Tier 1 risk-based
   capital ratio               9.61%     9.54%     8.09%     8.35%     8.32%
  Total risk-based capital
   ratio                      10.56     10.47      9.01      9.26      9.27
  Tier 1 leverage ratio        6.46      6.46      5.47      5.56      5.52


DATASOURCE: Texas United Bancshares, Inc.



CONTACT:  Tom Adams of Texas United Bancshares, Inc., [phone]



Web site:  http://www.statebanktx.com/ 

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